| | | | Gender | | Ethnicity/Race | | Independence | | Tenure | 63%
Diversity | | | | |  | |  | |  | |  | | | | | | | | | | | | | | | | | | | | | |
| * | Calculated as of the date of this Proxy Statement |  | Indicates Expertise |  | Indicates Experienced |
Table of Contents | | | | |  | | 2021 Proxy Statement | | 15 |
Proposal 1. Election of Directors
Election of DirectorsDirector Nominees
At the Annual Meeting, shareholders will be asked to elect Daniel L. Comas, Feroz Dewan, Sharmistha Dubey, Rejji P. Hayes, James A. Lico, Kate D. Mitchell, Jeannine Sargent, and Alan G. Spoon (each of whom has been recommended by the Nominating and Governance Committee, has been nominated by the Board and currently serves as a director of Fortive) to serve a one-year term until the 2022 Annual Meeting of Shareholders and until his or her successor is duly elected and qualified. Mitchell P. Rales and Steven M. Rales will not stand for re-election and will retire from our Board as of the 2021 Annual Meeting. Although as of the date of this Proxy Statement the number of directors is fixed at ten, the Board has adopted a resolution that, effective as of the retirement of Messrs. Rales and Rales at the Annual Meeting, the size of the Board will be reduced to eight.
We have included information as of April 12, 202111, 2022 relating to each nominee for election as director, including his or her age, the year in which he or she became a director, his or her principal occupation, any board memberships at other public companies (to the extent required under Item 401(e)(2) of Regulation S-K) during the past five years, and the other experience, qualifications, attributes or skills that led the Board to conclude that he or she should continue to serve as a director of Fortive. Please see “Corporate Governance – Director Nomination Process” for a further discussion of the Board’s process for nominating Board candidates. In the event a nominee declines or is unable to serve, the proxies may be voted at the discretion of the proxy holders for a substitute nominee designated by the Board, or the Board may reduce the number of directors to be elected. We know of no reason why this will occur. Director Nominees
| | | | | | | 
Daniel L. Comas Age: 58 Director Since: 2021 Independent | | | AGE: Background57
| | | | | | | ►Had served as Executive Vice President of Danaher Corporation, a global science and technology company, from April 2005 through December 2020, including as Chief Financial Officer through December 2018 ►Had also served in various other roles at Danaher, including in roles with responsibilities over corporate development, treasury, finance and risk management after joining Danaher in 1991 ►Currently serves as an advisor to Danaher and is an adjunct professor at Georgetown University ►Holds a Bachelor’s degree in Economics from Georgetown University and a Master’s degree in Business Administration from Stanford University | | | DIRECTOR SINCE: Other Current Public Company Directorships
2021None
| | INDEPENDENT
| |
Mr. Comas served as Executive Vice President of Danaher Corporation, a global science and technology company, from April 2005 through December 2020, including as Chief Financial Officer through December 2018. Mr. Comas joined Danaher in 1991 and had served in various roles at Danaher, including in roles with responsibilities over corporate development, treasury, finance and risk management. Mr. Comas currently serves as an advisor to Danaher and is an adjunct professor at Georgetown University. Mr. Comas holds a Bachelor’s degree in Economics from Georgetown University and a Master’s degree in Business Administration from Stanford University.
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS:
None
QUALIFICATIONS:Director Qualifications
Mr. Comas brings deep expertise in finance, strategy, corporate development, capital allocation, accounting, human capital management, and risk management. In addition, through his extensive leadership experience at Danaher Corporation, Mr. Comas brings direct understanding for the principles of the Fortive Business System and our culture of continuous improvement.
Mr. Comas brings deep expertise in finance, strategy, corporate development, capital allocation, accounting, human capital management and risk management. In addition, through his extensive leadership experience at Danaher Corporation, Mr. Comas brings direct understanding for the principles of the Fortive Business System and our culture of continuous improvement.
| | | | | 16 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Proposal 1. Election of Directors
| | | | | | | Feroz Dewan
| | AGE: 44
| | DIRECTOR SINCE: 2016
| | INDEPENDENT
| |
Mr. Dewan has served as the Chief Executive Officer of Arena Holdings Management LLC, an investment holding company, since 2016. Previously, Mr. Dewan served in a series of positions with Tiger Global Management, an investment firm with approximately $20 billion under management across public and private equity funds, from 2003 to 2015, including most recently as Head of Public Equities. He also served as a Private Equity Associate at Silver Lake Partners, a private equity firm focused on leveraged buyout and growth capital investments in technology, technology-enabled and related industries, from 2002 to 2003. Mr. Dewan served as a director of The Kraft Heinz Company, a public company, from 2016 to 2020.
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS:
None
QUALIFICATIONS:
Mr. Dewan’s qualifications to sit on the Board include, among other factors, extensive experience in the technology industry and technology-related companies, including extensive experience in valuation, investments and acquisitions, financial reporting, risk management, corporate governance, capital allocation, and operational oversight.
| | | | | | | Sharmistha Dubey
| | AGE: 50
| | DIRECTOR SINCE: 2020
| | INDEPENDENT
| |
Ms. Dubey currently serves as the Chief Executive Officer and Director of Match Group, Inc., a publicly-traded provider of global dating products, overseeing growth for the portfolio of brands including Tinder, Match, Meetic, OkCupid, Hinge, Pairs, PlentyOfFish, and OurTime. Prior to Ms. Dubey’s current role at Match Group, Inc., she has served in various senior leadership positions at Match Group, Inc. since 2006, including as Match Group’s President, Chief Operating Officer of Tinder, President of Match Group Americas, Chief Product Officer of Match, and Chief Product Officer and EVP of The Princeton Review. Ms. Dubey holds an undergraduate degree in Engineering from the Indian Institute of Technology and a master’s degree in Engineering from Ohio State University.
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS:
Match Group, Inc.
QUALIFICATIONS:
Ms. Dubey’s qualifications to sit on the Board include, among other factors, extensive experience and leadership in operation, innovative product development, competitive strategy and marketing in the technology industry. In addition, through her leadership roles at Match Group, Inc., Ms. Dubey has significant experience in data privacy, human capital management, scaling new technologies into new markets, and executing portfolio and investment strategies.
| | | | | | | 2021 Proxy Statement | | 17 |
Proposal 1. Election of Directors
| | | | | | | Rejji P. Hayes
| | AGE: 46
| | DIRECTOR SINCE: 2020
| | INDEPENDENT
| |
Since 2017, Mr. Hayes has served as Executive Vice President and Chief Financial Officer of CMS Energy Corporation, a publicly traded electric and natural gas company. As Chief Financial Officer, Mr. Hayes oversees all treasury, tax, investor relations, accounting, financial planning and analysis, internal controls and compliance, and mergers and acquisitions for CMS Energy Corporation. Mr. Hayes also currently serves as Chairman of the Board of EnerBank USA®, a CMS Energy subsidiary and nationwide provider of home improvement loans. Prior to joining CMS Energy Corporation, Mr. Hayes served as the Chief Financial Officer of ITC Holdings Corp, a publicly traded electric transmission company, from 2014 to 2016 and as its Vice President, Finance and Treasurer from 2012 to 2014. Prior to joining ITC Holdings Corp., Mr. Hayes held strategy and financial leadership roles for Exelon Corporation, Lazard Freres & Co., and Banc of America Securities. Mr. Hayes holds a bachelor’s degree from Amherst College and a master’s degree in business from Harvard Business School.
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS:
None
QUALIFICATIONS:
In addition to his strong knowledge of the power and energy sector, Mr. Hayes brings extensive experience in finance, capital markets, accounting and financial reporting, valuation, mergers & acquisitions, risk management, ESG and regulatory matters, and corporate governance. Mr. Hayes has significant expertise in structuring capital financing and executing investment and acquisition strategies.
| | | | | | | James A. Lico
| | AGE: 55
| | DIRECTOR SINCE: 2016
| | | |
Mr. Lico has served as the Chief Executive Officer and President of Fortive since 2016. From 1996 to 2016, Mr. Lico served in various leadership positions at Danaher Corporation, a global science and technology company, including as Executive Vice President from 2005 to 2016. Mr. Lico also served as a director of NetScout Systems, Inc., a public company, from 2015 to 2018.
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS:
None
QUALIFICATIONS:
Mr. Lico’s qualifications to sit on the Board include, among other factors, over 20 years of extensive experience in senior leadership positions, including as an Executive Vice President of Danaher with oversight at various times of each of the businesses that was separated from Danaher into Fortive. Mr. Lico, through his various senior leadership positions at Danaher and Fortive, has broad operating and functional experience with, and deep knowledge of, Fortive’s businesses, the Fortive Business System, capital allocation strategies, acquisitions, marketing and branding, and leadership strategies.
| | | | | 18 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Proposal 1. Election of Directors
| | | | | | | Kate D. Mitchell
| | AGE: 62
| | DIRECTOR SINCE: 2016
| | INDEPENDENT
| |
Ms. Mitchell has served as a partner and co-founder of Scale Venture Partners, a Silicon Valley-based firm that invests in early-in-revenue technology companies, since 1997. Prior to her current role, Ms. Mitchell served with Bank of America, a multinational banking and financial services corporation, from 1988 to 1996, most recently as Senior Vice President for Bank of America Interactive Banking. Ms. Mitchell currently serves on the boards of directors of SVB Financial Group, Silicon Valley Community Foundation and other private company boards on behalf of Scale Venture Partners.
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS:
SVB Financial Group
QUALIFICATIONS:
Ms. Mitchell’s qualifications to sit on the Board include, among other factors, over 35 years of extensive experience in the technology industry, with a focus on innovative software and technology markets. In addition, Ms. Mitchell has deep experience as a director, investor and senior executive in the areas of business management and operations, finance, financial reporting, risk management, investment and acquisition strategy, and executive compensation.
| | | | | | | Jeannine Sargent
| | AGE: 57
| | DIRECTOR SINCE: 2019
| | INDEPENDENT
| |
Ms. Sargent has served as an operating partner of Katalyst Ventures, an early-stage technology venture fund, since 2018. Ms. Sargent has also served as a senior advisor at Generation Investment Management, LLP since 2017 and as an advisor at Breakthrough Energy Ventures since 2018, each an investment venture focused on sustainable innovation. Previously, Ms. Sargent served as president of Innovation and New Ventures at Flex, a leader in global design and manufacturing, from 2012 until 2017. Prior to joining Flex, Ms. Sargent served as the chief executive officer at Oerlikon Solar, a thin-film silicon solar photovoltaic module manufacturer and a wholly owned subsidiary of Oerlikon, a publicly-traded Swiss company, and Voyan Technology, an embedded systems software provider. Ms. Sargent is also a director and an audit committee member of Synopsys, Inc., a publicly-traded electronic design automation company, a director and a member of the audit committee and the nominating and corporate governance committee of Queen’s Gambit Growth Capital, a publicly-traded special purpose acquisition company, and a director and chair of the nominating and governance committee of Proterra Inc., a commercial vehicle electrification technology company. Ms. Sargent was also a director at Cypress Semiconductor Corp. from 2017 to 2020, serving on the compensation and nominating and governance committees. She also currently serves on several investment and advisory boards and is on the board of trustees at Northeastern University. She holds a bachelor of science in chemical engineering from Northeastern University and certificates from the executive development programs at the MIT Sloan School of Management, Harvard University and Stanford University and CERT certificate of cyber risk oversight from National Association of Corporate Directors in conjunction with Carnegie Mellon University.
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS:
Synopsys, Inc. and Queen’s Gambit Growth Capital
QUALIFICATIONS:
Ms. Sargent’s qualifications to sit on the Board include, among other factors, over 30 years of experience encompassing leadership, operations, marketing and engineering roles with a diverse mix of high technology hardware and software companies across multiple industries. In addition, Ms. Sargent has significant experience with development and global launch of disruptive technology, executing investment and acquisition strategies, corporate governance, cybersecurity, sustainable innovation and executive compensation.
| | | | | | | 2021 Proxy Statement | | 19 |
Proposal 1. Election of Directors
| | | | | | | Alan G. Spoon
| | AGE: 69
| | DIRECTOR SINCE: 2016
| | INDEPENDENT
| |
Mr. Spoon has served as our Chairman of the Board since 2016. In addition, Mr. Spoon served as a Partner of Polaris Partners, a company that invests in private technology and life science firms, from 2000 to 2018, including as Managing General Partner from 2000 to 2010 and as Partner Emeritus from 2015 to 2018. In addition to his prior leadership role at Polaris Partners, Mr. Spoon previously served as president, chief operating officer and chief financial officer of one of the country’s largest, publicly-traded education and media companies. Mr. Spoon also previously served as a director of Cable One, Inc., a public company, until February 2021.
OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS:
Danaher Corporation, IAC/InteractiveCorp., and Match Group, Inc.
QUALIFICATIONS:
Mr. Spoon’s public and private company leadership experience gives him insight into business strategy, leadership, marketing, finance, corporate governance, executive compensation and board management. His public company and private equity experience gives him insight into trends in the internet and technology industries, acquisition strategy and financing, each of which represents an area of key strategic opportunity for Fortive.
2022 PROXY STATEMENT
Table of Contents 
Sharmistha Dubey Age: 51 Director Since: 2020 Independent | | | Background | | | | | | | ►Currently serves as the Chief Executive Officer and Director of Match Group, Inc., a publicly-traded provider of global dating products, overseeing growth for the portfolio of brands including Tinder, Match, Meetic, OkCupid, Hinge, Pairs, PlentyOfFish, and OurTime ►Had also served in various other senior leadership positions at Match Group, Inc., including as Match Group’s President, Chief Operating Officer of Tinder, President of Match Group Americas, Chief Product Officer of Match, and Chief Product Officer and EVP of The Princeton Review after joining Match Group in 2016 ►Currently serves as a director of Naspers Limited, a technology investment company, and Prosus N.V., a global consumer internet group that is majority-owned by Naspers ►Holds an undergraduate degree in Engineering from the Indian Institute of Technology and a master’s degree in Engineering from Ohio State University | | | Other Current Public Company Directorships
Match Group, Inc. Director Qualifications
Ms. Dubey’s qualifications to sit on the Board include, among other factors, extensive experience and leadership in operation, innovative product development, competitive strategy and marketing in the technology industry. In addition, through her leadership roles at Match Group, Inc., Ms. Dubey has significant experience in data privacy, human capital management, scaling new technologies into new markets, and executing portfolio and investment strategies. | | | | |
Rejji P. Hayes Age: 47 Director Since: 2020 Independent | | | Background | | | | | | | ►Currently serves as Executive Vice President and Chief Financial Officer of CMS Energy Corporation, a publicly-traded electric and natural gas company since 2017, overseeing all treasury, tax, investor relations, accounting, financial planning and analysis, internal audit services, supply chain, facilities, fleet, corporate safety, real estate, and mergers & acquisitions ►Previously served as Chairman of the Board of EnerBank USA®, a nationwide provider of home improvement loans and former CMS Energy subsidiary ►Had served as the Chief Financial Officer of ITC Holdings Corp, a publicly-traded electric transmission company, from 2014 to 2016 and as its Vice President, Finance and Treasurer from 2012 to 2014 ►Held strategy and financial leadership roles for Exelon Corporation, Lazard Freres & Co., and Bank of America Securities prior to joining ITC Holdings Corp. ►Holds a bachelor’s degree from Amherst College and a master’s degree in business from Harvard Business School | | | Other Current Public Company Directorships
None Director Qualifications
In addition to his strong knowledge of the power and energy sector, Mr. Hayes brings extensive experience in finance, capital markets, accounting and financial reporting, valuation, mergers & acquisitions, risk management, ESG and regulatory matters, and corporate governance. Mr. Hayes has significant expertise in structuring capital financing and executing investment and acquisition strategies. | | | | |
Table of Contents  Wright
Lassiter III Age: 58 Director Since: 2022* Independent * Mr. Lassiter, who was appointed by the Board effective January 1, 2022, was recommended by a third-party search firm engaged by the Nominating and Governance Committee. | | | Background | | | | | | | ►Currently serves as President and CEO of Henry Ford Health System, a $7 billion, private, not-for-profit health system comprised of six hospitals, a health plan and wide range of ambulatory and retail health services since 2014 ►Serves as the chair of The American Hospital Association Board of Trustees, a national organization that represents America’s hospitals and health systems to advance health in America ►Serves as a director of Quest Diagnostics, a publicly-traded diagnostic information services company, as well as a member of its Audit and Finance Committee and its Quality and Compliance Committee ►Serves as the lead independent director of DT Midstream, a publicly-traded energy company, as well as the chair of its Corporate Governance Committee, a member of its Environmental, Social and Governance Committee, and a member of its Organization and Compensation Committee ►Had served as the CEO of Alameda Health System in Oakland, California, from 2005 to 2014 ►Had served as a Director of the Federal Reserve Bank of Chicago from 2018 to 2021 | | | Other Current Public Company Directorships
DT Midstream Inc.
Quest Diagnostics, Inc. Director Qualifications
Mr. Lassiter’s qualifications to sit on the Board include, among other factors, extensive experience and leadership in healthcare services and innovation, strategic planning, operation, and execution, corporate governance, ESG, human capital management, finance and community service. | | | | |
James A. Lico Age: 56 Director Since: 2016 | | | Background | | | | | | | ►Currently serves as the Chief Executive Officer and President of Fortive since 2016 ►Had served in various leadership positions at Danaher Corporation, a global science and technology company, including as Executive Vice President from 2005 to 2016 ►Had served as a director of NetScout Systems, Inc., a public company, from 2015 to 2018 | | | Other Current Public Company Directorships
None Director Qualifications
Mr. Lico’s qualifications to sit on the Board include, among other factors, over 20 years of extensive experience in senior leadership positions, including as an Executive Vice President of Danaher with oversight at various times of each of the businesses that was separated from Danaher into Fortive. Mr. Lico, through his various senior leadership positions at Danaher and Fortive, has broad operating and functional experience with, and deep knowledge of, Fortive’s businesses, the Fortive Business System, capital allocation strategies, acquisitions, marketing and branding, and leadership strategies. | | | | |
2022 PROXY STATEMENT
Table of Contents 
Kate D. Mitchell Age: 63 Director Since: 2016 Independent | | | Background | | | | | | | ►Currently serves as a partner and co-founder of Scale Venture Partners, a Silicon Valley-based firm that invests in early-in-revenue technology companies, since 1997 ►Had served with Bank of America, a multinational banking and financial services corporation, from 1988 to 1996, most recently as Senior Vice President for Bank of America Interactive Banking ►Serves as director of SVB Financial Group, a publicly-traded financial services, bank holding and financial holding company, as well as a member of its Governance Committee and Risk Committee ►Serves as a director of Silicon Valley Community Foundation and other private company boards on behalf of Scale Venture Partners | | | Other Current Public Company Directorships
SVB Financial Group Director Qualifications
Ms. Mitchell’s qualifications to sit on the Board include, among other factors, over 40 years of extensive experience in the technology industry, with a focus on innovative software and technology markets. In addition, Ms. Mitchell has deep experience as a director, investor and senior executive in the areas of business management and operations, finance, financial reporting, risk management, investment and acquisition strategy, and executive compensation. | | | | |
Table of Contents 
Jeannine
Sargent Age: 58 Director Since: 2019 Independent | | | Background | | | | | | | ►Currently as an operating partner of Katalyst Ventures, an early-stage technology venture fund, since 2018 ►Serves as a senior advisor at Generation Investment Management, LLP since 2017 and as an advisor at Breakthrough Energy Ventures since 2018, each an investment venture focused on sustainable innovation ►Had served as president of Innovation and New Ventures at Flex, a leader in global design and manufacturing, from 2012 until 2017 ►Had also served as the chief executive officer at Oerlikon Solar, a thin-film silicon solar photovoltaic module manufacturer and a wholly owned subsidiary of Oerlikon, a publicly-traded Swiss company, and Voyan Technology, an embedded systems software provider ►Serves as a director of Synopsys, Inc., a publicly-traded electronic design automation company, as well as a member of its Audit Committee ►Serves as the lead independent director of Proterra Inc., a publicly-traded commercial vehicle electrification technology company, as well as the chair of its Nominating and ESG Committee | | | Other Current Public Company Directorships
Proterra Inc.
Synopsys, Inc. Director Qualifications
Ms. Sargent’s qualifications to sit on the Board include, among other factors, over 30 years of experience encompassing leadership, operations, marketing and engineering roles with a diverse mix of high technology hardware and software companies across multiple industries. In addition, Ms. Sargent has significant experience with development and global launch of disruptive technology, executing investment and acquisition strategies, corporate governance, cybersecurity, sustainable innovation and executive compensation. | | | | |
2022 PROXY STATEMENT
Table of Contents 
Alan G. Spoon Age:70 Director Since: 2016 Independent | | | Background | | | | | | | ►Has served as the Chairman of the Board of Fortive since 2016 ►Had served as a Partner of Polaris Partners, a company that invests in private technology and life science firms, from 2000 to 2018, including as Managing General Partner from 2000 to 2010 and as Partner Emeritus from 2015 to 2018 ►Had served in senior leadership roles as the Washington Post Company (now known as Graham Holdings Company), including as Chief Operating Officer and a director from 1991 to 2000, as President from 1993 to May 2000, and as President of Newsweek from 1989 to 1991 ►Serves as a director of IAC/InterActiveCorp, including as a chair of its Audit Committee ►Serves as a director of Match Group, Inc., including as a chair of its Audit Committee ►Serves as a director of Danaher Corporation, including as the chair of its Compensation Committee | | | Other Current Public Company Directorships
Danaher Corporation
IAC/InterActiveCorp
Match Group, Inc. Director Qualifications
Mr. Spoon’s public and private company leadership experience gives him insight into business strategy, leadership, marketing, finance, corporate governance, executive compensation and board management. His public company and private equity experience gives him insight into trends in the internet and technology industries, acquisition strategy and financing, each of which represents an area of key strategic opportunity for Fortive. | | | | |
Table of Contents | Proposal 1 | Election of Directors |
At the Annual Meeting, shareholders will be asked to elect Daniel L. Comas, Sharmistha Dubey, Rejji P. Hayes, Wright L. Lassiter III, James A. Lico, Kate D. Mitchell, Jeannine Sargent, and Alan G. Spoon (each of whom has been recommended by the Nominating and Governance Committee, has been nominated by the Board and currently serves as a director of Fortive) to serve a one-year term until the 2023 Annual Meeting of Shareholders and until his or her respective successor is duly elected and qualified. In the event a nominee declines or is unable to serve, the proxies may be voted at the discretion of the proxy holders for a substitute nominee designated by the Board, or the Board may reduce the number of directors to be elected. We know of no reason why this would occur.  | The Board of Directors recommends that shareholders vote “FOR”the election to the Board of each of the foregoing Director Nominees.Nominees to the Board. |
2022 PROXY STATEMENT
Table of Contents Corporate Governance | | | | | 20 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Corporate Governance Overview Our Board of Directors recognizes that protecting long-term value for our shareholders requires a robust framework of corporate governance that serves the best interests of all our shareholders.
The following are certain highlights demonstrating our Board’s dedication to strong corporate governance:
Governance Highlights Board Composition  | | | | | 
| | We have documented and executed our commitment to Board diversityin our Corporate Governance Guidelines and the Nominating and Governance Committee Charter, with three female directors and three ethnically/racially diverse directors | | We have engaged in rigorous refreshment of the Board, with a majority of the Board appointed during or after 2019 |
| | We have fully declassified the Boardto provide for the election of all directors for one-year terms | | |
| | We have no shareholder rights plan
| | |
| | We have adopted proxy accessto permit a shareholder, or a group of up to 20 shareholders, owning at least 3% of the outstanding shares continuously for at least 3 years to nominate and include in our proxy materials director nominees constituting up to 20% of the board of directors, as further detailed in our Bylaws |
| | | | |
| | We maintain a majority vote requirementfor the election of directorsin uncontested elections |
Board Structure | We have separated our Chairman and CEO positions, with an independent Chairman |
Board Role and Responsibilities
| | Subject to approval by the shareholders of Proposal 4, we have approved the ability of shareholders owning at least 25% of the outstanding shares to request that a special meeting be called
| | |
| | We have implemented a corporate social responsibilitySustainability (ESG) program, as reported in our annual Corporate Social ResponsibilitySustainability Report, with multi-layered oversight by the Nominating and Governance Committee and the full Board | | |
| | We have formalized and documented in the Compensation Committee Charter oversight of our human capital managementby the Compensation Committee, including matters related to overall employee retention and inclusive and diverse company culture, with annual review by the full Board |
| | | | We have formalized and documented in the Nominating and Governance Committee Charter oversight of our CEO succession planning by the Nominating and Governance Committee, with annual review by the full Board |
| | We have separatedour Chairman and CEO positions, with an independent Chairman
| | |
| | We have formalized and documented in the Audit Committee Charter oversight of our cybersecurityby the Audit Committee, with quarterly review by the Audit Committee of our cybersecurity planning, monitoring, risk management, remediation, and controls and annual review by the full Board | | We have implemented a robust annual shareholder engagement program |
Other Governance Policies and Practices
Table of Contents | |
Corporate Governance | | We have implemented a robust annual shareholder engagement program 19
|
Corporate Governance Guidelines, Committee Charters and StandardsCode of Conduct As part of its ongoing commitment to good corporate governance, our Board of Directors has codified its corporate governance practices into a set of Corporate Governance Guidelines and adopted written charters for each of the Audit Committee, the Compensation Committee, the Nominating and Governance Committee, and the Finance Committee of the Board. The Board of Directors has also adopted our StandardsCode of Conduct that includes, among other things, a code of business conduct and ethics for directors, officers (including our principal executive officer, principal financial officer and principal accounting officer) and employees. The Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter, Nominating and Governance Committee Charter, and StandardsCode of Conduct referenced above are each available in the “Investors – Corporate Governance” section of our website at http://www.fortive.com. | | | | | | | 2021 Proxy Statement | | 21 |
Corporate Governance
Board Leadership Structure The Board has separated the positions of Chairman and CEO because it believes that the separation of the positions best enables the Board to ensure that our businesses, risks, opportunities and affairs are managed effectively and in the best interests of our shareholders. The entire Board selects its Chairman, and our Board has selected Alan G. Spoon, an independent director, as its Chairman, in light of Mr. Spoon’s independence and his deep experience and knowledge with corporate governance, board management, shareholder engagement, risk management and Fortive’s diverse businesses and industries. As the independent Chairman of the Board, Mr. Spoon leads the activities of the Board, including: Calling, and presiding over, all meetings of the Board;
Together with the CEO and the Corporate Secretary, setting the agenda for the Board;
Calling, and presiding over, the executive sessions of non-management directors and of the independent directors;
Advising the CEO on strategic aspects of the Company’s business, including developments and decisions that are to be discussed with, or would be of interest to, the Board;
Acting as a liaison as necessary between the non-management directors and the management of the Company; and
Acting as a liaison as necessary between the Board and the committees of the Board.
| ► | Calling, and presiding over, all meetings of the Board; | | ► | Together with the CEO and the Corporate Secretary, setting the agenda for the Board; | | ► | Calling, and presiding over, the executive sessions of non-management directors and of the independent directors; | | ► | Advising the CEO on strategic aspects of the Company’s business, including developments and decisions that are to be discussed with, or would be of interest to, the Board; | | ► | Acting as a liaison, as necessary, between the non-management directors and the management of the Company; and | | ► | Acting as a liaison, as necessary, between the Board and the committees of the Board. |
In the event that the Chairman of the Board is not an independent director, the Corporate Governance Guidelines provide that the independent directors, upon recommendation from the Nominating and Governance Committee, will select by majority vote an independent director to serve as the Lead Independent Director with the authority to: Preside over all meetings of the Board at which the Chair is not present, including the executive sessions;
Call meetings of the independent directors;
Act as a liaison as necessary between the independent directors and the CEO; and
Advise with respect to the Board’s agenda.
| ► | Preside over all meetings of the Board at which the Chair is not present, including the executive sessions; | | ► | Call meetings of the independent directors; | | ► | Act as a liaison, as necessary, between the independent directors and the CEO; and | | ► | Advise with respect to the Board’s agenda. |
The Board’s non-management directors meet in executive session following the Board’s regularly-scheduledregularly scheduled meetings, with the executive sessions chaired by the independent Chairman. In addition, the independent directors meet as a group in executive session at least once a year. 2022 PROXY STATEMENT
Table of Contents | | | | | 22 20 | | 2021 Proxy Statement | | FORTIVE CORPORATION Corporate Governance |
Corporate Governance
Risk Oversight The Board’s role in risk oversight at the Company is consistent with the Company’s leadership structure, with management having day-to-day responsibility for assessing and managing the Company’s risk exposure and the Board and its committees overseeing those efforts, with particular emphasis on the most significant risks facing the Company. In determining to separate the position of the CEO and the Chairman, and in determining the appointment of the Chairman of the Board and the Chairs of the committees of the Board, the Board and the Nominating and Governance Committee considered the implementation of a governance structure and appointment of chairpersons with appropriate and relevant risk management experience that would enable Fortive to efficiently and effectively assess and oversee its risks.
Enterprise Risk Oversight by the Board of DirectorsOperations The Board oversees the Company’s risk management processes directly and through its committees. In general, the Board oversees the management of risks inherent in the operation of the Company’s businesses on a consolidated basis, by each operating segment and by key corporate functions. In addition, the enterprise risk oversight includes review of the risks and opportunities related to the implementation by the Company of its strategic plan, its acquisition and capital allocation program, its capital structure and liquidity and its organizational structure, and alsostructure. Furthermore, through the Audit Committee, the Board oversees the Company’s risk assessment andenterprise risk management process and policies. In addition, atAt least on an annual basis or more frequently as deemed appropriate by the Board, the Board reviews in depth with senior leaders of the Company the Company’s enterprise risk management, with particular focus on the enterprise risks and opportunities with the greatest impact and highest probability. In addition, the chairs of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee review with each other and with the rest of the Board during executive sessions of Board meetings as appropriate updates to the Company’s enterprise risk management discussed during the corresponding committee meetings. Furthermore, at least on an annual basis or more frequently as deemed appropriate by the Board, the Board reviews with the SVP – General Counsel our insurance policies, including our D&O insurance policy, general liability policy, and our information security risk insurance policy. Portfolio and Operating Segment Risk Oversight by the Board of Directors At each Board meeting, the Board oversees the Company’s performance and execution against the strategic goals for the Company’s operating segments, overall portfolio, and innovation, including overseeing the corresponding management of risks and opportunities. In addition, on an annual basis, the Board conducts a separatean informal meeting led by senior management and dedicated entirely to deeper review of the acquisition, product development, commercial, innovation, capital allocation, human capital and risk management strategies for each of the operating segments. Risk Oversight by the Committees
| | | | | | | 2021 Proxy Statement | | 23 |
Corporate Governance
Each committee reports to the full Board on a regular basis, including as appropriate with respect to the committee’s risk oversight activities. In addition, since risk issues often overlap, committees from time to time request that the full Board discuss particular risks.
Cybersecurity and Product Security Risk Oversight The Board has delegated to the Audit Committee the responsibility of exercising oversight with respect to the Company’s cybersecurity risk management and risk controls, with the Chair of the Audit Committee having received CERT certification on cyber risk oversight.controls. Consistent with such delegation, our Chief Information Officer provides a report to the Audit Committee on quarterly basis, and to the Board on an annual basis, regarding the Company’s cybersecurity program, including the Company’s compliance program, monthly training program, monitoring, auditing, implementation and communication processes, controls, and procedures. In addition, the Chief Information Officer reviews with the Audit Committee the results of the audit conducted by BitSight Technologies as well as the annual assessment by an independent auditing firm of our security program's alignment with the NIST Cyber Security framework. Although, as of the date of this proxy statement, there have been no cybersecurity breaches nor cybersecurity incidents that have had a material financial impact, the Chief Information Officer reviews with the Audit Committee the results of any notable incidents or attempted breaches on a quarterly basis. Corporate Social Responsibility Risk OversightSustainability (ESG)
The Board has delegated to the Nominating and Governance Committee the responsibility of exercising oversight with respect to the reporting of the Company’s corporate social responsibilitySustainability disclosure. Consistent with such delegation, our SVP – General Counsel provides frequent reports and updates to the Nominating and Governance Committee, and a report to the Board on an annual basis, regarding the Company’s corporate social responsibilitySustainability program and strategies, including the corresponding risks and opportunities, goals, progress, shareholder engagement and disclosure. See “Corporate Social Responsibility – Governance”“Sustainability (ESG)” for further discussion on governance structure of our Corporate Social ResponsibilitySustainability program. Human Capital Management Risk Oversight The Board has delegated to the Compensation Committee the responsibility of exercising oversight of the Company’s human capital and compensation, risks, including oversight of overall compensation, risks, overall retention risks and inclusion and diversity
Table of Contents strategies. Our SVP of Human Resources provides regular reports on compensation and other human capital management risks, trends, best practices, strategies and disclosure to the Compensation Committee. While the Board has delegated these responsibilities to the Compensation Committee, withthe Board remains actively involved and receives additional reports throughout the year to the full Board on succession planning, employee engagement, inclusion and diversity, talent development, company culture and alignment of human capital strategies with the Company’s overall portfolio and operational strategies. Management Succession The entire Board oversees the recruitment, development, retention, and succession planning of our executive officer positions, with the responsibilities of oversight of CEO succession planning delegated to the Nominating and Governance Committee, and the responsibilities of ensuring appropriate compensation strategies and programs to align with the retention and recruitment delegated to the Compensation Committee. Our SVP of Human Resources provides regular reports on the CEO succession planning process and strategies to the Nominating and Governance Committee and on compensation strategies and programs to assist in retention and recruitment of future leaders to the Compensation Committee. The SVP of Human Resources also provides additional reports throughout the year to the full Board on short-term and long-term readiness of potential successors, outside recruitment to populate the succession funnel as necessary, and development plans of future leaders. In addition to the formal activities noted below, the Board and its committee members engage and assess our executive officers and high-potential employees during management presentations, our annual multi-day leadership conference, our annual strategy sessions for the Board, regular the visits to our operating companies, and periodic informal meetings and communications. | ► | January | | February | | April | | August | | | | | | | | | STRATEGY UPDATE
AND CEO SUCCESSION
PLANNING PROCESS
REVIEW | | PERFORMANCE
REVIEW AND
COMPENSATION
AWARDS | | EMPLOYEE
ENGAGEMENT UPDATE
AND ENTERPRISE RISK
ASSESSMENT REPORT | | TALENT, SUCCESSION
AND ENGAGEMENT
UPDATE | | | | Nominating and Governance Committee: Review of the scope and process for annual CEO succession planning Compensation Committee: Preliminary review of the performance of the executive officers in connection with compensation analysis | | Compensation Committee: Finalize and approve performance reviews and compensation decisions for the prior year and target compensation for the current year, with deliberation and input from the entire Board | | Board: Update on company culture, leadership effectiveness reflected in employee survey Nominating and Governance Committee: Review status and progress on CEO succession planning, including review of short-term and long-term funnel and readiness | | Board: Review of senior management succession readiness, including short-term and long-term leadership development, diversity, and employee engagement | |
2022 PROXY STATEMENT
Table of Contents Committees’ Role in Risk Oversight  | Audit Committee | | | | | | Nominating and
Governance Committee |  | The Audit Committee oversees risks related to financial controls, legal and compliance risks and major financial, and business continuity risks. The Audit Committee also assists the Board in overseeing the Company’s risk assessment and risk management policies and oversees our cybersecurity risk management and risk controls as well as our data privacy controls. | |  | | The Nominating and Governance Committee oversees risks associated with corporate governance, board management, CEO succession planning, conflict of interest, political contribution, and Sustainability (ESG) reporting. | | | ► | | | | ◄ | | | | | | | | | | | | | | | | | | | | | ► | | | | ◄ | | | | | | | | | |  | Compensation Committee | | | | | | Finance Committee |  | The Compensation Committee oversees risks associated with the Company’s compensation policies and practices. The Compensation Committee also oversees risks associated with human capital, including retention, recruitment, inclusion and diversity strategies. | | | | The Finance Committee oversees risks associated with the execution of the Company’s acquisition, investment and divestiture strategies. |
Each committee reports to the full Board on a regular basis, including as appropriate with respect to the committee’s risk oversight activities. Internal Risk Committee The Company’s Risk Committee (consisting of members of senior management) inventories, assesses and prioritizes the most significant risks facing the Company as well as related mitigation efforts, and, on at least an annual basis, provides a report to the Board and provides a report of the process to the Audit Committee.
Table of Contents | | | | | 24Corporate Governance | | 2021 Proxy Statement 23 | | FORTIVE CORPORATION |
Corporate Governance
Management Succession Planning
The Compensation Committee and the entire Board oversees the recruitment, development, and retention of our executive officers, including oversight of management succession planning. In addition to the formal activities noted below, the Board and its committee members engage and assess our executive officers and high-potential employees during management presentations, our annual multi-day leadership conference, visits to our operating companies, and periodic informal meetings.
Director Independence
At least a majority of the Board must qualify as independent within the meaning of the listing standards of the NYSE. The Board has affirmatively determined that nine out of our 10 current directors, including Mss. Sharmistha Dubey, Kate D. Mitchell and Jeannine Sargent and Messrs. Daniel L. Comas, Feroz Dewan, Rejji P. Hayes, Mitchell P. Rales, Steven M. Rales, and Alan G. Spoon, are independent within the meaning of the listing standards of the NYSE.
Director Independence At least a majority of the Board must qualify as independent within the meaning of the listing standards of the NYSE. The Board has affirmatively determined that seven out of our eight current directors, including Mss. Sharmistha Dubey, Kate D. Mitchell and Jeannine Sargent and Messrs. Daniel L. Comas, Rejji P. Hayes, Wright Lassiter III, and Alan G. Spoon, are independent within the meaning of the listing standards of the NYSE. |  |
Board of Directors and Committees of the Board Director Attendance Director Attendance
In 2020,2021, the Board met nineeight times (including a separate session dedicated to portfolio strategy) and acted by unanimous written consent fourthree times. All directors attended at least 75% of the aggregate of the total number of meetings of the Board and of all committees of the Board on which they served during 2020.2021. As a general matter, directors are expected to attend annual meetings of shareholders. Each of theour current directors who were serving on the Board at the time attended the 2020remotely our virtual 2021 Annual Meeting of Shareholders. | | | | | | | 2021 Proxy Statement | | 25 |
Corporate Governance
Committee Membership The membership of each of the Audit, Compensation, Nominating and Governance, and Finance committeesCommittees as of April 12, 202111, 2022 is set forth below. | Name of Director | Audit | Compensation | Nominating and
Governance | Finance | | Daniel L. Comas | | Member | | Member | | Sharmistha Dubey | | Member | Member | | | Rejji P. Hayes | Chair | | | | NAME OF DIRECTORWright Lassiter III | | AUDIT
Member | | COMPENSATION
| | NOMINATING AND
GOVERNANCE
| | FINANCE
| | James A. Lico | | | | Member | Daniel L. ComasKate D. Mitchell
| Member | Chair | | Member | | Jeannine Sargent | Member | | Chair | | | Alan G. Spoon | | | Member | Chair |
2022 PROXY STATEMENT
Table of Contents  | Audit Committee |
Rejji P. Hayes
(Chair)  |  | Kate D.
Mitchell | Jeannine
Sargent |
Meetings in 2021:
8 | The Audit Committee is responsible for: | | | | | | | Feroz Dewan
►Assessing the qualifications and independence of Fortive’s independent auditors; ►Appointing, compensating, retaining, and evaluating Fortive’s independent auditors; ►Overseeing the quality and integrity of Fortive’s financial statements and making a recommendation to the Board regarding the inclusion of the audited financial statements in Fortive’s Annual Report on Form 10-K; ►Overseeing Fortive’s internal auditing processes; ►Overseeing management’s assessment of the effectiveness of Fortive’s internal control over financial reporting; ►Overseeing management’s assessment of the effectiveness of Fortive’s disclosure controls and procedures; ►Overseeing risks related to financial controls, legal and compliance risks and major financial, privacy, security and business continuity risks; ►Overseeing Fortive’s risk assessment and risk management policies; ►Overseeing Fortive’s compliance with legal and regulatory requirements; ►Overseeing Fortive’s cybersecurity and product security risk management and risk controls; ►Overseeing swap and derivative transactions and related policies and procedures; and ►Preparing a report as required by the SEC to be included in this proxy statement. |
| | | | | Member | The Board has determined that each member of the Audit Committee is: | | | | | | | Sharmistha Dubey
| | | | Member | | | | | | | | | | Rejji P. Hayes
| | Member | | Member | | | | | | | | | | James A. Lico
| | | | | | | | Member | | | | | | Kate D. Mitchell
| | Member | | Chair | | | | | | | | | | Mitchell P. Rales*
| | | | | | | | Member | | | | | | Steven M. Rales*
| | | | | | | | Member | | | | | | Jeannine Sargent
| | Chair | | Member | | Chair | | | | | | | | Alan G. Spoon
| | | | | | Member | | Chair►Independent for purposes of Rule 10A-3(b)(1) under the Exchange Act and the NYSE listing standards; ►Qualified as an audit committee financial expert as that term is defined in SEC rules; and ►Financially literate within the meaning of the NYSE listing standards. |
* | Messrs. Rales and Rales are retiring form our Board at the Annual Meeting.
|
Audit Committee
In 2020,Furthermore, as of the date of this proxy statement, no Audit Committee met eight times.member serves on the audit committee of more than three public companies.
The Audit Committee is responsible for: Assessingtypically meets in executive session, without the qualificationspresence of management, at each regularly scheduled meeting, and independence of Fortive’s independent auditors;
Appointing, compensating, retaining, and evaluating Fortive’s independent auditors;
Overseeing the quality and integrity of Fortive’s financial statements and making a recommendationreports to the Board regarding the inclusion of the audited financial statements in Fortive’s Annual Report on Form 10-K;
Overseeing Fortive’s internal auditing processes;
Overseeing management’s assessment of the effectiveness of Fortive’s internal control over financial reporting;
Overseeing management’s assessment of the effectiveness of Fortive’s disclosure controlsits actions and procedures;recommendations at each regularly scheduled Board meeting.
Overseeing risks related to financial controls, legal and compliance risks and major financial, privacy, security and business continuity risks;
Overseeing Fortive’s risk assessment and risk management policies;
Overseeing Fortive’s compliance with legal and regulatory requirements;
Overseeing Fortive’s cybersecurity and product security risk management and risk controls; and
Overseeing swap and derivative transactions and related policies and procedures.
The Audit Committee relies on the expertise and knowledge of management, the internal auditor, and the independent auditor in carrying out its oversight responsibilities. Management is responsible for the preparation, presentation, and integrity of Fortive’s financial statements, accounting and financial reporting principles, internal control over financial reporting, and disclosure controls and procedures designed to ensure compliance with accounting standards, applicable laws, and regulations. Management is also responsible for objectively reviewing and evaluating the adequacy, effectiveness, and quality of Fortive’s system of internal control over financial reporting. Fortive’s independent auditor, Ernst & Young LLP, is responsible for performing independent audits of Fortive’s financial statements and internal control over financial reporting and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States.
Table of Contents  | Compensation Committee |
Kate D. Mitchell
(Chair)
 |  | 26Daniel L.
Comas | Sharmistha
Dubey | | |  | | Wright
Lassiter III | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Corporate Governance
The Audit Committee also prepares a report as required by the SEC to be includedMeetings in this proxy statement. The Audit Committee typically meets in executive session, without the presence of management, at each regularly scheduled meeting, and reports to the Board on its actions and recommendations at each regularly scheduled Board meeting.
The Board has determined that each member of the Audit Committee is:
2021:
Independent6 for purposes of Rule 10A-3(b)(1) under the Securities Exchange Act and the NYSE listing standards; Qualified as an audit committee financial expert as that term is defined in SEC rules; and
Financially literate within the meaning of the NYSE listing standards.
Furthermore, as of the date of this proxy statement, no Audit Committee member serves on the audit committee of more than three public companies.
The Compensation Committee In 2020, the Compensation Committee met seven times and acted by unanimous written consent one time.
The Compensation Committee is responsible for:
Determining and approving the form and amount of annual compensation of the CEO and our other executive officers, including evaluating the performance of, and approving the compensation paid to, our CEO and other executive officers;time in 2021.
Reviewing and making recommendations to the Board with respect to the adoption, amendment and termination of all executive incentive compensation plans and all equity compensation plans, and exercising all authority with respect to the administration of such plans;
The Compensation Committee is responsible for: | | | ►Determining and approving the form and amount of annual compensation of the CEO and our other executive officers, including evaluating the performance of, and approving the compensation paid to, our CEO and other executive officers; ►Reviewing and making recommendations to the Board with respect to the adoption, amendment and termination of all executive incentive compensation plans and all equity compensation plans, and exercising all authority with respect to the administration of such plans; ►Reviewing and making recommendations to the Board with respect to the form and amounts of director compensation; ►Overseeing and monitoring compliance with Fortive’s compensation recoupment policy; ►Overseeing and monitoring compliance by directors and executive officers with Fortive’s stock ownership requirements; ►Overseeing risks associated with Fortive’s compensation policies and practices; ►Overseeing our engagement with shareholders and proxy advisory firms regarding executive compensation matters; ►Assisting the Board in oversight of our human capital management practices, including strategies, risk management, employee retention and inclusive and diverse culture; ►Overseeing the Company’s reporting on the Company’s human capital management practices; and ►Reviewing and discussing with management the Compensation Discussion & Analysis (“CD&A”) in the annual proxy statement and recommending to the Board the inclusion of the CD&A in the proxy statement. |
Each member of the Compensation Committee is: | | | ►A non-employee director for purposes of Rule 16b-3 under the Exchange Act; and ►Based on the determination of the Board, independent under NYSE listing standards and under Rule 10C-1 under the Exchange Act. |
Reviewing and making recommendations to the Board with respect to the form and amounts of director compensation;
Overseeing and monitoring compliance with Fortive’s compensation recoupment policy;
Overseeing and monitoring compliance by directors and executive officers with Fortive’s stock ownership requirements;
Overseeing risks associated with Fortive’s compensation policies and practices;
Overseeing our engagement with shareholders and proxy advisory firms regarding executive compensation matters;
Assisting the Board in oversight of our human capital management practices, including strategies, risk management, employee retention and inclusive and diverse culture;
Overseeing the Company’s reporting on the Company’s human capital management practices; and
Reviewing and discussing with management the Compensation Discussion & Analysis (“CD&A”) in the annual proxy statement and recommending to the Board the inclusion of the CD&A in the proxy statement.
The Chair of the Compensation Committee works with our Senior Vice President-Human Resources and our Corporate Secretary to schedule the Compensation Committee’s meetings and set the agenda for each meeting. Our Senior Vice President-Human Resources, Vice President-Total Rewards, Senior Vice President-General Counsel, and Vice President-Associate General Counsel and Secretary generally attend, and from time-to-time our CEO and CFO attend, the Compensation Committee meetings and support the Compensation Committee in preparing meeting materials and taking meeting minutes. In particular, our CEO provides background regarding the interrelationship between our business objectives and executive compensation matters and advises on the alignment of incentive plan performance measures with our overall strategy; participates in the Compensation Committee’s discussions regarding the performance and compensation of the other executive officers; and provides recommendations to the Compensation Committee regarding all significant elements of compensation paid to such other executive officers, their annual personal performance objectives and his evaluation of their performance. The Compensation Committee typically meets in executive session, without the presence of management, at each regularly scheduled meeting, and reports to the Board on its actions and recommendation at each regularly scheduled Board meeting. | | | | | | | 2021 Proxy Statement | | 27 |
Corporate Governance
Under the terms of its charter, the Compensation Committee has the authority to engage the services of outside advisors and experts to assist the Compensation Committee. Following the assessment and determination of Pearl Meyer & 2022 PROXY STATEMENT
Table of Contents Partners, LLC’s (“Pearl Meyer”) independence from Fortive’s management, the Compensation Committee engaged Pearl Meyer as the Compensation Committee’s independent compensation consultant for 2020.2021. The Compensation Committee had the sole discretion and authority to select, retain and terminate Pearl Meyer as well as to approve any fees, terms and other conditions of its services. Pearl Meyer reported directly to the Compensation Committee and took its direction solely from the Compensation Committee. Pearl Meyer’s primary responsibilities in 20202021 were to provide advice and data in connection with the selection of Fortive’s peer group for assessing executive compensation, the structuring of the executive compensation programs in 20202021 and 2021,2022, the compensation levels for our executive officers, and the compensation levels for our directors; assess our executive compensation program in the context of market practices and corporate governance best practices; and advise the Compensation Committee regarding our proposed executive compensation public disclosures. In the course of discharging its responsibilities, the Compensation Committee’s independent compensation consultant may, from time to time and with the Compensation Committee’s consent, request from management certain information regarding compensation amounts and practices, the interrelationship between our business objectives and executive compensation matters, the nature of our executive officer responsibilities and other business information. Pearl Meyer did not provide any services to Fortive or its management in 2020,2021, and the Compensation Committee is not aware of any work performed by Pearl Meyer that raises any conflicts of interest. Each member of the Compensation Committee is:
A non-employee director for purposes of Rule 16b-3 under the Securities Exchange Act; and
Based on the determination of the Board, independent under NYSE listing standards and under Rule 10C-1 under the Securities Exchange Act.
Compensation Committee Interlocks and Insider Participation During 2020,2021, none of the members of the Compensation Committee was an officer or employee of Fortive. No executive officer of Fortive served on the compensation committee (or other board committee performing equivalent functions) or on the board of directors of any entity having an executive officer who served on the Compensation Committee.Committee.  | Nominating and Governance Committee |
Jeannine Sargent
(Chair)
 |  | Sharmistha
Dubey | Alan G.
Spoon |
Meetings in 2021:
Nominating and Governance Committee4 In 2020, the Nominating and Governance Committee met three times.
The Nominating and Governance Committee is responsible for: Reviewing and making recommendations to the Board regarding the size, classification and composition of the Board;acted by unanimous written consent one time in 2021.
Assisting the Board in identifying individuals qualified to become Board members;
Assisting the Board in identifying characteristics, skills, and experiences for the Board with the objective of having a Board with diverse backgrounds, experiences, skills, and perspectives;
Proposing to the Board the director nominees for election by our shareholders at each annual meeting;
Assisting the Board in determining the independence and qualifications of the Board and Committee members and making recommendations to the Board regarding committee membership;
Developing and making recommendations to the Board regarding a set of corporate governance guidelines and reviewing such guidelines on an annual basis;
Overseeing compliance with the corporate governance guidelines;
Overseeing director education and director orientation process and programs;
Overseeing Fortive’s corporate social responsibility reporting;
The Nominating and Governance Committee is responsible for: | | | | | | 28►
| | 2021 Proxy StatementReviewing and making recommendations to the Board regarding the size, classification and composition of the Board; | | FORTIVE CORPORATION►Assisting the Board in identifying individuals qualified to become Board members;
►Assisting the Board in identifying characteristics, skills, and experiences for the Board with the objective of having a Board with diverse backgrounds, experiences, skills, and perspectives; ►Proposing to the Board the director nominees for election by our shareholders at each annual meeting; ►Overseeing and reviewing the process for, and making recommendations to the Board relating to the management of, the Company's CEO succession planning; ►Assisting the Board in determining the independence and qualifications of the Board and Committee members and making recommendations to the Board regarding committee membership; ►Developing and making recommendations to the Board regarding a set of corporate governance guidelines and reviewing such guidelines on an annual basis; ►Overseeing compliance with the corporate governance guidelines; ►Overseeing director education and director orientation process and programs; ►Overseeing Fortive’s Sustainability (ESG) reporting; ►Reviewing and making recommendation to the Board relating to the governance matters set forth in the Company's Certificate of Incorporation and Bylaws; ►Assisting the Board and the Committees in engaging in annual self-assessment of their performance; and ►Administering Fortive’s Related Person Transactions Policy.
|
Corporate Governance
Assisting the Board and the Committees in engaging in annual self-assessment of their performance; and
Administering Fortive’s Related Person Transactions Policy.
The Board has determined that each member of the Nominating and Governance Committee is independent within the meaning of the NYSE listing standards.
Table of Contents The Nominating and Governance Committee typically meets in executive session, without the presence of management, at each regularly scheduled meeting and reports to the Board on its actions and recommendations at each regularly scheduled Board meeting.  | Finance Committee |
Alan G. Spoon
Finance Committee(Chair)The Finance Committee assists the Board in assessing potential acquisition, investment and divestiture opportunities and approving business acquisitions, investments and divestitures up to the levels of authority delegated to it by the Board.
 |  | Daniel L.
Comas | James A.
Lico | | |  | | Kate D.
Mitchell | |
| The Finance Committee assists the Board in assessing potential acquisition, investment and divestiture opportunities and approving business acquisitions, investments and divestitures up to the levels of authority delegated to it by the Board. |
Director Nomination Process The Nominating and Governance Committee recommends to the Board director candidates for nomination and election at the annual meeting of shareholders and, in the event of vacancies between annual meetings of shareholders, for appointment to fill such vacancies. Board Membership Criteria In assessing the candidates for recommendation to the Board as director nominees, the Nominating and Governance Committee will evaluate such candidates against the standards and qualifications set out in our Corporate Governance Guidelines, including: | | |
| |  The extent to which the interplay of the candidate’s skills, knowledge, expertise and diversity of background and experience with that of the other Board members will help build a Board that is effective in collectively meeting our strategic needs and serving the long-term interests of the shareholders |
2022 PROXY STATEMENT
Table of Contents The Nominating and Governance Committee annually reviews with the Board the skills, knowledge, experience, background and attributes required of Board nominees, considering current Board composition and the Company’s circumstances. In making its recommendations to our Board, the Nominating and Governance Committee considers the criteria noted above, as well as, among others, the following skills, knowledge, experience, background and attributes: Skills and Attributes Independence
Diversity
Global Experience and International Exposure
Technology Experience, Including Software and Cybersecurity
Mergers and Acquisition Experience
Operational Management Experience
Senior Executive Leadership Experience
Financial Literacy or Public Accounting Experience
Public Company Board Experience
Capital Markets and Corporate Finance Experience
Corporate Governance
The Nominating and Governance Committee takes into account a candidate’s ability to contribute to the diversity of perspective and analysis of the Board and, as such, believes it is important to consider attributes such as race, ethnicity, gender, age, education, cultural experience, and professional experience in evaluating candidates who may be able to contribute to the diverse perspective and practical insight of the Board as a whole. Although we do not have a formal diversity policy and the Board does not make any particular weighting of diversity or any other characteristic in evaluating nominees and directors, the Board’s and the Nominating and Governance Committee’s commitment to diversity as an essential consideration in the director nominee selection process has been documented in both the Corporate Governance Guidelines and the Nominating and Governance Committee’s Charter.Charter and has been reflected in the Board’s actions. Director Evaluation and Board Refreshment Process On an annual basis, the Nominating and Governance Committee reviews and assesses, with input from the various other committees, the process for the annual self-assessment of the full Board, and each of the committees of the Board.Board, and individual directors. The process assessment takes into account the feedback from the directors on the effectiveness of the prior self-assessment process, incremental perspective and expertise a new director may bring, and input from the shareholder engagement process. For 2021, the Nominating and Governance Committee engaged Boardspan, an independent board governance company with deep expertise in board performance assessment, to assist in conducting a facilitated interview of each director and key management members to conduct an assessment of both the full Board (including each committee) and the individual directors.
Table of Contents The following describes the self-assessment process implemented and conducted by the Board and the committees of the Board in 2020. 
2021.
| | | | | 301. Anonymous Online Scoping Survey | | | | | | | | | | | | | | | With the assistance of Boardspan, the Nominating and Governance Committee conducted an online survey of each of the directors to identify the key areas of focus and topics to discuss and evaluate during the confidential, individual interview conducted by Boardspan. | | | | | | | | | 2021 Proxy Statement2. Confidential Facilitated Interviews of each Director and each Key Management Member for a Full Board and Peer Assessment | | | | | | | | | | | | | | | | Based on the consolidated results of the anonymous online survey, Boardspan interviewed each director and each key management member to conduct an assessment of the full Board, each committee and each individual director to identify key strengths and opportunities for continuous improvement. The areas of focus included strategic alignment, board culture, board efficiency, board meeting structure, interaction with management, committees and individual strength, and potential opportunities for continuous improvements. | | | | | | | | | 3. Full Board Review | | FORTIVE CORPORATION | | | | | | | | | | | | | | | The Chairman of the Board and the Chair of the Nominating and Governance Committee reviewed the results of the annual self-assessment for potential action and recommendations, with the final results and recommendations reviewed with the full Board for alignment on the assessment and potential actions. |
Corporate Governance
Shareholder Recommendations on Director Nomination Shareholders may recommend a director nominee to the Nominating and Governance Committee. A shareholder who wishes to recommend a prospective nominee for the Board should notify the Nominating and Governance Committee in writing using the procedures described below under “—Communications with the Board of Directors” with whatever supporting material the shareholder considers appropriate. If a prospective nominee has been identified other than in connection with a director search process initiated by the Nominating and Governance Committee, the Nominating and Governance Committee makes an initial determination as to whether to conduct a full evaluation of the candidate. The Nominating and Governance Committee’s determination of whether to conduct a full evaluation is based primarily on the Nominating and Governance Committee’s view as to whether a new or additional Board member is necessary or appropriate at such time, and the likelihood that the prospective nominee can satisfy the evaluation factors described above under “—Board Membership Criteria” and any such other factors as the Nominating and Governance Committee may deem appropriate. The Nominating and Governance Committee takes into account whatever information is provided to it with the recommendation of the prospective candidate and any additional inquiries the Nominating and Governance Committee may in its discretion conduct or have conducted with respect to such prospective nominee. The Nominating and Governance Committee evaluates director nominees in the same manner whether a shareholder or the Board has recommended the candidate. 2022 PROXY STATEMENT
Table of Contents Proxy Access Pursuant to the proxy access provisions in Section 2.12 of our Amended and Restated Bylaws, a shareholder, or group of up to 20 shareholders, owning 3% or more of Fortive’s outstanding shares of common stock continuously for at least three years may nominate and include in our proxy materials directors constituting up to 20% of the Board. With respect to the 20222023 Annual Meeting of Shareholders, the nomination notice and other materials required by these provisions must be delivered or mailed to and received by Fortive’s Secretary in writing between November 27, 202026, 2022 and December 27, 202126, 2022 (or, if the 20222023 Annual Meeting of Shareholders is called for a date that is not within 30 calendar days of the anniversary of the date of the Annual Meeting, by the later of the close of business on the date that is 120 days prior to the date of the 20222023 Annual Meeting of Shareholders or within 10 days after the public announcement of the date of the 20222023 Annual Meeting of Shareholders) at the following address: Fortive Corporation, Attn: Secretary, 6920 Seaway Blvd., Everett, WA 98203. When submitting nominees for inclusion in the proxy materials pursuant to the proxy access provisions, shareholders must follow the notice procedures and provide the information required by our Amended and Restated Bylaws. Our Amended and Restated Bylaws are available at “Investor—“Investor — Corporate Governance” section of our corporate website, http://www.fortive.com. Majority Voting for Directors Our Amended and Restated Bylaws provide for majority voting in uncontested director elections, and our Board has adopted a related director resignation policy. Under the policy, our Board will not appoint or nominate for election to the Board any person who has not tendered in advance an irrevocable resignation effective in such circumstances where the individual does not receive a majority of the votes cast in an uncontested election and such resignation is accepted by the Board. If an incumbent director is not elected by a majority of the votes cast in an uncontested election, our Nominating and Governance Committee will submit for prompt consideration by the Board a recommendation whether to accept or reject the director’s resignation. The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. At any meeting of shareholders for which Fortive’s Secretary receives a notice that a shareholder has nominated a person for election to the Board in compliance with our Amended and Restated Bylaws and such nomination has not been withdrawn on or before the tenth day before we first mail our notice of meeting to our shareholders, the directors will be elected by a plurality of the votes cast (which means that the nominees who receive the most affirmative votes would be elected to serve as directors).
Table of Contents | | | | | | | 2021 Proxy Statement 31 |
Shareholder Engagement Engagement Cadence Throughout the Year SPRING We publish our proxy statement and our annual report We continue our discussion with our largest shareholders, as warranted |  | SUMMER We conduct our annual meeting We assess how our shareholders voted on our proposals at our annual meeting We conduct our investor day event | | | WINTER |  | FALL | We assess governance best practices We review policy updates from stakeholders We update our annual governance framework and policies | | The Board and the committees approve the self-assessment process, which includes considerations from the shareholder engagement process The Board conducts the annual self-assessment 31We conduct our annual shareholder outreach
|
In addition, throughout the year, senior members of management engage in extensive discussions with our investor community to discuss our strategy, our results, our operations, our product offerings, our end markets, our Sustainability (ESG) efforts, and our outlook through numerous investor conferences, investor calls, investor meetings, investor events, and earnings calls. 2021 Annual Shareholder Outreach In 2021, as part of our annual shareholder outreach, we invited our top 16 shareholders, representing approximately 60 percent of our outstanding shares, and leading proxy advisory firms to discuss Sustainability, Corporate Governance, Board Composition, Risk Oversight, Human Capital Management and Executive Compensation. With a significant number of our investors accepting our invitation, our senior leaders met with investors holding approximately 30 percent of our outstanding shares. 2022 PROXY STATEMENT
Table of Contents Consistent with our prior practice, our management team shared the feedback from our shareholder outreach process with our Board for potential responsive actions. We have identified below feedback we have received from our shareholders in the past years during our annual shareholder outreach and the corresponding actions taken by the Board: | Shareholder Feedback | | Responsive Actions | | Increase shareholder rights and board accountability | | ►We declassified the Board ►We provided proxy access ►We provided right of shareholders to call a special meeting ►Subject to approval by the shareholders, we approved the elimination of the supermajority voting requirements ►We provided for majority vote requirement for director election | | Increase the level of independence on the Board | | ►We refreshed our Board, with 7 out of our 8 directors independent, with only our CEO representing a non-independent director on the Board ►We maintained an independent Chairman of the Board, with the CEO and the Chairman positions separated | | Ensure diversity on the Board | | ►We updated our governance guidelines to document our commitment to diversity on the Board ►We continued execution on our commitment, with three female directors and three directors representing ethnic or racial diversity | | Provide transparency in workforce diversity, including disclosure of EEO-1 report | | ►In 2021, we provided our first disclosure on work force diversity ►In 2021, we disclosed our long-term workforce diversity goals ►We will publish our 2021 EEO-1 report on our website by April 30, 2022 | | Increase the percentage of long-term equity awards dependent on relative total shareholder return and include additional performance measures | | ►In 2021, we increased the allocation of PSUs that are dependent on relative TSR from 25% to 35%, while maintaining requirement to achieve aboveaverage relative total shareholder return to receive target shares, with target performance maintained at 55th percentile of the S&P 500 index ►In 2022, we further increased the allocation of PSUs from 35% to 50% and added three-year average core revenue growth as an incremental performance measure | | Include greater transparency for special awards | | ►With the new hire of Messrs. Simmons and Soroye, each an NEO, in 2021, we included more detail in this proxy statement for the rationale for the grant of the sign-on equity awards to each of Messrs. Simmons and Soroye | | Describe the impact of workforce diversity and sustainability (ESG) efforts in executive compensation | | ►We included in this proxy statement the role of diversity and sustainability in executive compensation | | Aligned with standardized disclosure for sustainability efforts | | ►We disclosed sustainability data pursuant to GRI in 2020 and SASB in 2021, with plans to align with TCFD by 2023 ►We became a UN Global Compact Signatory in 2021 ►We currently plan to align with SDG by end of 2022 | | Disclose climate change data through CDP | | ►We provided data to CDP for scoring on climate change | | Provide transparency in political contributions | | ►In 2021, we adopted a political contribution policy resulting in 92.9 score on the CPA-Zicklin Index and identification as a 2021 CPA-Zicklin Trendsetter |
Corporate Governance
Communications with the Board of Directors Shareholders and other parties interested in communicating directly with the Board or with individual directors, the independent Chairman of the Board or, if the Chairman is not independent, the Lead Independent Director, or the non-management directors as a group may do so by addressing communications to the Board of Directors, to the specified individual director or to the non-management directors, as applicable, c/o Secretary, Fortive Corporation, 6920 Seaway Blvd, Everett, WA 98203.
Table of ContentsShareholder Engagement 
| | | | | 32 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
| | | | | Corporate Social Responsibility (ESG) 33
|
Sustainability (ESG) Corporate ResponsibilitySustainability Overview
At Fortive, corporate responsibility is inextricably entwined withOur commitment to Sustainability reinforces our shared purpose: essential technology for the people who accelerate progress. Both shareprogress. We have seen first-hand how empowering inclusive and diverse teams, investing in our spirit of generositycommunities, protecting the planet, working and optimismsourcing responsibly, and reflect our conviction that things can be better when we apply our time, talents, and teamwork. Generosity and optimism are part ofoperating with principle accelerate innovation. Sustainability is core to who we are so this happens organically. We see empowering our employees asand how we work; with the power of FBS, sustainability is a powerful accelerator.
One ofinspiration for our four values is kaizen is our way of life. This commitment to continuous improvement inspires us to measure our impactinnovation and create innovative ways to amplify it. It inspires us to come up with new solutions to pressing problems,the products and to set ambitious goals and hold ourselves accountable, viewing everything through that lens of continuous improvement.services we deliver.
As a growing company serving a wide range of industries and customers, we recognizeunderstand that global reach and global responsibility go hand in hand. We are committed to having a positive impact on the industries and communities we serve at every level, from products and processes to people. In 2021, Fortive became a signatory to the UN Global Compact to demonstrate our continued commitment to Sustainability at a global level. Fortive is more focused than ever on accelerating progress in workplace safety, engineering, and healthcare. As our strategic direction shifted over the past few years, so have our efforts in environmental and social responsibility. Furthermore, updating our materiality assessment inspired us to evaluate and refine our Sustainability pillars, with our material topics and Sustainability goals even more closely aligning with our shared purpose and values. Sustainability Strategic Pillars Fortive’s commitment to Sustainability (ESG) has been a priority since day one. We work every day to create a world that is stronger, safer, and smarter for everyone. In our culture of continuous improvement, we always consider how we can apply the power of the Fortive Business System to go further, faster. In 2021, we refreshed our ESG materiality assessment and incorporated the findings into the updated pillars below to guide our Sustainability (ESG) strategy going forward. This gives our global teams a powerful blueprint for building that sustainable future together. | | | | | | | | | | | | | | | | | | Empower Inclusive & Diverse Teams Advance an inclusive culture that enables everyone to do their best work. | | Invest in Our
Communities Create and advocate for positive impacts in the communities in which we work, live and serve. | | Protect
the Planet Protect the environment and resources across the value chain. | | Work & Source Responsibly Raise and reinforce expectations to ensure people, safety and quality are priority #1. | | Operate with
Principle Establish and enforce boundaries to protect critical assets. |
Empower Inclusive & Diverse Teams For a further discussion on our inclusion and diversity efforts, please see “Human Capital Strategy – Inclusion and Diversity” section in this proxy statement. 2022 PROXY STATEMENT
Table of Contents | 34 | | | | 2020 CSR Areas of Focus | | | | | | | | | | | | | | | | | | | 
ENVIRONMENT
| | | | 
SOCIAL
| | | | 
GOVERNANCE
| | | | | | As a global company, we
are aware of the impacts
of climate change on our
business and employees,
customers, communities, and
the planet. We are committed
to reducing our impacts on the
local and global environment | | | | We established the
Fortive Foundation in 2019 to
accelerate our philanthropic
efforts and corporate giving.
The Foundation provides
grants to support charitable
initiatives globally and in our
communities. | | | | Our work on environmental,
social, governance and
corporate citizenship are of
interest to a greater cross-
section of our stakeholders,
including investors. | | | | | | | | | Sustainability (ESG) |
Environment
Invest In 2019, we announced our first GHG emissions goal to achieve a 40% reduction in GHG emissions intensity1 by 2030 relative to our 2017 base year. We published our then-current GHG inventory via CDP, and after the separation of Vontier in October 2020, updated our GHG inventory to reflect our current business profile. We will publish our updated GHG emissions inventory and performance in our 2021 Corporate Responsibility Report and the 2021 CDP Climate Change disclosure. In 2020, we enhanced the rigor of our sustainability processes and systems to improve data integrity and align to industry best practices. Specifically, we:Our Communities
 | Transitioned our annual sustainability data collection process to a quarterly data collection process using the Intelex Sustainability Performance Indicators (SPI) application, a purpose-built sustainability software solution,
|
| Aligned our GHG accounting and reporting practices to The Greenhouse Gas (GHG) Protocol – Corporate Accounting and Reporting Standards, and
|
| Submitted our first full, public CDP Climate Change disclosure.
|
1 | Metric tons of carbon dioxide equivalent per U.S. dollar revenue (MTCO2e/$ revenue)
|
| | | | | | | 2021 Proxy Statement | | 33 |
Corporate Social Responsibility (ESG)
We actively seek opportunitiesare dedicated to reduce energy use, improve energy efficiency,fostering partnerships and integrate sustainability principles into everyday operations. Our energy kaizen program equipsrelationships to drive positive change in the communities where our people live and empowers employees to review operationswork. Through community engagement and identify opportunities to save energy (and thereby reduce costs) which reduce GHG emissions. Our internal energy kaizen teams leverage Fortive OpCo products and services, including a toolkit which includes measurement and testing devices, over half of whichphilanthropic donations, our team members are Fluke® devices. Social
We established the Fortive Foundation in 2019 to accelerate our philanthropic efforts and corporate giving. The Foundation provides grants to support charitable initiatives globally andpassionate about investing in our communities. In 2020, the Fortive Foundation made significant charitable donations focused on three strategic areas: support for at-risk communities impacted by the COVID-19 pandemic, social justice and racial equality, and communities impacted by natural disasters worldwide. The Foundation’s donations were directed to organizations that support these efforts.
In 2020, the Fortive Foundation made keynote donations to these organizations:
The American Red Cross is a humanitarian nonprofit organization that provides emergency assistance, disaster relief, and disaster preparedness education across the United States and globally through partnerships with International Red Cross chapters.
Direct Relief is a non-profit, nonpartisan global humanitarian organization whose mission is to “improve the health and lives of people affected by poverty or emergencies” by mobilizing and providing essential medical resources needed for their care.
The Equal Justice Initiative (EJI) is a private, nonprofit organization committed to changing the narrative about race in America. EJI provides legal representation to people who have been illegally convicted, unfairly sentenced, or abused in state jails and prisons.
Feeding America is a United States– based nonprofit organization that is a nationwide network of more than 200 food banks that feed more than 46 million people through food pantries, soup kitchens, shelters, and other community-based agencies.
We also sponsor the Fortive Scholarship Program, supporting children of our employees in their undergraduate and graduate studies through scholarship funds. Through the Scholarship Program, scholarships are awarded based on academic performance, leadership potential, and economic need. Each scholarship is renewable for up to three years.
| | | | | 34 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Corporate Social Responsibility (ESG)
Day of Caring Fortive’s spirit of generosity and optimism is reflected in our annual Day of Caring, a commitment we make to support our employees’ passion for building and fostering community service is core to who we are. Our annualimpact, and relationships through service. Day of Caring is a commitment we makeFortive tradition, providing paid time off for all employees to employeesdedicate their time and the communities where we live and work, to support their investmentenergy, as individuals or in the local communities through service. In spite of the challenges of conducting community service in 2020 (e.g., social distancing requirements, individual health circumstances), we maintained strong Day of Caring engagement in 2020, leveraging our culture of innovation to identify new and revised ways to engage and support our local communities.teams. Our teams around the world lead our Day of Caring effortsinitiatives from a grassroots level—in their communities in the areas that will have the most impact and are also close to their hearts. Although we stood up the Day of Caring idea across Fortive, the power and passion has been led by our people and teams globally. Day of Caring inspires our teams to stay involved with these charities throughout the year and to pursue causes they care about. Our employees and the communities they serve through Day of Caring consistently report that participating in Day of Caring is a positive, transformative experience. In 2020,2021, each of our operating companies participated, donating an estimated 35,000dedicating over 18,000 hours in overmore than 60 communities across 2519 countries globally. Fortive Foundation COVID-19 ResponseWe established the Fortive Foundation in 2019 to accelerate our philanthropic efforts and corporate giving to charitable initiatives that support our communities. In 2021, the Foundation focused on expanding our efforts to support communities locally and across the world, prioritizing organizations whose missions align with our five strategic Giving Areas:
| ► | STEM and Innovation | | ► | Inclusion, Diversity and Social Justice | | ► | Protect the Planet | | ► | Strengthen Communities | | ► | Disaster Response |
We believe education can be a powerful equalizer and catalyst for inclusion, opportunity, and intellectual growth. By investing in the next generations of leaders and innovators, we hope to enable more young people to pursue their passions and contribute to a more compassionate, sustainable world. Fortive mounted a massive global response to the COVID-19 pandemic, enabled by FBS, to ensureScholarship Program The Fortive Scholarship Program supports children of our employees in their undergraduate and graduate studies through scholarship awards. Through the Scholarship Program, scholarships are awarded based on academic performance, leadership potential, and economic need. Each scholarship is renewable for up to three years. In 2021 we expanded eligibility for students applying to vocational schools and community colleges and renewed our commitment to first-generation higher education students, to celebrate and support the many pathways that empower academic and professional development. 2021 Fortive Scholarships | 84 | 20 | 32 | 35% | | Scholarship Applications | Awarded scholarships | Scholarship Renewals | Recipients from locations
outside the United States |
Table of Contents Protect the Planet As a global company, we recognize that climate change presents a risk to our business, customers, were safe. Using virtual projectsuppliers, communities. We are committed to taking responsible, leading actions to reduce greenhouse gas (GHG) emissions and environmental impacts. In 2021, we accelerated our commitment to reduce GHG emissions intensity, revising our goal to achieve a 50% reduction of GHG emissions intensity from 2017. Through our culture of continuous improvement and the power of FBS, we are using and building tools and mechanisms to meaningfully contribute to local and global initiatives to address climate change. To drive progress toward our accelerated GHG emissions intensity, we focused on three strategic levers in 2021:  | Operating company performance targets: we defined GHG emissions reduction targets for our operating companies. The targets were determined through detailed analysis of operating companies’ diverse and distinct business portfolios, and reflect their respective emissions intensities; | | Emissions reduction projects: we began investing additional capital for emissions reduction projects. Projects range from infrastructure-related improvements, such as lighting and HVAC system upgrades, to process improvements and operational reconfigurations to optimize work streams; and | | Energy kaizen events: with a goal to reduce energy use by a targeted amount, typically between 15–25% annually, we deconstruct the sources of energy use and their dependencies into detailed work streams to identify inefficiencies and test potential solutions. |
Work & Source Responsibly Environmental, Health & Safety As part of our commitment to a safe, secure workplace, our operating companies manage and track progress toward our goals using FBS tools. Each has robust environmental, health, and safety (EHS) programs to identify, prevent, and avoid harm to our employees. Across Fortive, 30% of our sites with manufacturing or light assembly operations are certified to ISO 14001, ISO 45001, and/or the International Contractors Safety Rating System. To quantify and drive continuous improvement, our operating companies assess the EHS risk at each of our significant sites from the annual jumping off point (JOP) and report their EHS Risk Score on a semi-annual basis. The EHS Risk Score is a Fortive standard metric comprising EHS performance criteria, which include procurement and supply chain management, tools,leadership engagement, energy efficiency and emissions reduction initiatives, and action plans in support of Sustainability targets. Responsible Sourcing We continue to evolve our Fortive COVID-19 response teams collaborated dailysupply chain and procurement practices, and the excellence demonstrated by our operating companies highlights our commitment to develop hundreds of pieces of standard workdeveloping further efforts in our supply chain. We are committed to keep our employees safeidentifying and our essential customers upcultivating inclusive and running. Through it all, we innovateddiverse supplier relationships that foster responsible sourcing, inspire collaboration, and caredaccelerate innovation. This commitment creates growth, opportunity, and value for our employees, communities,shareholders, suppliers, and customers –communities. We uphold fair labor standards for all employees across our operating companies and create a culture of respect, integrity, and fairness. We are committed to conducting our operations in an ethical and responsible manner. As outlined in our Supplier Code of Conduct, we expect suppliers and permitted subcontractors who do business with Fortive and our operating companies to share these same commitments and to establish policies and practices to prohibit corruption, labor violations, and human trafficking. Additionally, our Conflict Minerals Policy Statement states that our suppliers should source precious metals and minerals only from conflict-free smelters. 2022 PROXY STATEMENT
Table of Contents Operate with Principle Digital Privacy & Security As we shift our product evolution toward greater digital transformation and AI-driven software solutions, we continue to evolve our approach and invest in added infrastructure to further protect the privacy and security of our stakeholders. We recently strengthened privacy and governance considerably by centralizing cookies and legal issues management into an advanced cloud-based platform, which provides greater oversight and optimizes our processes. Our actions often transcend legal privacy requirements. For example, in response to Brazil’s new privacy law, Lei Geral de Proteção de Dados, we require our operating companies to send privacy questionnaires to their service provider vendors, even though the law does not require it. Similarly, we continue to voluntarily adopt California’s stringent requirements set by the California Consumer Privacy Act across our U.S. operations. Ethics & Compliance Our compliance program is founded on a simple but powerful concept—Your Integrity/Our Success. We believe that individual actions and decisions that reflect our Values position both the individual and the healthcare professionalscompany to grow and first responderssucceed. Our Code of Conduct (the “Code”) reflects who relywe are as an organization and the high standards we set for ourselves and those who do business with Fortive. We maintain a comprehensive library of global policies that provide guidance on their productsimportant topics for our business and servicesdaily work, for patients’example, our Anti-Corruption Policy and their own safety. At our Everett, Washington facility, we designedAnti-trust/Fair Competition Policy. We also have a comprehensive training and produced face shieldscommunications program to support local Pacific Northwest communities who had shortagesthe Code, our policies, and other important topics relevant to our business. Employees complete multiple online course modules throughout the year that are supported by live trainings and reinforced by communications and learning toolkits.
Data and data analytics enable us to advance our understanding of critical PPE duringrisk in our business. To assess, mitigate and manage risk, we conduct an annual enterprise risk assessment process known internally as the onsetRisk Assessment Process (RAP). With Intelex, we built a customized software application and interface to enable greater data analytics for the RAP. Every OpCo participates in RAP, the results of the COVID-19 pandemic. The design team worked with our tool-supplier based in China to go from design to a finished tool in 14 days. We donatedwhich are rolled up and shipped over 50,000 face shields in 2020 to more than 100 facilities across the US, including hospitals, clinics, retirement homes, dental offices, and schools. We appliedthe principles of lean and kaizen to scale production capacity of ventilator components from 1,000 assemblies per week to nearly 20,000 per week, supporting customers who were producing these units. We transformed a 55 sq. ft production cell with one operator into a 160 sq. ft cell to accommodate four full-time operators and run multiple shifts. The new production area also accommodates social distancing to protect the safety of our operators.
We pivoted quickly to develop easy-to-install versions of our room pressure indicator product. By containing airborne pathogens in the room, the new product enabled medical facilities to reduce the risk of airborne transmission through automated air pressure sensors. This enabled customers to install the room pressure indicator in stand-up or repurposed patient rooms to effectively convert them into isolation rooms. Our product provided hospitals and medical facilities much-needed versatility in the early months of the pandemic.
| | | | | | | 2021 Proxy Statement | | 35 |
Corporate Social Responsibility (ESG)
Governance
Fortive CSR process Board SVP/General Counsel Director of Sustainability EHS Leadership Council Fortive's CSR process is overseen by our Senior Vice President and General Counsel Peter Underwood. Mr Underwood reports directlypresented to the CEO,Board of Directors. Progress on actions to mitigate risk are tracked quarterly throughout the year.
To ensure all stakeholders, including our employees, have a channel to report their ethics-related concerns, our Speak Up! program, a confidential channel for employees or partners to raise issues and his responsibilities include oversight ofconcerns, is available in over 20 local languages 24/7 through a phone hotline and/or our web reporting tool. Our Speak Up! activity and trending inform upcoming training and communications, are reviewed against both internal and external benchmarks, and associated data and metrics are reviewed regularly with both the EHS function, CSR and Risk Management. Mr. Underwood provide periodic updates to the Nominating and Corporate GovernanceAudit Committee and the full Board of Directors on CSR-related activities. In 2020 we hired a DirectorDirectors.
Table of Sustainability, Alexis Fuge, demonstrating our support of and commitment to the professionalization and growth of the CSR program. Ms. Fuge reports to Mr. Underwood, and on a quarterly basis, Ms. Fuge briefs the senior leadership team on CSR and Sustainability related matters. Mr. Underwood is the executive sponsor of the EHS Leadership Council (EHSLC), comprised of senior EHS and Sustainability leaders across OpCos. Ms. Fuge is a member of the EHSLC, representing the corporate CSR and Sustainability programs. The EHSLC meets bi-weekly and provides input on CSR and Sustainability related matters. The EHSLC facilitates communication between corporate EHS and Sustainability leaders and the EHS, Operations and Facilities teams across OpCos. The bi-directional nature of the Council's role ensures corporate leaders have a mechanism to obtain voice of the customer for operations-focused initiatives (e.g. emissions reduction projects). Contents | | | | | 36Sustainability (ESG) | | 2021 Proxy Statement 37 |
Governance  | Fortive’s Sustainability strategy is overseen by our Senior Vice President and General Counsel, Peter Underwood. Mr. Underwood reports directly to the CEO, and his responsibilities include oversight of the EHS function, Enterprise Risk Management program and Sustainability. Mr. Underwood provides regular updates to the Fortive senior leadership team and periodic updates to the Board’s Nominating and Governance Committee as well as the full Board of Directors on Sustainability-related initiatives and performance. |  | Fortive’s Sustainability function is led by Senior Director of Sustainability, Alexis Fuge. Ms. Fuge is responsible for development and implementation of the company’s Sustainability strategy, with primacy for the Protect the Planet and Invest in Our Communities pillars. Ms. Fuge reports to Mr. Underwood and on a quarterly basis briefs the senior leadership team on Sustainability-related initiatives and performance. The corporate Sustainability team is comprised of a Sustainability Manager (Reporting and Operations) and Business Intelligence Analyst & Developer who support implementation of the Sustainability strategy and initiatives. The team was formally established and resourced in 2021. |  | Mr. Underwood is the executive sponsor of the EHS Leadership Council (EHSLC), comprised of senior EHS leaders from the OpCos, who also have responsibility for leading Sustainability initiatives at the OpCo operational level. Ms. Fuge is also a member of the EHSLC, representing the corporate Sustainability function and working with the OpCo EHS leaders to drive Sustainability across the company’s operations. The EHSLC meets bi-weekly and provides input on Sustainability-related matters. The EHSLC facilitates across OpCos. The bi-directional nature of the Council ensures that corporate leaders have a mechanism to obtain voice of the customer for operations-focused initiatives (e.g., emissions reduction projects) and the OpCos have a channel through which they can provide feedback on progress, challenges and ideas. |
2022 PROXY STATEMENT
Table of Contents
Building a strong culture and employer brand is critical to activating our shared purpose through our approximately 18,000 employees around the world. We are focused on attracting, retaining, and developing the world’s best talent to drive our business strategy. We do this by offering challenging career opportunities that enable growth and an inclusive, winning culture strengthened by high expectations. Empowering our talented, global team to contribute in meaningful ways isdrives our success and builds the organization for the future. To realize our promise to make a critical component ofdifference for our strategycustomers, teams and the world around us, we are accelerating our work to strengthen our inclusion, diversity, and equity through deliberate action and transparency about our progress. Growth and Development To support our teams’ learning and advancement and our success. To support the advancement of our employees and thecompany’s success, of our Company, we invest in and develop our employeespeople at every level. We are committed to creating a challenging and collaborative culture and an environment wherein which our employees can grow, develop, and do their best work. | | | | | | | | | | | | | | | COVID-19
| In the uncertainty that immediately followed the COVID-19 pandemic, we were guided by five key pillars in our response to our employees: Safety, Transparency, Empathy, Science and Employee Trust. The policies we implemented were guided with the safety of our employees, their families, our customers, and our communities as the number one priority, with our actions informed by data and expert public health guidance. The manner in which we considered and communicated our policies and actions were driven by the recognition of, and empathy for, the uncertainty, fear and real-life impact caused by the pandemic for our colleagues. With that in mind, we focused on being agile and transparent on what we were doing and why we were doing it while listening to ongoing feedback from our global teams and quickly making changes where needed. We did our best to accommodate the needs of our people as they managed through an incredibly difficult year personally and professionally.
| Driven by our values, we:
| | | | | | | | | 
| | Formed global and local response teams at every level to create hundreds of standard processes to share best practices and streamline communication to keep our employees safe and informed; | | | |
| | Quickly made the decision to enable and then mandate remote work for those who were able to do so while ensuring that our essential manufacturing team members had the education, resources and support needed to stay safe on the job; | | | |
| | Provided subsidized childcare and other caregiver services as well as parental counseling; | | | | | | | | | | | |
| | Ensured pay continuity for quarantine periods for our employees;
| | | | | | | | | | | |
| | Acted quickly to limit and then stop business travel; and
| | | | | | | | | | | |
| | Waived deductibles, co-pays, and co-insurance for COVID-19 testing or treatment as well as all virtual healthcare visits;
| | | |
| | Created flexible shifts and schedules to accommodate childcare and other family or personal needs;
| | | | | | | | | | | |
| | Provided enhanced counseling and mental health coverage and services on a global basis.
| | | | | | | | | | | | | | | | | |
| | | | | | | 2021 Proxy Statement | | 37 |
Human Capital Management
Workforce Diversity
Employee Development
We are committed to our employees’ continued learning, development, and success. To respond to our growing business and technology changes, our Leadership, Development & Learning team has adopted a blended learning approach that combines online digital learning with classroom teaching and coaching to effectively scale continuous learning and accelerate our ability to learn quickly and remain agile throughout Fortive. With the challenges presented by the COVID-19 pandemic, we further enhanced our virtual and online learningprovide numerous, valuable growth and development platform to ensure safety ofopportunities for our employees without compromising our commitment to our employees’ ongoing career success.employees. | | | | | 38 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Human Capital Management
The following is a summary of some of the key support we provide to our employees to further their learning and development: | | | | | The Fortive9 | | | | The Fortive9 is our leadership behavior framework that is critical to how we guideguides the development of our employees becauseemployees. It is a roadmap for the Fortive9 is howway we aspire to work, deliver value, and build organization capability.strong teams. Examples of the Fortive9 include Customer Obsessed, Innovation,Innovate for Impact, and Team and Talent Development. Adaptability. | | People Leader
Experience | | | | People Leader Experience
| | | | ComprehensiveDeep, experiential learning for both new and experienced leaders, harnessing the best of interactive learning, and providing the critical tools as our employees assume greater people leadership responsibilities throughout their career with us.
responsibilities. | | Accelerated
Leadership
Experience | | | | Accelerated
Leadership
Experience
| | | | Designed for high performing employees to experience runningin preparation for leading Fortive businesses or functions, we functions. We use immersive and experiential learning, where individuals can driveleaders develop personal progressskill and overcome obstaclesinsight to fulfill their leadership potential. | | FBS Office and
University | | | | FBS Office
and University
| | | | FBSThe Fortive Business System Office is dedicated to strategically imbed FBSembedding the mindset and toolset in everything we do, from innovations to operations.do. FBS University, our proprietary virtual and hands-on learning environment, develops and reinforces learning for hundreds of FBS Champions across our Companycompany each year.year to deliver value for our customers and shareholders.
| | | | | | FBS Ignite | | | | An immersive development experience that leverages the diversity of our operating companies. Supported with intensive development in the FBS toolset, active mentoring from the FBS Office, and executive career coaching, participants advance and share their FBS expertise and business acumen.
across different businesses. | | Growth Accelerator | | | | Growth
Accelerator
| | | | A key development experience that enables our team to solve challenges in new, inspiring ways through three key innovation tools,tools: Deep Customer Insight, Solution Generation, and Experimentation -- each designed to enable our employees to develop critical, breakthrough solutions for our customers. |
Each one of these investments in our team delivers value to both our people and our customers, with the investments focused on development that adds most value to stakeholders.customers.
Table of Contents | | | | | | | 2021 Proxy Statement 39 | | 39 |
Workforce Diversity | Global Gender Diversity(1) | | Ethnic/Racial Diversity in the U.S.(2) |  | |  |
| (1) | Based on internal data as of October 29, 2021. | | (2) | Ethnic/racial diversity in the U.S. is based on our most recent EEO-1 report that we will publish on our website by April 30, 2022 at www.fortive.com for the payroll period from October 25, 2021 to October 29, 2021. Nothing on our website, including our consolidated EEO-1 reports shall be deemed incorporated by reference into this proxy statement. |
Human Capital Management
Inclusion and Diversity We believe that creatingCreating inclusive places to work and promoting diverse points of view are the lifeblood of innovation and growth and provide us with a strategic advantage.our success. In 2020,the spirit of continuous improvement, we continued to make significant strides in 2021 to reflect the needs, priorities and experiences of our global team and strengthen our culture of inclusion and diversity.inclusion. Our Board of Directors and our Compensation Committee oversee our Human Capital Management strategies, including our inclusion and diversity efforts. Our VP, Inclusion & Diversity works closely with our senior management and our Inclusion & Diversity Council, involving employees at every level in establishingadvancing our work to build and nurture a collaborative vision that will truly reflect the needs, priorities,strong and viewpoints of our diverse global team.
Our Inclusion and Diversity strategies are founded on the following pillars, using the insights from employees, community, and other stakeholders to prioritize our goals and our initiatives and actions.
| Strategic Pillar | | | | | | |  | | | | | | STRATEGIC PILLAR
| | GOALS
| | 2020 KEY ACTIONS AND RESULTS
| 
| | Inclusion and Diversity Matters: ►Build a diverse Fortive through hiring, developing and retaining a strong and diverse team | | Increase overall diversity representation
| | • Appointment of Sharmistha Dubey and Rejji Hayes to the Board
• Inclusion and diversity embedded into hiring processes and decisions.
• Human Rights Campaign: 100% on the Corporate Equality Index
| 
 | | Everyone Owns Inclusion: ►Invest in development of our teams to build a Fortive where you can be yourself and do your best work | | Improve and expand tools and resources to drive inclusive behavior
| | • +5-point increase in inclusion index, employee experience survey since 2018
• ~95%+ of employees completed Unconscious Bias learning
• Leading inclusion workshop introduced for people leaders
• 23+ Employee Resource and Allies Groups
• Published resources and learning guides on our I&D for all employees to access
| 
 | | I&D in Our DNA: ►Build a culture of equity that enables greater innovation for customers and the world | | Refine processes and systems to drive an inclusive environment
| | • 100+ Courageous Conversations held with leaders and employees to listen and learn (informing actions) on race & social justice
• Embedded inclusion in all talent and leadership experiences and processes
• Day of Caring made more flexible to address social justice
• Acting on our CEO ACT!ON pledge, FTV is sponsoring an employee for CEO Action for Racial Equity fellowship
• Donated to the Equal Justice Initiative
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In 2021, we continued to strengthen our culture of inclusion and diversity by introducing a new development experience, providing our leaders tools and support to become more inclusive leaders. We also expanded our employee resource communities, and operationalized equitable talent processes. Reinforcing our I&D priorities, annual I&D goals are imbedded into performance measures for both executives and other senior leader roles across Fortive. We will publish our 2021 EEO-1 report (U.S. data) on our website at www.fortive.com by April 30, 2022. In addition, to increase transparency and solidify our long-term commitment, we released the following 2025 aspirational goals supported by our employee experience survey. | | | | Our 2025 Goals | | Gender Representation | | 50% | | BIPOC Representation | | 37% | | Senior Leader Diversity | | 50% | | Inclusion & Belonging Score in Employee Experience Survey | | 85% |
2022 PROXY STATEMENT
Table of Contents | 40 | | 2021 Proxy Statement | | FORTIVE CORPORATION Human Capital Strategy |
Human Capital Management
Employee Experience and Communication Engagement and Communication
A key focus of our human capital management strategy is creating exceptional employee experiences through active listening and effective communication throughout the organization. Our senior leaders are committed to actively listensearching out and listening to our employees and other stakeholders as demonstrated by over one hundred separate Courageous Conversations held in 2020 to actively listen and learn on race and social justice matters so we can make a real impact withbuild our actions. In addition, in 2020, we conducted several employee surveys focused on getting feedback on actions related to our COVID-19 response work. We wanted to ensure our teams had the best support possible through such an extremely challenging time. This allowed for us to listen, learn and adjust quickly to the needsculture. As part of our teams across the globe. Based on the learnings from 2020,this effort, we have adjustedcontinued to conduct our approach toannual employee experience surveys and feedback. Beginningsurvey, but also, beginning in 2021, we will move from an annual surveymoved to a shorter feedback loop, introducing quarterly employee experience surveys and a more thorough biennial survey.pulse surveys. This will enablecadence has enabled us to be more responsive to the needs and feedback from the organization while enhancing our ability to understand trends over time. TheWith over 80% of our team participating throughout 2021, our overall employee engagement score averaged 77%, and our inclusion and belonging score averaged 81%. As in prior years, the 2021 results informinformed both management and the Board of Directors on appropriate actions and strategies to continuously enhance our employees’ experience withinexperience. Pandemic Support In our efforts to support our global team during the Company. continuing COVID-19 pandemic, we are guided by five key pillars: Safety, Transparency, Empathy, Science and Employee Trust. The policies we implemented were guided with the safety of our employees, their families, our customers, and our communities as the number one priority, with our actions informed by data and expert public health guidance. The manner in which we considered and communicated our policies and actions were driven by the recognition of, and empathy for, the uncertainty, fear, and real-life impact caused by the pandemic for our colleagues. With that in mind, we continue to be focused on being agile and transparent with what we were doing and why we were doing it, while listening to ongoing feedback from our global teams and quickly making changes where needed. | | | | Driven by the five key pillars described above, we: | Formed global and local response teams at every level to create hundreds of standard processes to share best practices and streamline communication to keep our employees safe and informed Waived deductibles, co-pays, and co-insurance for COVID-19 testing or treatment as well as all virtual healthcare visits | To the extent practicable, enabled flexible work location, work schedule and work hours designed to balance the requirements for both the Company and the individual employees while ensuring that our essential manufacturing team members had the education, resources, and support needed to stay safe on the job | Provided subsidized childcare and other caregiver services as well as parental counseling Ensured pay continuity for quarantine periods for our employees Provided enhanced counseling and mental health coverage and services on a global basis Created flexible shifts and schedules to accommodate childcare and other family or personal needs |
Table of Contents | | 2021 Proxy Statement 41 | | 41 |
| | | | | Certain Relationships and Related TransactionsPolicy
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Policy
Under our Related Person Transactions Policy adopted by the Board, the Nominating and Governance Committee of the Board is required to review and, if appropriate, approve all related person transactions prior to consummation whenever practicable.consummation. If advance approval of a related person transaction is not practicable under the circumstances or if our management becomes aware of a related person transaction that has not been previously approved or ratified, the transaction is submitted to the Nominating and Governance Committee at its next meeting. The Nominating and Governance Committee is required to review and consider all relevant information available to it about each related person transaction, and a transaction is considered approved or ratified under the policy if the Nominating and Governance Committee authorizes it according to the terms of the policy after full disclosure of the related person’s interests in the transaction. Related person transactions of an ongoing nature are reviewed annually by the Nominating and Governance Committee. The definition of “related person transactions” for purposes of the policy covers the transactions that are required to be disclosed under Item 404(a) of Regulation S-K promulgated under the Securities Exchange Act.S-K. Relationships and Transactions Two of our former directors, Messrs. Steven M. Rales and Mitchell P. Rales, who retired from the Board in June 2021 are executive officers of Danaher in their respective capacity as Chairman of the Board of Danaher and Chairman of the Executive Committee of the Board of Danaher. Mitchell P. Rales and Steven M. Rales will not stand for re-election and will retire from our Board as of the 2021 Annual Meeting. In addition, Daniel L. Comas, who joined our Board in March 2021 after retiring from Danaher in December 2020 was an Executive Vice President of Danaher in 2020 prior to his retirement from Danaher. Certain subsidiaries of Fortive sell products and services to, or purchase products and services from, Danaher from time to time in the ordinary course of business and on an arms’-length basis. In 2020,2021, under arms’-length leasing arrangements, Fortive paid to Danaher approximately $1.4$1.45 million. Furthermore, in 2020,2021, certain subsidiaries of Fortive purchased approximately $12.3$13.88 million of products from, and sold approximately $13.0$13.22 million of products to, Danaher, which in each case was less than 0.3% of Fortive’s, and of Danaher’s, revenues for 2020.2021. Our subsidiaries intend to sell products to and purchase products from Danaher in the future in the ordinary course of their businesses and on an arms’-length basis. In addition, Messrs. Steven Rales and Mitchell Rales collectively own more than 10% of the equity of Colfax Corporation, a publicly tradedpublicly-traded company. Certain of our subsidiaries sell products to Colfax from time to time in the ordinary course of business and on an arms’-length basis. In 2020,2021, our subsidiaries sold approximately $150$120 thousand of products to Colfax. Our subsidiaries intend to sell products to Colfax in the future in the ordinary course of their businesses and on an arms’-length basis. Mr. Rejji P. Hayes, who joinedis a director on our Board, in December 2020, is an Executive Vice President and Chief Financial Officer of CMS Energy Corporation, a publicly tradedpublicly-traded utilities company. Certain of our subsidiaries sell products to CMS Energy from time to time in the ordinary course of business and on an arms’-length basis. In 2020,2021, our subsidiaries purchased approximately $1$2 thousand of products and services from, and sold approximately $284$420 thousand of products to, CMS Energy. Our subsidiaries intend to sell products to and purchase products and services from CMS Energy in the future in the ordinary course of their businesses and on an arms’-length basis. 2022 PROXY STATEMENT
Table of Contents | | | | | | 42 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
| COVID-19 Update
Consistent with the cost saving actions undertaken by the Company in 2020 in response to the COVID-19 pandemic, the Board of Directors voluntarily reduced the annual retainer by 30% for the 2020 compensation period (July 2020 through June 2021), with the annual retainer reduced from $100,000 to $70,000.
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Summary of Director Compensation
Director Compensation Policy The Compensation Committee reviews our non-employee director compensation policy annually and proposes changes to the Board, as appropriate. In reviewing the non-employee director compensation policy in 2020,2021, the Compensation Committee worked with Pearl Meyer to assess the competitiveness of our non-employee director compensation policy based on benchmark information from peer companies and relevant compensation surveys. Based on its review, the Compensation Committee proposed the following non-employee director compensation policy, which recommendation the Board adopted. Pursuant to our non-employee director compensation policy, eachEach of our non-management directors receives the following compensation:
An annual retainer of $100,000 (with the annual retainer reduced to $70,000 for the 2020 compensation period), payable pursuant to an election made the prior year under the Non-Employee Director’s Deferred Compensation Plan described below (the “Election”).
An annual equity award with a target award value of $175,000, divided equally between options and RSUs; provided, however, that, upon request by a director and at the sole discretion of the Compensation Committee or the Board, such annual equity award may be comprised solely of RSUs. The options will be fully vested as of the grant date. The RSUs will vest upon the earlier of (1) the first anniversary of the grant date, or (2) the date of, and immediately prior to, the next annual meeting of our shareholders following the grant date, but the underlying shares are not issued until the earlier of the director’s death or the first day of the seventh month following the director’s retirement from the Board.
Reimbursement for out-of-pocket expenses, including travel expenses, related to the director’s service on the Board.
| ► | An annual retainer of $105,000, payable pursuant to an election made the prior year under the Non-Employee Director’s Deferred Compensation Plan described below (the “Election”). | | ► | An annual equity award with a target award value of $180,000, divided equally between options and RSUs; provided, however, that, upon request by a director and at the sole discretion of the Compensation Committee or the Board, such annual equity award may be comprised solely of RSUs. The options will be fully vested as of the grant date. The RSUs will vest upon the earlier of (1) the first anniversary of the grant date, or (2) the date of, and immediately prior to, the next annual meeting of our shareholders following the grant date, but the underlying shares are not issued until the earlier of the director’s death or the first day of the seventh month following the director’s retirement from the Board. | | ► | Reimbursement for out-of-pocket expenses, including travel expenses, related to the director’s service on the Board. |
In addition, the Board chair receives an annual retainer of $92,500 payable pursuant to the Election and an annual equity award with a target value of $92,500 (divided either equally between options and RSUs or comprised solely of RSUs, as described above), the chair of the Audit Committee receives an annual retainer of $25,000, each of the non-chair members of the Audit Committee receives an annual retainer of $15,000, the chair of the Compensation Committee receives an annual retainer of $20,000, each of the non-chair members of the Compensation Committee receives an annual retainer of $10,000, the chair of the Nominating and Governance Committee receives an annual cash retainer of $15,000,$20,000, each of the non-chair members of the Nominating and Governance Committee receives an annual retainer of $7,500,$10,000, the chair of the Finance Committee receives an annual retainer of $10,000, and each of the non-chair members of the Finance Committee receives an annual retainer of $10,000, in each case, payable pursuant to the Election. Pursuant to the Non-Employee Director’s Deferred Compensation Plan, each director may make an election during the prior year to receive suchthe director’s annual retainer, including the base annual retainer payable to all directors, additional annual retainer payable to the Board chair, and the additional annual retainer payable to the committee chairs, in: | ► | cash payable in four equal installments following each quarter of service; | | ► | RSUs with a target value equal to the annual retainer and granted concurrently with the annual equity award that will: |
| ► | vest upon the earlier of (1) the first anniversary of the grant date, or (2) the date of, and immediately prior to, the next annual meeting of our shareholders following the grant date; | | ► | have the underlying shares not issued until the earlier of the director’s death or, based on the election made by the director, the first day of the seventh month, first year, third year, or fifth year following the director’s retirement from the Board; or |
| ► | a combination of cash and RSUs as allocated in increments of 1% of the total annual retainer. |
Table of service; RSUs with a target value equal to the annual retainer and granted concurrently with the annual equity award that will:
vest upon the earlier of (1) the first anniversary of the grant date, or (2) the date of, and immediately prior to, the next annual meeting of our shareholders following the grant date;
have the underlying shares not issued until the earlier of the director’s death or, based on the election made by the director, the first day of the seventh month, first year, third year, or fifth year following the director’s retirement from the Board; or
a combination of cash and RSUs as allocated in increments of 1% of the total annual retainer.
Contents | | | | | | | 2021 Proxy Statement 43 | | 43 |
Director Compensation
Stock Ownership Policy Our Board has also adopted stock ownership requirements for non-management directors. Under the requirements, each non-management director (within five years of his or her initial election or appointment) is required to beneficially own shares of our common stock with a market value of at least five times his or her annual cash retainer. Once a director has acquired a number of shares that satisfies such ownership multiple, such number of shares then becomes such director’s minimum ownership requirement (even if his or her retainer increases or the fair market value of such shares subsequently declines). Under the policy, beneficial ownership includes RSUs and restricted shares held by the director and shares in which the director or his or her spouse or child has a direct or indirect interest, but does not include shares subject to unexercised stock options. In addition, our Board has adopted a policy that prohibits any director or executive officer from pledging as security under any obligation any shares of our common stock that he or she directly or indirectly owns and controls (other than shares that were issued in the Separation as a dividend on shares of Danaher common stock that were already pledged as of February 21, 2013), and provides that pledged shares of our common stock do not count toward our stock ownership requirements.controls. We have also adopted a policy that prohibits our directors and employees from engaging in any transactions involving a derivative of our securities, including hedging transactions. Director Compensation Table The table below summarizes the compensation paid to the non-management directors for the year ended December 31, 2020.2021. Mr. Lico is a member of the Board but does not receive any additional compensation for services provided as a director. Messrs. Feroz Dewan, Mitchell P. Rales, and Steven M. Rales each retired from the Board in 2021. Mr. Wright Lassiter III joined the Board as of January 1, 2022 and, therefore, is not included in the table below. | | | | | | | | | | | | | | | | | NAME | | FEES EARNED OR PAID IN CASH ($) | | | STOCK AWARDS ($) (1)(2)(3) | | | OPTION AWARDS ($) (1)(2) | | | TOTAL ($) (3) | | | | | | | Daniel L. Comas (3) | | | — | | | | — | | | | — | | | | — | | | | | | | Feroz Dewan (4) | | | — | | | $ | 191,928 | | | $ | 76,312 | | | $ | 268,240 | | | | | | | Sharmistha Dubey (3), (4) | | | — | | | $ | 157,706 | | | $ | 73,455 | | | $ | 231,161 | | | | | | | Rejji P. Hayes (3) | | $ | 21,250 | | | | — | | | | — | | | $ | 21,250 | | | | | | | Kate D. Mitchell (4) | | | — | | | $ | 202,423 | | | $ | 76,312 | | | $ | 278,735 | | | | | | | Mitchell P. Rales (4) | | | — | | | $ | 268,030 | | | | — | | | $ | 268,030 | | | | | | | Steven M. Rales (4) | | | — | | | $ | 268,030 | | | | — | | | $ | 268,030 | | | | | | | Jeannine Sargent (4) | | $ | 12,500 | | | $ | 210,194 | | | $ | 76,312 | | | $ | 299,006 | | | | | | | Alan G. Spoon (4) | | $ | 98,750 | | | $ | 236,488 | | | $ | 116,682 | | | $ | 451,920 | |
| | Fees Earned or | | Stock Awards | | Option | | | | | Name | | Paid In Cash ($) | | ($)(1)(2)(4) | | Awards ($)(1)(2) | | Total ($) | | Daniel L. Comas(3) | | $ | 97,500 | | $ | 204,017 | | | $ | 21,130 | | $ | 322,647 | | Feroz Dewan(4), (5) | | | — | | $ | 206,640 | (6) | | $ | 84,222 | | $ | 290,862 | | Sharmistha Dubey(4) | | | — | | $ | 206,640 | | | $ | 84,222 | | $ | 290,862 | | Rejji P. Hayes(3), (4) | | $ | 47,500 | | $ | 364,396 | | | $ | 37,221 | | $ | 449,117 | | Kate D. Mitchell(4) | | | — | | $ | 241,798 | | | $ | 84,222 | | $ | 326,020 | | Mitchell P. Rales(5) | | | — | | | — | | | | — | | | — | | Steven M. Rales(5) | | | — | | | — | | | | — | | | — | | Jeannine Sargent(4) | | $ | 70,625 | | $ | 181,169 | | | | — | | $ | 251,794 | | Alan G. Spoon(4) | | $ | 98,750 | | $ | 246,461 | | | $ | 127,322 | | $ | 472,533 |
| (1) | The amounts reflected in these columns represent the aggregate grant date fair value of the applicable award computed in accordance with Accounting Standards Codification Topic 718 (“ASC 718”). With respect to stock awards, the grant date fair value under ASC 718 is calculated based on the number of shares of our common stock underlying the award, timesmultiplied by the closing price of a share of our common stock on the date of grant. With respect to stock options, the grant date fair value under ASC 718 has beenis calculated using the Black-Scholes option pricing model, based on (i) for the grants made in June 2020,2021, the following assumptions (and assuming no forfeitures): an 8 year option life, a risk-free interest rate of 0.55%1.31%; a stock price volatility rate of 25.37%26.15%; and a dividend yield of 0.45%0.39% per share; and(ii) for the prorated grant made in August 2020January 2021 for Ms. Dubey,Mr. Hayes, the following assumptions (and assuming no forfeitures): an 8 year option life, a risk-free interest rate of 0.44%0.84%; a stock price volatility rate of 25.81%25.96%; and a dividend yield of 0.40%0.84% per share; and (iii) for the prorated grant made in April 2021 for Mr. Comas, the following assumptions (and assuming no forfeitures): an 8 year option life, a risk-free interest rate of 1.45%; a stock price volatility rate of 26.07%; and a dividend yield of 0.39% per share. |
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Director Compensation
(2) | The table below sets forth as to each non-management director the aggregate number of unvested RSUs and aggregate number of stock options outstanding as of December 31, 2020.2021. All of the stock options set forth in the table below are fully vested. The RSUs set forth in the table below vest in accordance with the terms described above. |
2022 PROXY STATEMENT | | | | | | | | | | | | NAME | | AGGREGATE NUMBER OF FORTIVE STOCK OPTIONS OWNED AS OF DECEMBER 31, 2020 | | AGGREGATE NUMBER OF UNVESTED FORTIVE RSUs OWNED AS OF DECEMBER 31, 2020 | | | | Daniel L. Comas (3) | | | | — | | | | | — | | | | | Feroz Dewan | | | | 39,381 | | | | | 3,730 | | | | | Sharmistha Dubey (3) | | | | 4,510 | | | | | 2,683 | | | | | Rejji P. Hayes (3) | | | | — | | | | | — | | | | | Kate D. Mitchell | | | | 23,981 | | | | | 3,934 | | | | | Mitchell P. Rales | | | | 5,220 | | | | | 5,209 | | | | | Steven M. Rales | | | | 5,220 | | | | | 5,209 | | | | | Jeannine Sargent | | | | 9,429 | | | | | 4,085 | | | | | Alan G. Spoon | | | | 37,334 | | | | | 4,596 | |
Table of Contents (3) 44 | Ms. Dubey joined the Board in August 2020,
| Director Compensation |
| | Aggregate Number of Fortive Stock | | Aggregate Number of Unvested Fortive | | Name | | Options Held as of December 31, 2021 | | RSUs Held as of December 31, 2021 | | Daniel L. Comas | | 960 | | 2,525 | | | Feroz Dewan(6) | | 27,811 | | 2,880 | (6) | | Sharmistha Dubey | | 8,340 | | 2,880 | | | Rejji P. Hayes | | 1,900 | | 4,490 | | | Kate D. Mitchell | | 27,811 | | 3,370 | | | Mitchell P. Rales | | 5,220 | | — | | | Steven M. Rales | | 5,220 | | — | | | Jeannine Sargent | | 9,429 | | 2,525 | | | Alan G. Spoon | | 43,124 | | 3,435 | |
| (3) | Mr. Hayes joined the Board in December 2020, and Mr. Comas joined the Board in March 2021. As a result of the timing of their respective appointment to the Board, Ms. Dubey received her award in August 2020, Mr. Hayes received his prorated award in January 2021 and Mr. Comas received his prorated award in April 2021. |
| (4) | Pursuant to the Non-Employee Director’s Deferred Compensation Plan, each of the directors was entitled to defer up to 100% of the annual retainer into RSUs with a target value equal to the amount of the annual retainer deferred. For compensation payable in 2020,2021, each of Mss. Dubey Mitchell and SargentMitchell and Messrs. Dewan, Hayes, Rales and Rales elected to defer 100%, and Mr. Spoon elected to defer 50%, of the annual retainer into RSUs with target value equal to the amount deferred and vesting on the anniversary of the grant date. In addition, Ms. Sargent elected to defer 100% of the annual retainer payable in 2021 prior to July 1, 2021 into RSUs with target value equal to the amount deferred and vesting on the anniversary of the grant date. Since RSUs granted in 20202021 for the annual retainer deferred are accounted for under FASB ASC Topic 718, they are reported under the “Stock Awards” column in the table above. As discussed | | (5) | Messrs. Rales and Rales served on the Board until their respective retirements from the Board in further detailJune 2021 and Mr. Dewan served on the Board until his retirement from the Board in “Compensation Discussion and Analysis—Treatment of Equity-Based Compensation Upon Vontier Separation,”December 2021. | | (6) | Because Mr. Dewan retired from the share amounts set forth above reflect adjustments as applicable pursuantBoard prior to the anti-dilution provisionsvesting of the 2016 Stock Incentive PlanRSUs granted to account forhim in 2021, including RSUs granted in lieu of the separationdeferred cash in retainer, Mr. Dewan forfeited all of Vontier and preserve the intrinsic valueRSUs granted to him by the Company in 2021. As a result, Mr. Dewan did not realize any of each award.the stock awards granted to him in 2021. |
Table of Contents | | | | | | | 45 |
Compensation Discussion and Analysis | Executive Summary | 46 | | Named Executive Officers | 47 | | Compensation Philosophy and Design | 47 | Our 2021 Proxy StatementPerformance Highlights | 49 | | Transformative Portfolio Evolution | 50 | | Our Business Strategy | 51 | | 2021 Updates to Executive Compensation | 52 | | Compensation Governance | 54 | | Analysis of 2021 Executive Compensation | 56 | | Peer Group Analysis | 56 | | Elements of Compensation | 57 | | 2021 Compensation Mix | 57 | | Year over Year Change in Target Compensation | 58 | | Determination of 2021 Annual Incentive Award Payout | 60 | | Determination of Long-Term Incentive Award Payout | 64 | | Other Compensation | 66 | | Compensation Policies | 68 | | Stock Ownership Requirements | 68 | | Pledging Policy | 68 | | Hedging Policy | 68 | | Recoupment Policy | 68 | | Regulatory Considerations | 69 | | Risk Considerations | 70 |
2022 PROXY STATEMENT
Table of Contents
| | | | | Proposal 2. Ratification of Independent Registered Public Accounting Firm
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The Audit Committee on behalf of the Company has selected Ernst & Young LLP, an international accounting firm of independent certified public accountants, to act as the independent registered public accounting firm for the Company and its consolidated subsidiaries for the year ending December 31, 2021. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. Although shareholder approval of the selection of Ernst & Young LLP is not required by law, the Board of Directors believes that it is advisable to give our shareholders an opportunity to ratify this selection. If this proposal is not approved by our shareholders at the Annual Meeting, the Audit Committee will reconsider its selection of Ernst & Young LLP. Even if the selection of Ernst & Young LLP is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders.
| | | | | | | | | | | The Board of Directors recommends that shareholders vote “FOR” the ratification of the appointment of Ernst & Young LLP to serve as the Company’s independent registered public accounting firm for 2021.
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Fees Paid to Independent Registered Public Accounting Firm
Aggregate fees for professional services rendered by our independent registered public accounting firm, Ernst & Young LLP, for 2019 and 2020 are set forth in the table below.
| | | | | | | | | FEE CATEGORIES | | FISCAL 2019 FEES | | | FISCAL 2020 FEES | | | | | Audit Fees (1) | | $ | 11,472,501 | | | $ | 10,628,572 | | | | | Audit-Related Fees (2) | | $ | 6,580,370 | | | $ | 738,400 | | | | | Tax Fees (3) | | $ | 5,898,327 | | | $ | 4,678,256 | | | | | All Other Fees (4) | | $ | 0 | | | $ | 0 | | | | | TOTAL FEES | | $ | 23,951,198 | | | $ | 16,045,228 | |
(1) | Audit Fees consist of fees for the integrated audit of annual financial statements and internal control over financial reporting, reviews of quarterly financial statements, statutory audits, audit of captive insurance company, audit procedures associated with the adoption of new accounting standards, consents, review of documents filed with the SEC, and other services normally provided by the auditor in connection with statutory and regulatory filings or engagements.
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(2) | Audit-Related Fees consist of fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements and internal control over financial reporting that are not reported under “Audit Fees” above, including employee benefit plan audits, due diligence related to acquisitions, and consultations concerning financial accounting and reporting standards. In addition, Audit-Related Fees included fees for audit services related to the separation of Fortive into two separate, publicly traded companies, including audit services associated with the corresponding filings with the SEC. Such fees were $0.6 million and $5.5 million in fiscal 2020 and 2019, respectively.
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(3) | Tax Fees consist of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance, assistance with tax reporting requirements and audit compliance, mergers and acquisitions tax diligence, and tax advice on international, federal and state tax matters. None of these services were provided under contingent fee arrangements. Tax compliance fees were $160,716 and $300,720 in fiscal 2020 and 2019, respectively. All other tax fees were $4.5 million and $5.6 million in fiscal 2020 and 2019, respectively. The fees for tax services related to the separation of Fortive into two separate, publicly traded companies were approximately $3.6 million and $4.1 million in fiscal 2020 and 2019, respectively.
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(4) | All Other Fees consist of fees for products and services provided by Ernst & Young LLP, other than the services reported under “Audit Fees,” “Audit-Related Fees” or “Tax Fees” above.
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| | | | | 46 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Proposal 2. Ratification of Independent Registered Public Accounting Firm
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Under its charter, the Audit Committee must pre-approve all auditing services and permitted non-audit services to be performed for the Company and its consolidated subsidiaries by our independent registered public accounting firm. To assure that the audit and non-audit services performed by the independent registered public accounting firm do not impair its independence, the Audit Committee establishes on an annual basis the Pre-Approval Policy of the Audit Committee (the “Policy”). The Policy outlines the scope of services that Ernst & Young LLP may provide to the Company. The Policy sets forth guidelines and procedures the Company must follow when retaining Ernst & Young LLP to perform audit, audit-related, tax and other services. The Policy also specifies certain non-audit services that may not be performed by Ernst & Young LLP under any circumstances. Pursuant to the Policy, the Audit Committee approves services to be provided by Ernst & Young LLP and fee thresholds within each of the service categories, and services within these thresholds are deemed pre-approved. Additional services and fees materially exceeding those thresholds require further pre-approval. Requests for specific pre-approvals may be considered by the full Audit Committee. In addition, the Audit Committee has delegated to the Chair the authority to grant specific pre-approvals. Any such pre-approvals are reported to the full Audit Committee at its next meeting. The Policy is evaluated and updated annually by the Audit Committee. The Audit Committee has pre-approved all amounts for 2020.
| | | | | | | 2021 Proxy Statement | | 47 |
This report 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 Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference into any prior or subsequent filing by Fortive Corporation under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Fortive Corporation specifically incorporates this report by reference therein.
The Audit Committee has been appointed by the Board of Directors to assist the Board of Directors in the oversight of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the qualifications and independence of the Company’s independent auditor, and (iv) the performance of the Company’s internal audit function and independent auditors. In addition, the Audit Committee reviews with management the Company’s risk assessment process and risk management policies. Furthermore, within the scope of its compliance oversight responsibilities, the Audit Committee reviews with management the Company’s major cybersecurity risk exposures and the steps management has taken to monitor and mitigate such exposures.
Each member of the Audit Committee meets the criteria for independence applicable to audit committee members under the Securities Exchange Act and the NYSE listing standards. Each member of the Audit Committee is financially literate within the meaning of the NYSE listing standards, and the Board of Directors has further determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as that term is defined in Regulation S-K.
Management is responsible for the financial reporting process, including its internal control over financial reporting, and for the preparation of its consolidated and combined financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company’s independent registered public accounting firm is responsible for performing an independent audit of the consolidated and combined financial statements, and expressing opinions on the conformity of the financial statements with GAAP.
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. Ernst & Young LLP had been retained by Danaher Corporation as the independent registered public accounting firm for the Company’s businesses prior to the separation of the Company from Danaher. In addition, Ernst & Young was first appointed by the Audit Committee as the Company’s independent registered public accounting firm concurrently with the Company’s separation from Danaher in 2016. The Audit Committee will interview and select any new lead audit engagement partner from Ernst & Young, which Ernst & Young will rotate every five years. In addition, the Audit Committee will also consider as part of its oversight whether to rotate the Company’s independent registered public accounting firm. After consideration of the independence and performance of the Company’s independent registered public accounting firm, the Audit Committee believes that the continued retention of Ernst & Young to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders. Consequently, the Audit Committee has appointed Ernst & Young as the Company’s independent registered public accounting firm for 2021.
The Audit Committee has reviewed and discussed with the Company’s management and with Ernst & Young (with and without management present) the audited consolidated and combined financial statements of the Company contained in the Company’s Annual Report on Form 10-K for year ended December 31, 2020 and the Company’s internal control over financial reporting. The Audit Committee has also discussed with Ernst & Young LLP the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board and the SEC.
The Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accounting firm’s communications with the Audit Committee concerning independence. The Audit Committee has discussed with Ernst & Young LLP its independence, including a review of both audit and non-audit fees, and considered the compatibility of non-audit services with maintaining Ernst & Young’s independence.
| | | | | 48 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Audit Committee Report
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated and combined financial statements for the Company for the year ended December 31, 2020 be included in the Company’s Annual Report on Form 10-K for its fiscal year 2020 for filing with the Securities and Exchange Commission.
Audit Committee of the Board of Directors
Jeannine Sargent (Chair)
Rejji P. Hayes
Kate D. Mitchell
| | | | | | | 2021 Proxy Statement | | 49 |
| | | | | Compensation Discussion and Analysis |
Table of Contents
| | | | | 50 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) describes Fortive’s executive compensation philosophy and the pay program that we provided to our Named Executive Officers (“NEOs”) for 2020.2021. Executive Summary We continued to deliver exceptional performance. In 2021, we celebrated our fifth anniversary as a public company. Over the last five years, we have articulated a strategy that would increase our exposure to higher growth markets aligned with strong secular trends. Our execution has proven the benefits of that strategy, yielding higher and more profitable growth in 2021, with 13.4% revenue growth, including 9.5% core revenue growth, adjusted operating margin expansion of 210 basis points and over 30% adjusted earnings per share growth. We are pleased with the strong foundation we have built, yielding a more resilient and less cyclical business with approximately 40% recurring revenue. Further, the power of the Fortive Business System, especially in the face of supply chain disruptions and market volatility, is positioning us for continued differentiated growth and margin expansion. Our executive compensation program supports long-term value creation.Approximately 90% of the compensation for the Named Executive Officers Our NEOs is variable and at risk, tied to the long-term stock price performance or achievement of performance metrics that are important for 2020 are listed below:
President and Chief Executive Officer
Senior Vice President and Chief Financial Officer
Senior Vice President
Senior Vice President – Human Resources
Senior Vice President*
* On March 12, 2021, Mr. Pringle resigned asour shareholders. Exceeding market standards, our equity awards to our executive officers vest over four years with no vesting prior to the Company’s Senior Vice President for personal reasons.
Executive Summarythird anniversary, with PSUs, if earned at the end of the three-year performance cycle, subject to an additional one-year holding requirement.
TheIn 2021, we executed a transformative management team succession. To ensure leadership team strength in the face of the intensely competitive talent market, the Compensation Committee usesapproved market-based pay adjustments to maintain competitiveness of our compensation program. The adjustments reflected, among other factors, improved organizational capability, accelerating the continued evolution of our portfolio toward SaaS, software and recurring revenue products and solutions.
The company financial factor, which constitutes 60% of our annual incentive program, paid out at 137% of target, reflecting a deliberatenegative discretion applied by the Compensation Committee. In collaboration with management, the Compensation Committee reduced the above-target performance for the company financial factor by approximately 50% to maintain alignment of the annual incentive program with our shareholder experience despite strong operational and continuous processfinancial performance and the fact that the 2021 company financial factor was rigorously set above the prior year’s level, excluding the Industrial Technologies segment we spun-off at the end of 2020. Performance share units (PSUs), an important component of our program that aligns executive compensation to ensure thatlong-term shareholder returns, vested in 2021 at 25% of target consistent with below-target PSU vesting in the prior two years. 2021 Incremental RSUs were earned in full based on the achieved core return on invested capital performance (ROIC), which remains an important component of our strategy to support growth and business portfolio transformation. In response to our shareholders’ feedback, we implemented several changes to our executive compensation philosophyprogram. For our annual long-term incentive program, we increased the allocation of PSUs from 25% to 35% in 2021 and further increased to 50% in 2022 to align even more tightly the interest of our executive compensation program reflectofficers with that of our unique identity, strategy and performance with the goal of creating long-term value for our shareholders and other stakeholders. With that in mind, our program and philosophy are designed to align with Fortive’s Business Strategy, Shared Purpose and Values, and Performance.shareholders. The Compensation Committee designed our 2020 executive compensation program based on the Design Consideration Factors that we describe on page 61 under “—Analysis of 2020 Executive Compensation-Design Consideration Factors.”
| * | Core revenue growth, adjusted operating margin expansion, and adjusted earnings per share growth are non-GAAP financial measures. Please refer to “Non-GAAP Financial Measures” in Appendix B. |
| 1-YEAR TSR | |
| COVID-198.1% UpdatePay for Performance is a foundational pillar of the Compensation Philosophy adopted by our Compensation Committee.
The performance measures for the 2020 incentive-based compensation awards for our NEOs were established in February 2020 prior to the COVID-19 pandemic materially impacting the global economy. Although the COVID-19 pandemic had an adverse impact on the actual results:
•No COVID-19 adjustments were made to either the performance targets or the actual results for the NEOs under our long-term or the short-term incentive plans, and the actual 2020 incentive-based compensation was determined without positive discretion being exercised in favor of the NEOs; and
• The only adjustment made to the compensation of the NEOs in connection with the COVID-19 pandemic was a temporary reduction in base salary for all NEOs as part of the cost-saving actions taken by the Company in 2020.
As demonstrated during the challenges in 2020, our Compensation Committee views at-risk compensation for our NEOs as truly at-risk, even in the midst of a global pandemic.
|
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Compensation Discussion and Analysis
2020 Company Performance Highlights
Living Our Shared Purpose and Value - Essential Technology for the People Who Accelerate Progress
Because our shared purpose is why we are here, our shared purpose and our values remained unwavering and uncompromised during the challenges of 2020. The spirit of optimism and generosity embedded in our values guided our path in the midst of a global pandemic and enabled our employees and businesses to respond with nimbleness, innovation and integrity to progress our shared purpose for all our stakeholders. We have identified below a few highlights of how we put our values to work for our shareholders, employees, customers, and community during the challenges of 2020.
Customer Success Inspires our Innovation
Our innovation is inspired by the desire to enable the success of our customers. When the COVID-19 pandemic created new challenges for our healthcare customers, our teams viewed the challenges as an opportunity to care for our customers and our communities.
When our customers were facing shortages of critical N95 respirator masks to protect their frontline healthcare professionals, we secured emergency use authorization approvals globally for use of our STERRAD Systems to disinfect compatible single-use N95 respirator masks, tripling the usage lifespan of these masks that were dangerously in short supply. We also designed, produced, and donated face shields for those who were serving courageously in the front lines of COVID-19 response.
When our customers and our communities were in critical need of managing the supply of life-saving ventilators, we developed free predictive applications to enable hospitals to effectively manage replacement parts for ventilators. We also increased ventilator component manufacturing more than ten times to meet the demands of our customers and community. In addition, we provided gas flow analyzers to ensure ventilators deployed at healthcare facilities were functioning properly.
When our customers needed our assistance to create isolation rooms to reduce the risk of airborne transmission, we pivoted quickly to develop easy-to-install versions of our room pressure indicator product. By containing airborne pathogens in the room with the assistance of our room pressure indicators, our customers were able to reduce the risk of airborne transmission and quickly repurpose patient rooms into isolation rooms.
We Build Extraordinary Teams for Extraordinary Results
In addition to the actions we have taken to invest in our people at every level, as further described in “Corporate Governance – Human Capital Management,” our values guided how we cared for our teams during the challenges of the COVID-19 pandemic.
In the uncertainty that immediately followed the COVID-19 pandemic, we were guided by five key pillars in our response to our employees: Safety, Transparency, Empathy, Science and Employee Trust. The policies we implemented were guided with the safety of our employees, their families, our customers, and our communities as the number one priority, with our actions informed by data and expert public health guidance. The manner in which we considered and communicated our policies and actions were driven by the recognition of, and empathy for, the uncertainty, fear and real-life impact caused by the pandemic for our colleagues. With that in mind, we focused on being agile and transparent on what we were doing and why we were doing it while listening to ongoing feedback from our global teams and quickly making changes where needed. We did our best to accommodate the needs of our people as they managed through an incredibly difficult year personally and professionally.
Driven by our values, we:
Formed global and local response teams at every level to create hundreds of standard processes to share best practices and streamline communication to keep our employees safe and informed;
Acted quickly to limit and then stop business travel;
Ensured pay continuity for quarantine periods for our employees;
| | | 36.4% | | | 522021 PERFORMANCE
HIGHLIGHTS
| | | RECURRING REVENUE | | 2021 Proxy Statement | ~40% | FORTIVE CORPORATION |
Compensation Discussion and Analysis
Quickly made the decision to enable and then mandate remote work for those who were able to do so while ensuring that our essential manufacturing team members had the education, resources and support needed to stay safe on the job;
Created flexible shifts and schedules to accommodate childcare and other family or personal needs;
Provided subsidized childcare and other caregiver services as well as parental counseling;
Waived deductibles, co-pays, and co-insurance for COVID-19 testing or treatment as well as all virtual healthcare visits; and
Provided enhanced counseling and mental health coverage and services on a global basis.
In addition, we believe that creating inclusive places to work and diverse points of view are the lifeblood of innovation and growth and provide us with a strategic advantage. In 2020, we continued to make significant strides to reflect the needs, priorities, and experiences of our global team and strengthen our culture of inclusion and diversity. Our Board of Directors and our Compensation Committee oversee our Human Capital Management strategies, including our inclusion and diversity efforts. Our VP, Inclusion & Diversity works closely with our senior management and our Inclusion & Diversity Council, involving employees at every level in establishing a collaborative vision that will truly reflect the needs, priorities, and viewpoints of our diverse global team. The actions we have taken and the pillars that drive our Inclusion and Diversity efforts are further described in “Corporate Governance – Human Capital Management.”
We Compete for Shareholders
In September 2019, we announced our plan to separate Vontier Corporation, our former Industrial Technologies segment, into a separate, publicly-traded company. Our plan to separate Vontier reflected our conviction that the transaction would allow both Fortive and Vontier to benefit from increased focus on the specific growth and capital allocation opportunities for each company.
The subsequent capital market volatility and logistical complication presented by the COVID-19 pandemic did not alter our conviction that the separation would create strategic value for our shareholders, our employees and our customers. Leveraging the execution advantages provided by the tools of Fortive Business System and our consistent drive to compete for our shareholders, we quickly adapted our strategy to align with the economic and capital market conditions and completed the transformative separation of Vontier on October 9, 2020 by distributing 80.1% of the outstanding shares of Vontier to our shareholders. Furthermore, following the separation, we monetized the 19.9% ownership interest in Vontier we retained upon separation to reduce our outstanding debt in a tax-free manner. The separation and the subsequent disposition of the retained interest have provided Fortive with enhanced focus and fiscal flexibility to accelerate our pursuit of opportunities to further evolve our portfolio.
Kaizen is Our Way of Life
One of the key defining attributes of our company is our drive for continuous improvement. With FBS as our foundation, we embrace experimentation, learn from our successes and failures, grow as individuals and teams, and always seek to improve. Because FBS is embedded in our culture and our behavior, we instinctively applied our FBS mindset and toolkit to address the challenges presented to us by the COVID-19 pandemic.
Our FBS teams put kaizen into action and viewed the challenges as opportunities to innovate and enhance our FBS toolkits and approach. Our agile FBS teams created virtual leadership experiences, kaizens, and events like our virtual 2020 FBS Hackathon. We further enhanced our online FBS university, allowing our teams to deploy our FBS tools in a virtual environment, take FBS courses online, participate virtually in our FBS conferences, such as our 2020 Fortive Growth & Innovation Conference, and access the power of FBS from afar.
| REVENUE GROWTH | | | | | 13.4% | | | CORE REVENUE
GROWTH | 2021 Proxy Statement | | 53 |
Compensation Discussion and Analysis
Total Shareholder Return
2020 Company Performance Factor *
| | | 9.5% | | Adjusted EPS (1)
| ADJUSTED
OPERATING MARGIN
EXPANSION | | | Free Cash Flow Conversion Ratio (2)
| | 210 bps | | | ADJUSTED EARNINGS
PER SHARE GROWTH | $3.06 | | 32% | | | | | | 116%
|
Table of Contents | Compensation Discussion and Analysis | | 47 |
Named Executive Officers Our NEOs for 2021 are listed below:  | |  | |  | |  | |  | James A. Lico
President and Chief
Executive Officer | | | Target of $3.18
Charles E.
McLaughlin
Senior Vice
President and Chief
Financial Officer | | Barbara B. Hulit
Former President and
CEO of Advanced
Healthcare Solutions* | | Target of 100%
| WEIGHTING: 75%Edward R.
Simmons
Senior Vice
President – Strategy
| | | | WEIGHTING: 25%Olumide Soroye
President and
CEO of Intelligent
Operating Solutions
|
| Actual Company Performance Factor of 115.6%
|
| * | Company Performance Factor isOn December 31, 2021, Ms. Hulit retired from her position as the primary financial measurePresident and CEO of Advanced Healthcare Solutions.
|
| Compensation Philosophy and Design | The Compensation Committee uses a deliberate and continuous process to ensure that our executive compensation philosophy and our executive compensation program reflect our strategy and performance with focus on creating long-term value for our 2020 annual incentive awards. Adjusted EPSshareholders and Free Cash Flow Ratioother stakeholders. With that in mind, our philosophy and programs are defined on page 66. |
(1) | In connection with the separation of Vontier from Fortive and the treatment of Vontier as discontinued operations following the separation, the target Adjusted EPS metric for 2020 was designed to reflect the exclusion of contribution by Vontier for the fourth quarter of 2020.
|
(2) | When establishing the metricsalign with Fortive’s Performance, Business Strategy, and targets for the 2020 annual incentive awards, the Compensation Committee designated Adjusted Net Income, instead of the GAAP Net Income, as the denominator for calculating the Cash Flow Conversion ratio metric for the Company Financial Factor. The change was made to align the Free Cash Flow Conversion ratio metric used in the Company Financial Factor with the Cash Flow Conversion ratio measure disclosed by the Company to its investors.Shared Purpose and Values.
|
| | | | | 54 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Compensation Discussion and Analysis
Our Compensation Philosophy Our compensation philosophy is aligned with building long-term value for our shareholders and other stakeholders, with our executive compensation program designed to: | | | 
 | | Attract, Recruit & Retain | | Recruit, retain, and motivate talented, high-qualityhigh-performing leaders with a passion for creativity, innovation, continuous improvement, and customer experience | |  | | 
| | Be Competitive
Deliver a total pay opportunity that is competitive in the market | |  | | 
| | Align with Business Strategy | | Focus our incentive compensation programs on performance that leads to sustained shareholder value creation consistent with our business strategy | |  | | 
| | Pay for Performance | | With a culture of high expectations, set, achieve, and reward both short-term and long-term performance | |  | | 
| | Align with Shareholders | | Place a strong emphasis on long-term, equity-based compensation to align interests of our executive officers with those ofand our shareholders |
Elements of Executive CompensationKey Design Consideration Factors
Consistent withIn designing our executive compensation philosophy,program, the Compensation Committee adopted a program in 2020 that emphasizes equity-based compensationconsiders the factors listed below with long-term vesting requirementsinput and is dependent on long-term company performance, as follows:
| | | | | | | | | | | | | BASE SALARY | | ANNUAL
INCENTIVE
COMPENSATION
| | STOCK
OPTIONS
| | RESTRICTED
STOCK UNITS
(“RSUs”) | | PERFORMANCE
STOCK UNITS
(“PSUs”) | Form of Compensation
| | Cash
| | Equity
| Performance Timing
| | Near-Term Emphasis
| | Long-Term Emphasis
| Compensation Period
| | N/A
| | Annual Performance
| | 5 years
| | 5 years
| | 3 years with an
additional
2 year holding
Period
| Key Performance Measures
| | N/A
| | Annual Financial, Operational
and Individual Performance
| | Stock Price Appreciation
| | Annual Financial Performance and Stock Price Appreciation
| | Multi-Year Relative Total Shareholder Return and Stock Price Appreciation
| Determination of
Performance-Based Payouts
| | N/A
| | Formulaic +
Discretion
| | N/A
| | Formulaic
| | Formulaic
|
In connection with overall employee recruitment and retention efforts, the Compensation Committee, with the assistance ofguidance from the independent compensation consultant assessed the market practicesand guided by our overall compensation philosophy.
2022 PROXY STATEMENT
Table of peer group companies and other companies in industries aligned with the evolution of the Company’s portfolio. Contents | 48 | | Compensation Discussion and Analysis |
| Competition | | The Compensation Committee considers the competitive demand for executive talent in light of our historical performance, our portfolio evolution and our executive officers’ prior success in executing our business strategies. While the Compensation Committee does not target a specific competitive position versus the market in determining compensation, how our executive compensation package compares to those of our peer group companies as well as how our overall compensation program aligns with our portfolio strategy are important factors in the design and the determination of total compensation for each of our executive officers. | | Performance | | The Compensation Committee considers the performance of Fortive, the executive officers’ respective roles and their contributions. As such, the program includes significant “at-risk” elements that appropriately motivate and reward executive officers for our continued high performance and align them with sustainable long-term value creation for our shareholders. | | Succession Planning | | In designing individual compensation for each executive officer, the Compensation Committee considers the historical performance of such executive officer, readiness of such executive officer to assume greater leadership responsibility, and the ability to execute on succession planning. | | Complexity and Importance of Role | | The Compensation Committee considers pay equity among the executive officers based on the relative complexity, importance of the position and each executive officer’s historical performance, tenure and leadership potential. |
Based on market comparisons and beginning with equity grants made in 2021,the Design Consideration Factors noted above, the Compensation Committee has adoptedestablishes each executive officer’s total target compensation. The Compensation Committee then allocates the total target compensation amount among each of the elements of compensation noted below. Objectives for Elements of Compensation The Compensation Committee believes that, while fixed compensation is important to provide a default vesting period for options and RSUs atstable source of income, executive compensation should primarily be performance-based, with a bias toward long-term incentive compensation in the form of equity awards. The following table sets forth the four years and has reduced the additional holding period for PSUs to one year following the three-year performance period. This approach strikes a balance between maintainingelements of our compensation programs that have retention elements and being aligned with general market practices. program: | | | | | | | 2021 Proxy StatementCompensation
Philosophy | | 55Form of
Compensation | | Primary Objectives | Base Salary | |  | | Cash | | ►Attract and retain executive talent. ►Recognize day-to-day role and scope of responsibility. ►Provide stable source of income. | Annual Incentive Compensation | |  | | Cash | | ►Align compensation with business strategy. ►Reward annual performance on key operational, strategic and financial measures. ►Motivate and reward high performance. | Long-Term Incentive Compensation | |  | | Stock Options
RSUs
PSUs | | ►Drive sustainable performance that aligns the interest of the executives for the delivery of long-term value to shareholders. ►Retain executive talent through an extended vesting period. ►Incentivize strong relative total shareholder return. | Other Compensation | |  | | Benefit Plans
Perquisites
Severance Benefits | | ►Provide competitive benefits at actual cost to the company lower than the perceived value to the executives. |
 | ATTRACT,
RECRUIT &
RETAIN | |  | COMPETITIVE | | 
| ALIGNMENT
WITH BUSINESS
STRATEGY | | 
| PAY FOR
PERFORMANCE | | 
| ALIGNMENT WITH
SHAREHOLDERS |
Table of Contents | Compensation Discussion and Analysis | | 49 |
Pay for Performance
Compensation Discussion and AnalysisPay for performance is at the heart of our compensation philosophy with an emphasis on long-term incentive compensation in the form of equity-based awards.
2020 Compensation Mix
OurThe executive compensation program emphasizes performance-basedis designed so that the compensation for our executive officers is dependent on actual performance. This philosophy is demonstrated in the compensation mix of our executives, with 90% of the total compensation of the NEOs dependent on how well we execute our strategy, perform against our annual financial and personal goals, and deliver long-term return for our shareholders.
This philosophy is reflected in the 2021 PSU awards for our executive officers which require our total shareholder return to outperform the S&P 500 index before our executive officers can earn the corresponding target compensation. With the cash component of the summary compensation table and realizable pay identical, the pay for performance nature of our compensation program is best demonstrated by a comparison of the PSU grant date fair value shown in the summary compensation table and the corresponding realizable pay. As demonstrated in the chart below, when our total shareholder return did not outperform relative to the S&P 500 index, our CEO received significantly lower compensation under the PSU grants than what was otherwise presented in the corresponding summary compensation table. Realizable PSU Compensation for our CEO* 
| * | Realizable PSU Compensation is based on, for vested awards, the actual number of shares earned based on the corresponding three-year relative total shareholder return (“rTSR”) performance multiplied by the closing price of our common stock on the last trading day of the grant year (the “Applicable Price”) and, for unvested awards, the projected number of shares that would be earned assuming the rTSR performance at the end of 2021 applied for the remainder of the performance period multiplied by the Applicable Price. | | ** | The actual or projected three-year relative total shareholder return percentile for each grant year relates to the actual or projected performance measure corresponding to the PSUs granted to the CEO during such year. With respect to PSUs granted in 2020 and 2021 for which the corresponding three-year performance periods have not been completed, the corresponding projected three-year relative total shareholder return percentile is based on the assumption that the performance at the end of 2021 applied for the remainder of the performance period. |
Our 2021 Performance Highlights We trust our shared purpose and our values to remain unwavering and uncompromised in every situation and in every challenge. In 2021, the COVID-19 pandemic continued to impact and disrupt the global economy, supply chain, communities and how we work. With the continuing global challenges, we continued to demonstrate the enduring nature of our values as we responded not only with nimbleness, innovation and integrity but also with grit to deliver for our shareholders, employees, customers, and community, including expanding our operating profit margin in 2021 despite the global disruption to the supply chain. Below are some of the highlights of our Company’s performance. 2022 PROXY STATEMENT
Table of Contents | 50 | | Compensation Discussion and Analysis |
Financial Performance Highlights | Revenue | Operating Profit | Adjusted Operating
Profit | Free Cash Flow | | in millions | in millions | in millions | in millions |  |  |  |  | | Core Revenue Growth of 9.5% | 390 bps of Operating Profit Margin Expansion with 2021 EPS of $1.65 | 210 bps of Adjusted Operating Profit Margin Expansion with 2021 Adjusted EPS of $2.75, representing 32% Adjusted EPS Growth | |
| * | Core Revenue Growth, Adjusted Operating Profit, Adjusted Operating Profit Margin Expansion, Adjusted EPS, Adjusted EPS Growth, and Free Cash Flow are non-GAAP financial measures. For the definition of these non-GAAP financial measures and the reconciliation of such measures to the corresponding GAAP measures, please refer to “Non-GAAP Financial Measures” in Appendix B. |
Transformative Portfolio Evolution Over the last five years, we have articulated a strategy that aligns compensationwould increase our exposure to higher growth markets aligned to stronger secular trends. Our execution has proven the benefits of that strategy, yielding higher and more profitable growth, and a more resilient and less cyclical business with approximately 40% recurring revenue. In 2021, we made considerable progress accelerating our segment strategies with the creationadditions of ServiceChannel and Provation, building scale and differentiation in our software offerings and strengthening established positions in the Facility & Asset Lifecycle and Healthcare industries. We are confident we have the right strategy that will ultimately deliver significant, long-term value for our shareholders. As shown below, the significant majority of our 2020 executive compensation was performance-based (90.0% for the CEO and an average of 80.2% for our other NEOs). See “Executive Compensation Tables —2020 Summary Compensation Tables” for additional details. 2020 Compensation Mix from the Summary Compensation Tables
| * | | Based on 2022 forward-looking projections |  | Based on comparison of 2016 results to 2022 forward-looking projections | | *** | Based on 2022 forward-looking projections and inclusive of related services and solutions |
Table of Contents | Compensation Discussion and Analysis | |  |
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Compensation Discussion and Analysis
Our Compensation Governance Practices
| | | | | | | | | WHAT WE DO | | | | WHAT WE DON’T DO |
| | | | | 
| | Core Executive Compensation Principles Designed to Promote Alignment with the Interest of Shareholders and Other Stakeholders | | |
| | Performance Measures Aligned with Business Objectives | | |
| | Pay for Performance | | |
| | Maintain Stock Ownership Requirements (Including Multiple of Five Times Base Salary for the CEO) | | |
| | Maintain a Compensation Recoupment Policy | | |
| | Maintain Long Vesting for Equity Awards | | |
| | Require Minimum Vesting Schedule under our Equity Plan | | |
| | Monitor for Risk-Taking Incentives | | |
| | Engage an Independent Compensation Consultant | | |
| | Limit Perquisites |
| | | | | 
| | No Excise Tax Gross-Ups | | |
| | No “Single-Trigger” Change-of-Control Severance Benefits or Change-of-Control Equity Vesting | | |
| | No Pledging of our Common Stock by Executive Officers | | |
| | No Hedging Transactions by Executive Officers | | |
| | No Evergreen Provision in Stock Incentive Plan | | |
| | No Repricing of Stock Options | | |
| | No Liberal Share Recycling under Stock Incentive Plan | | |
| | No Liberal Definition of Change-of-Control | | |
| | No Defined Benefit Plans for Executive Officers | | |
| | No Delivery of Payment of Dividends on Unvested Equity Awards |
| | | | | | | 2021 Proxy Statement | | 57 |
Compensation Discussion and Analysis
Aligning Compensation with Our Business Strategy
The Fortive Formula
The foundation of our business strategy is built on the continued execution of the Fortive Formula.  
| * | Represents strategic targets and not forecasted results for any future period. |
Our executive compensation program was designed to align the compensation measures to the execution of our business strategy. As such, the core metrics underlying the Fortive Formula, including earnings per share, free cash flow, core revenue growth, operating margin expansion and return on invested capital, are embedded in our executive compensation programs. Human Capital ManagementSustainability and Diversity
EmpoweringWe included sustainability and diversity goals in our talented global team to contributeexecutive compensation programs in meaningful ways is a critical component2021 as personal performance factors in some of our strategy and success, as reflected inNEOs’ annual incentive compensation awards. 40% of each executive officer’s annual incentive compensation for 2021 was determined by his or her personal performance factors. While the incorporation of human capital management infinancial factors are determined by the Company’s consolidated financial results, the personal performance factor for each ofstructure allows the flexibility to establish goals that are applicable to the specific executive officer.
For example, with respect to sustainability efforts, the executives with the greatest accountability and impact on the results, including our NEOs. Each ofCEO and our executive officers, including the NEOs, has a dedicated pillar within theSVP – General Counsel, had quantitative and qualitative sustainability goals included in their personal performance factorfactors for building extraordinary teams,2021. Likewise, with focus on succession planning, inclusionrespect to diversity efforts, our CEO, segment leaders and our SVP – Human Resources had quantitative and qualitative diversity employee development and employee experience. | | | | | 58 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Compensation Discussion and Analysis
goals included in their personal performance factors for 2021. Aligning Compensation with Our Shared Purpose and Values
We designed our incentive compensation program with the goal of translating our Shared Purpose and Values into action by each of our executive officers.
| | | 
| | • We seek out talented, curious people with
a passion for creativity, innovation, continuous improvement, and customer experience.
• We apply creativity and rigor to breakthrough products, services and processes.
• Kaizen, or continuous improvement, is
the foundation of our culture and fuels
our passion for finding a better way.
• We build our businesses to attract and retain
long-term shareholders and employees.
|
As we describe below in “-Annual Incentive Awards – Personal Performance Factor,” theThe personal performance goals for our incentive compensation program are anchored in the Values underlying our Shared Purpose. For example, theThe Compensation Committee established the following personal performance measures for Mr. Lico, our President and CEO, each of which is anchored in one of the Values:Values. The Compensation Committee determines the results relative to the quantitative and qualitative goals.
2022 PROXY STATEMENT
Table of Contents | | | | | | | Compensation Discussion and Analysis |
2021 Proxy StatementWE BUILD EXTRAORDINARY TEAMS FOR EXTRAORDINARY RESULTS
Weighting – 25% ►Execute succession planning, diversity goals, and organizational capabilities and evolution ►Increase software capabilities within the organization | 
| CUSTOMER SUCCESS INSPIRES OUR INNOVATION Weighting – 20% ►Build innovation at scale with lean portfolio management ►Accelerate organic growth rate | WE COMPETE FOR SHAREHOLDERS Weighting – 40% ►Execute on quantified and preset internal financial metrics ►Evolve portfolio aligned with long-term strategy ►Execute on identified Sustainability targets and goals | | KAIZEN IS OUR WAY OF LIFE Weighting – 15% ►Build software best practices into Fortive Business System infrastructure ►Accelerate digital transformation ►Expand data analytics, artificial intelligence and machine learning capabilities into operating companies |
2021 Updates to Executive Compensation Negative Discretion on 2021 Annual Incentive Award Payout The uncertainty resulting from pandemic, including the scope of the initial remediation efforts and the pace of the subsequent macroeconomic recovery, created an extremely difficult environment in 2021 to forecast future business results. In such an unprecedented and uncertain environment, the Compensation Committee established the financial targets used to determine the company financial factors (the “2021 CFF”) in the first quarter of 2021 based on the Company’s initial fiscal 2021 public guidance to our shareholders. At such time, the Company had anticipated greater impact on the Company’s 2021 financial results from the pandemic-related macroeconomic conditions than what was achieved by the end of 2021. As a result of the strong financial performance of the Company in 2021, partly due to macroeconomic conditions improving from prior year’s unprecedented global pandemic impacts, the 2021 CFF that accounts for 60% of the NEOs’ 2021 annual incentive compensation, exceeded target by 73.3%, with a 2021 CFF performance result of 173.3%. In collaboration with management, the Compensation Committee reduced the above-target performance for the 2021 CFF by approximately 50% to maintain alignment of the 2021 annual incentive compensation program with our shareholder experience despite strong operational and financial performance and the fact that the 2021 CFF targets were rigorously set above the prior year’s level, excluding the Industrial Technologies segment we spun-off at the end of 2020. This resulted in an adjusted 2021 CFF of 137.0% instead of the 173.3% with a corresponding reduction in the 2021 annual incentive compensation that would be payable to the executive officers, including a reduction of the CEO’s 2021 annual incentive compensation by $517,275.
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2021 was an important year that demonstrated the strength of our leadership development and succession planning process in support of the evolution of our executive team, with key internal and external additions that aligned with our portfolio evolution.In 2021, we executed transformative management transitions and succession planning, including the transition of Patrick Murphy from CEO and President of Precision Technologies to CEO and President of Advanced Health Solutions to replace Ms. Hulit following her retirement, the promotion of Tamara Newcombe as CEO and President of Precision Technologies to replace Mr. Murphy, the recruitment and hiring of Olumide Soroye as the CEO and President of Intelligent Operating Solutions, our largest operating segment, and the recruitment and hiring of Edward Read Simmons as the Senior Vice President of Strategy to lead our portfolio strategy. As the Compensation DiscussionCommittee and Analysisthe management team recruited Messrs. Soroye and Simmons, each an NEO for 2021, to join the executive team in 2021, the negotiations and decisions on compensation were impacted by the competitive market for key talent in the technology industry. The market for key talent is especially competitive for proven leaders like Messrs. Soroye and Simmons with expertise in software, automation, data analytics, and artificial intelligence. Olumide Soroye: The Compensation Committee considered that Mr. Soroye had multiple competing offers. Prior to approving the sign-on equity grant with a target value of $12 million, the Compensation Committee considered the following factors, among others: | ► | The importance of the role for the future success of the Company and long-term value for the shareholders; | | ► | Succession planning with leaders who have the necessary expertise and experience to lead the Company in the future; | | ► | The potential impact of the size of the compensation on internal dynamics; | | ► | Anticipated investor views about the size of the sign-on equity award; | | ► | Lack of a regular annual equity award for Mr. Soroye in 2021 outside of the one-time sign-on equity award; and | | ► | Comparable compensation required to recruit other experienced and proven leaders with the required technological expertise but who may not have the comparable alignment with our purpose, culture and diversity of experience possessed by Mr. Soroye. |
The sign-on equity award was delivered to Mr. Soroye in a mix of PSUs (35%) with a three-year rTSR performance measure and an additional one-year holding requirement, RSUs (35%) vesting 50% on each of the third and fourth anniversary of the grant date, and stock options (30%) vesting 50% on each of the third and fourth anniversary of the grant date. Edward R. Simmons: The Compensation Committee considered that Mr. Simmons had a number of opportunities with competing offers. Prior to approving the sign-on equity grant with a target value of $1.2 million, the Compensation Committee considered the following factors, among others: | ► | The importance of identifying and executing the right acquisition and organic growth strategies for the success of the Company; | | ► | Alignment of Mr. Simmons’ expertise and experience in developing, accelerating, and executing strategies in the industrial technology and software sectors with the skill set necessary to develop and accelerate the core portfolio strategy at the Company; | | ► | Anticipated investor views about the size of the sign-on equity award; and | | ► | The fact that the sign-on equity grant would be incremental to the annual equity award granted to Mr. Simmons in 2021. |
The sign-on equity award was delivered to Mr. Simmons in the form of RSUs vesting ratably over a three-year period. 2022 PROXY STATEMENT
Table of Contents | 54 | | Compensation Discussion and Analysis |
Based on the weighing of those factors among others and after deliberation, the Compensation Committee determined that, while the size of the sign-on equity awards for Messrs. Simmons and Soroye was significant, the potential long-term positive impact to shareholder value from software and technical expertise each brings, with expected impactful contributions for our largest segment or for our corporate strategy far outweighed offering the market rate necessary to retain the services of proven leaders with the necessary leadership skills and technological expertise and, therefore, unanimously determined to grant the sign-on equity awards to each of them. Updates to the Performance Metrics The Compensation Committee determined that, based on the long-term strategic nature of the Return on Invested Capital (“ROIC”) metric, ROIC would be better aligned as a performance measure for long-term incentive compensation than for annual incentive compensation. As a result, starting in 2021, the Company has adopted Core ROIC as the performance measure for the Restricted Stock Unit awards. At the same time, the Compensation Committee replaced ROIC with Core Revenue Growth as a performance measure for the Annual Incentive Award, with Adjusted EPS, Free Cash Flow Conversion Ratio and Core Revenue Growth representing 60%, 20% and 20%, respectively, of the Company Financial Factor. 2022 Updates to the Equity Awards Consistent with the actions taken by the Compensation Committee in response to investor feedback in prior years to increase the portion of the equity awards that are dependent on performance measures beyond absolute stock price, the Compensation Committee implemented the following updates in 2022 to the long-term equity compensation program for our executive officers that increased the portion allocated to PSUs. PSUs | | 2020 | | 2021 | | 2022 | | Allocation Percentage | | 25% | | 35% | | 50% | | Performance Measure | | Relative TSR with target at 55% of S&P 500 | | Relative TSR with target at 55% of S&P 500 | | Relative TSR with target at 55% of S&P 500 and three-year average annual core revenue growth performance |
Compensation Governance Decisions and Oversight We summarize the allocation of responsibilities for executive compensation decisions in the table below: Compensation
Committee | | ►Determines our compensation program and policies for our executive officers; and ►Approves the compensation levels applicable to our executive officers | Board of Directors
and Management | | ►The Compensation Committee consults the Board of Directors, the CEO, the SVP of Human Resources, and other members of management as the Committee evaluates performance of, and establishes the compensation program and policies for, our executive officers | Independent
Compensation
Consultant | | ►Provides counsel and guidance to the Compensation Committee concerning our compensation levels and our compensation programs; and ►Reports directly to the Compensation Committee |
The Compensation Committee engaged Pearl Meyer in 2021 as its independent compensation consultant to provide counsel and guidance to the Compensation Committee in the design of our 2021 and 2022 executive compensation program. The Compensation Committee assessed the independence of Pearl Meyer in accordance with the NYSE Listing Standards and applicable SEC regulations and concluded that the firm’s work did not raise any conflict of interest.
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Our Compensation Governance Practices | What We Do |  | Core Executive Compensation Principles Designed to Promote Alignment with the Interest of Shareholders and Other Stakeholders | | Performance Measures Aligned with Business Objectives | | Pay for Performance | | Maintain Stock Ownership Requirements (Including Multiple of Five Times Base Salary for the CEO) | | Maintain a Compensation Recoupment Policy | | Maintain Long Vesting for Equity Awards | | Require Minimum Vesting Schedule under our Equity Plan | | Monitor for Risk-Taking Incentives | | Engage an Independent Compensation Consultant | | Limit Perquisites |
| What We Don’t Do |  | No Excise Tax Gross-Ups | | No “Single-Trigger” Change-of-Control Severance Benefits or Change-of-Control Equity Vesting | | No Pledging of our Common Stock by Executive Officers | | No Hedging Transactions by Executive Officers | | No Evergreen Provision in Stock Incentive Plan | | No Repricing of Stock Options | | No Liberal Share Recycling under Stock Incentive Plan | | No Liberal Definition of Change-of-Control | | No Defined Benefit Plans for Executive Officers | | No Delivery of Payment of Dividends on Unvested Equity Awards |
Consideration of 2020 2021 Say-on-Pay Vote and Shareholder Engagement Our shareholders approved the 2021 advisory say-on-pay resolution with 87.2% favorable support. While the results demonstrated strong support for our executive compensation in 2020, the favorable votes were lower than for our 2020 advisory say-on-pay resolution. Our top 15 shareholders holding approximately 60% of our outstanding shares at the time of the 2021 Annual Meeting were in favor of our say-on-pay resolution, but the results were impacted by a negative recommendation from a proxy advisory firm on our 2019 executive compensation with 96.7% favorable support. In addition, during2021 advisory say-on-pay resolution. During the fourth quarter of 2020,2021, we reached out to shareholders who beneficially own in the aggregate approximately 50%60% of our outstanding shares as well as key proxy advisory firms to solicit their input on, among other matters, our executive compensation practices. The input from our shareholders is an important consideration in the Compensation Committee’s evaluation of opportunities to make further enhancements to our executive compensation program. Executive Compensation Decision-Making and Oversight
Decisions and Oversight
We summarizeprogram, including the allocation of responsibilities for executive compensation decisions in the table below:
following: | Input from Our Shareholders | | Our Responsive Actions | Increase the percentage of long-term equity awards dependent on relative total shareholder return and include additional performance measures | | ►In 2021, we increased the allocation of PSUs that are dependent on relative TSR from 25% to 35%, while maintaining requirement to achieve above-average relative total shareholder return to receive target shares, with target performance maintained at 55th percentile of the S&P 500 index ►In 2022, we further increased the allocation of PSUs from 35% to 50% and added three-year average core revenue growth metric as an incremental performance measure | Include greater transparency for special awards | | ►With the new hire of Messrs. Simmons and Soroye, each an NEO, in 2021, we included more detail in this proxy statement for the rationale for the grant of the sign-on equity awards to each of Messrs. Simmons and Soroye | Describe the impact of workforce diversity and sustainability (ESG) efforts in executive compensation | | ►We included in this proxy statement the role of diversity and sustainability in executive compensation |
2022 PROXY STATEMENT
Table of Contents | 56 | | | Compensation Committee | | • Determines our compensation programDiscussion and policies for our executive officers; and
• Approves the compensation levels applicable to our executive officers
| | | Board of Directors and Management
| | • The Compensation Committee consults the Board of Directors, the CEO, the SVP of Human Resources, and other members of management as the Committee evaluates performance of, and establishes the compensation program and policies for, our executive officers
| | | Independent Compensation Consultant
| | • Provides counsel and guidance to the Compensation Committee concerning our compensation levels and our compensation programs; and
• Reports directly to the Compensation Committee
Analysis |
The Compensation Committee engaged Pearl Meyer in 2020 as its independent compensation consultant to provide counsel and guidance to the Compensation Committee in the design of our 2020 and 2021 executive compensation program. The Compensation Committee assessed the independence of Pearl Meyer in accordance with the NYSE Listing Standards and applicable SEC regulations and concluded that the firm’s work did not raise any conflict of interest.
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Compensation Discussion and Analysis
Analysis of 20202021 Executive Compensation Design Consideration Factors
In designing our executive compensation program, the Compensation Committee considered the factors listed below with input and guidance from the independent compensation consultant and guided by our overall compensation philosophy. We refer to these factors as the Design Consideration Factors:
| | | | | The Competitive Landscape for Executive Talent
| | The Compensation Committee considered the competitive demand for executive talent in light of our historical performance, our portfolio evolution and our executive officers’ prior success in executing our business strategies and leveraging the Fortive Business System. While the Compensation Committee did not target a specific competitive position versus the market in determining the compensation of our executive officers, how our executive compensation package compares to those of our peer group companies as well as how our overall compensation program aligns with our portfolio strategy were important factors in the design of our 2020 compensation program.
| | | The Company’s and Individual Executive’s Performance
| | The Compensation Committee considered the performance of Fortive, the executive officers’ respective roles and their contributions to our performance. As such, the program includes “at-risk” elements that appropriately motivate and reward executive officers for our continued high performance and align them with the goal of long-term value creation for our shareholders.
| | | An Executive Officer’s Potential to Assume Additional Leadership Responsibility, including for Succession Planning
| | In designing individual compensation for each executive officer, the Compensation Committee considered the historical performance of such executive officer, readiness of such executive officer to assume greater leadership responsibility, and the ability to execute on succession planning.
| | | The Relative Complexity and Importance of the Executive Officer’s Position within Fortive
| | The Compensation Committee considered the importance of pay equity among the executive officers based on the relative complexity and importance of the position and each executive officer’s historical performance, tenure and leadership potential.
|
Based on the Design Consideration Factors noted above, the Compensation Committee established each executive officer’s total target compensation for 2020. After establishing each executive officer’s total target compensation, the Compensation Committee then allocated the total target compensation amount among each of the elements of compensation described below.
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Compensation Discussion and Analysis
Elements of Compensation – At a Glance
The Compensation Committee believes that, while fixed compensation is important to provide a stable source of income, executive compensation should primarily be performance-based, with a bias toward long-term incentive compensation in the form of equity awards. The following table sets forth the four elements of our compensation program:
| | | | | | | ELEMENT | | FORM OF COMPENSATION | | PRIMARY OBJECTIVES | | COMPENSATION
PHILOSOPHY | | | | | Base Salary
| | Cash | | • Help attract and retain executive talent.
• Provide stable source of income.
• Recognize day-to-day role and scope of responsibility.
| | 
| | | | | Annual Incentive Compensation
| | Cash | | • Align compensation with business strategy.
• Reward annual performance on key operational and financial measures.
• Motivate and reward high individual performance.
| |
| | | | | Long-Term Incentive
Compensation
| | • Stock Options
• RSUs
• PSUs
| | • Drive sustainable performance that delivers long-term value to shareholders.
• Help retain executive talent through an extended vesting schedule.
• Incentivize strong return on invested capital.
• Align the interest of the executive with those of the shareholders.
| |
| | | | | Other
Compensation
| | Employee Benefit Plans;
Perquisites; Severance
Benefits
| | • Provide competitive compensation at an actual cost to the company lower than the perceived value to the executives.
| |
|
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Compensation Discussion and Analysis
Peer Group Compensation Analysis The Compensation Committee believes it is important to clearly understand the relevant market for executive talent to inform its decision-making and ensure that our executive compensation program supports our recruitment and retention needs. In designing the 20202021 compensation program, the Compensation Committee worked with Pearl Meyer, its independent compensation consultant, to assess the competitiveness of our executive compensation practices using a peer group of the companies listed below, which we refer to as the peer group. In assessing the composition of the peer group, the Compensation Committee considered the diverse nature of our businesses, with different operating companies within the Fortive portfolio participating in various industries and with the diversity of companies in our peer group representing the diversity of the end markets and industries in which our various operating companies operate. Furthermore, in 2021, to align with our portfolio transformation and the separation of Vontier, the Compensation Committee made the following changes to the prior peer group: | Additions: + | | ►Ecolab, Inc. ►ServiceNow, Inc. ►STERIS plc ►Stryker Corporation ►Trimble Inc. ►Zebra Technologies Corporation |
| Removals: – | | ►Amphenol Corporation ►Citrix Systems, Inc. ►Dover Corp. ►PTC Inc. ►Stanley Black & Decker, Inc. |
The Compensation Committee intends to periodically reviewreviews compensation data for the peer group derived from publicly-filedpublicly filed proxy statements and available compensation survey data. | | | | | | | | 3M Company | | Dover Corp. | | Rockwell Automation Inc. | | | | Ametek Inc.
| | Honeywell International Inc. | | Roper Technologies, Inc. | | | | Amphenol Corporation
| | IDEX Corporation | | Stanley Black & Decker, Inc.STERIS plc | | Ametek Inc. | | | Autodesk, Inc.
| | Illinois Tool Works Inc. | | Stryker Corporation | | Autodesk, Inc. | | Mettler-Toledo International Inc. | | Synopsys Inc. | | Danaher Corp. | | Rockwell Automation Inc. | | Trimble Inc. | Citrix Systems,Ecolab, Inc.
| | Mettler-ToledoRoper Technologies, Inc. | | Zebra Technologies Corporation | | Honeywell International Inc. | | | | ServiceNow, Inc. | | | Danaher Corp.
| | PTC Inc. | | |
The Compensation Committee selected companies for inclusion in this peer group based on the following criteria: | ► | publicly traded on a major US stock exchange; | | ► | the similarity of their industry to our current portfolio of businesses and the industries in which we compete for talent; | | ► | the strength of their performance over multiple years, including operating margin, and total shareholder return; | | ► | the extent to which they compete with the Company for executive talent and for investors; and | | ► | general comparability of key size measures, primarily revenue and enterprise value. |
membership in the S&P 1500 composite index;
the strength of their financial performance over multiple years, including growth in revenue, income, and total shareholder return (“TSR”);
the extent to which they compete with the Company for executive talent and for investors; and
general comparability of key size measures, primarily revenue and market capitalization.
| Compensation Discussion and Analysis | | 57 |
The Compensation Committee does not rely solely on data from the peer group inor compensation surveys establishing the compensation for our executive officers. Furthermore, the Compensation Committee does not target a specific competitive position versus the market in determining the compensation of our executive officers because, in light of our diverse mix of businesses, it believes strict benchmarking against a selected group of companies would not provide a meaningful basis for establishing compensation. While the Compensation Committee considers the data from the peer group helpful in assessing our competitive position, it also refers to other resources, including public compensation data for other potential competitors for executive talent. The Compensation Committee considers peer group and competitor pay, alongside our pay for performance and long-term value creation objectives, in determining the compensation for our executive officers that best aligns compensation with the interests of our stakeholders. Elements of Compensation – In Detail Base Salaries
Consistent with our executive compensation philosophy and market practices, the 2021 executive compensation program emphasizes equity-based compensation with long-term vesting requirements. | Base Salary | Annual Incentive
Compensation | Stock Options | Restricted Stock
Units (“RSUs”) | Performance Stock
Units (“PSUs”) | Form of
Compensation | Cash
Near-Term Emphasis | Cash
Near-Term Emphasis | | Equity
Long-Term Emphasis | | COVID-19Compensation
Period Update
| 1 year | ConsistentAnnual
Performance
| 4 years | 4 years | 3 years with the cost saving actions undertaken by the an
additional 1 year
holding Period | Key Performance Measures | N/A | Company in 2020 in response Financial,
Results and
Performance Relative
to the COVID-19 pandemic, Mr. Lico reduced his base salary by 30%, Individual
Goals | Stock Price
Appreciation | Financial
Performance
and the other executive officers reduced their respective base salaries by 15%, in each case, from May 15, 2020 to December 27, 2020.Stock Price
Appreciation | Three-Year Relative
Total
Shareholder
Return | Determination
of Performance-
Based Payouts | N/A | Formulaic +
Discretion | N/A | Formulaic | Formulaic |
2021 Compensation Mix Our executive compensation program emphasizes performance-based compensation that aligned compensation with the creation of long-term value for our shareholders. As shown below, the significant majority of our 2021 executive compensation was performance-based (including compensation that was dependent on performance of our stock). See “Executive Compensation Tables —2021 Summary Compensation Tables” for additional details. | CEO Pay | | All Other NEO Pay* |  | |  |
 | | Salary | |  | | Annual Incentive Compensation | |  | | Stock Options | | 2021 Proxy Statement | | PSUs/RSUs | | 63 | | All Other |
| * | The 2021 Compensation Mix for All Other NEO Pay was impacted by the one-time sign-on equity awards granted to Messrs. Simmons and Soroye in 2021. |
2022 PROXY STATEMENT
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Year over Year Change in Target Compensation
Compensation Discussion and Analysis
Target Base Salaries The 20202021 target base salaries for the NEOs reflecting the reduction in base salary noted above from the original target compensation established in February 2020, were as follows: | | | | | | | | | | | | | | | | | EXECUTIVE OFFICER | | 2020
ACTUAL
BASE SALARY | | 2020
TARGET
BASE SALARY(1) | | 2019
TARGET
BASE SALARY | | | | | James A. Lico | | | $ | 896,936 | | | | $ | 1,100,000 | | | | $ | 1,100,000 | | | | | | Charles E. McLaughlin | | | $ | 626,507 | | | | $ | 700,000 | | | | $ | 667,013 | | | | | | Barbara B. Hulit | | | $ | 560,736 | | | | $ | 617,753 | | | | $ | 617,753 | | | | | | William W. Pringle | | | $ | 530,150 | | | | $ | 584,064 | | | | $ | 584,064 | | | | | | Stacey A. Walker | | | $ | 508,465 | | | | $ | 575,000 | | | | $ | 525,000 | |
| Executive Officer | | 2021 Target
Base Salary | | 2020 Target
Base Salary | | Percentage
Increase | | James A. Lico | | $ | 1,250,000 | | $ | 1,100,000 | | 13.6% | | Charles E. Mc Laughlin | | $ | 725,000 | | $ | 700,000 | | 3.6% | | Barbara Hulit(1) | | $ | 650,000 | | $ | 617,753 | | 5.2% | | Edward R. Simmons(2) | | $ | 600,000 | | $ | N/A | | N/A | | Olumide Soroye(2) | | $ | 750,000 | | $ | N/A | | N/A |
| (1) | Prior toMs. Hulit resigned from her officer position on December 31, 2021.
| | (2) | Messrs. Simmons and Soroye joined the voluntary temporary reduction related to COVID-19.Company in 2021. The target base salary represents annualized base salary assuming the target base salary had been implemented on January 1, 2021. Messrs. Simmons and Soroye received a prorated portion of their target base salary in 2021. |
Determination of the 2020 Base Salaries
Prior to the pay reduction effected in connection with the COVID-19 pandemic, the Compensation Committee initially approved a modest market-based increase in base salaries for Mr. McLaughlin of 5% and Ms. Walker of 10% after considering their respective roles and responsibilities and the compensation data of our peer group.
However, after taking into account the pay reduction adopted by the Compensation Committee in connection with the COVID-19 pandemic, the base salary for the each of the NEOs decreased on a year over year basis as noted above.
Annual Incentive Awards
We provide annual incentive awards to our NEOs under our Executive Incentive Compensation Plan. The Executive Incentive Compensation Plan provides cash bonuses to participants based on the achievement of annual performance measures relating to our business and the participant’s personal performance.
20202021 Annual Incentive Award Target Award Percentage
The Compensation Committee granted a performance-based 20202021 annual incentive award to each of the NEOs, with the target award expressed as the following percentage of the corresponding target base salary prior to voluntary reduction related to the COVID-19 pandemic.salary. The actual payout was determined based on achievement of the performance goals described under “—Determination of the Actual 20202021 Annual Incentive Award Payout.” | Executive Officer | | 2021 Target
Award Percentage | | 2020 Target Award
Percentage | | James A. Lico | | 190% | | 185% | | Charles E. McLaughlin | | 125% | | 125% | | Barbara Hulit | | 100% | | 90% | | Edward Read Simmons | | 80% | | N/A | | Olumide Soroye | | 150% | | N/A |
Target 2021 Annual Equity Awards | | | | | | | | | | | | EXECUTIVE OFFICER | | 2020 TARGET
AWARD PERCENTAGE | | 2019 TARGET
AWARD PERCENTAGE | | | | James A. Lico | | | | 185 | % | | | | 180 | % | | | | Charles E. McLaughlin | | | | 125 | % | | | | 125 | % | | | | Barbara B. Hulit | | | | 90 | % | | | | 80 | % | | | | William W. Pringle | | | | 90 | % | | | | 85 | % | | | | Stacey A. Walker | | | | 85 | % | | | | 80 | % |
For 2021, the Compensation Committee set the following target dollar values for the NEOs’ annual equity awards. | Executive Officer | | 2021 Target
Dollar Value(1) | | 2020 Target
Dollar Value(1) | | Year Over Year
Increase(1) | | James A. Lico | | $ | 12,000,000 | | $ | 11,000,000 | | 9.1% | | Charles E. McLaughlin | | $ | 3,750,000 | | $ | 3,150,000 | | 19.0% | | Barbara Hulit | | $ | 2,100,000 | | $ | 1,650,000 | | 27.3% | | Edward R. Simmons(2) | | $ | 1,500,000 | | | N/A | | N/A | | Olumide Soroye(2) | | | – | | | N/A | | N/A |
| (1) | The target dollar values of the equity grants noted above do not reflect the valuations computed in accordance with Accounting Standards Codification Topic 718 (“ASC 718”). Instead, based upon the target dollar value of equity awards and the allocation of form of equity awards noted below, the actual number of RSUs and target number of PSUs granted was determined by dividing the corresponding allocation of the dollar value by the 20-day average of the closing price of our common stock as of the grant date (“20 Day Average”) and the actual number of stock options granted was determined by dividing the corresponding allocation of the dollar value by one-third of the 20 Day Average. Additional details on amounts of the 2021 equity grants to all of our NEOs are shown in “Executive Compensation Tables—Fiscal 2021 Grants of Plan-Based Awards.” | | (2) | Target Dollar Value for 2021 Annual Grant does not include, for Mr. Simmons, $1.2 million in target sign-on equity awards and, for Mr. Soroye, $12.0 million in target sign-on equity awards. For Mr. Soroye, no annual equity awards were granted in 2021 in light of the sign-on equity award. The offer letter to Mr. Soroye contemplates a target value for annual equity awards of $4.5 million. |
There was a significant deviation in the target value increase in 2021 equity awards and the corresponding accounting valuation increase due to the unusually lower accounting valuation of the option awards in 2020. For example, the 9.1% increase from 2020 to 2021 in the target value of the annual equity awards approved by the Compensation Committee for Mr. Lico was significantly lower than the 22.2% increase in accounting valuation for the equity awards for the same period reflected in the Summary Compensation Table. The primary reason for the higher
Table of Contents | Compensation Discussion and Analysis | | 59 |
year over year increase in equity awards reflected in the Summary Compensation Table was the lower volatility assumptions in the 2020 Black-Scholes option pricing model (19.8% in 2020 versus 26.1% in 2021), that resulted in each option in 2020 being valued by $4.69 less than in 2021 with approximately $1.2 million lower accounting valuation for Mr. Lico’s option awards in 2020 than the amount that would have been calculated using the 2021 Black-Scholes option pricing model. Reasons for the Year over Year Changes to Target Total Compensation In determining the 2021 target compensation, including each component of the target compensation, for Messrs. Lico and McLaughlin and Ms. Hulit, the Compensation Committee considered the following accomplishments and factors. With respect to Messrs. Simmons and Soroye, each of whom joined the Company in 2021, please see “Management Transitions and Sign-on Equity Grants.” James A. Lico | ► | Improved organizational capability to enable Fortive’s strategic focus, with significant improvements in succession planning and diversity of leadership talent through internal development and external recruitment | | ► | Strong leadership in delivering excellent operational performance despite the challenges of the COVID 19 pandemic | | ► | Strengthened capability of the FORT platform to accelerate utilization of data analytics and the pace of organic innovation | | ► | Continued evolution of the Fortive portfolio toward higher SaaS, software and recurring revenue | | ► | Leadership in the completion of the separation of Vontier in the midst of the pandemic and related disruptions to the financial markets | | ► | Base Salary: Minimal salary increases over the last 4 years with overweight in compensation allocation to performance-based long-term compensation | | ► | Annual Incentive Award and Annual Equity Award: Moderate market-based adjustments, reward for performance noted above, and alignment with our executive compensation practice of focus on performance-based compensation with a bias toward long-term incentive compensation in the form of equity awards |
Charles E. McLaughlin | ► | Significant improvements in the overall strength of talent in the Corporate Finance organization to deliver on our portfolio evolution, including implementation of a Finance Organization structure to strengthen finance talent in the operating segments and to improve succession plan funnels through the development of internal talent balanced with acquisition of external talent | | ► | Leadership in the completion of the separation of Vontier in the midst of the pandemic and related disruptions to the financial markets | | ► | Overall competitiveness of the market for seasoned, high performing chief financial officers | | ► | Base Salary: Moderate increase reflecting market-based adjustments | | ► | Annual Incentive Award and Annual Equity Award: Reward for performance noted above, and alignment with our executive compensation practice of focus on performance-based compensation with a bias toward long-term incentive compensation in the form of equity awards |
Barbara B. Hulit | ► | Significant contribution in building extraordinary teams with particular focus in strengthening and broadening diversity of leadership talent in the Advanced Healthcare Solutions segment, including structuring the segment organization and enhancing the segment succession funnels for President, General Manager and other key roles | | ► | Driving the evolution and scale of the FORT platform’s data science capability leading to enhanced expansion of data analytics and increased pace and scale of innovation within operating companies | | ► | Leadership to drive strong operational performance of operating companies with the Advanced Healthcare Solutions segment despite the challenges of the COVID-19 pandemic |
2022 PROXY STATEMENT
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| ► | Overall competitiveness of the market for seasoned, high performing multi-operational business executives | | ► | Base Salary: Moderate increase reflecting market-based adjustments | | ► | Annual Incentive Award and Annual Equity Award: Pay equity considerations, reward for performance noted above, and alignment with our executive compensation practice of focus on performance-based compensation with a bias toward long-term incentive compensation in the form of equity awards |
Determination of the 20202021 Annual Incentive Award Target PercentagePayout The Compensation Committee elected to increase the target award percentage for Mr. Lico by 5% for 2020 based on market analysis, retention considerations, and overall performance consideration. In addition, the Compensation Committee increased the target award percentage for Ms. Hulit by 10% and Mr. Pringle and Ms. Walker by 5% for 2020 based on market analysis, input from its independent compensation consultant, and pay equity considerations among executive officers with comparable performances and responsibilities.
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Compensation Discussion and Analysis
Determination of the Actual 2020 Annual Incentive Award Payout
 
Each executive officer is eligible for a bonus equal to his or her target base salary multiplied by his or her target award percentage multiplied by the Composite Performance Factor (which was the sum of the Company Performance Factor (weighted 60%) and the Personal Performance Factor (weighted 40%)). We further describe each element of the 20202021 performance formula below: Company Performance Factor
| COVID-19 Update
Although the Company Performance Factor targets were established in February 2020 without taking into account the impact of COVID-19 and despite the negative adverse impact the COVID-19 pandemic had on actual performance, no adjustments were made to either the performance targets or the actual results for the NEOs, and the actual 2020 annual incentive award payout for the NEOs were determined without positive discretion being exercised in favor of the NEOs.
|
Update to2021 Company Performance Factor in 2020 and 2021
Incentivizing strong return on invested capital continues to be an important component of our compensation strategy. However, in anticipation of the separation of Vontier and the significant variable impact the timing of the separation would have on the Return on Invested Capital (“ROIC”) metric, the Compensation Committee removed ROIC from the 2020 Company Performance Factor and instead increased the weighting of each of Adjusted EPS and Free Cash Flow Conversion Ratio by 5% to 75% and 25%, respectively.
In addition, in connection with the separation of Vontier from Fortive and the treatment of Vontier as discontinued operations following the separation, the target Adjusted EPS metric for 2020 was designed to reflect the exclusion of contribution by Vontier for the fourth quarter of 2020. Moreover, starting in 2020, the Compensation Committee designated Adjusted Net Income, instead of the GAAP Net Income, as the denominator for calculating the Cash Flow Conversion Ratio metric for the Company Financial Factor. The change was made to align the Free Cash Flow Conversion Ratio metric used in the Company Financial Factor with the Free Cash Flow Conversion Ratio measure disclosed by the Company to its investors.
For 2021, the Compensation Committee considered that, based on the long-term strategic nature of the ROIC measure, the ROIC measure is more appropriate as a performance measure for long-term incentive compensation than for annual incentive compensation. As a result, starting in 2021, the Company has adopted Core ROIC as the performance measure for the Restricted Stock Unit awards and has replaced ROIC with Core Revenue Growth as a performance measure for the Annual Incentive Award, with Adjusted EPS, Free Cash Flow Conversion Ratio and Core Revenue Growth representing 60%, 20% and 20%, respectively, of the Company Financial Factor.
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Compensation Discussion and Analysis
2020 Company Performance Factor Determination
As noted above, the Company Performance Factor for 20202021 was based on the twothree financial measures described below. For each of the measures, the Compensation Committee established threshold, target and maximum levels of performance, as well as a payout percentage curve that relates each level of performance to a payout percentage, as follows:percentage. The Compensation Committee set the targets after taking into account the guidance provided to investors in connection with the first earnings release in February. In addition, similar to the guidance provided during the earnings release in February 2021, the targets reflect the separation of Vontier through the spin-off at the end of 2020, with the Adjusted EPS targets in 2021 higher than the prorated target for the remaining businesses in 2020. | | | | | | | | | | | | | | | | | | Adjusted EPS(1) | | Free Cash Flow
Conversion Ratio (“Free
Cash Flow Ratio”)(2) | | Core Revenue Growth(3) | | | | ADJUSTED EPS (1) | | FREE CASH FLOW
CONVERSION RATIO (“FREE
CASH FLOW RATIO”) (2) | | PERFORMANCE LEVEL | | PAYOUT
PERCENTAGE | | PERFORMANCE | | PAYOUT
PERCENTAGE | | PERFORMANCE | | | | Performance Level | | | Payout
Percentage | | Performance | | Payout
Percentage | | Performance | | Payout
Percentage | | Performance | Maximum | | | | 200 | % | | $ | 3.50 | | | | | 200 | % | | | 115 | % | | 200% | | $2.67 | | 200% | | 115% | | 200% | | 8.0% | | Target | | | | 100 | % | | $ | 3.18 | | | | | 100 | % | | | 100 | % | | 100% | | $2.43 | | 100% | | 105% | | 100% | | 5.0% | | Threshold | | | | 50 | % | | $ | 2.70 | | | | | 50 | % | | | 85 | % | | 50% | | $2.07 | | 50% | | 90% | | 50% | | 2.0% | | Below Threshold | | | | 0 | % | | <$ | 2.70 | | | | | 0 | % | | | <85 | % | | 0% | | <$2.07 | | 0% | | <90% | | 0% | | <2.0% |
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| (1) | Solely for the purposes of the Company Performance Factor in 2020, “Adjusted“Adjusted EPS” means fully diluted earnings per share on a continuing operations basis for the fiscal year ended December 31, 20202021 as determined pursuant to GAAP, but (i) including the fully diluted earnings per share contributed from the former Industrial Technologies segment prior to the separation of Vontier, (ii) excluding on a pretax basis amortization of acquisition-related intangible assets, (iii)(ii) excluding on a pretax basis acquisition and other transaction costs deemed significant, (iv)(iii) excluding on a pretax basis the effect of deferred revenue and inventory fair value adjustments related to significant acquisitions, (v)(iv) excluding on a pretax basis the effect of losses from the Company’s equity method investments, (vi) excluding unrealized gain on our retained investment in Vontier, (vii)(v) excluding on a pretax basis the non-cash interest expense associated with our 0.875% Convertible Senior Notes due 2022, (viii)(vi) excluding on a pretax basis the cost incurred pursuant to discrete restructuring plans that are fundamentally different (in terms of the size, strategic nature, and planning requirements, as well as the inconsistent frequency of such plans), from ongoing productivity improvements, (ix) excluding on a pretax basis gain on disposition of assets, (x) excluding non-cash tax expense adjustment resulting from separation of Vontier, excluding discrete taxlitigation resolution, and other tax-related adjustments resulting from internal reorganizations effectuated in connection with the pending separation of Vontier, and (xi)(vii) excluding the provisional tax effect of the adjustments identified in clauses (ii-ix) above(i-vi) above.
|
| (2) | “Free cash flow” means cash provided by operating activities during the fiscal year ended December 31, 20202021 as determined pursuant to GAAP less payments for additions to property, plant and equipment, “Adjusted Net Income” means, net income for the fiscal year ended December 31, 20202021 as determined pursuant to GAAP, but (i) including net income contributed from the former Industrial Technologies segment prior to the separation of Vontier, (ii) excluding on a pretax basis amortization of acquisition-related intangible assets, (iii)(ii) excluding on a pretax basis acquisition and other transaction costs deemed significant, (iv)(iii) excluding on a pretax basis the effect of deferred revenue and inventory fair value adjustments related to significant acquisitions, (v)(iv) excluding on a pretax basis the effect of losses from the Company’s equity method investments, (vi)(v) excluding unrealizedthe pretax loss on debt extinguishment, net of non-recurring gain on our retained investment in Vontier (vii)common stock, (vi) excluding on a pretax basis the non-cash interest expense associated with our 0.875% Convertible Senior Notes due 2022, (vii) excluding on a pre-tax basis the non-recurring gain on the disposition of assets, (viii) excluding on a pretax basis the cost incurred pursuant to discrete restructuring plans that are fundamentally different (in terms of the size, strategic nature, and planning requirements, as well as the inconsistent frequency of such plans), from ongoing productivity improvements, (ix) excluding on a pretax basis gain on depositing assets, (x)litigation dismissal, (ix) excluding non-cash tax expense adjustment resulting from separation of Vontier, excluding discrete tax and other tax-related adjustments resulting from internal reorganizations effectuated in connection with the pending separation of Vontier, and (xi)(x) excluding the provisional tax effect of the adjustments identified in clauses (ii-ix)(i-viii) above and “Free cash flow conversion ratio” means the ratio of such free cash flow measure to Adjusted Net Income. | | (3) | “Core Revenue Growth” means a corresponding year-over-year GAAP revenue growth, excluding (1) the impact from acquired businesses and (2) the impact of currency translation. |
The payout percentages for performance between threshold and target, or between target and maximum, respectively, were determined by linear interpolation. Following the end of 2020,2021, we calculated the Company Performance Factor as follows:follows, with the actual payment based on the adjusted Company Performance Factor reflecting the negative discretion to reduce the performance above target by approximately 50%, resulting in a reduction of the Company Performance Factor from 173.3% to 137.0% and with the corresponding reduction in actual payout below what would otherwise have been earned based on actual performance: | | 2021 Company Performance Factor Matrix | | Measure* | | Target
Performance
Level | | Actual
Performance
Level | | Payout %
(Before
Weighting) | | Weighting of
Measure | | Weighted
Payout% | | Adjusted EPS | | $2.48 | | $2.75 | | 200.0% | | 60% | | 120.0% | | Free Cash Flow Conversion Ratio | | 105% | | 95% | | 66.7% | | 20% | | 13.3% | | Core Revenue Growth Rate | | 5.0% | | 9.5% | | 200.0% | | 20% | | 40.0% | | | Actual Company Performance Factor | | | | 173.3% | | | Adjusted Company Performance Factor After Voluntary
Reduction | | 137.0% |
| | | | | | | | | | | | | | | | 2020 COMPANY PERFORMANCE FACTOR MATRIX | MEASURE* | | TARGET
PERFORMANCE LEVEL | | ACTUAL
PERFORMANCE
LEVEL | | PAYOUT %
(BEFORE
WEIGHTING) | | WEIGHTING
OF
MEASURE | | | WEIGHTED
PAYOUT% | | | | | | | Adjusted EPS | | $3.18 | | $3.06 | | 87.5% | | | 75% | | | 65.6% | | | | | | | Free Cash Flow Conversion Ratio | | 100% | | 116% | | 200% | | | 25% | | | 50.0% | | | | | | | | Actual Company Performance Factor | | | | | | 115.6% |
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Compensation Discussion and Analysis
Personal Performance Factor Determination On an annual basis, theThe Compensation Committee establishes performance goals for each NEO with such goalsannually that are designed to align each NEO’s performance objectives with the Company’s overall strategic initiatives. In determining the Personal Performance Factor for the corresponding fiscal year for an NEO, the Compensation Committee takes into account the individual’s execution against his or her performance goals, while also considering the individual’s overall performance, the contribution of such individual to the Company’s results and the individual’s demonstrated leadership behavior in alignment with the Company’s core values. Following such assessment, the Compensation Committee exercises its judgment in assigningassigns for each executive officer a Personal Performance Factor between 0% and 200%.
2022 PROXY STATEMENT
Table of Contents | 62 | | Compensation Discussion and Analysis |
The following tables summarize the personal performance goals the Compensation Committee established for each NEO for the purpose of determining the corresponding Personal Performance Factor for 2020:2021:  James A. Lico
 | We build extraordinary teams for extraordinary results | Customer success inspires our innovation | Kaizen is our way of life | We compete for shareholders |  | Execute succession planning, diversity goals, and organizational capabilities and evolution Increase software capabilities within the organization | Build innovation at scale with lean portfolio management Accelerate organic growth rate | Build software best practices into Fortive Business System (“FBS”) infrastructure Accelerate digital transformation Expand data analytics, artificial intelligence, and machine learning capabilities into operating companies | Execute on quantified and preset internal financial metrics Evolve portfolio aligned with long-term strategy Execute on identified Sustainability targets and goals |  | 25% | 20% | 15% | 40% |
Charles E. McLaughlin  | We build extraordinary teams for extraordinary results | Customer success inspires our innovation | Kaizen is our way of life | We compete for shareholders |  | Execute succession planning, diversity goals, and organization capabilities and evolution for the finance function Achieve elevated acquisition capabilities in relevant industries | Execute relative to quantified and preset targets relating to acquisition and portfolio evolution | Execute on quantified and preset goals relating to supply chain, including incorporation of data analytics and artificial intelligence | Execute on quantified and preset internal financial metrics |  | 25% | 20% | 15% | 40% |
Table of Contents | | | | | | | | |  | | We build extraordinary teams for extraordinary results 63
|
Barbara B. Hulit  | We build extraordinary
teams for extraordinary
results | Customer success
inspires our innovation | Kaizen is our way of
life | We compete for
shareholders |  | Execute succession planning, diversity goals, and organization capabilities and evolution for the AHS segment and AHS operating companies Elevate employee experience in the AHS segment, including through achievement of quantified and preset metric on employee experience results | Execute relative to quantified and preset targets related to innovation and execution of business strategy for the AHS segment | Execute on quantified and preset financial and operational goals relating to internal development of data analytics, artificial intelligence and machine learning | Execute on quantified and preset internal financial metrics and acquisition goals for the AHS segment |  | 30% | 20% | 20% | 30% |
Edward R. Simmons | We build extraordinary
teams for extraordinary results | Customer success inspires our innovation | Kaizen is our way of
life | We compete for
shareholders | | Execute succession planning, diversity goals, and organization capabilities and evolution for the strategy function Achieve elevated acquisition assessment capabilities in relevant industries | Execute relative to quantified and preset targets relating to synthesizing various innovation vehicles into unified strategy | Execute on quantified and preset goals relating to development and execution of portfolio and operational strategies aligned with long-term financial targets | Execute on quantified and preset internal financial metrics, including financial goals related to acquired entities | | 25% | 20% | 25% | 30% |
2022 PROXY STATEMENT
Table of Contents | 64 | | Compensation Discussion and Analysis |
Olumide Soroye*
Customer success*
inspires our innovation
| | Kaizen is our
way of life
| | We compete for
shareholders
| | Qualitative and quantitativeMr. Soroye’s performance relating to improvement of overall organization strength, including talent acquisition, inclusion and diversity, succession planninggoals reflect his objectives for the leadership team, recruiting leaders with expertise2021 period following the start of his employment in software and healthcare, employee engagement, and employee performance enablement.August 2021.
| | Qualitative and quantitative performance relating to innovation and technological advancement strategies. | | Qualitative and quantitative performance relating to leveraging and incorporating best practices in software development into FBS. | | Evolution of the portfolio and development of internal capabilities in alignment with segment and technology strategy, execution of the Vontier separation and performance in terms of core revenue growth, core operating margins, free cash flow and integration of prior acquisitions.
|
Charles E. McLaughlin
| | | | | | | | | | | We build extraordinary teams
for extraordinary results
| | Customer success
inspires our innovation
| | Kaizen is our
way of life
| | We compete for
shareholders
| | Qualitative and quantitative
performance relating to
improvement of financial
organization strength,
including talent acquisition, talent development, diversity, employee experience, succession development, and talent capability related to portfolio evolution. | | Qualitative and quantitative
performance relating to
effective capital deployment against strategic targets and acquisition integration, development of strategic initiatives to improve long term performance of the portfolio and increase long term performance by executing acquisition, Vontier separation, and return on investments on prior acquisitions.
| | Qualitative performance
relating to utilization of FBS for
the development and execution of strategies relating to supply chain and logistics. | | Performance in terms of core
revenue growth, operating
profit margin,
free cash flow, recurring revenue, and integration of prior acquisitions.
|
| | | | | | | 2021 Proxy Statement | | 67 |
Compensation Discussion and Analysis
Barbara B. Hulit
| | | | | | | | | | | We build extraordinary teams for extraordinary results
| | Customer success
inspires our innovation
| | Kaizen is our
way of life
| | We compete for
Shareholders
| | Qualitative and quantitative
performance relating to
improvement of segment
organization strength,
including talent acquisition, talent development, diversity, employee experience, succession development and planning, and talent capability and recruitment related to senior leadership roles at key operating companies within segment.
| | Performance related to innovation and key product developments in the segment. | | Qualitative and quantitative
performance relating to
executing on revenue growth opportunities and expanding and scaling our innovation and data analytic platforms. | | Consolidated financial performance in terms of core revenue growth, operating profit margin, and
working capital in the segment.
|
William W. Pringle
| | | | | | | | | | | We build extraordinary teams for extraordinary results
| | Customer success
inspires our innovation
| | Kaizen is our
way of life
| | We compete for
shareholders
| | Qualitative and quantitative
performance relating to
improvement of segment
organization strength,
including talent acquisition, talent development, diversity, employee experience, succession development and planning, and talent capability and recruitment related to senior leadership roles at key operating companies within segment.
| | Qualitative and quantitative performance relating to effective capital deployment to increase long term performance by executing acquisition, integration, strategic initiatives, and financial performance of prior acquisitions in the segment. | | Qualitative and quantitative performance relating to organic growth, internal innovation and growth accelerator efforts, and execution of portfolio and businesses strategies with the segment. | | Consolidated financial performance in terms of core revenue growth, operating profit margin, and
working capital in the segment.
|
Stacey A. Walker
| | | | | | | | | | | We build extraordinary teams for extraordinary results
| | Customer success
inspires our innovation
| | Kaizen is our
way of life
| | We compete for
shareholders
| | Qualitative and quantitative
performance relating to
talent strength and internal communication within the organization and within the HR function, including talent
development, diversity, employee engagement, culture, retention, succession planning, employee development, and successful launch of Vontier.
| | Qualitative and quantitative
performance relating to effective integration of culture and FBS for newly acquired companies, online training and development platform, and accelerated leadership development within the organization. | | Qualitative and quantitative
performance relating to
launch, deployment and adoption across the organization of new HCM platform. | | Qualitative and quantitative
performance relating to
CEO and other executive succession planning, leadership succession planning within operating companies, and recruitment and retention aligned with portfolio strategy. |
Based on such considerations, the Compensation Committee assigned a Personal Performance Factor of 150.0%125.0% for Mr. Lico. With respect to the non-CEO NEOs, the average Personal Performance Factor that the Compensation Committee assigned was 142.5%116.3%. The payout percentages and corresponding Composite Performance Factor resulted in the payouts set forth in the 20202021 Summary Compensation Table. Determination of Long-Term Incentive Award Payout 2021 Annual Equity Award Type and Allocation  With respect to the sign-on equity award to Mr. Simmons, the target $1.2 million sign-on award was granted in RSUs vesting ratable over three years.
Table of Contents | | | | | 68Compensation Discussion and Analysis | | 2021 Proxy Statement 65 | | FORTIVE CORPORATION |
Compensation Discussion and Analysis
Annual Long-Term Incentive Awards
Determination of the Target 2020 Annual Equity Awards
After determining the year over year increase in the total target compensation for the NEOs based on the Design Consideration Factors, the Compensation Committee set the following 2020 target dollar values for the NEOs’ equity awards. The year over year increases in the target dollar value of the NEOs’ equity awards reflect the Compensation Committee’s determination toallocate more of any increase in total target compensation to equity awards with a long vesting schedule. Furthermore, in determining the 2020 target dollar values for the NEOs’ equity awards, the Compensation Committee considered the completed and pending transactions, execution of business strategies, and assumption of additional responsibilities in connection with the resegmentation of the businesses.
| | | | | | | | | | | | | | | | EXECUTIVE OFFICER | | 2020 TARGET
DOLLAR VALUE (1) | | 2019 TARGET
DOLLAR VALUE (1) | | YEAR OVER YEAR INCREASE (1) | | | | | James A. Lico | | | $ | 11,000,000 | | | | $ | 10,000,000 | | | | | 10.0 | % | | | | | Charles E. McLaughlin | | | $ | 3,150,000 | | | | $ | 2,650,000 | | | | | 18.9 | % | | | | | Barbara B. Hulit | | | $ | 1,650,000 | | | | $ | 1,500,000 | | | | | 10.0 | % | | | | | William W. Pringle | | | $ | 1,700,000 | | | | $ | 1,550,000 | | | | | 9.7 | % | | | | | Stacey A. Walker | | | $ | 1,500,000 | | | | $ | 1,375,000 | | | | | 9.1 | % |
(1) | The target dollar values of the equity grants noted above do not reflect the valuations computed in accordance with Accounting Standards Codification Topic 718 (“ASC 718”). Instead, based upon the target dollar value of equity awards and the allocation of form of equity awards noted below, the actual number of RSUs and target number of PSUs granted was determined by dividing the corresponding allocation of the dollar value by the 20-day average of the closing price of our common stock as of the grant date (“20 Day Average”) and the actual number of stock options granted was determined by dividing the corresponding allocation of the dollar value by one-third of the 20 Day Average. Additional details on amounts of the 2020 equity grants to all of our NEOs are shown in “Executive Compensation Tables—Fiscal 2020 Grants of Plan-Based Awards.”
|
In addition, the Compensation Committee allocated the 2020 equity awards for the NEOs as follows, reflecting further emphasis on the performance-based element of long-term compensation for all executive officers:
| ANNUAL EQUITY AWARD TYPE AND PROPORTION
|
Update to 2021 Equity Award Allocation
In 2021, the Compensation Committee considered the market trends in relevant industries on allocation of equity awards to executive officers as well as the discussions on our equity award allocation with certain of our investors during our annual shareholder engagement. Based on those considerations, in 2021, the Compensation Committee reduced the allocation of stock options from 50% to 35% and increased the allocation of PSUs and RSUs from 25% and 25% to 35% and 30%, respectively.
| | | | | | | 2021 Proxy Statement | | 69 |
Compensation Discussion and Analysis
Special Retention Equity Awards
Based on the increasing competition for executive talent, the potential retention considerations as a result of increasing third-party recruitment efforts of our senior leaders, extraordinary performance, pay equity considerations and additional responsibilities assumed by Ms. Walker, and recommendations from the Compensation Committee’s independent compensation consultant in light of market conditions, the Compensation Committee awarded to Ms. Walker the following special retention equity award in February 2020, with 25% of the grant in the form of RSUs, 25% in the form of PSUs and 50% in stock options.
| | | | | EXECUTIVE OFFICER | | 2020 TARGET
DOLLAR VALUE (1) | | | | Stacey A. Walker
| | $ | 1,000,000 | |
(1) | The target dollar value of the equity grant noted above does not reflect the valuations computed in accordance with ASC 718. Instead, based upon the target dollar value of the equity awards and the allocation of the forms of equity award noted below, the actual number of RSUs granted was determined by dividing the corresponding allocation of the dollar value by the 20 Day Average and the actual number of stock options granted was determined by dividing the corresponding allocation of the dollar value by one-third of the 20 Day Average. Additional details on amounts of the 2020 equity grants to all of our NEOs are shown in “Executive Compensation Tables—Fiscal 2020 Grants of Plan-Based Awards.”
|
| SPECIAL RETENTION EQUITY AWARD TYPE AND PROPORTION
|
Key Terms of Equity Awards The key terms of the different equity award types that we granted to the executive officers in 20202021 are as follows: | | | FORM OF AWARD
Form of Award | | KEY TERMSKey Terms | | | | Stock Options | | | •►Ratable vesting with respect to Mr. Lico, on 4th and 5th anniversaries of grant and, with respect to all other executive officers, on 3rd 4th, and 5th4th anniversaries of grant.•►Exercise price based on the closing price on grant date.
| | | | RSUs | | | •►Ratable vesting with respect to Mr. Lico, on 4th and 5th anniversaries of grant and, with respect to all other executive officers, on 3rd 4th, and 5th4th anniversaries of grant.•►Incremental RSUs above the “base” number of RSUs contingent on achievement of the Company Performance Factorcore return on invested capital as described below.
| | | | PSUs | | | •►Contingent on Fortive’s relative TSR versus S&P 500 over a three-year performance period as described below.•►Earned shares are subject to two-yearone-year holding requirement.
|
In connection with overall employee recruitment and retention efforts, the Compensation Committee, with the assistance of the independent compensation consultant, assessed the market practices of peer group companies and other companies in industries aligned with the evolution of the Company’s portfolio. Based on market comparisons and beginning with equity grants made in 2021, the Compensation Committee has adopted a default vesting period for options and RSUs at four years, with options and RSUs vesting 50% on each of the third and fourth anniversary of the grant, and has reduced the additional holding period for PSUs to one year following the three-year performance period.
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Compensation Discussion and Analysis
RSU Performance Measures and Results The actual number of RSUs that were eligible to be earned under the RSU awards granted in 2021 to the NEOs in 2020 was based on the 2020 Company Performance Factor, with no incremental RSUs payable above theincluded a base number of RSUs for actual Company Performance Factor below 110% ofpayable subject only to a time-vesting requirement (“Base RSUs”), with a potential to earn up to 50% incremental payout above the target Company Performance Factor. BasedBase RSUs based on the Company Performance Factor of 115.6% of target, the incremental RSUs earned above the base number of RSUs were as follows:
| | | | | | | | | | | | | | | | | | | | | | EXECUTIVE OFFICER | | “BASE” RSUS (1) | | POTENTIAL INCREMENTAL
PERFORMANCE-BASED
RSUS (2) | | ACTUAL 2020
COMPANY
PERFORMANCE
FACTOR | | TOTAL INCREMENTAL
PERFORMANCE-
BASED RSUS
IN 2020 | | | | | | | James A. Lico | | | | 42,952 | | | | | 21,476 | | | | | 115.6 | % | | | | 3,350 | | | | | | | | Charles E. McLaughlin | | | | 12,299 | | | | | 6,150 | | | | | 115.6 | % | | | | 959 | | | | | | | | Barbara B. Hulit | | | | 6,447 | | | | | 3,224 | | | | | 115.6 | % | | | | 503 | | | | | | | | William W. Pringle | | | | 6,640 | | | | | 3,320 | | | | | 115.6 | % | | | | 518 | | | | | | | | Stacey A. Walker (3) | | | | 9,768 | | | | | 4,884 | | | | | 115.6 | % | | | | 762 | |
following 2021 Core ROIC performance requirements: | 2021 CORE ROIC (1) | “Base”
| INCREMENTAL PERFORMANCE-BASED RSUs are payable subjectRELATIVE TO BASE RSUs (2) | | ≥6.8% | | Maximum—50% | | 6.4% | | Threshold—10% | | <6.4% | | 0% |
| (1) | “Core ROIC” means, with respect to time-vesting requirement irrespectivebusinesses that were not acquired in 2021, the quotient of (A) the net operating profit for fiscal 2021 determined by reducing the GAAP operating profit by an assumed tax expense applicable to such GAAP operating profit using the GAAP effective tax rate, divided by (B) the average of the Company Performance Factor.quarter-end balances for the fourth quarter of 2020 and each fiscal quarter of 2021 of (a) the sum of (i) the total stockholders’ equity as determined pursuant to GAAP and (ii) the total short-term and long-term debt, in each case, as determined pursuant to GAAP; less (b) cash and cash equivalents, in each case, as determined pursuant to GAAP. |
| (2) | The incremental performance-based RSUs are determined by linear interpolation between 5%10% and 50% of the Base RSUs for Company Performance FactorCore ROIC between 110%6.4% and 200% of target6.8% (with 50% maximum incremental performance-based RSUs for Company Performance FactorCore ROIC at or above 200% of target)6.8%). No incremental performance-based RSUs are payable for Company Performance FactorCore ROIC below 110% of target. 6.4%. |
| Executive Officer | | “Base” RSUs | | Potential Incremental
Performance-Based RSUs | | Actual 2021
Core ROIC | | Total
Incremental
Performance-Based
RSUs In 2021 | | James A. Lico | | 53,130 | | 26,565 | | 7.5% | | 26,565 | | Charles E. McLaughlin | | 16,605 | | 8,303 | | 7.5% | | 8,303 | | Barbara Hulit | | 9,300 | | 4,650 | | 7.5% | | 4,650 | | Edward R. Simmons(1) | | 6,645 | | 3,323 | | 7.5% | | 3,323 | | Olumide Soroye(1) | | N/A | | N/A | | N/A | | N/A |
| (1) | Does not include 17,710 RSUs and 48,685 RSUs granted as sign-on equity awards in 2021 to Messrs. Simmons and Soroye, respectively. The sign-on equity RSUs awards are not entitled to any incremental performance-based earnings. |
(3) | Includes special retention equity award granted in 2020.
|
For the 2021 RSU Performance Measure, the Compensation Committee has replaced Company Performance Factor with a core ROIC measure because the Compensation Committee determined that a ROIC measure, which reflects return on investment and which had previously been incorporated into the performance measure for the annual incentive award, was more appropriate to measure performance for long-term performance awards.
PSU Performance Measures TheAs described below, the actual payout for the PSU awards granted in 20202021 will be based on the followingrelative total shareholder return (“rTSR”) performance over a three-year period, againstprovided, however, that a minimum 25% of the following relativetarget award will be payable irrespective of the rTSR performance if the Company’s absolute total shareholder return performance targets:during such three-year period is positive.
2022 PROXY STATEMENT
Table of Contents | 66 | | Compensation Discussion and Analysis |
RELATIVERelative TSR PERCENTILE—Percentile—S&P 500 INDEX
Index | | PSU Payout Percentage(1) | | ≥75% | | PSU PAYOUT PERCENTAGE (1) | | | ³75%
| | Maximum—200% | | 55% | | 55%
| | Target—100% | | 35% | | 35%
| | Threshold—50% | | <35% | | <35%
| | 0% |
| (1) | The payout percentages for performance between threshold and target, or between target and maximum, respectively, would be determined by linear interpolation. However, if Fortive’s absolute TSR performance for the period were negative, then a maximum of 100% of the target PSUs would vest (regardless of how strong Fortive’s performance was on a relative basis), and if Fortive’s absolute TSR performance for the period were positive, then a minimum of 25% of the target PSUs would vest. |
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Compensation Discussion and Analysis
Performance Share Units Earned for 2018-20202019-2021 Performance While the rTSR performance with respect to the PSUs granted in February 20182019 (“20182019 PSUs”) to the NEOs werewas below the 35% rTSR threshold, 25% of the target award was earned based on performance goalsthe terms of the grant because the absolute total shareholder return during the three-year periods ended December 31, 2020 and payout percentages as follows:period was positive. | | | RELATIVERelative TSR PERCENTILE—Percentile—S&P 500 INDEX
Index | | PSU Payout Percentage(1) | | ≥75% | | PSU PAYOUT PERCENTAGE (1) | | | ³75%
| | Maximum—200% | | 55% | | 55%
| | Target—100% | | 35% | | 35%
| | Threshold—50% | | <35% | | <35%
| | 0% |
| (1) | The payout percentages for performance between threshold and target, or between target and maximum, respectively, would be determined by linear interpolation. However, if Fortive’s absolute TSR performance for the period were negative, then a maximum of 100% of the target PSUs would vest (regardless of how strong Fortive’s performance was on a relative basis), and if Fortive’s absolute TSR performance for the period were positive, then a minimum of 25% of the target PSUs would vest. |
Our Compensation Committee determined that the relative total shareholder return percentile with respect to the S&P 500 Index and corresponding payout percentages and shares earned were as follows for the 2018 PSUs. The following shares earned by the NEOs under the 20182019 PSUs are subject to an additional two-year holding period following the end of the performance period.
| Executive Officer | | Target Shares | | Relative TSR
Percentile—S&P 500
Index(1) | | PSU Payout
Percentage(1) | | Shares Earned | | James A. Lico | | 38,845 | | 23.2% | | 25.0% | | 9,711 | | Charles E. McLaughlin | | 10,296 | | 23.2% | | 25.0% | | 2,574 | | Barbara Hulit | | 5,828 | | 23.2% | | 25.0% | | 1,457 | | Edward R. Simmons | | N/A | | N/A | | N/A | | N/A | | Olumide Soroye | | N/A | | N/A | | N/A | | N/A |
| (1) | Although the relative TSR performance fell below 35%, 25% of the target PSUs were earned under the terms of the grants based on a positive absolute TSR performance of 17.0% during the performance period. |
2018 PSUs
| | | | | | | | | | Executive Officer | | Target Shares | | RELATIVE TSR
PERCENTILE—S&P 500
INDEX | | PSU
PAYOUT PERCENTAGE | | SHARES
EARNED | | | | | | | James A. Lico | | 36,337 | | 42.25% | | 68.13% | | 24,756 | | | | | | | Charles E. McLaughlin | | 9,292 | | 42.25% | | 68.13% | | 6,331 | | | | | | | Barbara B. Hulit | | 5,353 | | 42.25% | | 68.13% | | 3,647 | | | | | | | William W. Pringle | | 5,654 | | 42.25% | | 68.13% | | 3,852 | | | | | | | Stacey A. Walker | | 5,052 | | 42.25% | | 68.13% | | 3,442 |
Treatment of Equity-Based Compensation Upon Vontier Separation
In connection with the separation of Vontier and pursuant to the anti-dilution provisions of the 2016 Plan and EDIP, as applicable, the Company made certain adjustments to the share reserves and limits set forth under such plans, as well as the exercise price and the number of shares underlying the stock-based compensation awards held by our directors, executive officers and other employees, with the intention of preserving the intrinsic value of the awards prior to the separation of Vontier. Accordingly, the number of shares underlying each stock-based award outstanding as of the date of the separation was multiplied by a factor of 1.2028 and the related exercise price for stock options was divided by a factor of 1.2028 which resulted in no increase in the intrinsic value of awards outstanding and no additional compensation expense. All disclosures in this Proxy Statement reflect such adjustments. The stock-based compensation awards continue to vest over their original vesting period. Stock-based compensation awards that were held by employees who transferred to Vontier in connection with the separation were converted to awards issued by Vontier relating to Vontier shares.
Other Compensation Severance Benefits To be consistent with market practices and ensure that our executive officers remain focused on our businesses during periods of uncertainty and are motivated to pursue transactions in the best interest of the shareholders and other stakeholders, we maintain a Severance and Change-in-Control Plan for Officers, which we refer to as the Severance Plan. It | | | | | 72 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Compensation Discussion and Analysis
provides for severance benefits upon (i) a termination without cause not preceded by a change-in-control and (ii) a termination without cause, or good reason resignation, within 24 months following a qualified change-in-control. “Double Trigger” Change-in-Control SeveranceChange-in-Control Severance. Because we intend the change-in-control severance benefit to ensure that the executive officers pursue transactions in the best interest of the shareholders and other stakeholders, the Compensation Committee limited the definition of “change-in-control”“change-in-control” to include only: sale of all or substantially all assets of Fortive, or
any transaction approved by the Board that results in any person or entity that is not an affiliate of Fortive owning 100% of Fortive’s outstanding voting securities.
| Compensation Discussion and Analysis | | 67 |
| ► | sale of all or substantially all assets of Fortive, or | | ► | any transaction approved by the Board that results in any person or entity that is not an affiliate of Fortive owning 100% of Fortive’s outstanding voting securities. |
If, within 24 months following a qualified change-in-control, an NEO is terminated without cause, or resigns for good reason, then the following severance payment would be due: | | | | | COMPENSATION
Compensation | | PRESIDENT ANDPresident and CEO | | OTHEROther NEOs | | | | Cash Severance Payment | | 2 times Base Salary and Target Annual Incentive Award | | 1 times Base Salary and Target Annual Incentive Award | | | | Prorated Cash Annual Incentive Award | | Target Annual Incentive Award prorated for the period from the beginning of the year to the date of termination. | | Same | | | | Equity Awards | | Immediate acceleration of all unvested outstanding equity awards. | | Same | | | | Health Benefits | | 24 months | | 12 months | | | | 280G Excise Tax | | No tax gross up | | No tax gross up |
Termination without Cause Severance. Recognizing the increased risk of forfeiture for the equity awards by the NEOs as a result of our 54 year vesting schedule with either a 3 year or a 4 year cliff before the initial vesting and to ensure that our executive officers remain focused on our businesses during periods of uncertainty, the Compensation Committee provided the following severance benefits under the Severance Plan upon a termination without cause: | | | | | COMPENSATION
Compensation | | PRESIDENT ANDPresident and CEO | | OTHEROther NEOs | | | | Cash Severance Payment | | 2 times Base Salary | | 1 times Base Salary | | | | Prorated Cash Annual Incentive Award | | Payment based on actual performance against performance targets and prorated for the period from the beginning of the year to the date of termination. | | Same | | | | Prorated Equity Awards | | •►Based on actual performance against performance targets; | | Same | | | •►Subject to original time-vesting; and | | | | | •►Prorated for the period from the date of grant to the date of termination.
| | Same | | | | Health Benefits | | 24 months | | 12 months |
| 280G Excise Tax | | No tax gross up | | | | | 2021 Proxy Statement | | 73No tax gross up |
Compensation Discussion and Analysis
Perquisites We offer limited perquisites to our NEOs which are not a major component of our compensation package or philosophy. We believe these limited perquisites help make our executive compensation plans competitive, are generally aligned with market practices and are cost-effective in that the perceived value of these items is higher than our actual cost. The perquisites we made available to our NEOs during 20202021 were as follows: | | | TYPE
Type | | PARTICIPATINGParticipating NEOs | | | Personal aircraft use | | Messrs. Lico and McLaughlin | | | Relocation expenses
| | None in 2020 | | | Tickets to sporting events | | None in 2020Ms. Hulit and Mr. McLaughlin | | | Stipend ($10,000) for financial services | | All NEOs | | | Executive physical | | Ms. Hulit |
We made the personal aircraft use available under an aircraft use policy adopted by the Compensation Committee. The policy permits the use of our aircraft only for business purposes other than with respect to a $150,000 and $50,000 personal use allowance to Messrs. Lico and McLaughlin, respectively. Messrs. Lico and McLaughlin must reimburse us for any personal use of the aircraft in a particular year in excess of their respective personal use allowances. Additional details on the other perquisites we made available to our NEOs in 20202021 are in the footnotes to the “Summary Compensation Table.” Other2022 PROXY STATEMENT
Table of Contents | 68 | | Compensation Discussion and Analysis |
General Benefits Our NEOs are eligible to participate in broad-based employee benefit plans, which are generally available to all U.S. salaried employees and do not discriminate in favor of our NEOs. In addition, each of our NEOs participates in the Fortive Executive Deferred Incentive Plan, or EDIP. The EDIP is a shareholder-approved, non-qualified, unfunded deferred compensation program available to selected members of our management. We use the EDIP to tax-effectively contribute amounts to executives’ retirement accounts and give our executives an opportunity to defer taxes on cash compensation and realize tax-deferred, market-based notional investment growth on their deferrals. We set the amount we contribute annually to the executives’ accounts in the EDIP at a level that we believe is competitive with comparable plans offered by the companies in our peer group. Participants in the EDIP do not fully vest in such amounts until they have participated in the program for 15 years or have reached age 55 with at least five years of service (including, for executives who were employed by Danaher prior to the Separation,our separation from Danaher, years of service with Danaher prior to the Separation)that separation). We show the amounts we contributed to the EDIP for 20202021 with respect to our NEOs in the “Summary Compensation Table.” Compensation Policies | | | | | 74 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Compensation Discussion and Analysis
Compensation Governance Policies
Stock Ownership Requirements To further align management and shareholder interests and discourage inappropriate or excessive risk-taking, our stock ownership policy requires each of our executive officers to obtain a substantial equity stake in our common stock within five years of their appointment to an executive position. The multiples of base salary that the guidelines require are as follows: | | | EXECUTIVE LEVELExecutive Level | | STOCK OWNERSHIP GUIDELINES
Stock Ownership Guidelines
(ASAs A MULTIPLE OF SALARY) Multiple Of Salary) | | | | Chief Executive Officer | | 5.0x base salary | | | | All Other Executive Officers | | 3.0x base salary |
Once an executive has acquired a number of shares that satisfies the ownership multiple then applicable to him or her, such number of shares then becomes his or her minimum ownership requirement (even if the executive’s salary increases or the fair market value of such shares subsequently changes) until he or she is promoted to a higher level. Under the policy, beneficial ownership includes shares in which the executive or his or her spouse or child has a direct or indirect interest, notional shares of our common stock in the EDIP plan, shares held in a 401(k) plan, and unvested RSUs and PSUs (based on target number of shares until vested and then based on the actual number of vested shares), but does not include shares subject to unexercised stock options. Each of our NEOs was in compliance with the stock ownership requirements as of December 31, 2020, having acquired the required number of shares. Pledging Policy Our Board has adopted a policy that prohibits any of our executive officers, including our NEOs, or directors from pledging as security under any obligation any shares of our common stock that he or she directly or indirectly owns and controls. Hedging Policy We include within our Insider Trading Policy a prohibition applicable to all our employees, including our NEOs, and our directors against engaging at any time in: | ► | short sales of our common stock; or | | ► | transactions in any derivatives of our securities, including, but not limited to, hedging, buying or selling puts, calls or other options (except for instruments granted under our equity compensation plan). |
Table of our common stock; orContents | Compensation Discussion and Analysis | | 69 |
transactions in any derivatives of our securities, including, but not limited to, buying or selling puts, calls or other options (except for instruments granted under our equity compensation plan).
Recoupment Policy To further discourage inappropriate or excessive risk-taking, the Compensation Committee has adopted a recoupment policy applicable to our executives, including our NEOs, and certain other employees (the “covered persons”). Under the policy, in the event of a material restatement of our consolidated financial statements (other than any restatement required pursuant to a change in applicable accounting rules), our Board may, to the extent permitted by law and to the extent it determines that it is in our best interests to do so, in addition to all other remedies available to us require reimbursement or payment to us of: | ► | the portion of any annual incentive compensation payment awarded to, or any equity grants with financial performance measures earned by, any covered person within the three year period prior to the date such material restatement is first publicly disclosed that would not have been awarded had the consolidated financial statements that are the subject of such restatement been correctly stated (except that our Board has the right to require reimbursement of the entire amount of any such annual incentive compensation payment or equity grant from any covered person whose fraud or other intentional misconduct in our Board’s judgment alone or with others caused such restatement); and | | | | | | | 2021 Proxy Statement | | 75all gains from other equity awards realized by any covered person during the twelve-month period immediately following the original filing of the consolidated financial statements that are the subject of such restatement. |
Compensation Discussion and Analysis
all gains from other equity awards realized by any covered person during the twelve-month period immediately following the original filing of the consolidated financial statements that are the subject of such restatement.
Our recoupment policy provides that it will be automatically amended to comply with applicable NYSE and SEC requirements. In addition, under the terms of our 2016 Stock Incentive Plan, all outstanding unvested equity awards will be terminated immediately upon, and no associate can exercise any outstanding equity award after, such time he or she is terminated for gross misconduct. Under the terms of the EDIP, if the administrator determines that termination of an employee’s participation in the EDIP resulted from the employee’s gross misconduct, the administrator may determine that the employee’s vesting percentage is zero with respect to all balances that were contributed by us. Regulatory Considerations Code Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation in excess of $1 million paid for any fiscal year to certain covered employees, generally including our NEOs. At the time of determining our executive compensation for 2020,2021, we reviewed the tax impact of such compensation on us as well as on our executive officers. In addition, we reviewed the impact of our compensation programs against other considerations, such as accounting impact, alignment of interest with shareholders and other stakeholders, market competitiveness, effectiveness and perceived value to employees. Because we believe these considerations other than tax deductibility should play an important role in shaping our compensation programs, we have awarded, and may award in the future, compensation to our NEOs in excess of $1 million to the extent the Compensation Committee believes such compensation is necessary to continue to provide competitive arrangements intended to attract and retain, and provide appropriate incentives to, our NEOs.
2022 PROXY STATEMENT
Table of Contents | | | | | 76 70 | | 2021 Proxy Statement | | FORTIVE CORPORATION Compensation Discussion and Analysis |
Compensation Discussion and Analysis
Risk Considerations and Review of Executive Compensation Practices Risk-taking is an essential part of growing a business, and prudent risk management is necessary to deliver long-term, sustainable shareholder value. The Compensation Committee engaged Pearl Meyer, its independent compensation consultant, to review our executive and non-executive compensation programs. The Compensation Committee determined, based on the conclusion of Pearl Meyer, that none of the elements of our compensation program encourages or creates excessive risk-taking, and none is reasonably likely to have a material adverse effect on the Company. The Compensation Committee believes that our executive compensation program supports the objectives described above without encouraging inappropriate or excessive risk-taking. In reaching this conclusion, the Compensation Committee considered, in particular, the following attributes and risk-mitigation features of our executive compensation program: | | | ATTRIBUTEAttribute | | RISK-MITIGATING EFFECTRisk-Mitigating Effect | | | Emphasis on long-term, equity-based compensation that areis subject to our rigorous recoupment policy | | Discourages risk-taking that produces short-term results at the expense of building long-term shareholder value | | | Long vesting requirements: •► FiveFour year vesting for options and RSUs, with a four-year cliff for the CEO and a three-year cliff for all other executive officers•►Three-year cliff vesting for PSUs with an additional twoone year holding requirement
| | Helps ensure our executives realize their compensation over a time horizon consistent with creating long-term stakeholder value | | | Payment amounts under our annual cash incentive compensation plan and the number of shares that a participant may earn under our RSU and PSU awards are capped | | Reduces possibility that extraordinary events or formulaic payments could distort incentives or over-emphasize short-term over long-term performance | | | Robust stock ownership guidelines | | Helps ensure our executives’ economic interests are aligned with the long-term interests of our shareholders and other stakeholders | | | Prohibition on derivative transactions | | Helps ensure the alignment of interests generated by our executives’ equity holdings is not undermined by hedging or similar transactions | | | Use of independent compensation consultants that perform no other services for the Company | | Helps ensure advice will not be influenced by conflicts of interest | | | The Compensation Committee can exercise judgment in assessing the personal performance factor for our annual incentive awards to determine annual cash incentive compensation payments | | Discourages risk-taking that produces short-term results at the expense of building long-term shareholder value |
Table of Contents | | | | | | | 2021 Proxy Statement 71 | | 77 |
| | | | | Compensation Committee Report |
This report 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 Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference into any prior or subsequent filing by Fortive Corporation under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Fortive Corporation specifically incorporates this report by reference therein. The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis set forth above, and based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for incorporation by reference into Fortive Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020.2021. Compensation Committee of the Board of Directors
Kate D. Mitchell (Chair)
Daniel L. Comas
Sharmistha Dubey
Wright L. Lassiter III
Rejji P. Hayes2022 PROXY STATEMENT
Jeannine P. Sargent
Table of Contents | | | | | 78 72 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
| | | | | Executive Compensation Tables
|
20202021 Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NAME AND PRINCIPAL POSITION | | YEAR | | | SALARY
($) (1) | | | BONUS
($) | | | STOCK
AWARDS
($) (2) | | | OPTION AWARDS ($) (2) | | | NON-EQUITY
INCENTIVE
PLAN
COMPENSATION ($) (1) (3) | | | CHANGE IN
PENSION VALUE
AND
NONQUALIFIED DEFERRED
COMPENSATION
EARNINGS ($) (4) | | | ALL OTHER
COMPENSATION
($) (5) | | | TOTAL ($) | | James A. Lico President and Chief Executive Officer | | | 2020 | | | $ | 896,936 | | | | — | | | $ | 5,490,084 | | | $ | 4,134,823 | | | $ | 2,632,476 | | | | — | | | $ | 469,744 | | | $ | 13,624,063 | | | | | 2019 | | | $ | 1,086,546 | | | | — | | | $ | 5,651,302 | | | $ | 4,722,482 | | | $ | 2,206,116 | | | | — | | | $ | 475,031 | | | $ | 14,141,477 | | | | | 2018 | | | $ | 1,050,000 | | | | — | | | $ | 5,031,778 | | | $ | 4,328,248 | | | $ | 2,960,948 | | | | — | | | $ | 350,019 | | | $ | 13,720,993 | | Charles E. McLaughlin Chief Financial Officer | | | 2020 | | | $ | 626,507 | | | | — | | | $ | 1,570,717 | | | $ | 1,184,054 | | | $ | 1,166,900 | | | | — | | | $ | 193,484 | | | $ | 4,741,662 | | | | | 2019 | | | $ | 658,463 | | | | — | | | $ | 1,497,914 | | | $ | 1,251,623 | | | $ | 1,029,034 | | | | — | | | $ | 173,920 | | | $ | 4,610,954 | | | | | 2018 | | | $ | 627,110 | | | | — | | | $ | 1,286,676 | | | $ | 1,106,116 | | | $ | 1,197,764 | | | | — | | | $ | 140,088 | | | $ | 4,357,754 | | Barbara B. Hulit Senior Vice President | | | 2020 | | | $ | 560,736 | | | | — | | | $ | 823,353 | | | $ | 620,300 | | | $ | 696,974 | | | | — | | | $ | 121,999 | | | $ | 2,823,362 | | | | | 2019 | | | $ | 612,916 | | | | — | | | $ | 2,261,962 | | | $ | 1,884,631 | | | $ | 580,292 | | | | — | | | $ | 119,099 | | | $ | 5,458,900 | | | | | 2018 | | | $ | 599,768 | | | | — | | | $ | 741,192 | | | $ | 637,335 | | | $ | 725,110 | | | | — | | | $ | 108,067 | | | $ | 2,811,472 | | William W. Pringle Former Senior Vice President (6) | | | 2020 | | | $ | 530,150 | | | | — | | | $ | 848,001 | | | $ | 639,032 | | | $ | 585,373 | | | | — | | | $ | 94,873 | | | $ | 2,697,429 | | | | | 2019 | | | $ | 578,016 | | | | — | | | $ | 2,290,835 | | | $ | 1,908,278 | | | $ | 523,362 | | | | — | | | $ | 90,385 | | | $ | 5,390,876 | | | | | 2018 | | | $ | 555,787 | | | | — | | | $ | 782,832 | | | $ | 673,504 | | | $ | 705,931 | | | | — | | | $ | 81,580 | | | $ | 2,799,634 | | Stacey A. Walker Senior Vice President – Human Resources | | | 2020 | | | $ | 508,465 | | | | — | | | $ | 1,247,481 | | | $ | 939,808 | | | $ | 661,572 | | | | — | | | $ | 86,741 | | | $ | 3,444,067 | |
Name and Principal
Position | | Year | | Salary
($)(1) | | Bonus
($) | | Stock
Awards
($)(2) | | Option
Awards
($)(2) | | Non-Equity
Incentive Plan
Compensation
($)(1)(3) | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(4) | | All Other
Compensation
($)(5) | | Total
($) | | James A. Lico | | 2021 | | $ | 1,207,887 | | — | | $ | 7,891,487 | | $ | 3,865,747 | | $ | 3,139,750 | | — | | $ | 493,848 | | $ | 16,598,719 | | President and Chief | | 2020 | | $ | 896,936 | | — | | $ | 5,490,084 | | $ | 4,134,823 | | $ | 2,632,476 | | — | | $ | 469,744 | | $ | 13,624,063 | | Executive Officer | | 2019 | | $ | 1,086,546 | | — | | $ | 5,651,302 | | $ | 4,722,482 | | $ | 2,206,116 | | — | | $ | 475,031 | | $ | 14,141,477 | | Charles E. | | 2021 | | $ | 717,982 | | — | | $ | 2,466,193 | | $ | 1,208,046 | | $ | 1,198,063 | | — | | $ | 201,961 | | $ | 5,792,245 | | McLaughlin | | 2020 | | $ | 626,507 | | — | | $ | 1,570,717 | | $ | 1,184,054 | | $ | 1,166,900 | | — | | $ | 193,484 | | $ | 4,741,662 | | Chief Financial Officer | | 2019 | | $ | 658,463 | | — | | $ | 1,497,914 | | $ | 1,251,623 | | $ | 1,029,034 | | — | | $ | 173,920 | | $ | 4,610,954 | | Barbara B. Hulit | | 2021 | | $ | 640,948 | | — | | $ | 1,381,342 | | $ | 676,670 | | $ | 833,300 | | — | | $ | 151,780 | | $ | 3,684,040 | | Former President and | | 2020 | | $ | 560,736 | | — | | $ | 823,353 | | $ | 620,300 | | $ | 696,974 | | — | | $ | 121,999 | | $ | 2,823,362 | | CEO of Advanced | | 2019 | | $ | 612,916 | | — | | $ | 2,261,962 | | $ | 1,884,631 | | $ | 580,292 | | — | | $ | 119,099 | | $ | 5,458,900 | | Healthcare | | | | | | | | | | | | | | | | | | | | | | | | | | Solutions (6) | | | | | | | | | | | | | | | | | | | | | | | | | | Edward R. Simmons | | 2021 | | $ | 530,785 | | — | | $ | 2,174,981 | | $ | 483,218 | | $ | 634,560 | | — | | $ | 71,464 | | $ | 3,895,008 | | Senior Vice President | | | | | | | | | | | | | | | | | | | | | | | | | | – Strategy(7) | | | | | | | | | | | | | | | | | | | | | | | | | | Olumide Soroye | | 2021 | | $ | 274,041 | | — | | $ | 7,748,360 | | $ | 3,867,986 | | $ | 1,374,750 | | — | | $ | 53,356 | | $ | 13,318,493 | | President and Chief | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Officer of | | | | | | | | | | | | | | | | | | | | | | | | | | Intelligent Operating | | | | | | | | | | | | | | | | | | | | | | | | | | Solutions(8) | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Includes amounts deferred into our EDIP. See the “2020“2021 Nonqualified Deferred Compensation” table below for more information regarding amounts that each of our NEOs deferred during 2020.2021. |
| (2) | The amounts reflected in these columns represent the aggregate grant date fair value of all equity awards that we granted to our NEOs, computed in accordance with ASC 718. For all NEOs, the amount in the “Stock Awards” column for 20202021 equals the aggregate grant date fair value of all PSUs and RSUs that we granted during 2020.2021. We calculated the grant date fair value of all PSUs based on the probable outcome of the applicable performance conditions, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under ASC 718. The maximum aggregate value of all of each NEO’s PSUs at the grant date assuming that we attain the highest level of performance is as follows: Mr. Lico – $5,563,646;$ 8,696,496; Mr. McLaughlin – $1,593,111;$2,717,611; Ms. Hulit – $835,091;$1,522,255; Mr. PringleSimmons – $860,091$1,087,325; and Ms. Walker – $1,265,266.Mr. Soroye -- $8,350,736. With respect to RSUs, we calculated the grant date fair value under ASC 718 based on the base number of shares of common stock underlying the RSU times the closing price of the common stock on the date of grant. The RSUs granted to Mssrs. Lico and McLaughlin and Ms. Hulit, and a portion of the RSUs (6,645) granted to Mr. Simmons, included a potential to earn additional RSUs. The maximum aggregate value of thethese RSUs granted in 2020,2021, reflecting an opportunity to earn up to a maximum of 150% of the corresponding base number of shares of common stock underlying the corresponding RSUs, of all of each NEO’s RSUs at the grant date assuming that the highest level of performance was achieved was as follows: Mr. Lico – $4,062,391;$5,314,860; Mr. McLaughlin – $1,161,243;$1,188,164; Ms. Hulit – $608,711;$930,326; and Mr. Pringle – $626,933; and Ms. Walker – $922,272.Simmons -- $664,733. The actual number of shares of common stock underlying the RSUs granted in 2020,2021, based on the actual level of performance achieved in 2020,2021, was 107.8%50% of the corresponding base number of shares of common stock underlying the RSUs.RSUs that were subject to such performance measure. With respect to stock options, we have calculated the grant date fair value under FASB ASC Topic 718 using the Black-Scholes option pricing model. Additional information about the assumptions that we used when valuing equity awards is set forth in our Annual Report on Form 10-K in Note 17 to the Consolidated Financial Statements for fiscal year 2020.2021. |
| The amount reflected for Ms. Walker in 2020 includes a special retention equity award granted in 2020.
|
| (3) | The amounts set forth in this column reflect compensation earned during the corresponding fiscal year under the Company’s Executive Incentive Compensation Plan. |
| (4) | Fortive does not have a defined benefit pension plan and does not pay above market earnings on account balances under the EDIP or pursuant to any other deferred compensation arrangement. |
| (5) | The amounts set forth in this column for 20202021 include the following benefits: |
| | NAME | | 2020 COMPANY
401(K)
CONTRIBUTIONS ($) | | 2020 COMPANY
EDIP
CONTRIBUTIONS ($) | | PERSONAL USE OF
COMPANY
AIRPLANE | | EXECUTIVE
PHYSICAL | | TAX/FINANCIAL
PLANNING | | | | Name | | | 2021 Company 401(K)
Contributions($) | | 2021 Company EDIP
Contributions($) | | Personal Use of
Company Airplane | | Executive
Physical | | Tax/Financial
Planning | | Tickets to
Sporting Events | James A. Lico | | $ | 20,042 | | | $ | 308,002 | | | $ | 131,700 | | | | — | | | $ | 10,000 | | | $ | 20,346 | | $ | 313,502 | | $ | 150,000 | | | — | | $ | 10,000 | | $ | — | Charles E. McLaughlin | | $ | 20,042 | | | $ | 120,063 | | | $ | 43,379 | | | | — | | | $ | 10,000 | | | $ | 20,346 | | $ | 126,001 | | $ | 41,434 | | | — | | $ | 10,000 | | $ | 4,180 | Barbara B. Hulit | | $ | 20,042 | | | $ | 88,957 | | | | — | | | $ | 3,000 | | | $ | 10,000 | | | $ | 20,346 | | $ | 117,374 | | | — | | $ | 3,000 | | $ | 10,000 | | $ | 1,060 | William W. Pringle | | $ | 20,042 | | | $ | 64,831 | | | | — | | | | — | | | $ | 10,000 | | | Stacey A. Walker | | $ | 20,042 | | | $ | 56,699 | | | | — | | | | — | | | $ | 10,000 | | | | Edward R. Simmons | | | $ | 1,846 | | $ | 59,618 | | | — | | | — | | $ | 10,000 | | $ | — | | Olumide Soroye | | | $ | 6,231 | | $ | 37,125 | | | — | | | — | | $ | 10,000 | | $ | — |
Table of Contents | Executive Compensation Tables | | 73 |
| | The amounts under “Personal Use of Company Airplane” reflect the incremental cost to us of personal use of our airplane by Mr. Lico and Mr. McLaughlin. We calculate that incremental cost by multiplying the total number of personal flight hours times the average direct variable operating costs (including costs related to fuel, on-board catering, maintenance expenses related to operation of the plane during the year, landing and parking fees, navigation fees, related ground transportation, crew accommodations and meals and supplies) per flight hour for the particular airplane for the year, net of any applicable employee reimbursement. Since the airplane is used primarily for business travel, we do not include in the calculation the fixed costs that do not change based on usage, such as crew salaries, the lease or acquisition cost of the airplane, exterior paint and other maintenance, inspection and |
| | | | | | | 2021 Proxy Statement | | 79 |
Executive Compensation Tables
| capital improvement costs intended to cover a multiple-year period. Mr. Lico’s and Mr. McLaughlin’s annual perquisite allowance for personal use of our corporate airplane is limited to $150,000 and $50,000, respectively, and Mr. Lico and Mr. McLaughlin are required to reimburse us for any personal use of the airplane in a particular year in excess of such limits. |
| (6) | On December 31, 2021, Ms. Hulit retired from her position as the President and CEO of Advanced Healthcare Solutions. | | (7) | Mr. Pringle resigned as the Company’sSimmons became our Senior Vice President – Strategy on March 12,February 1, 2021. | | (8) | Mr. Soroye became our President and Chief Executive Officer, Intelligent Operating Solutions on August 9, 2021. |
Grants of Plan-Based Awards for Fiscal 20202021 As discussed in further detail in “Compensation Discussion and Analysis – Treatment of Equity-Based Compensation Upon Vontier Separation,” all of the share amounts and option exercise prices set forth below reflect adjustments pursuant to the anti-dilution provisions of the 2016 Plan and EDIP, as applicable, to account for the separation of Vontier and preserve the intrinsic value of each award.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NAME | | GRANT
DATE | | | AWARD
TYPE | | ESTIMATED POSSIBLE PAYOUTS UNDER NON-EQUITY
INCENTIVE PLAN AWARDS (1) | | | ESTIMATED FUTURE PAYOUTS
UNDER EQUITY INCENTIVE PLAN AWARDS (2) | | | ALL OTHER
STOCK
AWARDS
(#) | | | ALL OTHER
OPTION
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS (3) (#) | | | EXERCISE
OR BASE
PRICE OF
OPTION
AWARDS
($/SHARE) | | | GRANT
DATE FAIR
VALUE OF STOCK AND
OPTION AWARDS ($) | | | | THRESHOLD ($) | | | TARGET ($) | | | MAXIMUM ($) | | | THRESHOLD (#) | | | TARGET (#) | | | MAXIMUM (#) | | | | | | | | | | | | | | | | James A.
Lico | | | — | | | Annual Cash Incentive | | $ | 610,500 | | | $ | 2,035,000 | | | $ | 4,070,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | 2/20/2020 | | | Stock Option | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 260,248 | | | $ | 63.85 | | | $ | 4,134,823 | | | | | 2/20/2020 | | | RSU | | | — | | | | — | | | | — | | | | 42,952 | | | | 42,952 | | | | 64,428 | | | | — | | | | — | | | | — | | | $ | 2,708,261 | | | | | 2/20/2020 | | | PSU | | | — | | | | — | | | | — | | | | 21,476 | | | | 42,952 | | | | 85,904 | | | | — | | | | — | | | | — | | | $ | 2,781,823 | | Charles E. McLaughlin | | | — | | | Annual Cash Incentive | | $ | 262,500 | | | $ | 875,000 | | | $ | 1,750,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | 2/20/2020 | | | Stock Option | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 74,525 | | | $ | 63.85 | | | $ | 1,184,054 | | | | | 2/20/2020 | | | RSU | | | — | | | | — | | | | — | | | | 12,299 | | | | 12,299 | | | | 18,449 | | | | — | | | | — | | | | — | | | $ | 774,162 | | | | | 2/20/2020 | | | PSU | | | — | | | | — | | | | — | | | | 6,150 | | | | 12,299 | | | | 24,598 | | | | — | | | | — | | | | — | | | $ | 796,555 | | Barbara B. Hulit | | | — | | | Annual Cash Incentive | | $ | 166,793 | | | $ | 555,978 | | | $ | 1,111,956 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | 2/20/2020 | | | Stock Option | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 39,042 | | | $ | 63.85 | | | $ | 620,300 | | | | | 2/20/2020 | | | RSU | | | — | | | | — | | | | — | | | | 6,447 | | | | 6,447 | | | | 9,671 | | | | — | | | | | | | | | | | $ | 405,807 | | | | | 2/20/2020 | | | PSU | | | — | | | | — | | | | — | | | | 3,224 | | | | 6,447 | | | | 12,894 | | | | — | | | | — | | | | — | | | $ | 417,546 | | William W. Pringle | | | — | | | Annual Cash Incentive | | $ | 157,697 | | | $ | 525,658 | | | $ | 1,051,316 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | 2/20/2020 | | | Stock Option | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 40,221 | | | $ | 63.85 | | | $ | 639,032 | | | | | 2/20/2020 | | | RSU | | | — | | | | — | | | | — | | | | 6,640 | | | | 6,640 | | | | 9,960 | | | | | | | | — | | | | — | | | $ | 417,955 | | | | | 2/20/2020 | | | PSU | | | — | | | | — | | | | — | | | | 3,320 | | | | 6,640 | | | | 13,280 | | | | — | | | | — | | | | — | | | $ | 430,045 | | Stacey A. Walker | | | — | | | Annual Cash Incentive | | $ | 146,625 | | | $ | 488,750 | | | $ | 977,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | 2/20/2020 | | | Stock Option | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 59,152 | | | $ | 63.85 | | | $ | 939,808 | | | | | 2/20/2020 | | | RSU | | | — | | | | — | | | | — | | | | 9,768 | | | | 9,768 | | | | 14,652 | | | | — | | | | — | | | | — | | | $ | 614,848 | | | | | 2/20/2020 | | | PSU | | | — | | | | — | | | | — | | | | 4,884 | | | | 9,768 | | | | 19,536 | | | | — | | | | — | | | | — | | | $ | 632,633 | |
| | | | | | Estimated Possible Payouts Under Non-
Equity Incentive Plan Awards (1) | |
Estimated Future Payouts Under
Equity Incentive Plan Awards (2) | | All
Other
Stock
Awards
(#) | | All Other
Option
Awards:
Number of
Securities
Underlying
Options (3)
(#) | | Exercise
or Base
Price of
Option
Awards
($/Share) | | Grant Date
Fair Value
of Stock
and Option
Awards ($) | | Name | | Grant
Date | | Award
Type | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | James A. | | | | Annual | | | | | | | | | | | | | | | | | | | | | | | | | | | Lico | | | | Cash | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | Incentive | | $ | 1,187,500 | | $ | 2,375,000 | | $ | 4,750,000 | | — | | — | | — | | — | | — | | | — | | | — | | | | | Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/24/2021 | | Option | | | — | | | — | | | — | | — | | — | | — | | — | | 187,840 | | $ | 67.64 | | $ | 3,865,747 | | | 2/24/2021 | | RSU | | | — | | | — | | | — | | 53,130 | | 53,130 | | 76,695 | | — | | — | | | — | | $ | 3,543,240 | | | 2/24/2021 | | PSU | | | — | | | — | | | — | | 30,993 | | 61,985 | | 123,970 | | — | | — | | | — | | $ | 4,348,248 | | Charles E. | | | | Annual | | | | | | | | | | | | | | | | | | | | | | | | | | | McLaughlin | | | | Cash | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | Incentive | | $ | 453,125 | | $ | 906,250 | | $ | 1,812,500 | | — | | — | | — | | — | | — | | | — | | | — | | | | | Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/24/2021 | | Option | | | — | | | — | | | — | | — | | — | | — | | — | | 58,700 | | $ | 67.64 | | $ | 1,208,046 | | | 2/24/2021 | | RSU | | | — | | | — | | | — | | 16,605 | | 16,605 | | 24,908 | | — | | — | | | — | | $ | 1,107,387 | | | 2/24/2021 | | PSU | | | — | | | — | | | — | | 9,685 | | 19,370 | | 38,740 | | — | | — | | | — | | $ | 1,358,806 | | Barbara B. | | | | Annual | | | | | | | | | | | | | | | | | | | | | | | | | | | Hulit | | | | Cash | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | Incentive | | $ | 325,000 | | $ | 650,000 | | $ | 1,300,000 | | — | | — | | — | | — | | — | | | — | | | — | | | | | Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/24/2021 | | Option | | | — | | | — | | | — | | — | | — | | — | | — | | 32,880 | | $ | 67,64 | | $ | 676,670 | | | 2/24/2021 | | RSU | | | — | | | — | | | — | | 9,300 | | 9,300 | | 13,950 | | — | | | | | | | $ | 620,217 | | | 2/24/2021 | | PSU | | | — | | | — | | | — | | 5,425 | | 10,850 | | 21,700 | | — | | — | | | — | | $ | 761,128 | | Edward R. | | | | Annual | | | | | | | | | | | | | | | | | | | | | | | | | | | Simmons | | | | Cash | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | Incentive | | $ | 240,000 | | $ | 480,000 | | $ | 960,000 | | — | | — | | — | | — | | — | | | — | | | — | | | | | Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/24/2021 | | Option | | | — | | | — | | | — | | — | | — | | — | | — | | 23,480 | | $ | 67.64 | | $ | 483,218 | | | 2/24/2021 | | RSU | | | — | | | — | | | — | | 6,645 | | 6,645 | | 9,968 | | — | | — | | | | | $ | 443,155 | | | 2/24/2021 | | RSU | | | | | | | | | | | | | | | | | 17,710 | | | | | | | $ | 1,188,164 | | | 2/24/2021 | | PSU | | | — | | | — | | | — | | 3,875 | | 7,750 | | 15,500 | | — | | — | | | — | | $ | 543,663 | | Olumide | | | | Annual | | | | | | | | | | | | | | | | | | | | | | | | | | | Soroye | | | | Cash | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | Incentive | | $ | 562,500 | | $ | 1,125,000 | | $ | 2,250,000 | | — | | — | | — | | — | | — | | | — | | | — | | | | | Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/24/2021 | | Option | | | — | | | — | | | — | | — | | — | | — | | — | | 172,140 | | $ | 74.36 | | $ | 3,867,986 | | | 2/24/2021 | | RSU | | | — | | | — | | | — | | — | | — | | — | | 48,685 | | — | | | — | | $ | 3,572,992 | | | 2/24/2021 | | PSU | | | — | | | — | | | — | | 28,400 | | 56,800 | | 113,600 | | — | | — | | | — | | $ | 4,175,368 |
| (1) | These columns relate to 20202021 cash award opportunities under our Executive Incentive Compensation Plan, which we describe in more detail above under “– Annual Incentive Awards.” The amount that each NEO earned under these awards based on actual performance for fiscal year 20202021 appears in the “Non-Equity“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. |
| (2) | These columns relate to performance-based restricted stock units and performance stock unit awards that we granted under our 2016 Stock Incentive Plan. We discuss the performance and vesting conditions and other key terms of these awards in more detail above under “– Long-Term Incentive Awards.” |
| (3) | We made all stock option grants under our 2016 Stock Incentive Plan. We discuss the key terms of these awards in more detail above under “– Determination of Long-Term Incentive Awards.Award Payouts.” |
2022 PROXY STATEMENT
Table of Contents | | | | | 80 74 | | 2021 Proxy Statement | | FORTIVE CORPORATION Executive Compensation Tables |
Executive Compensation Tables
Outstanding Equity Awards at 20202021 Fiscal Year-End The following table summarizes the number of securities underlying outstanding equity awards for each of our NEOs as of December 31, 2020. As discussed in further detail in “Compensation Discussion and Analysis – Treatment of Equity-Based Compensation Upon Vontier Separation,” all of the share amounts and option exercise prices set forth below reflect adjustments pursuant to the anti-dilution provisions of the 2016 Plan and EDIP, as applicable, to account for the separation of Vontier and preserve the intrinsic value of each award.2021. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NAME | | OPTION
GRANT
DATE | | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#) EXERCISABLE | | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#) UNEXERCISABLE (1) | | | OPTION
EXERCISE
PRICE ($) | | | OPTION
EXPIRATION
DATE | | | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#) | | | MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK THAT HAVE
NOT VESTED ($) (1) | | | EQUITY
INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#) | | | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($) (1) | | | | | | | | | | | | James A. Lico | | | 2/20/2020 | | | | — | | | | 260,248 | (2) | | $ | 63.85 | | | | 2/20/2030 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/25/2019 | | | | — | | | | 235,398 | (2) | | $ | 67.85 | | | | 2/25/2029 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/22/2018 | | | | — | | | | 220,219 | (2) | | $ | 63.76 | | | | 2/22/2028 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/23/2017 | | | | — | | | | 241,701 | (2) | | $ | 47.61 | | | | 2/23/2027 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 7/5/2016 | | | | 69,870 | | | | 69,870 | (2) | | $ | 40.41 | | | | 7/5/2026 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/24/2016 | | | | 98,058 | | | | 98,059 | (2) | | $ | 35.38 | | | | 2/24/2026 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/24/2015 | | | | 139,882 | | | | — | | | $ | 35.31 | | | | 2/24/2025 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 5/15/2014 | | | | 104,480 | | | | — | | | $ | 30.42 | | | | 5/15/2024 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/24/2014 | | | | 131,525 | | | | — | | | $ | 31.07 | | | | 2/24/2024 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 7/30/2013 | | | | 185,540 | | | | — | | | $ | 27.26 | | | | 7/30/2023 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/21/2013 | | | | 152,851 | | | | — | | | $ | 24.75 | | | | 2/21/2023 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/23/2011 | | | | 105,866 | | | | — | | | $ | 20.12 | | | | 2/23/2021 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 195,463(3) | | | $ | 13,842,690 | | | | 62,375 | (4) | | $ | 4,417,398 | | | | | | | | | | | | Charles E. McLaughlin | | | 2/20/2020 | | | | — | | | | 74,525 | (5) | | $ | 63.85 | | | | 2/20/2030 | | | | — | | | | — | | | | — | | | | — | | | | | 2/25/2019 | | | | — | | | | 62,388 | (5) | | $ | 67.85 | | | | 2/25/2029 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/22/2018 | | | | — | | | | 56,278 | (5) | | $ | 63.76 | | | | 2/22/2028 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/23/2017 | | | | 21,485 | | | | 42,972 | (5) | | $ | 47.61 | | | | 2/23/2027 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/24/2016 | | | | 69,728 | | | | 17,445 | (6) | | $ | 35.38 | | | | 2/24/2026 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 7/15/2015 | | | | 16,467 | | | | — | | | $ | 35.84 | | | | 7/15/2025 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 7/15/2014 | | | | 14,816 | | | | — | | | $ | 31.75 | | | | 7/15/2024 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 7/30/2013 | | | | 16,911 | | | | — | | | $ | 27.26 | | | | 7/30/2023 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 7/25/2012 | | | | 21,176 | | | | — | | | $ | 20.73 | | | | 7/25/2022 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 11/4/2011 | | | | 7,863 | | | | — | | | $ | 19.78 | | | | 11/4/2021 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/23/2011 | | | | 14,322 | | | | — | | | $ | 20.12 | | | | 2/23/2021 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 53,259(7) | | | $ | 3,771,802 | | | | 17,447 | (4) | | $ | 1,235,597 | | | | | | | | | | | | Barbara B. Hulit | | | 2/20/2020 | | | | — | | | | 39,042 | (5) | | $ | 63.85 | | | | 2/20/2030 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 7/31/2019 | | | | — | | | | 68,475 | (5) | | $ | 63.23 | | | | 7/31/2029 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/25/2019 | | | | — | | | | 35,314 | (5) | | $ | 67.85 | | | | 2/25/2029 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/22/2018 | | | | — | | | | 32,427 | (5) | | $ | 63.76 | | | | 2/22/2028 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/23/2017 | | | | 12,893 | | | | 25,788 | (5) | | $ | 47.61 | | | | 2/23/2027 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/24/2016 | | | | 50,846 | | | | 25,429 | (5) | | $ | 35.38 | | | | 2/24/2026 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/24/2015 | | | | 48,098 | | | | — | | | $ | 35.31 | | | | 2/24/2025 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 5/15/2014 | | | | 20,905 | | | | — | | | $ | 30.42 | | | | 5/15/2024 | | | | — �� | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/24/2014 | | | | 45,214 | | | | — | | | $ | 31.07 | | | | 2/24/2024 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/21/2013 | | | | 56,061 | | | | — | | | $ | 24.75 | | | | 2/21/2023 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 56,442(8) | | | $ | 3,997,222 | | | | 9,361 | (4) | | $ | 662,946 | | | | | | | | | | | | William W. Pringle | | | 2/20/2020 | | | | — | | | | 40,221 | (5) | | $ | 63.85 | | | | 2/20/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7/31/2019 | | | | — | | | | 68,475 | (5) | | $ | 63.23 | | | | 7/31/2029 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/25/2019 | | | | — | | | | 36,492 | (5) | | $ | 67.85 | | | | 2/25/2029 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/22/2018 | | | | — | | | | 34,267 | (5) | | $ | 63.76 | | | | 2/22/2028 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/23/2017 | | | | 12,893 | | | | 25,788 | (5) | | $ | 47.61 | | | | 2/23/2027 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/24/2016 | | | | 52,292 | | | | 13,087 | (6) | | $ | 35.38 | | | | 2/24/2026 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 54,576(9) | | | $ | 3,865,072 | | | | 9,653 | (4) | | $ | 683,625 | |
| Name | | Option
Grant Date | | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable (1) | | Option
Exercise
Price ($) | | Option
Expiration
Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested (#) | | Market Value
of Shares or
Units of
Stock
That Have
Not Vested
($) (1) | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units
or Other
Rights
That Have
Not
Vested (#) | | Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($) (1) | | James A. Lico | | 2/24/2021 | | — | | 187,840 (2) | | $ | 67.64 | | 2/24/2031 | | — | | | — | | — | | | — | | | 2/20/2020 | | — | | 260,248 (2) | | $ | 63.85 | | 2/20/2030 | | — | | | — | | — | | | — | | | 2/25/2019 | | — | | 235,398 (2) | | $ | 67.85 | | 2/25/2029 | | — | | | — | | — | | | — | | | 2/22/2018 | | — | | 220,219 (2) | | $ | 63.76 | | 2/22/2028 | | — | | | — | | — | | | — | | | 2/23/2017 | | 120,850 | | 120,851 (2) | | $ | 47.61 | | 2/23/2027 | | — | | | — | | — | | | — | | | 7/5/2016 | | 139,740 | | — | | $ | 40.41 | | 7/5/2026 | | — | | | — | | — | | | — | | | 2/24/2016 | | 196,117 | | — | | $ | 35.38 | | 2/24/2026 | | — | | | — | | — | | | — | | | 2/24/2015 | | 139,882 | | — | | $ | 35.31 | | 2/24/2025 | | — | | | — | | — | | | — | | | 5/15/2014 | | 104,480 | | — | | $ | 30.42 | | 5/15/2024 | | — | | | — | | — | | | — | | | 2/24/2014 | | 131,525 | | — | | $ | 31.07 | | 2/24/2024 | | — | | | — | | — | | | — | | | 7/30/2013 | | 185,540 | | — | | $ | 27.26 | | 7/30/2023 | | — | | | — | | — | | | — | | | — | | — | | — | | | — | | — | | 228,987 (3) | | $ | 17,469,418 | | 52,469 (4) | | $ | 4,002,860 | | Charles E. McLaughlin | | 2/24/2021 | | — | | 58,700 (5) | | $ | 67.64 | | 2/24/2031 | | — | | | — | | — | | | — | | | 2/20/2020 | | — | | 74,525 (5) | | $ | 63.85 | | 2/20/2030 | | — | | | — | | — | | | — | | | 2/25/2019 | | — | | 62,388 (5) | | $ | 67.85 | | 2/25/2029 | | — | | | — | | — | | | — | | | 2/22/2018 | | 18,758 | | 37,520 (5) | | $ | 63.76 | | 2/22/2028 | | — | | | — | | — | | | — | | | 2/23/2017 | | 42,970 | | 21,487 (5) | | $ | 47.61 | | 2/23/2027 | | — | | | — | | — | | | — | | | 2/24/2016 | | 87,173 | | — | | $ | 35.38 | | 2/24/2026 | | — | | | — | | — | | | — | | | 7/15/2015 | | 16,467 | | — | | $ | 35.84 | | 7/15/2025 | | — | | | — | | — | | | — | | | 7/15/2014 | | 14,816 | | — | | $ | 31.75 | | 7/15/2024 | | — | | | — | | — | | | — | | | 7/30/2013 | | 16,911 | | — | | $ | 27.26 | | 7/30/2023 | | — | | | — | | — | | | — | | | 7/25/2012 | | 21,176 | | — | | $ | 20.73 | | 7/25/2022 | | — | | | — | | — | | | — | | | — | | — | | — | | | — | | — | | 62,466 (6) | | $ | 4,765,531 | | 15,835 (4) | | $ | 1,208,052 | | Barbara B. Hulit | | 2/24/2021 | | — | | 32,880 (5) | | $ | 67.64 | | 2/24/2031 | | — | | | — | | — | | | — | | | 2/20/2020 | | — | | 39,042 (5) | | $ | 63.85 | | 2/20/2030 | | — | | | — | | — | | | — | | | 7/31/2019 | | — | | 68,475 (5) | | $ | 63.23 | | 7/31/2029 | | — | | | — | | — | | | — | | | 2/25/2019 | | — | | 35,314 (5) | | $ | 67.85 | | 2/25/2029 | | — | | | — | | — | | | — | | | 2/22/2018 | | 10,808 | | 21,619 (5) | | $ | 63.76 | | 2/22/2028 | | — | | | — | | — | | | — | | | 2/23/2017 | | 25,786 | | 12,895 (5) | | $ | 47.61 | | 2/23/2027 | | — | | | — | | — | | | — | | | 2/24/2016 | | 76,275 | | — | | $ | 35.38 | | 2/24/2026 | | — | | | — | | — | | | — | | | 2/24/2015 | | 46,098 | | — | | $ | 35.31 | | 2/24/2025 | | — | | | — | | — | | | — | | | 5/15/2014 | | 18,505 | | — | | $ | 30.42 | | 5/15/2024 | | — | | | — | | — | | | — | | | 2/24/2014 | | 39,814 | | — | | $ | 31.07 | | 2/24/2024 | | — | | | — | | — | | | — | | | 2/21/2013 | | 49,062 | | — | | $ | 24.75 | | 2/21/2023 | | — | | | — | | — | | | — | | | — | | — | | — | | | — | | — | | 57,540 (7) | | $ | 4,389,727 | | 8,649 (4) | | $ | 659,832 | | Edward R. Simmons | | 2/24/2021 | | — | | 23,480 (5) | | $ | 67.64 | | 2/24/2021 | | | | | | | | | | | | | — | | — | | | | | | | — | | 27,678 (8) | | $ | 2,111,555 | | 3,875 (4) | | $ | 295,624 | | Olumide Soroye | | 8/25/2021 | | — | | 172,140 (5) | | $ | 74.36 | | 8/25/2031 | | — | | | — | | — | | | — | | | — | | | | — | | | — | | — | | 48,685 (9) | | $ | 3,714,179 | | 28,400 (4) | | $ | 2,166,636 |
| | | | | | | 2021 Proxy Statement(1) | | 81 |
Executive Compensation Tables
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NAME | | OPTION
GRANT
DATE | | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#) EXERCISABLE | | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#) UNEXERCISABLE (1) | | | OPTION
EXERCISE
PRICE ($) | | | OPTION
EXPIRATION
DATE | | | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#) | | | MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK THAT HAVE
NOT VESTED ($) (1) | | | EQUITY
INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#) | | | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($) (1) | | | | | | | | | | | | Stacey A. Walker | | | 2/20/2020 | | | | — | | | | 59,152 | (5) | | $ | 63.85 | | | | 2/20/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/25/2019 | | | | — | | | | 32,367 | (5) | | $ | 67.85 | | | | 2/25/2029 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/22/2018 | | | | — | | | | 30,587 | (5) | | $ | 63.76 | | | | 2/22/2028 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/23/2017 | | | | 10,744 | | | | 21,490 | (5) | | $ | 47.61 | | | | 2/23/2027 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 2/24/2016 | | | | 10,895 | | | | 10,900 | (6) | | $ | 35.38 | | | | 2/24/2026 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 7/15/2015 | | | | 1,303 | | | | — | | | $ | 35.84 | | | | 7/15/2025 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | 11/15/2014 | | | | 2,331 | | | | — | | | $ | 33.36 | | | | 11/15/2024 | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 31,981(10) | | | $ | 2,264,894 | | | | 12,442 | (4) | | $ | 881,142 | |
(1) | We calculated market value based on the closing price of our common stock on December 31, 2020,2021, the last trading day of the year, as reported on the NYSE ($70.8276.29 per share), times the number of unvested shares. In addition, for the purposes of this section, we use the term “RSU” to refer to both Restricted Stock Units and Restricted Stock Awards and “PSU” to refer to both Performance Stock Units and Performance Stock Awards. |
| (2) | Under the terms of the award, 50% of the options granted become or became exercisable on, for awards granted prior to 2021, each of the fourth and fifth anniversaries of the grant date and, for awards granted in 2021, each of the third and fourth anniversaries of the grant date. |
Table of Contents | Executive Compensation Tables | | 75 |
| (3) | Includes 79,695 RSUs granted on 2/24/2021 (inclusive of incremental RSUs earned in 2021); 46,302 RSUs granted on 2/20/2020 (inclusive of the incremental RSUs earned in 2020); 38,845 RSUs granted on 2/25/2019 (no incremental RSUs were earned in 2019); 47,565 RSUs granted on 2/22/2018 (inclusive of the incremental RSUs earned in 2018); 33,160and 16,580 RSUs granted on 2/23/2017; and 29,591 RSUs granted on 7/5/2016, one2017. One half of whichthe original awards vest, with respect to awards granted in 2021, on each of the third and fourth anniversaries of the grant date and, with respect to awards granted prior to 2021, on each of the fourth and fifth anniversaries of the corresponding grant date. |
| (4) | Includes, for the applicable NEO, the following PSU grants: |
| | NAME | | TARGET PSUS GRANTED 2/20/2020
(“2020 PSUS”) | | | TARGET PSUS GRANTED 2/25/2019
(“2019 PSUS”) | | | | | Name | | | Target PSUs
Granted 2/24/2021
(“2021 PSUs”) | | Target PSUs
Granted 2/20/2020
(“2020 PSUs”) | James A. Lico | | | 42,952 | | | | 38,845 | | | 61,985 | | 42,952 | | Charles E. McLaughlin | | | 12,299 | | | | 10,296 | | | 19,370 | | 12,299 | | Barbara B. Hulit | | | 6,447 | | | | 5,828 | | | 10,850 | | 6,447 | | William W. Pringle | | | 6,640 | | | | 6,026 | | | | Stacey A. Walker | | | 9,768 | | | | 5,347 | | | | Edward R. Simmons | | | 7,750 | | N/A | | Olumide Soroye | | | 56,800 | | N/A |
| As of 12/31/20,21, actual performance with respect to the 20192020 PSUs was trending below threshold, so the number of shares reported in the Outstanding Equity Awards at Fiscal 20202021 Year End table with respect to the 20192020 PSUs is the number of shares that would be earned assuming threshold performance is achieved, pursuant to SEC requirements. As of 12/31/20,21, actual performance with respect to the PSUs granted in 20202021 was trending abovebelow threshold, but below target, so the number of shares reported in the Outstanding Equity Awards at Fiscal 20202021 Year End table with respect to the 20202021 PSUs is the number of shares that would be earned assuming targetthreshold performance is achieved, pursuant to SEC requirements. The number of shares of common stock that vest pursuant to the PSU awards is based on total shareholder return (TSR) ranking relative to the S&P 500 Index over a three-year performance period. Payout at 100% of the target level requires achievement of above-median performance and rank at the 55th percentile of the S&P 500 Index, while the PSUs pay out at 200% for performance that equals or exceeds the 75th percentile, 50% for performance at the 35th percentile and zero percent for performance below the 35th percentile. The payout percentages for performance between threshold and target, or between target and maximum, respectively, are determined by linear interpolation. Notwithstanding the above, if absolute TSR performance for the period is negative, a maximum of 100% of the target PSUs will vest, regardless of how strong performance is on a relative basis, and if absolute TSR performance for the period is positive, a minimum of 25% of the target PSUs will vest. The shares received upon the vesting of the PSUs are subject to an additional two-year holding period following the end of the three-year performance period. The total does not include PSUs that were granted on 2/22/201825/2019 and vested on 2/24/202128/2022 upon certification on the date thereof as having been earned at the three-year performance period ended 12/31/2020.2021. |
| (5) | Under the terms of the award, for awards granted prior to 2021, one-third of the options granted become or became exercisable on each of the third, fourth and fifth anniversaries of the grant date. |
(6) | Under the terms of the award, 20%date and, for awards granted in 2021, 50% of the options granted become or became exercisable on each of the first fivethird and fourth anniversaries of the grant date.
|
(7)(6) | Includes 24,908 RSUs granted on 2/24/2021 (inclusive of the incremental RSUs earned in 2021);13,258 RSUs granted on 2/20/2020 (inclusive of the incremental RSUs earned in 2020); 10,296 RSUs granted on 2/25/2019 (no incremental RSUs were earned in 2019); 12,1648,109 RSUs granted on 2/22/2018 (inclusive of the incremental RSUs earned in 2018); and 11,7905,895 RSUs granted on 2/23/2017, one-third2017. With respect to awards granted in 2021, 50% of which originalthe awards vest on each of the third and fourth anniversary of the grant date, and for all other awards, one third of the awards vests on each of the third, fourth, and fifth anniversaries of the corresponding grant date. In addition, includes 5,751 | | (7) | Includes 13,950 RSUs granted on 2/24/2016, one-fifth of which original awards vests on each2021 (inclusive of the first five anniversaries of the corresponding grant date. |
(8) | Includesincremental RSUs earned in 2021); 6,950 RSUs granted on 2/20/2020 (inclusive of the incremental RSUs earned in 2020); 22,601 RSUs granted on 7/31/2019; 5,828 RSUs granted on 2/25/2019 (no incremental RSUs were earned in 2019); 7,008 RSUs granted on 2/22/2018 (inclusive of the incremental RSUs earned in 2018); 7,077
|
| | | | | 82 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Executive Compensation Tables
| RSUs granted on 2/23/2017; and 6,978 RSUs granted on 7/5/2016. One-third of each award vests on each of the third, fourth, and fifth anniversaries of the grant date. |
(9) | Includes 7,158 RSUs granted on 2/20/2020 (inclusive of the incremental RSUs earned in 2020); 22,601 RSUs granted on 7/31/2019; 6,026 RSUs granted on 2/25/2019 (no incremental RSUs were earned in 2019); 7,4014,672 RSUs granted on 2/22/2018 (inclusive of the incremental RSUs earned in 2018); and 7,0773,539 RSUs granted on 2/23/2017, one-third2017. With respect to awards granted in 2021, 50% of which originalthe awards vestsvest on each of the third and fourth and fifth anniversaries of the corresponding grant date. In addition, includes 4,313 RSUs granted on 2/24/2016, one-fifth of which original award vests on each of the first five anniversariesanniversary of the grant date.
|
(10) | Includes 10,530 RSUs granted on 2/20/2020 (inclusivedate and, for all other awards, one-third of the incremental RSUs earned in 2020); 5,347 RSUs granted on 2/25/2019 (no incremental RSUs were earned in 2019); 6,613 RSUs granted on 2/22/2018 (inclusive of the incremental RSUs earned in 2018); 5,897 RSUs granted on 2/23/2017; and 3,594 RSUs granted on 2/24/2016. One-third of each awardawards vests on each of the third, fourth, and fifth anniversaries of the grant date.
| | (8) | Includes 27,768 RSUs granted on 2/24/2021 (inclusive of the incremental award RSUs earned in 2021), 17,710 of which vest ratable annually over a three-year period, and 9,968 vest 50% on each of the third and fourth anniversaries of the grant date. | | (9) | Includes 48,685 RSUs granted on 8/25/2021, 50% of which award vests on each of the third and fourth anniversaries of the grant date. |
Option Exercises and Stock Vested During Fiscal 20202021 The following table summarizes stock option exercises and the vesting of RSU and PSU awards with respect to our NEOs in 2020.2021. | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | STOCK AWARDS | | | | | | | NAME | | NUMBER OF SHARES
ACQUIRED ON
EXERCISE (#) | | VALUE REALIZED ON
EXERCISE ($) (1) | | NUMBER OF SHARES
ACQUIRED ON VESTING (#) | | VALUE REALIZED ON
VESTING ($) (2) | | | | | | James A. Lico | | | | 496,316 | | | | $ | 21,917,340 | | | | | 78,026 | | | | $ | 5,127,241 | | | | | | | Charles E. McLaughlin | | | | 17,108 | | | | $ | 823,066 | | | | | 12,732 | | | | $ | 858,082 | | | | | | | Barbara B. Hulit | | | | 100,323 | | | | $ | 4,226,129 | | | | | 15,809 | | | | $ | 1,093,768 | | | | | | | William W. Pringle | | | | 104,624 | | | | $ | 4,241,493 | | | | | 9,149 | | | | $ | 606,671 | | | | | | | Stacey A. Walker | | | | — | | | | | — | | | | | 6,969 | | | | $ | 465,553 | |
| | Option Awards | | Stock Awards | | Name | | Number of Shares
Acquired on Exercise (#) | | Value Realized on
Exercise ($) (1) | | Number of Shares
Acquired on Vesting (#) | | Value Realized
on Vesting ($) (2) | | James A. Lico | | 258,717 | | $ | 13,169,820 | | 55,882 | | $ | 3,910,248 | | Charles E. McLaughlin | | 22,185 | | $ | 1,131,915 | | 18,275 | | $ | 1,254,977 | | Barbara B. Hulit | | 16,799 | | $ | 795,136 | | 14,309 | | $ | 978,471 | | Edward R. Simmons | | — | | $ | — | | — | | $ | — | | Olumide Soroye | | — | | | — | | — | | $ | — |
| (1) | We calculated the amounts shown in this column by multiplying the number of shares acquired times the difference between the exercise price and the market price of the underlying common stock at the time of exercise. |
| (2) | We calculated the amounts shown in this column by multiplying the number of shares acquired times the closing price of the common stock as reported on the NYSE on the vesting date (or on the last trading day prior to the vesting date if the vesting date was not a trading day). For the PSUs earned with respect to fiscal year 2019-2021 performance, the closing price on December 31, 2021, the last day of the performance period, was used to calculate the value realized. |
2022 PROXY STATEMENT
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2021 Pension Benefits None of our NEOs participated in a defined benefit pension plan during 2020.2021. 20202021 Nonqualified Deferred Compensation
The table below sets forth, for each NEO, information regarding participation in the EDIP. There were no withdrawals by or distributions to any of the NEOs from the EDIP in 2020.2021. | | | | | | | | | | | | | | | | | | | | | | | | | | | NAME | | EXECUTIVE
CONTRIBUTIONS
IN LAST FISCAL YEAR ($) (1) | | REGISTRANT
CONTRIBUTIONS
IN LAST
FISCAL YEAR ($) (2) | | AGGREGATE
EARNINGS
IN LAST
FISCAL YEAR ($) (3) | | AGGREGATE
BALANCE
AT LAST
FISCAL
YEAR END ($) (4) | | | | | | James A. Lico | | | $ | 200,000 | | | | $ | 308,002 | | | | $ | 1,654,225 | | | | $ | 12,706,226 | | | | | | | Charles E. McLaughlin | | | | — | | | | $ | 120,063 | | | | $ | 135,588 | | | | $ | 1,362,795 | | | | | | | Barbara B. Hulit | | | | — | | | | $ | 88,957 | | �� | | $ | 230,034 | | | | $ | 2,264,270 | | | | | | | William W. Pringle | | | $ | 226,268 | | | | $ | 64,831 | | | | $ | 427,358 | | | | $ | 2,502,187 | | | | | | | Stacey A. Walker | | | $ | 100,000 | | | | $ | 56,699 | | | | $ | 204,791 | | | | $ | 810,951 | |
| Name | | Executive
Contributions in Last
Fiscal Year ($)(1) | | Registrant
Contributions in Last
Fiscal Year ($)(2) | | Aggregate
Earnings in Last
Fiscal Year ($)(3) | | Aggregate Balance
at Last Fiscal Year
End ($)(4) | | James A. Lico | | $ | 150,000 | | $ | 313,502 | | $ | 1,355,025 | | $ | 14,524,754 | | Charles E. McLaughlin | | | — | | $ | 126,001 | | $ | 125,973 | | $ | 1,614,768 | | Barbara B. Hulit | | | — | | $ | 117,374 | | $ | 198,829 | | $ | 2,580,473 | | Edward R. Simmons | | $ | 46,155 | | $ | 59,618 | | $ | 5,957 | | $ | 111,730 | | Olumide Soroye | | $ | 20,192 | | $ | 37,125 | | $ | 1,501 | | $ | 58,819 |
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Executive Compensation Tables
(1) | This column reflects the amount of base salary and non-equity incentive plan compensation that each NEO deferred in 20202021 under our EDIP, as follows: |
| | NAME | | SALARY | | NON-EQUITY INCENTIVE PLAN
COMPENSATION | | | | Name | | | Salary | | Non-Equity Incentive
Plan Compensation | James A. Lico | | | $ | — | | | | $ | 200,000 | | | $ | — | | $ | 150,000 | | Charles E. McLaughlin | | | $ | — | | | | $ | — | | | $ | — | | $ | — | | Barbara B. Hulit | | | $ | — | | | | $ | — | | | $ | — | | $ | — | | William W. Pringle | | | $ | 95,427 | | | | $ | 130,841 | | | | Stacey A. Walker | | | $ | — | | | | $ | 100,000 | | | | Edward R. Simmons | | | $ | 46,155 | | $ | — | | Olumide Soroye | | | $ | 20,192 | | $ | — |
| All amounts set forth in the Salary column above are included as 20202021 compensation under the “Salary” column in the Summary Compensation Table for 2020.2021. All amounts set forth in the Non-Equity Incentive Plan Compensation column above were included as 20192020 compensation under the “Non-Equity“Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table for 2019.2020. |
| (2) | We included the amounts set forth in this column as 20202021 compensation under the “All Other Compensation” column in the Summary Compensation Table. |
| (3) | The amounts set forth in this column represent earnings that are neither above market nor preferential, and accordingly, we do not include these amounts as compensation in the Summary Compensation Table. |
| (4) | The table below indicates for each NEO how much of the EDIP balance set forth in this column that we have reported as compensation in the Summary Compensation Table for previous years. |
| | NAME | | AMOUNT INCLUDED IN “AGGREGATE BALANCE AT LAST
FYE” COLUMN THAT HAS BEEN REPORTED AS
COMPENSATION IN THE SUMMARY COMPENSATION
TABLE FOR PREVIOUS YEARS ($) | | | | Name | | | Amount Included in “Aggregate Balance at Last FYE”
Column That has been Reported as Compensation in the
Summary Compensation Table for Previous Years ($) | James A. Lico | | | $ | 1,941,524 | | | $ | 2,405,026 | | Charles E. McLaughlin | | | $ | 335,427 | | | $ | 461,428 | | Barbara B. Hulit | | | $ | 310,204 | | | $ | 427,578 | | William W. Pringle | | | $ | 781,354 | | | | Stacey A. Walker | | | $ | 156,699 | | | | Edward R. Simmons | | | $ | N/A | | Olumide Soroye | | | $ | N/A |
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Executive Compensation Tables
Potential Payments Upon Termination or Change-of-Control as of 20202021 Fiscal Year-End The following table describes the payments and benefits that each NEO would be entitled to receive upon termination of employment or in connection with a change-of-control of our company. The amounts set forth below assume that the triggering event occurred on December 31, 2020.2021. Where benefits are based on the market value of our common stock, we have used the closing price of our common stock as reported on the NYSE on December 31, 20202021 the last trading day of the year ($70.8276.29 per share). In addition to the amounts set forth below, upon any termination of employment, each executive would also be entitled to (1) receive all payments generally provided to salaried employees on a non-discriminatory basis on termination, such as accrued salary, life insurance proceeds (for any termination caused by death), unused vacation and 401(k) plan distributions, (2) receive accrued, vested balances under the EDIP (except that under the EDIP, if an employee’s employment terminates as a result of gross misconduct, the EDIP administrator may determine that the employee’s vesting percentage with respect to all employer contributions is zero), and (3) exercise vested stock options (except that, under the terms of our 2016 Stock Incentive Plan, all outstanding equity awards are terminated upon, and no employee can exercise any outstanding equity award after, termination for gross misconduct). Retirement is defined generally as either a voluntary resignation after age 65 or an approved early retirement. | | | | Termination/Change of Control (“CiC”) Event | Named Executive
Officer | | Benefit | | Termination
Without Cause(1) | | Retirement | | Death | | Termination
Due to CiC(1) | | James A. Lico | | Value of unvested stock options that would
be accelerated (2),(3) | | $ | 8,788,163 | | $ | 8,962,746 | | $ | 13,074,411 | | $ | 13,074,411 | | | Value of unvested RSUs and PSUs
that would be accelerated (2),(3) | | $ | 14,739,149 | | $ | 14,169,245 | | $ | 15,813,243 | | $ | 26,411,903 | | | Benefits continuation | | $ | 60,532 | | | — | | | — | | $ | 60,532 | | | Severance Payment | | $ | 2,500,000 | | | — | | | — | | $ | 7,250,000 | | | Target Annual Incentive Award (4) | | | — | | | — | | | — | | $ | 2,375,000 | | | Performance-Based Annual Incentive Award (4) | | $ | 3,139,750 | | | — | | | — | | | — | | | Value of unvested EDIP balance that would
be accelerated (5) | | | — | | | — | | | — | | | — | | | Total: | | $ | 29,227,594 | | $ | 23,131,991 | | $ | 28,887,654 | | $ | 49,171,846 | | Charles E. McLaughlin | | Value of unvested stock options that would
be accelerated (2),(3) | | $ | 1,973,594 | | $ | 2,544,892 | | $ | 3,047,773 | | $ | 3,047,773 | | | Value of unvested RSUs and PSUs that
would be accelerated (2),(3) | | $ | 4,052,793 | | $ | 5,457,048 | | $ | 4,364,269 | | $ | 7,333,605 | | | Benefits continuation | | $ | 30,266 | | | — | | | — | | $ | 30,266 | | | Severance Payment | | $ | 725,000 | | | — | | | — | | $ | 1,631,250 | | | Target Annual Incentive Award (4) | | | — | | | — | | | — | | $ | 906,250 | | | Performance-Based Annual Incentive Award (4) | | $ | 1,198,063 | | | — | | | — | | | — | | | Value of unvested EDIP balance that would
be accelerated (5) | | | — | | | — | | | — | | | — | | | Total: | | $ | 7,979,716 | | $ | 8,001,940 | | $ | 7,412,042 | | $ | 12,949,144 |
2022 PROXY STATEMENT | | | | | | | | | | | | | | | | | | | NAMED EXECUTIVE OFFICER | | BENEFIT | | TERMINATION/CHANGE OF CONTROL (“CIC”) EVENT | | | | TERMINATION
WITHOUT CAUSE (1) | | | RETIREMENT | | | DEATH | | | TERMINATION
DUE TO CIC (1) | | | | | | | | | James A. Lico | | Value of unvested stock options that would be accelerated (2),(3) | | $ | 11,595,148 | | | $ | 11,595,148 | | | $ | 13,463,746 | | | $ | 13,463,698 | | | | | | | | | | Value of unvested RSUs and PSUs that would be accelerated (2),(3) | | $ | 11,691,674 | | | $ | 4,024,559 | | | $ | 12,128,350 | | | $ | 15,887,830 | | | | | | | | | | Benefits continuation | | $ | 58,733 | | | | — | | | | — | | | $ | 58,733 | | | | | | | | | | Severance Payment | | $ | 2,200,000 | | | | — | | | | — | | | $ | 6,270,000 | | | | | | | | | | Target Annual Incentive Award (4) | | | — | | | | — | | | | — | | | $ | 2,035,000 | | | | | | | | | | Performance-Based Annual Incentive Award (4) | | $ | 2,632,476 | | | | — | | | | — | | | | — | | | | | | | | | | Value of unvested EDIP balance that would be accelerated (5) | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | Total: | | $ | 28,178,031 | | | $ | 15,619,707 | | | $ | 25,592,096 | | | $ | 37,715,261 | | | | | | | | Charles E. McLaughlin | | Value of unvested stock options that would be accelerated (2),(3) | | $ | 1,758,986 | | | $ | 1,758,986 | | | $ | 2,072,897 | | | $ | 2,072,856 | | | | | | | | | | Value of unvested RSUs and PSUs that would be accelerated (2),(3) | | $ | 3,263,527 | | | $ | 1,630,347 | | | $ | 3,358,851 | | | $ | 4,220,348 | | | | | | | | | | Benefits continuation | | $ | 29,366 | | | | — | | | | — | | | $ | 29,366 | | | | | | | | | | Severance Payment | | $ | 700,000 | | | | — | | | | — | | | $ | 1,575,000 | | | | | | | | | | Target Annual Incentive Award (4) | | | — | | | | — | | | | — | | | $ | 875,000 | | | | | | | | | | Performance-Based Annual Incentive Award (4) | | $ | 1,166,900 | | | | — | | | | — | | | | — | | | | | | | | | | Value of unvested EDIP balance that would be accelerated (5) | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | Total: | | $ | 6,918,779 | | | $ | 3,389,333 | | | $ | 5,431,748 | | | $ | 8,772,570 | |
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| | | | | | | | | | | | | | | | | | | NAMED EXECUTIVE OFFICER | | BENEFIT | | TERMINATION/CHANGE OF CONTROL (“CIC”) EVENT | | | | TERMINATION
WITHOUT CAUSE (1) | | | RETIREMENT | | | DEATH | | | TERMINATION
DUE TO CIC (1) | | | | | | | | | Barbara B. Hulit | | Value of unvested stock options that would be
accelerated (2),(3) | | $ | 1,843,992 | | | | — | | | $ | 2,353,185 | | | $ | 2,353,128 | | | | | | | | | | Value of unvested RSUs and PSUs that would be accelerated (2),(3) | | $ | 2,771,966 | | | | — | | | $ | 3,040,232 | | | $ | 4,296,933 | | | | | | | | | | Benefits continuation | | $ | 14,150 | | | | — | | | | — | | | $ | 14,150 | | | | | | | | | | Severance Payment | | $ | 617,753 | | | | — | | | | — | | | $ | 1,173,731 | | | | | | | | | | Target Annual Incentive Award (4) | | | — | | | | — | | | | — | | | $ | 555,978 | | | | | | | | | | Performance-Based Annual Incentive Award (4) | | $ | 696,974 | | | | — | | | | — | | | | — | | | | | | | | | | Value of unvested EDIP balance that would be accelerated (5) | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | Total: | | $ | 5,944,835 | | | | — | | | $ | 5,393,417 | | | $ | 8,393,920 | | | | | | | | William W. Pringle | | Value of unvested stock options that would be
accelerated (2),(3) | | $ | 1,425,256 | | | | — | | | $ | 1,932,034 | | | $ | 1,931,962 | | | | | | | | | | Value of unvested RSUs and PSUs that would be accelerated (2),(3) | | $ | 2,644,348 | | | | — | | | $ | 2,911,552 | | | $ | 4,185,594 | | | | | | | | | | Benefits continuation | | $ | 26,918 | | | | — | | | | — | | | $ | 26,918 | | | | | | | | | | Severance Payment | | $ | 584,064 | | | | — | | | | — | | | $ | 1,109,722 | | | | | | | | | | Target Annual Incentive Award (4) | | | — | | | | — | | | | — | | | $ | 525,658 | | | | | | | | | | Performance-Based Annual Incentive Award (4) | | $ | 585,373 | | | | — | | | | — | | | | — | | | | | | | | | | Value of unvested EDIP balance that would be accelerated (5) | | | — | | | | — | | | $ | 447,690 | | | | — | | | | | | | | | | | Total: | | $ | 5,265,959 | | | | — | | | $ | 5,291,276 | | | $ | 7,779,854 | | | | | | | | Stacey A. Walker | | Value of unvested stock options that would be
accelerated (2),(3) | | $ | 1,031,907 | | | | — | | | $ | 1,197,054 | | | $ | 1,197,010 | | | | | | | | | | Value of unvested RSUs and PSUs that would be accelerated (2),(3) | | $ | 1,754,990 | | | | — | | | $ | 1,805,839 | | | $ | 2,255,820 | | | | | | | | | | Benefits continuation | | $ | 29,366 | | | | — | | | | — | | | $ | 29,366 | | | | | | | | | | Severance Payment | | $ | 575,000 | | | | — | | | | — | | | $ | 1,063,750 | | | | | | | | | | Target Annual Incentive Award (4) | | | — | | | | — | | | | — | | | $ | 488,750 | | | | | | | | | | Performance-Based Annual Incentive Award (4) | | $ | 661,572 | | | | — | | | | — | | | | — | | | | | | | | | | Value of unvested EDIP balance that would be accelerated (5) | | | — | | | | — | | | $ | 287,259 | | | | — | | | | | | | | | | | Total: | | $ | 4,052,835 | | | | — | | | $ | 3,290,152 | | | $ | 5,034,696 | |
| | | | Termination/CiC Event | Named Executive
Officer | | Benefit | | Termination
Without Cause(1) | | Retirement | | Death | | Termination
Due to CiC(1) | | Barbara B. Hulit | | Value of unvested stock options that would
be accelerated (2),(3) | | $ | 1,686,949 | | $ | 1,731,002 | | $ | 2,603,143 | | $ | 2,603,143 | | | Value of unvested RSUs and PSUs that would
be accelerated (2),(3) | | $ | 3,355,621 | | $ | 3,232,732 | | $ | 3,789,516 | | $ | 5,799,184 | | | Benefits continuation | | $ | 14,588 | | | — | | | — | | $ | 14,588 | | | Severance Payment | | $ | 650,000 | | | — | | | — | | $ | 1,300,000 | | | Target Annual Incentive Award (4) | | | — | | | — | | | — | | $ | 650,000 | | | Performance-Based Annual Incentive
Award (4) | | $ | 833,300 | | | — | | | — | | | �� | | | Value of unvested EDIP balance that would
be accelerated (5) | | | — | | | — | | | — | | | — | | | Total: | | $ | 6,540,458 | | $ | 4,963,734 | | $ | 6,392,659 | | $ | 10,366,915 | | Edward R. Simmons | | Value of unvested stock options that would
be accelerated (2),(3) | | $ | 50,297 | | | — | | $ | 203,102 | | $ | 203,102 | | | Value of unvested RSUs and PSUs that would
be accelerated (2),(3) | | $ | 993,856 | | | — | | $ | 1,170,986 | | $ | 2,449,290 | | | Benefits continuation | | $ | 24,403 | | | — | | | — | | $ | 24,403 | | | Severance Payment | | $ | 600,000 | | | — | | | — | | $ | 1,080,000 | | | Target Annual Incentive Award (4) | | | — | | | — | | | — | | $ | 480,000 | | | Performance-Based Annual Incentive
Award (4) | | $ | 634,560 | | | — | | | — | | | — | | | Value of unvested EDIP balance that would be
accelerated (5) | | | — | | | — | | $ | 64,064 | | | — | | | Total: | | $ | 2,303,116 | | | — | | $ | 1,438,152 | | $ | 4,236,795 | | Olumide Soroye | | Value of unvested stock options that would
be accelerated (2),(3) | | $ | 33,954 | | | — | | $ | 332,230 | | $ | 332,230 | | | Value of unvested RSUs and PSUs that would
be accelerated (2),(3) | | $ | 985,772 | | | — | | $ | 2,812,915 | | $ | 8,047,451 | | | Benefits continuation | | $ | 27,696 | | | — | | | — | | $ | 27,696 | | | Severance Payment | | $ | 750,000 | | | — | | | — | | $ | 1,875,000 | | | Target Annual Incentive
Award (4) | | | — | | | — | | | — | | $ | 1,125,000 | | | Performance-Based Annual Incentive
Award (4) | | $ | 1,374,750 | | | — | | | — | | | — | | | Value of unvested EDIP balance that would be
accelerated (5) | | | — | | | — | | $ | 38,263 | | | — | | | Total: | | $ | 3,172,172 | | | — | | $ | 3,183,408 | | $ | 11,407,377 |
| (1) | Please see “Severance and Change in Control Plan for Officers”Benefits” for a description of the severance benefits and cash payments our NEOs would be entitled to receive if we terminate the executive’s employment without cause, or upon termination following a change-in-control, as well as a description of the noncompetition and other post-closing covenants agreed to by our NEOs under the Proprietary Interest Agreements. The amounts set forth in the table assume that the executive would have executed our standard release in connection with any termination without cause or termination following a change-in-control. |
| (2) | The terms of our 2016 Stock Incentive Plan provide for (a) continued pro-rata vesting of certain of the participant’s RSUs, PSUs, and stock options upon retirement under certain circumstances, and (b) accelerated vesting of a participant’s stock options and certain of a participant’s RSUs and PSUs if the participant dies during employment. |
| (3) | Pursuant to the Severance and Change in Control Plan for Officers (“Severance Plan”), in the event we terminate an NEO without cause not in connection with a change in control, a prorated portion of the NEO’s outstanding equity awards will remain outstanding and continue to vest pursuant to the original vesting schedule, subject to the satisfaction of any performance measures that had not been met prior to the date of the termination. The remaining portion of such unvested awards would be forfeited. If we terminate an NEO without cause or an NEO resigns with good reason, in either case within 2 years following a qualified change-in-control, all unvested equity awards shall become immediately vested (assuming, if applicable, that any performance goals were met at the target level, irrespective of any actual performance). |
| (4) | Pursuant to the Severance Plan, in the event we terminate an NEO without cause not in connection with a change in control, a prorated portion of the NEO’s annual incentive award will remain outstanding and be payable at the end of the performance period subject to the satisfaction of any performance measures that had not been met prior to the date of the termination. If we terminate an NEO without cause or an NEO resigns with good |
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Executive Compensation Tables
| reason, in either case within 2 years following a qualified change-in-control, a prorated portion of the NEO’s target annual incentive award will immediately vest and be paid. None of the annual incentive awards are prorated for purposes of the table since we assume that the NEO terminated employment on December 31, 2020,2021, which is the end of the performance period for our annual incentive awards, with assumed performance based on actual performance. |
| (5) | Under the terms of the EDIP, any unvested portion of the employer contributions that have been credited to the participant’s EDIP account would immediately vest upon the participant’s death. Ms. Simmons and Mr. Pringle isSoroye are the only NEONEOs who hashave unvested EDIP balances. |
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Pay Ratio Disclosure We are providing this pay ratio disclosure to comply with Item 402(u) of Regulation S-K promulgated under the Exchange Act. The pay ratio disclosed below is a reasonable estimate derived from our internal records using the methodology described below. This information may not be comparable to the ratio that any other company reports because other companies may have different employment and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their pay ratios. We have historically used October 1st of the applicable year to determine the employee population and to apply the compensation measure for the purposes of complying with Item 402(u). In connection with determining our “median employee” for purposes of calculating our pay ratio for the median employee identified in last year’s proxy statementfiscal year ended 2021 (the “2019“2021 Median Employee”), we considered only those employees that we employed as of October 1, 2019. The rest2021. In addition, in reliance on the “de minimis” exemption that the rule provides, we identified the 2021 Median Employee from an employee population that excluded the non-U.S. employees from each of the methodology that we used to identify the 2019 Median Employee is described in our Definitive Proxy Statement on Schedule 14A filedjurisdictions listed below. In compliance with the SEC on April 20, 2020.
For 2020, we again used October 1, 2020 as“de minimis” exemption, the 817 non-U.S. employees in the excluded countries constituted less than 5% of our determination date,16,914 aggregate employees (comprised of 9,437 U.S. and we concluded that,7,477 non-U.S. employees) as of October 1, 2020, there had been no change2021 (the “Cut-Off Date”).
| Country | | Employees in the Applicable
Country as of October 1, 2021 | | Argentina | | 23 | | Austria | | 18 | | Belgium | | 20 | | Chile | | 13 | | Columbia | | 42 | | Croatia | | 4 | | Czech Republic | | 3 | | Denmark | | 2 | | Ecuador | | 3 | | Egypt | | 2 | | Finland | | 15 | | Greece | | 4 | | Hong Kong | | 10 | | Indonesia | | 21 | | Ireland | | 28 | | Israel | | 33 | | Italy | | 78 | | Korea, Republic of | | 79 | | Malaysia | | 16 | | Mexico | | 94 | | Morocco | | 1 | | New Zealand | | 2 | | Norway | | 2 | | Panama | | 2 | | Peru | | 2 | | Philippines | | 3 | | Portugal | | 8 | | Qatar | | 4 | | Saudi Arabia | | 18 | | South Africa | | 18 | | Spain | | 38 | | Taiwan | | 67 | | Thailand | | 27 | | Tunisia | | 1 |
2022 PROXY STATEMENT
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| Country | | Employees in the Applicable
Country as of October 1, 2021 | | Turkey | | 14 | | United Arab Emirates | | 65 | | Vietnam | | 37 |
We identified the 2021 Median Employee by examining the base compensation plus cash bonuses for each of the employees in oursuch employee population (excluding the employees we describe above), using the following methodology: | ► | Using internal payroll records, we determined each employee’s base salary or wages plus overtime, as applicable, that we paid during the period from January 1, 2021 through September 30, 2021, which we refer to as the “compensation period.” For any permanent employee that we hired after January 1, 2021, we adjusted his or her base salary or wages plus overtime to reflect what such individual would have earned if he or she had been employed for the entire compensation period. | | ► | We added any cash incentive compensation, sales commission, and other bonus that we actually paid during the compensation period, irrespective of when earned, without making any adjustments with regard to employees that we hired after January 1, 2021. | | ► | For non-U.S. employees that we paid in currency other than U.S. Dollars, we applied the applicable currency exchange rate as of October 1, 2021. |
Once we identified our median employee compensation arrangements that would result in a significant change in our pay ratio disclosure, such that, consistent with the SEC’s regulations, we could continue to use the 2019 Median Employee in calculating our pay ratio for 2020. However, because the 2019 Median Employee joined Vontier in the subsequent separation of Vontier on October 9, 2020, for the purposes of our pay ratio disclosure, we used an employee (“Substitute Median Employee”) whose compensation was substantially similaraccording to the compensation for the 2019 Median Employee based on the compensation measuremethodology we used to previously identify the 2019 Median Employee. To determine the compensation of the Substitute Median Employee for purposes of the pay ratio,describe above, we calculated the Substitute Median Employee’ssuch employee’s total compensation for 2020 using2021 in the same methodology used to calculate theway that we calculated total compensation for each of theour NEOs that appear in the 2020 Summary Compensation Table. Table above. The total compensation of James A. Lico, our Chief Executive Officer, and the total compensation of our Substitute Median Employee for 2020median employee in 2021 were $13,624,063$16,598,719 and $58,268,$61,746, respectively, resulting in a ratio of Mr. Lico’s compensation to the Substitute Median Employee’smedian employee’s compensation of 233.8268.8 to 1.
Table of Contents | | | | | | | 2021 Proxy Statement 81 | | 87 |
| | | | | Equity Compensation Plan Information |
All data set forth in the table below is as of December 31, 2020. As discussed in further detail in “Compensation Discussion and Analysis—Treatment of Equity-Based Compensation Upon Vontier Separation,” all of the share amounts and option exercise prices set forth below reflect adjustments pursuant to the anti-dilution provisions of the 2016 Plan and EDIP, as applicable, to account for the separation of Vontier and preserve the intrinsic value of each award.2021. | | | | | | | | | | | | | | | | NUMBER OF SECURITIES
TO BE ISSUED UPON EXERCISE
OF OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS | | | WEIGHTED-AVERAGE
EXERCISE PRICE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS | | | NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDER
EQUITY COMPENSATION
PLANS (EXCLUDING
SECURITIES REFLECTED IN
COLUMN (A)) | | | PLAN CATEGORY | | (A) | | | (B) (1) | | | (C) | | Equity compensation plans approved by security holders (2) | | | 11,846,031 | (3) | | $ | 43.99 | | | | 21,713,644 | (4) | Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | | Total | | | 11,846,031 | | | | 43.99 | | | | 21,713,644 | |
| | Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights | | Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights | | Number of Securities Remaining
Available for Future Issuance Under
Equity Compensation Plans (Excluding
Securities Reflected in Column (A)) | | Plan Category | | (A) | | (B)(1) | | (C) | Equity compensation plans approved
by security holders(2) | | 11,343,529(3) | | $54.81 | | 19,496,963(4) | Equity compensation plans not
approved by security holders | | — | | — | | — | | Total | | 11,343,529 | | $54.81 | | 19,496,963 |
| (1) | The RSUs, RSAs, PSUs, and PSAsPSUs that have been issued under our 2016 Stock Incentive Plan (the “Stock Plan”) do not require a payment by the recipient to us at the time of vesting. In addition, under our EDIP, if a participant receives their EDIP distribution in shares of common stock, the participant’s EDIP balance is converted into shares of common stock and distributed to the participant at no additional cost. As such, the weighted-average exercise price in column (b) does not take these awards into account. |
| (2) | Consists of the Stock Plan and the EDIP. |
| (3) | Consists of 10,865,313 shares attributable to the Stock Plan and 980,718 shares attributable to the EDIP. Under the terms of the EDIP, upon distribution of a participant’s EDIP balance the participant may elect to receive his or her distribution in cash, shares of common stock or a combination of cash and shares of common stock (except that any portion of a participant’s account that is subject to the common stock earnings rate must be distributed in shares of common stock). For purposes of this table, we have assumed that all EDIP balances as of December 31, 20202021 would be distributed in common stock. |
| (4) | Consists of 20,787,526 shares available for future issuance under the Stock Plan and, based on notional phantom shares representing outstanding balances in EDIP accounts as of December 31, 2020, 926,1182021, shares available for future issuance under the EDIP. |
2022 PROXY STATEMENT
Table of Contents | | | | | 88 82 | | 2021 Proxy Statement | | FORTIVE CORPORATION Equity Compensation Plan Information |
| | | | | Proposal 3. 2
| Advisory Vote on
Executive Compensation |
In accordance with Section 14A of the Securities Exchange Act, we are asking our shareholders to vote at the Annual Meeting to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement (the “say-on-pay“say-on-pay vote”). Our say-on-pay vote occurs every year. Our shareholders will have an opportunity every six years to vote on an advisory basis on the frequency of the say-on-pay vote, with the next advisory vote on the frequency to occur in 2023. As discussed in detail under the heading “Executive Compensation—Compensation“Compensation Discussion and Analysis,” our executive compensation program is designed to attract and retain executives with the leadership skills, attributes and experience necessary to succeed in an enterprise with the Company’s overall size, diversity and global footprint; drive sustainable performance that delivers long-term value to shareholders; align the interest of the executives with those of the shareholders; align compensation with the Company’s business strategy; and motivate our executives to demonstrate exceptional personal performance and perform consistently over the long-term at or above the levels that we expect. Our executive compensation program is structured within a strong framework of compensation governance with a bias toward compensation that is dependent on long-term company performance and with compensation that is balanced to mitigate risks appropriately. We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. Accordingly, we are asking our shareholders to vote on an advisory basis “FOR” the following non-binding resolution: “RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” The vote on this proposal is not intended to address any specific element of compensation; rather, the vote relates to all compensation relating to the Company’s named executive officers, as described in this Proxy Statement. The vote is advisory and is not binding on the Company, the Board, or the Compensation Committee and will not be construed as overruling a decision by, or creating or implying any additional fiduciary duty for, the Company, the Board, or the Compensation Committee. However, the Board and Compensation Committee value the opinions expressed by shareholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions and policies regarding the Company’s executive officers.  | | | | | | | | | | | The Board of Directors recommends that shareholders vote “FOR”the resolution set forth in Proposal 3.2. |
Table of Contents | Equity Compensation Plan Information | | 83 |
| Proposal 3 | Ratification of Independent
Registered Public Accounting Firm |
| | | | | | | 2021 Proxy Statement | | 89 |
| | | | | Proposal 4. Approval of an Amendment to our Amended and Restated Certificate of Incorporation to Allow Holders who Own at Least Twenty-Five Percent (25%) of the Company’s Outstanding Shares of Common Stock to Request that a Special Meeting of Shareholders be Called
|
After careful consideration, our Board has unanimously adopted, and recommends that our shareholders approve, an amendment (the “Proposed Amendment”) to our Amended and Restated Certificate of Incorporation (the “Charter”) to allow holders of record who own at least 25%The Audit Committee on behalf of the our outstanding sharesCompany has appointed Ernst & Young LLP, an international accounting firm of Common Stockindependent certified public accountants, to act as the independent registered public accounting firm for the Company and who otherwise comply withits consolidated subsidiaries for the requirements set forth in our Bylaws from timeyear ending December 31, 2022. Representatives of Ernst & Young LLP are expected to timebe present at the Annual Meeting, will have the opportunity to request thatmake a special meeting of shareholders be called. If shareholders approve the Proposed Amendment, as described in more detail below, the Company’s Amendedstatement if they desire to do so, and Restated Bylaws (the “Bylaws”) will be amendedavailable to conformrespond to the Proposed Amendment and to set forth certain requirements and procedures that must be met for shareholders to have the ability to require the Company to call a special meeting of shareholders (the “Special Meeting Bylaw Amendment”). Shareholders do not currently have the right to call a special meeting of shareholders. The Proposed Amendment is set forth in Appendix A. This summaryappropriate questions. Although shareholder approval of the Proposed Amendmentselection of Ernst & Young LLP is qualified in its entiretynot required by reference to Appendix A.
Atlaw, the time of our separation from Danaher Corporation in 2016, Article VI of our Charter limited the ability to call a special meeting of our shareholders to our Board of Directors our Chairman of the Board and our Chief Executive Officers, with the ability of the shareholder to call a special meeting of the shareholders specially denied.
The Proposed Amendment and the Special Meeting Bylaw Amendment are a result of the Board’s ongoing review of our corporate governance polices, as well as a review of the policies and preferences of certain of our significant shareholders. Our Board believes that the Proposed Amendment and the Special Meeting Bylaw Amendment strike an appropriate balance between enhancing shareholder rights and adequately protecting shareholder interests. The Board recognizes that providing shareholders the abilityit is advisable to call special meetings is viewed by some shareholders as an important corporate governance practice. However, special meetings of the shareholders can be potentially disruptive to business operations and to long-term shareholder interests and can cause the Company to incur substantial expenses. Accordingly, the Board believes that the proposed 25% threshold for calling special meetings of shareholders will help balance these considerations and will provide that special meetings are extraordinary events. In addition, the Board believes that shareholder-requested special meetings should not be held in close proximity to annual meetings or when the matters to be addressed have been recently considered or are planned to be considered at another meeting. Our Board (including each of the Chairman and the Chief Executive Officer) would continue to have the ability to call special meetings ofgive our shareholders an opportunity to ratify this selection. If this proposal is not approved by our shareholders at the Annual Meeting, the Audit Committee will reconsider its selection of Ernst & Young LLP. Even if the selection of Ernst & Young LLP is ratified, the Audit Committee in instances when, inits discretion may select a different independent registered public accounting firm at any time during the exercise of their fiduciary obligations, they determineyear if it is appropriate.
After careful consideration, our Board has determineddetermines that itsuch a change would be in the best interests of the Company and our shareholders.
 | The Board of Directors recommends that shareholders vote “FOR” the ratification of the appointment of Ernst & Young LLP to serve as the Company’s independent registered public accounting firm for 2022. |
2022 PROXY STATEMENT
Table of Contents Audit Committee Matters Fees Paid to Independent Registered Public Accounting Firm Aggregate fees for professional services rendered by our independent registered public accounting firm, Ernst & Young LLP, for 2021 and has declared it advisable to amend our Charter as set forth on Appendix A to allow holders of record who own at least twenty-five percent (25%) of the Company’s outstanding shares of Common Stock and who otherwise comply with the requirement2020 are set forth in the Bylaws (includingtable below. | Fee Categories | | Fiscal 2021 Fees | | Fiscal 2020 Fees | | Audit Fees(1) | | $ | 10,215,633 | | $ | 10,628,572 | | Audit-Related Fees(2) | | $ | 143,000 | | $ | 738,400 | | Tax Fees(3) | | $ | 1,098,014 | | $ | 4,678,256 | | All Other Fees(4) | | $ | 0 | | $ | 0 | | Total Fees | | $ | 11,456,647 | | $ | 16,045,228 |
| (1) | Audit Fees consist of fees for the integrated audit of annual financial statements and internal control over financial reporting, reviews of quarterly financial statements, statutory audits, audit of captive insurance company, audit procedures associated with the adoption of new accounting standards, consents, review of documents filed with the SEC, and other services normally provided by the auditor in connection with statutory and regulatory filings or engagements. | | (2) | Audit-Related Fees consist of fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements and internal control over financial reporting that are not reported under “Audit Fees” above, including employee benefit plan audits, due diligence related to acquisitions, and consultations concerning financial accounting and reporting standards. | | (3) | Tax Fees consist of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance, assistance with tax reporting requirements and audit compliance, mergers and acquisitions tax diligence, and tax advice on international, federal and state tax matters. None of these services were provided under contingent fee arrangements. Tax compliance fees were $154,981 and $160,716 in fiscal 2021 and 2020, respectively. All other tax fees were $0.9 million and $4.5 million in fiscal 2021 and 2020, respectively. The fees for tax services related to the separation of Vontier into a separate, publicly-traded company were approximately $0.4 million and $3.6 million in fiscal 2021 and 2020, respectively. | | (4) | All Other Fees consist of fees for products and services provided by Ernst & Young LLP, other than the services reported under “Audit Fees,” “Audit-Related Fees” or “Tax Fees” above. |
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors Under its charter, the Special Meeting Bylaw Amendment)Audit Committee must pre-approve all auditing services and permitted non-audit services to requestbe performed for the Company and its consolidated subsidiaries by our independent registered public accounting firm. To assure that the audit and non-audit services performed by the independent registered public accounting firm do not impair its independence, the Audit Committee establishes on an annual basis the Pre-Approval Policy of the Audit Committee (the “Policy”). The Policy outlines the scope of services that Ernst & Young LLP may provide to the Company. The Policy sets forth guidelines and procedures the Company must follow when retaining Ernst & Young LLP to perform audit, audit-related, tax and other services. The Policy also specifies certain non-audit services that may not be performed by Ernst & Young LLP under any circumstances. Pursuant to the Policy, the Audit Committee approves services to be provided by Ernst & Young LLP and fee thresholds within each of the service categories, and services within these thresholds are deemed pre-approved. Additional services and fees materially exceeding those thresholds require further pre-approval. Requests for specific pre-approvals may be considered by the full Audit Committee. In addition, the Audit Committee has delegated to the Chair the authority to grant specific pre-approvals. Any such pre-approvals are reported to the full Audit Committee at its next meeting. The Policy is evaluated and updated annually by the Audit Committee. The Audit Committee has pre-approved all amounts for 2021.
Table of Contents Audit Committee Report This report 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 Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference into any prior or subsequent filing by Fortive Corporation under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Fortive Corporation specifically incorporates this report by reference therein. The Audit Committee has been appointed by the Board of Directors to assist the Board of Directors in the oversight of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the qualifications and independence of the Company’s independent auditor, and (iv) the performance of the Company’s internal audit function and independent auditors. In addition, the Audit Committee reviews with management the Company’s risk assessment process and risk management policies. Furthermore, within the scope of its compliance oversight responsibilities, the Audit Committee reviews with management the Company’s major cybersecurity risk exposures and the steps management has taken to monitor and mitigate such exposures. Each member of the Audit Committee meets the criteria for independence applicable to audit committee members under the Exchange Act and the NYSE listing standards. Each member of the Audit Committee is financially literate within the meaning of the NYSE listing standards, and the Board of Directors has further determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as that term is defined in Regulation S-K. Management is responsible for the financial reporting process, including its internal control over financial reporting, and for the preparation of its consolidated and combined financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company’s independent registered public accounting firm is responsible for performing an independent audit of the consolidated and combined financial statements, and expressing opinions on the conformity of the financial statements with GAAP. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. Ernst & Young was first appointed by the Audit Committee as the Company’s independent registered public accounting firm concurrently with the Company’s separation from Danaher in 2016. The Audit Committee will interview and select any new lead audit engagement partner from Ernst & Young, which Ernst & Young will rotate every five years. In addition, the Audit Committee will also consider as part of its oversight whether to rotate the Company’s independent registered public accounting firm. After consideration of the independence and performance of the Company’s independent registered public accounting firm, the Audit Committee believes that the continued retention of Ernst & Young to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders. Consequently, the Audit Committee has appointed Ernst & Young as the Company’s independent registered public accounting firm for 2022. The Audit Committee has reviewed and discussed with the Company’s management and with Ernst & Young (with and without management present) the audited consolidated and combined financial statements of the Company contained in the Company’s Annual Report on Form 10-K for year ended December 31, 2021 and the Company’s internal control over financial reporting. The Audit Committee has also discussed with Ernst & Young LLP the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board and the SEC. The Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accounting firm’s communications with the Audit Committee concerning independence. The Audit Committee has discussed with Ernst & Young LLP its independence, including a review of both audit and non-audit fees, and considered the compatibility of non-audit services with maintaining Ernst & Young’s independence. Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated and combined financial statements for the Company for the year ended December 31, 2021 be included in the Company’s Annual Report on Form 10-K for its fiscal year 2021 for filing with the Securities and Exchange Commission. Audit Committee of the Board of Directors
Rejji P. Hayes (Chair)
Kate D. Mitchell
Jeannine Sargent 2022 PROXY STATEMENT
Table of Contents | 86 | | Audit Committee Report |
| Proposal 4 | Elimination of the Supermajority
Voting Requirements Applicable to
Shares of Our Common Stock |
Article IX of our Restated Certificate of Incorporation (“Charter”) provides that a special meetingsupermajority vote of 80% of the shareholders be called. The Board has also conditionally approved the changes to our Bylaws relating to this matter, which changes as further described below will become effective upon the filing and effectivenessvoting power of the Certificateshares entitled to vote for the election of Amendment.directors will be required to amend, alter, change, or repeal or to adopt any provision inconsistent with Article V (Board of Directors), Article VI (Stockholders), Article VII (Limitation of Liability; Indemnification), or Article IX (Amendment) of the Charter or to amend, repeal or adopt any provision of the Bylaws. After considering the advantages and disadvantages of supermajority voting requirements applicable to the shares of common stock in the Charter, the board has approved, subject to approval of this Proposal 4 by the shareholders, to amend the Charter (the “Amendments”) to eliminate the supermajority voting requirements noted above in favor of a majority of the shares of common stock outstanding. No conforming amendments to the Bylaws will be required to effectuate the elimination of the supermajority voting requirements noted above. The Proposed AmendmentAmendments would become effective upon the filing of a Certificate of Amendment setting forth the Proposed Amendment (the “Certificate of Amendment”)Amendments with the Secretary of State of the State of Delaware, which we would file promptly following the Annual Meeting if our shareholders approve this Proposal 4. | | | | | 90 | | 2021 Proxy Statement | | FORTIVE CORPORATION |
Proposal 4. Approval of an Amendment to our Amended and Restated Certificate of Incorporation
the Amendments. The Proposed Amendment isAmendments are attached to this proxy statement as Appendix A. The affirmative vote of the holders of 80 percent of the outstanding shares of our Common Stockcommon stock entitled to vote generally in the election of directors on the record date is required to approve this proposal pursuant to the Charter. | | | | | | | | | | | The Board of Directors recommends that shareholders vote “FOR”the approval of an amendmentthe amendments to our Amended andFortive’s Restated Certificate of Incorporation to alloweliminate the supermajority voting requirements |
Table of Contents Additional Information About This Proxy Statement and the Annual Meeting This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (“Board”) of Fortive Corporation, a Delaware corporation (“Fortive”), of proxies for use at the 2022 Annual Meeting of Shareholders (the “Annual Meeting”) to be held in virtual only meeting format through www.virtualshareholdermeeting.com/FTV2022 at 3:00 p.m., PDT, and at any and all postponements or adjournments thereof. Fortive’s principal address is 6920 Seaway Blvd., Everett, WA 98203. The date of mailing of this Proxy Statement is on or about April 25, 2022. The purpose of the 2022 Annual Meeting is to: | 1. | Elect the eight director nominees named in this Proxy Statement, each for a one-year term expiring at the 2023 annual meeting and until his or her respective successor is duly elected and qualified; | | 2. | Approve on an advisory basis Fortive’s named executive officer compensation; | | 3. | Ratify the selection of Ernst & Young LLP as Fortive’s independent registered public accounting firm for the year ending December 31, 2022; | | 4. | Approve amendments to Fortive’s Restated Certificate of Incorporation to eliminate the supermajority voting requirements; and | | 5. | Consider and act upon such other business as may properly come before the meeting or any adjournment thereof. |
Annual Meeting Participation As a result of the coronavirus (COVID-19) pandemic and the continuing public health and travel concerns of our shareholders, directors, officers, employees and service providers, we will conduct the 2022 Annual Meeting in a virtual-only meeting format. You will not be able to attend the 2022 Annual Meeting physically. We anticipate that we will return to holding in-person annual meetings in the future when doing so will not jeopardize the health of our meeting attendees. If you plan to participate in the 2022 Annual Meeting, you must be shareholder of record as of the record date of April 11, 2022. If you are not a shareholder of record but hold shares through a broker, bank or nominee (i.e., in street name), you must hold a legal proxy for the 2022 Annual Meeting provided by your broker, bank or nominee. To be admitted to the 2022 Annual meeting at www.virtualshareholdermeeting.com/FTV2022, you must enter the 16-digit control number found on your proxy card, voting instruction form or Notice of Internet Availability. On June 7, 2022, you may begin to log into the meeting platform beginning at 2:30 p.m. Pacific time and the meeting will begin promptly at 3:00 p.m. Pacific time. The virtual meeting platform is fully supported across browsers and devices running the most updated version of applicable software. Participants should ensure that they have a strong WiFi connection wherever they intend to participate in the meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting. The rules and procedures applicable to the 2022 Annual Meeting, together with a list of shareholders of record for inspection for any legally valid purpose, will be available during the 2022 Annual Meeting for the participating shareholders of record at www.virtualshareholdermeeting.com/FTV2022. You may vote during the 2022 Annual Meeting by following the instructions available on the meeting website during the meeting. Whether or not you participate in the 2022 Annual Meeting, we encourage you to vote and submit your proxy in advance of the meeting by one of the methods described in these proxy materials. The proxy card included with the proxy materials may be used to vote your shares in connection with the 2022 Annual Meeting. 2022 PROXY STATEMENT
Table of Contents | 88 | | Additional Information |
Similar to in-person meetings, you will have the ability to submit questions live during the annual meeting. Questions may be submitted during the meeting through www.virtualshareholdermeeting.com/FTV2022 by typing your question into the “Ask a Question” field and clicking “Submit.” Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints. If you encounter any difficulties accessing the meeting during the meeting time, please call the technical support number that will be posted on the meeting website. Following completion of the meeting, a webcast replay will be posted online to our Investor Relations website at www. fortive.com for at least one year. Outstanding Stock and Voting Rights In accordance with Fortive’s Amended and Restated Bylaws, the Board has fixed the close of business on April 11, 2022 as the record date for determining the shareholders entitled to notice of, and to vote at, the Annual Meeting. Only shareholders of record at the close of business on that date will be entitled to vote. The only outstanding securities of Fortive entitled to vote at the Annual Meeting are shares of Common Stock, $.01 par value (“Common Stock”). Each outstanding share of Common Stock entitles the holder to one vote on each directorship and other matter brought before the Annual Meeting. As of the close of business on April 11, 2022, ________ shares of Common Stock were outstanding, excluding shares held by or for the account of Fortive. Solicitation of Proxies The proxies being solicited hereby are being solicited by Fortive’s Board. The total expense of the solicitation will be borne by Fortive, including reimbursement paid to banks, brokerage firms and nominees for their reasonable expenses in forwarding material regarding the Annual Meeting to beneficial owners. Solicitation of proxies may be made personally or by mail, telephone, internet, e-mail or facsimile by officers and other management employees of Fortive, who will receive no additional compensation for their services. In addition, we have retained D.F. King & Co., Inc. to aid in the solicitation of proxies by mail, telephone, facsimile, e-mail and personal solicitation. For these services, we will pay D.F. King & Co., Inc. a fee of $12,500 plus reasonable expenses. Proxy Instructions Proxies will be voted as specified in the proxy. If you sign and submit your proxy card with no further instructions, your shares will be voted: | FOR the election of each of the eight director nominees identified in this Proxy Statement to serve as directors, each for a one-year term expiring at the 2023 Annual Meeting; | | FOR ratification of the selection of Ernst & Young LLP as Fortive’s independent registered public accounting firm for the year ending December 31, 2022; | | FOR approval of the Company’s named executive officer compensation; | | FOR approval of amendments to the Restated Certificate of Incorporation to eliminate the supermajority voting requirements; | | In the discretion of the proxy holders on any other matter that properly comes before the meeting or any adjournment thereof. The Board has selected Peter C. Underwood and Daniel B. Kim to act as proxies with full power of substitution. |
Table of Contents | Additional Information | | 89 |
Notice of Electronic Availability of Proxy Materials As permitted by the SEC rules, we are making the proxy materials available to our shareholders primarily via the Internet. By doing so, we can reduce the printing and delivery costs and the environmental impact of the Annual Meeting. On or about April 25, 2022, we mailed a Notice of Internet Availability of Proxy Materials (the “Notice”) to our shareholders. The Notice contains instructions on how to access our proxy materials and how to vote online or by telephone. If you would like to receive a paper copy of the proxy materials, please follow the instructions in the Notice. Voting Requirements with Respect to Each of the Proposals Described in this Proxy Statement Quorum The quorum necessary to conduct business at the Annual Meeting consists of a majority of the issued and outstanding shares of Common Stock entitled to vote at the Annual Meeting as of the record date present in person or represented by proxy. Abstentions and broker non-votes will be counted as present in determining whether the quorum requirement is satisfied. Broker Non-Votes Under New York Stock Exchange (“NYSE”) rules, if your broker holds your shares in its name and does not receive voting instructions from you, your broker has discretion to vote those shares on Proposal 3, which is considered a “routine” matter. However, on “non-routine” matters such as Proposals 1, 2, and 4, your broker must receive voting instructions from you, as it does not have discretionary voting authority for these particular items. Therefore, if you are a beneficial owner and do not provide your broker with voting instructions, your shares may constitute broker non-votes with respect to Proposals 1, 2, and 4. Broker non-votes will not affect the required vote with respect to Proposals 1 and 2. However, because approval of Proposal 4 requires the affirmative vote of the holders of 80 percent of the outstanding shares entitled to vote generally in the election of directors on the record date, broker non-votes will have the same effect as a vote against Proposal 4. Approval Requirements If a quorum is present, the vote required under the Company’s Amended and Restated Bylaws and the Restated Certificate of Incorporation to approve each of the proposals is as follows: | ► | With respect to Proposal 1, the election of directors, you may vote “for” or “against” any or all director nominees or you may abstain as to any or all director nominees. In uncontested elections of directors, such as this election, a nominee is elected by a majority of the votes cast by the shares present in person or represented by proxy and entitled to vote. A “majority of the votes cast” means that the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee. A vote to abstain is not treated as a vote “for” or “against,” and thus will have no effect on the outcome of the vote. Under our director resignation policy, our Board will not appoint or nominate for election to the Board any person who own at least twenty-five percent (25%)has not tendered in advance an irrevocable resignation effective in such circumstances where the individual does not receive a majority of the votes cast in an uncontested election and such resignation is accepted by the Board. If an incumbent director is not elected by a majority of the votes cast in an uncontested election, our Nominating and Governance Committee will submit for prompt consideration by the Board a recommendation whether to accept or reject the director’s resignation. The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. | | ► | With respect to Proposals 2 and 3, the affirmative vote of the holders of a majority of the shares of Common Stock represented in person or by proxy and entitled to vote on the proposal is required for approval. For these proposals, abstentions are counted for purposes of determining the minimum number of affirmative votes required for approval and, accordingly, have the effect of a vote against the proposal. | | ► | With respect to Proposal 4, the affirmative vote of the holders of 80% of the outstanding shares of Common Stock entitled to request thatvote generally in the election of directors on the record date is required to approve this proposal. For this proposal abstentions are counted for the purposes of determining the minimum number of affirmative votes required for approval and, accordingly, have the effect of a special meeting ofvote against the shareholders be called.proposal. |
2022 PROXY STATEMENT
Table of Contents | 90 | | Additional Information |
Conditional AmendmentsTabulation of Votes. Our inspector of election, Broadridge Financial Services, will tabulate votes cast by proxy or in person at the meeting. We will report the results in a Current Report on Form 8-K filed with the SEC within four business days of the Annual Meeting.
Voting Methods If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered the registered holder of those shares. As the registered shareholder, you can ensure your shares are voted at the Annual Meeting by submitting your instructions by telephone, over the internet, by completing, signing, dating and returning the enclosed proxy card in the envelope provided, or by participating in the virtual Annual Meeting and voting your shares at the meeting. Telephone and internet voting for registered shareholders will be available 24 hours a day, up until 11:59 p.m., Eastern time on June 6, 2022. Detailed instructions for telephone and internet voting are set forth on the Notice.  | Vote your shares at www.proxyvote.com. Have your Notice of Internet Availability or proxy card in hand for the 16-digit control number needed to vote. | | |  | Call toll-free number 1-800-690-6903. | | |  | Mark, sign, date, and return the enclosed proxy card or voting instruction form in the envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
If you hold your shares through a broker, bank or nominee, rather than registered directly in your name, you are considered the beneficial owner of shares held in street name, and the proxy materials are being forwarded to you by your broker, bank or nominee, together with a voting instruction form. As the beneficial owner, you are entitled to direct the voting of your shares by your intermediary. Brokers, banks and nominees typically offer telephonic or electronic means by which the beneficial owners of shares held by them can submit voting instructions, in addition to the Bylawstraditional mailed voting instruction forms. If you participate in the Proposed Amendment is approved by our shareholders, upon its effectiveness,Fortive Stock Fund through the BylawsSavings Plan, your proxy will be amended to conform toalso serve as a voting instruction for Fidelity Management Trust Company (“Fidelity”), the provisionstrustee of the Charter (including the Proposed Amendment) andSavings Plan, with respect to specify the procedures for shareholder-requested special meetings. The Special Meeting Bylaw uses the current definition of stock ownership that applies under Section 2.12 of the Bylaws for shareholders who seek to use proxy access. Under this definition, a person will be deemed to “own” only those shares of Common Stock asattributable to which the person possesses (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit from and risk of loss on) such shares. The definition excludes ownership of derivative securities,your Savings Plan account as detailed further in the Bylaws. The Board believes that this definition of ownership is an appropriate mechanism to limit shareholders’ ability to request that a special meeting be called to shareholders with full economic interest and voting rights in our Common Stock. The Special Meeting Bylaw Amendment would provide that any shareholders seeking to require that the Company call a special meeting must furnish information, including the information that would be required when shareholders seek to propose business or nominate directors at a shareholders’ meeting under our advance notice provisions in the Bylaws. This is intended to promote transparency and to provide the Company and shareholders with comparable information about matters that a shareholder seeks to present for a shareholder vote, whether the shareholder is seeking to use the advance notice process or requesting that the Company call a special meeting of shareholders.
Under the Special Meeting Bylaw Amendment, any disposition of shares by the requesting shareholder(s) that count toward the 25% ownership threshold will be deemed a revocation of the special meeting request with respect to therecord date. Fidelity will vote your Savings Plan shares disposed, and that such shares will no longer be counted for purposes of determining whether the 25% ownership threshold requirement has been satisfied. If, at any point after 60 days following delivery of an initial special meeting request, unrevoked requests represent less than 25% of the outstanding shares of Common Stock, the Board would have the discretion to cancel the special meeting of shareholders. The requesting shareholder(s) will also be required to update the information provided in the request to ensure that it is true and correct as of the record date forin the specialmanner directed by you. If Fidelity does not receive voting instructions from you by June 2, 2022, Fidelity will not vote your Savings Plan shares on any of the proposals brought at the Annual Meeting.
Changing Your Vote Any person giving a proxy pursuant to this solicitation has the power to revoke it at any time before it is voted. It may be revoked by filing with the Secretary of Fortive a written notice of revocation or a duly executed proxy bearing a later date, or it may be revoked by participating in the meeting and asvoting at the meeting. Please note, however, that if your shares are held of 15 days priorrecord by a broker, bank or nominee and you wish to revoke your proxy or vote at the meeting, you must follow the instructions provided to you by the record holder and/or obtain from the record holder a proxy issued in your name. Participation in the meeting will not, by itself, revoke a proxy. Householding We are permitted to send a single set of our proxy statement and annual report to shareholders who share the same last name and address. This procedure is called “householding” and is intended to reduce our printing and postage costs. We will promptly deliver a separate copy of our annual report and proxy statement to you if you contact us at Fortive Corporation, Attn: Investor Relations, 6920 Seaway Blvd., Everett, WA 98203; telephone us at 425-446-5000; or email us at investors@fortive.com. In addition, if you want to receive separate copies of the proxy statement or annual report in the future; if you and another shareholder sharing an address would like to request delivery of a single copy of the proxy statement or annual report at such special meeting.address in the future; or if you would like to make a permanent election to receive either printed or electronic copies of the proxy materials and annual report in the future, you may contact us at the same address, telephone number or email address. If you hold your shares through a broker or other intermediary
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Website DisclosureProposal 4. ApprovalWe may provide disclosure in the “Investor – Corporate Governance” section of an Amendmentour corporate website, http://www. fortive.com, of any of the following:
| ► | the identity of the presiding director at meetings of non-management or independent directors, or the method of selecting the presiding director if such director changes from meeting to meeting; | | ► | the method for interested parties to communicate directly with the Board or with individual directors, the independent Chairman of the Board, or if the Chairman is not independent, the Lead Independent Director, or the non-management directors as a group; | | ► | the identity of any member of the Audit Committee, if any, who also serves on the audit committees of more than three public companies and a determination by the Board that such simultaneous service will not impair the ability of such member to effectively serve on our Audit Committee; | | ► | contributions by Fortive to a tax exempt organization in which any non-management director serves as an executive officer if, within the preceding three years, contributions in any single fiscal year exceeded the greater of $1 million or 2% of such tax exempt organization’s consolidated gross revenues; and | | ► | any amendment to the Code of Conduct that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, and any waiver from a provision of the Code of Conduct granted to any of our directors, principal executive officer, principal financial officer, principal accounting officer, or any other executive officer within four business days following the date of such amendment or waiver. |
Information Relating to Forward-Looking Statements Certain statements included in this Proxy Statement are “forward-looking statements” within the meaning of the United States federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation, statements regarding strategic plans and plans for growth, innovation and future operations; financial or operating targets or projections; future capital allocation, acquisitions and the integration thereof; plans and strategies relating to corporate governance, executive compensation, director compensation, sustainability, and human capital management; the goals, objectives and anticipated benefits of our Amendedexecutive compensation and Restated Certificatedirector compensation programs; risk oversight; risk mitigation efforts; the anticipated roles and responsibilities of Incorporation A special meeting called would havethe Board’s committees; plans with respect to shareholder engagement and alignment, Board recruitment, selection and refreshment; general economic and capital markets conditions; the timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Fortive intends or believes will or may occur in the future. Terminology such as “believe,” “anticipate,” “should,” “could,” “intend,” “will,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “possible,” “potential,” “forecast” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words. Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other factors they believe to be heldappropriate. These forward-looking statements are subject to a number of risks and uncertainties, including but not more than 90 days afterlimited to the Company receives a valid special meeting request. The Special Meeting Bylaw Amendment sets forth certain procedural requirements that the Board believes are appropriate to avoid duplicative or unnecessary special meetings. Under these provisions, a special meeting request would not be valid if it:
does not comply with the requirements pertaining to special meeting requestsrisks and uncertainties set forth under “Item 1A. Risk Factors” in the Bylaws or applicable law;
relates to an itemaccompanying Annual Report on Form 10-K for the year ended December 31, 2021. Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business that isdecisions contemplated by our forward-looking statements. Accordingly, you should not a proper subject for shareholder action under applicable law;
is delivered during the period commencing 90 days prior to the first anniversaryplace undue reliance on any such forward-looking statements. Forward-looking statements included in this Proxy Statement speak only as of the preceding year’s annual meeting and ending on the date of this Proxy Statement. Except to the next annual meeting date;
relates to a Similar Item (where the election of directors shall be deemed to be a “Similar Item” with respect to all items of business involving election or removal of directors, changing the size of the Board and the filing of vacancies or newly created directorships) that was presented at a meeting of shareholders held within 90 days before the special meeting request is delivered; and
relates to a Similar Item that is included in the Company’s notice of meeting for a shareholder meeting that has been called but not yet held or that is called for a date within 90 days of the receipt of the special meeting request.
Business transacted at the meeting would be limited to the purpose(s) stated in the shareholder request(s) for a special meeting, and any other matters submitted to the meeting by our Board.
In the event the Proposed Amendment is approved, upon the filing and effectiveness of the Certificate of Amendment, the Special Meeting Bylaw would become effective without any further action by the Board or the shareholders.
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| | | | | Proposal 5. Shareholder Proposal Regarding Shareholder Action by Written ConsentOther Matters
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John Chevedden (2215 Nelson Avenue, No, 205, Redondo Beach, CA 90278) who owns at least 75 shares of Common Stock has notified us that he intends to present the proposal set forth below for consideration at the 2021 Annual Meeting. The following shareholder proposal will be voted on at our 2021 Annual Meeting if properly presented by the shareholder proponent or by a qualified representative on behalf of the shareholder proponent. We do not believe that certain assertions in the shareholder proposal are correct. We have not attempted to refute these inaccuracies, and the Company is not responsible for the inaccuracies it contains. Furthermore, the graphic below, for which we accept no responsibility, was submitted as part of the shareholder proposal. Our Board of Directors has recommended a vote AGAINST the shareholder proposal for the reasons set forth below in “The Statement by the Board of Directors in OPPOSITION.”
Proposal 5 – Adopt a Mainstream Shareholder Right - Written Consent
Shareholders request that our board of directors take such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to give shareholders the fullest power to act by written consent consistent with applicable law. This includes shareholder ability to initiate any appropriate topic for written consent.
This proposal topic won 95%-support at Dover Corporation and 88%-support at AT&T.
A shareholder right to act by written consent affords Fortive management strong deference for any lingering status quo management mentality. Any action taken by written consent would still need 56% supermajority approval from the shares that normally cast ballots at the Fortive annual meeting to equal a majority from the Fortive shares outstanding.
The right for the shareholders to act by written consent is gaining acceptance as a more important right than the right to call a special meeting. The directors at Intel apparently thought they could divert shareholder attention away from written consent by making it less difficult for shareholder attention away from written consent by making it less difficult for shareholders to call a special meeting. However Intel shareholders responded with greater support for written consent in 2019 compared to 2018.
Even if we did have a shareholder right to call for a special shareholder meeting it would still be important to have the right to act by written consent.
The year 2020 marked the near extinction of in-person shareholder meetings. With the new style of tightly controlled online shareholder meetings everything is optional. For instance a 3-minute management report on the state of the company is completely optional. Also management answers to submitted shareholder questions are optional.
Now more than ever shareholders need to have the option to take action outside of a shareholder meeting and send a wake-up call to management if need be since tightly controlled online shareholder meetings are a shareholder engagement wasteland.
It is important to cure this lapse in our corporate governance at a time there appears to be another lapse. Apparently Mr. Alan Spoon, Chairman of the Board and Chairman of the Governance Committee, could not care less whether the overwhelmingly supported simply majority vote proposal topic received the necessary 80% of all shares outstanding in 2019 and 2020. There was no special effort to remind shareholders that every last vote mattered.
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Proposal 5. Shareholder Proposal Regarding Shareholder Action by Written Consent
If the topic of the failed management 2019 and 2020 proposals on simple majority vote was a management bonus one can imagine that Mr. Spoon would move a mountain to put the proposal over the top. Shareholders were not happy with Mr. Spoon and Mr. Spoon was rejected by 5-times as many votes as 2 of his Fortive director peers.
Please vote yes:
Adopt a Mainstream Shareholder Right – Written Consent – Proposal 5
The Statement by the Board of Directors in OPPOSITION
After careful consideration, the Board of Directors believes that the proposal to allow shareholders to act by written consent is not in the best interests of the Company or the shareholders for the following reasons:
Matters that are sufficiently important to be subject to a shareholder vote should be communicated to all shareholders in the context of an annual or special meeting, with adequate time to consider the matters proposed. The Board of Directors values transparency and believes that allowing shareholders to act by written consent could lead to significant actions being approved without giving all shareholders adequate notice and the opportunity to express their views. Shareholder action by written consent is less transparent than an annual or special meeting and does not incorporate all shareholders’ input. In a meeting of shareholders (including a special meeting of shareholders), the matters that will be voted on at the meeting are publicly disclosed in advance of the meeting, in accordance with the Company’s governing documents and applicable law, and shareholders are entitled to participate in the meeting, including by voting or asking questions about the matters presented at the meeting. By contrast, shareholder action by written consent does not require notice to all shareholders about a proposed action, nor does it permit differing views on a particular action or issue to be discussed. The Board does not believe that it is appropriate for some shareholders to take action affecting all shareholders without first informing all shareholders of the proposed action and allowing all shareholders to voice their views and vote on the proposed action.
Further, shareholder action by written consent could enable short-term or special-interest shareholders to advance proposals that are not in the interests of the shareholders as a whole. The ability of shareholders to act by written consent provides opportunity for short-term or special interest investors who are under no obligation to promote the best interests of the Company or its other shareholders to circumvent our existing shareholder protections and to deny other shareholders the opportunity to be informed of, and vote on, proposed corporate actions.
If Proposal 4 is approved by our shareholders, shareholders who own at least 25% of the our outstanding shares of Common Stock and who otherwise comply with the requirements set forth in our Bylaws will have the ability to request that a special meeting of shareholders be called. Unlike shareholder action by written consent as proposed by the shareholder proponent, the ability of shareholders to request a special meeting of shareholders as contemplated by management’s Proposal 4 provides safeguards against the exertion of undue influence by individual shareholders in pursuit of special interests that may be inconsistent with our shareholders’ long-term best interests.
Additionally, the process for shareholders to act by written consent as proposed by the shareholder proponent could lead to various groups of shareholders soliciting written consents at the same time, on a nearly continuous basis as different shareholder groups select their own special interest cause. These solicitations may be duplicative or conflicting. Addressing these solicitations could impose significant administrative and financial burdens on the Company with no corresponding benefit to shareholders.
Finally, as highlighted below and elsewhere in this proxy statement, the Company’s existing corporate governance practices empower shareholders and promote accountability:
| | | | | Substantial majority of our Board is comprised of independent directors, 90% of whom are independent pursuant to the listing standards of the New York Stock Exchange. |
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Proposal 5. Shareholder Proposal Regarding Shareholder Action by Written Consent
| | | | | | | We have documented and executed our commitment to Board diversity in our Corporate Governance Guidelines and the Nominating and Governance Committee Charter | | | | | We have fully declassified the Board to provide for the election of all directors for one-year terms | | | | | We have no shareholder rights plan | | | | | We have adopted proxy access to permit a shareholder, or a group of up to 20 shareholders, owning at least 3% of the outstanding shares continuously for at least 3 years to nominate and include in our proxy materials director nominees constituting up to 20% of the board of directors, as further detailed in our Bylaws | | | | | We maintain a majority vote requirement for the election of directors in uncontested elections | | | | | We have separated our Chairman and CEO positions, with an independent Chairman | | | | | Subject to approval by the shareholders of Proposal 4, we have approved the ability of shareholders owning at least 25% of the outstanding shares and otherwise complying with the requirements of the Bylaws to request that a special meeting be called | | | | | We have implemented a corporate social responsibility program, as reported in our Corporate Social Responsibility Report with multi-layered oversight by the Nominating and Governance Committee and the full Board | | | | | We have implemented a robust annual shareholder engagement program | | | | | We have formalized and documented in the Audit Committee Charter oversight of our cybersecurity by the Audit Committee, with quarterly review by the Audit Committee of our cybersecurity planning, monitoring, risk management, remediation, and controls and annual review by the full Board | | | | | We have formalized and documented in the Compensation Committee Charter oversight of our human capital management by the Compensation Committee, including matters related to overall employee retention and inclusive and diverse company culture, with annual review by the full Board | | | | | We have implemented stock ownership requirements for non-CEO executive officers at multiple of three times base salary and for CEO and directors at multiple of five times base salary and annual cash retainer, respectively |
For the reasons stated above, the Board believes that the proposal to allow shareholders to act by written consent is not in the best interests of the Company and its shareholders.
| | | | | | | | | | | The Board of Directors recommends that shareholders vote “AGAINST” the shareholders proposal (Proposal 5) regarding shareholder action by written consent.
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Fortive’s management is not aware of any other business that may come before the meeting. Under our Amended and Restated Bylaws, the deadline for shareholders to notify us of any proposals or director nominations to be presented for action at the 2021 Annual Meeting has passed. However, if additional matters properly come before the meeting, proxies will be voted at the discretion of the proxy holders. We may provide disclosure in the “Investor – Corporate Governance” section of our corporate website, http://www.fortive.com, of any of the following:
the identity of the presiding director at meetings of non-management or independent directors, or the method of selecting the presiding director if such director changes from meeting to meeting;
the methodShareholder Proposals for interested parties to communicate directly with the Board or with individual directors, the independent Chairman of the Board, or if the Chairman is not independent, the Lead Independent Director, or the non-managementNext Year’s Annual Meeting directors as a group;
the identity of any member of the Audit Committee, if any, who also serves on the audit committees of more than three public companies and a determination by the Board that such simultaneous service will not impair the ability of such member to effectively serve on our Audit Committee;
contributions by Fortive to a tax exempt organization in which any non-management director serves as an executive officer if, within the preceding three years, contributions in any single fiscal year exceeded the greater of $1 million or 2% of such tax exempt organization’s consolidated gross revenues; and
any amendment to the Standards of Conduct that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, and any waiver from a provision of the Standards of Conduct granted to any of our directors, principal executive officer, principal financial officer, principal accounting officer, or any other executive officer within four business days following the date of such amendment or waiver.
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| | | | | Shareholder Proposals for Next Year’s Annual Meeting
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Pursuant to Rule 14a-8 under the Securities Exchange Act, a shareholder who wishes to have a proposal included in Fortive’s proxy statementmaterials for the 20212023 Annual Meeting of Shareholders must submit the proposal in writing to Fortive’s Secretary at Fortive’s principal executive offices, 6920 Seaway Blvd., Everett, WA 98203, for receipt no later than December 27, 202126, 2022 in order to be considered for inclusion. In order to be properly brought before the 20222023 Annual Meeting of Shareholders, a shareholder’s notice of nomination of one or more director candidates to be included in Fortive’s proxy statement and ballotmaterials (a “proxy access nomination”) must be received by Fortive’s Secretary at Fortive’s principal executive offices, 6920 Seaway Blvd., Everett, WA 98203, between November 27, 202126, 2022 and December 27, 202126, 2022 (or, if the 20222023 Annual Meeting of Shareholders is called for a date that is not within 30 calendar days of the anniversary of the date of the Annual Meeting, by the later of the close of business on the date that is 120 days prior to the date of the 20222023 Annual Meeting of Shareholders or within 10 days after the public announcement of the date of the 20222023 Annual Meeting of Shareholders) at the following address: Fortive Corporation, Attn: Secretary, 6920 Seaway Blvd., Everett, WA 98203. When submitting nominees for inclusion in the proxy materials pursuant to the proxy access provisions, shareholders must follow the notice procedures and provide the information required by our Amended and Restated Bylaws. Shareholders intending to present a proposal at the 20222023 Annual Meeting of Shareholders without having it included in the Company’s proxy statementmaterials or to make a nomination other than a proxy access nomination must comply with the advance notice requirements set forth in the Company’s Amended and Restated Bylaws. If a shareholder fails to provide timely notice of a proposal to be presented at the 20222023 Annual Meeting of Shareholders, the proxies provided to Fortive’s Board will have discretionary authority to vote on any such proposal which may properly come before the meeting. Assuming that the 20212023 Annual Meeting of Shareholders is held during the period from May 9, 20228, 2023 to July 8, 20227, 2023 (as it is expected to be), in order to comply with the advance notice requirements set forth in the Company’s Amended and Restated Bylaws, appropriate notice would need to be provided to Fortive’s Secretary at the address noted above no earlier than February 8, 20227, 2023 and no later than March 10, 2022.9, 2023. BY ORDER OF THE BOARD OF DIRECTORS 
 Daniel B. Kim
SecretaryDated: April 26, 202125, 2022 COPIES OF FORTIVE’S ANNUAL REPORT, THIS PROXY STATEMENT, PROXY CARD OR VOTING INSTRUCTION FORM MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING TO FORTIVE OR AT WWW.PROXYVOTE.COM. REQUESTS SHOULD BE SENT TO THE ATTENTION OF INVESTOR RELATIONS AT OUR CORPORATE OFFICES WHICH ARE LOCATED AT 6920 SEAWAY BLVD, EVERETT, WA 98203.
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CERTIFICATE OF AMENDMENT
OF
AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
OF
FORTIVE CORPORATION
Pursuant to Section 242
of the General Corporation Law of the State of Delaware
Fortive Corporation, a corporation duly organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify that: 1. The Amended and Restated Certificate of Incorporation of the Corporation (the “Amended and Restated“Restated Certificate”) is hereby amended as follows: Section 6.03Sections 9.01 and 9.02 of Article VIIX of the Amended and Restated Certificate is hereby amended in itstheir entirety to read as follows:
“Section 6.03 9.01 Special MeetingsCertificate of Incorporation. Unless otherwise requiredThe Corporation shall have the right, from time to time, to amend, alter, change or repeal any provision of this Amended and Restated Certificate of Incorporation in any manner now or hereafter provided by law orthis Restated Certificate of Incorporation, the terms of any resolution or resolutions adopted by the Board providing for the issuance of a class or series of the Preferred Stock, special meetings of stockholders, for any purpose or purposes, may be called by the Secretary upon a written request delivered to the Secretary by (i) the Board as set forth in the Corporation’s Bylaws (ii) the Chairman of the Board, (iii) the Chief Executive Officer of the Corporation or (iv) the holdersDGCL, and all rights, preferences, privileges and powers of record who “Own” (asany kind conferred upon any director or stockholder of the Corporation by this Restated Certificate of Incorporation or any amendment thereof are conferred subject to such termright. Section 9.02 Bylaws. In furtherance and not in limitation of the powers conferred by law, the Board is defined in Section 2.12expressly authorized and empowered, without the assent or vote of Article IIthe stockholders, to adopt, amend and repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation) at least twenty-five percent (25%)Corporation by the Board shall require the approval by the majority of the outstanding shares of Common Stock and whoentire Board. The stockholders shall also have complied in full with the requirements set forth inpower to adopt, amend or repeal the Bylaws of the Corporation. AtCorporation; provided, however, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Restated Certificate of Incorporation, the affirmative vote of the holders of at least a special meetingmajority of stockholders, only such businessthe voting power of the shares entitled to vote for the election of directors shall be conducted as shall be specified inrequired to amend, repeal or adopt any provision of the noticeBylaws of meeting (or any supplement thereto).the Corporation.” 2. The foregoing amendment to the Amended and Restated Certificate was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment to the Amended and Restated Certificate of Incorporation on this 8th7th day of June, 2021.2022. | FORTIVE CORPORATION | | By: | | | | FORTIVE CORPORATION
| | | By:
| | | | | Name: | | Daniel B. Kim | | | Title: | | Corporate Secretary |
2022 PROXY STATEMENT
Table of Contents Appendix B Non-GAAP Financial Measures Core Revenue Growth We use the term “core revenue growth” when referring to a corresponding year-over-year generally accepted accounting principles (“GAAP”) revenue measure, excluding (1) the impact from acquired businesses and (2) the impact of currency translation. References to sales attributable to acquisitions or acquired businesses refer to GAAP sales from acquired businesses recorded prior to the first anniversary of the acquisition and the effect of purchase accounting adjustments, less the amount of sales attributable to certain divested businesses or product lines not considered discontinued operations prior to the first anniversary of the divestiture. The portion of sales attributable to the impact of currency translation is calculated as the difference between (a) the period-to-period change in sales (excluding sales impact from acquired businesses) and (b) the period-to-period change in sales (excluding sales impact from acquired businesses) after applying the current period foreign exchange rates to the prior year period. This non-GAAP measure should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measure, and may not be comparable to similarly titled measures reported by other companies. Management believes that this non-GAAP measure provides useful information to investors by helping identify underlying growth trends in our business and facilitating comparisons of our revenue performance with prior and future periods and to our peers. We exclude the effect of acquisition and divestiture-related items because the nature, size and number of such transactions can vary dramatically from period to period and between us and our peers. We exclude the effect of currency translation from sales measures because currency translation is not under management’s control and is subject to volatility. We believe that such exclusions, when presented with the corresponding GAAP measures, may assist in assessing the business trends and making comparisons of long-term performance. Adjusted Earnings Per Share (“EPS”), Adjusted EPS Growth, Adjusted Operating Profit and Adjusted Operating Profit Margin Expansion We disclose the non-GAAP measures of adjusted EPS, adjusted EPS growth, adjusted operating profit and adjusted operating profit margin expansion, which to the extent applicable, make the following adjustments to GAAP diluted net EPS from continuing operations, GAAP growth in diluted net EPS from continuing operations, GAAP operating profit and GAAP operating profit margin expansion: | ► | Excluding on a pretax basis amortization of acquisition-related intangible assets; | | ► | Excluding on a pretax basis acquisition and other transaction costs deemed significant (“Transaction Costs”); and | | ► | Excluding on a pretax basis the effect of deferred revenue and inventory fair value adjustments related to significant acquisitions. |
In addition, the non-GAAP measures of adjusted EPS and adjusted EPS growth make the additional following adjustments to GAAP diluted net EPS from continuing operations and GAAP growth in diluted net EPS from continuing operations: | ► | Excluding on a pretax basis the effect of losses from our equity method investments; | | ► | Excluding the pretax loss on debt extinguishment, net of non-recurring gain on our investment in Vontier Corporation (“Vontier”) common stock; |
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| ► | Excluding on a pretax basis the non-cash interest expense associated with our prior 0.875% convertible senior notes; | | ► | Excluding on a pretax basis the non-recurring gain on the disposition of assets; | | ► | Excluding on a pretax basis the gain on litigation resolution; | | ► | Excluding the tax effect (to the extent tax deductible) of the adjustments noted above. The tax effect of such adjustments was calculated by applying our overall estimated effective tax rate to the pretax amount of each adjustment (unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment). We expect to apply our overall estimated effective tax rate to each adjustment going forward; | | ► | Excluding the non-cash discrete tax expense resulting from the separation of Vontier into a separate, publicly-trade company (the “Separation”); and | | ► | Including the impact of the assumed conversion of our prior Mandatory Convertible Preferred Stock at the beginning of the period. |
Acquisition and Divestiture Related Items While we have a history of acquisition and divestiture activity, we do not acquire and divest of businesses and assets on a predictable cycle. The amount of an acquisition’s purchase price allocated to intangible assets and related amortization term and the deferred revenue and inventory fair value adjustments are unique to each acquisition and can vary significantly from acquisition to acquisition. In addition, the Transaction Costs and non-recurring gain on disposition of assets are unique to each transaction, are impacted from period to period depending on the number of acquisitions or divestitures evaluated, pending, or completed during such period, and the complexity of such transactions. We adjust for, and identify as significant, Transaction Costs, acquisition related fair value adjustments to deferred revenue and inventory, and corresponding restructuring charges primarily related to acquisitions, in each case, incurred in a given period, if we determine that such costs and adjustments exceed the range of our typical Transaction Costs and adjustments, respectively, in a given period. We believe, however, that it is important for investors to understand that such intangible assets contribute to revenue generation and that intangible assets and deferred revenue and inventory fair value adjustments related to past acquisitions will recur in future periods until such intangible assets and deferred revenue and inventory fair value adjustments, as applicable, have been fully amortized. Equity Method Investments We adjust for the effect of earnings and losses from our equity method investments over which we do not exercise control over the operations or the resulting earnings or losses. We believe that this adjustment provides our investors with additional insight into our operational performance. However, it should be noted that earnings and losses from our equity method investments will recur in future periods while we maintain such investments. Gain on Retained Investment in Vontier and Loss on Extinguishment of Debt On October 9, 2020, we completed the Separation and retained 19.9% of the shares of Vontier common stock immediately following the Separation (“Retained Vontier Shares”). We did not retain a controlling interest in Vontier and therefore the fair value of our Retained Vontier Shares was included in our assets of continuing operations as of December 31, 2020, and subsequent fair value changes are included in our results from continuing operations for the twelve month period ended December 31, 2021. On January 19, 2021, we completed the debt-for-equity exchange of 33.5 million shares of common stock of Vontier, representing all of the Retained Vontier Shares, for $1.1 billion in aggregate principal amount of indebtedness of the Company held by Goldman Sachs & Co., including (i) all $400.0 million of the 364-day delayed-draw term loan due March 22, 2021 and (ii) $683.2 million of the delayed-draw term loan due May 30, 2021. The change in fair value of the Retained Vontier Shares and the resulting gain of $57.0 million was recorded in the twelve month period ended December 31, 2021. We recorded a loss on extinguishment of the debt included in the debt-for-equity exchange of $94.4 million in the twelve month period ended December 31, 2021. 2022 PROXY STATEMENT
Table of Contents | 96 | | Non-GAAP Financial Measures |
Additionally, on February 9, 2021 we repurchased $281 million of the 0.875% Convertible Senior Notes due 2022 (the “Convertible Notes”) at fair value using the remaining cash proceeds received from Vontier in the Separation and other cash on hand. In connection with the repurchase, we recorded a loss on debt extinguishment during the twelve month period ended December 31, 2021 of $10.5 million. We adjust for the non-recurring effect of the gain on our investment in the Retained Vontier Shares and the corresponding loss on debt extinguishment because we believe that this adjustment facilitates comparison of our performance with prior and future periods and provides our investors with additional insight into our operational performance. Mandatory Convertible Preferred Stock In June 2018, we issued $1.38 billion in aggregate liquidation preference of shares of our 5.00% Mandatory Convertible Preferred Stock (“MCPS”). Dividends on the MCPS were payable on a cumulative basis at an annual rate of 5.00% on the liquidation preference of $1,000 per share. On July 1, 2021 each share of the MCPS then outstanding automatically converted into 14.0978 shares of the Company’s common stock. The number of shares of our common stock issuable on conversion of the MCPS was determined based on the average volume weighted average price per share of our common stock over the 20 consecutive trading day period beginning on and including the 22nd scheduled trading day immediately preceding July 1, 2021. For the purposes of calculating adjusted earnings and adjusted EPS in periods when the MCPS are anti-dilutive, we have excluded the MCPS dividend and, for the purposes of calculating adjusted EPS, assumed the “if-converted” method of share dilution and assumed the shares were converted at the beginning of the period (the incremental shares of common stock deemed outstanding applying the “if-converted” method of share dilution, the “MCPS Converted Shares”). We believe that using the “if-converted” method provides additional insight to investors on the potential impact of the MCPS had they been converted at the beginning of the period. For periods where the MCPS are dilutive, no such adjustment is made, as the “if-converted” method is applied and the assumed conversion is already included. Non-cash Interest Expense On February 22, 2019, we issued $1.4 billion in aggregate principal amount of our Convertible Notes, including $187.5 million in aggregate principal amount resulting from an exercise in full of an over-allotment option. The Convertible Notes accrued interest at a rate of 0.875% per year, paid semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2019. The outstanding Convertible Notes matured and were repaid on February 15, 2022. Of the proceeds received from the issuance of the Convertible Notes, $1.3 billion was classified as debt and $102.2 million was classified as equity, using an assumed effective interest rate of 3.38%. We recognized interest expense on the outstanding notes using the 3.38% assumed rate, and paid interest to holders of the notes at a coupon rate of 0.875%. We believe that adjusting for the non-cash imputed interest expense between the assumed rate and coupon rate provides additional insight into our cash interest expense. Adjustments on Litigation Resolution In the event that a potential liability related to a legal contingency for an acquired entity existing at the time of the acquisition is allocated to the corresponding purchase price, we will adjust for the subsequent non-recurring effect of the gain or loss recognized upon resolution because we believe that this adjustment facilitates comparison of our performance with prior and future periods and provides our investors with additional insight into our operational performance.
Table of Contents | Non-GAAP Financial Measures | | 97 |
Non-cash Discrete Tax Adjustments Resulting from the Separation of Vontier We adjust for non-cash discrete tax expense items that resulted from the Separation. These discrete items are non-recurring, non-cash expenses that resulted from the GAAP calculation of income taxes from continuing operations and do not reflect our current or future cash tax obligations. Management believes that these non-GAAP financial measures provide useful information to investors by reflecting additional ways of viewing aspects of our operations that, when reconciled to the corresponding GAAP measure, help our investors to understand the long-term profitability trends of our business, and facilitate comparisons of our operational performance and profitability to prior and future periods and to our peers. These non-GAAP measures should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measures, and may not be comparable to similarly titled measures reported by other companies. Free Cash Flow We use the term “free cash flow” when referring to cash provided by operating activities calculated according to GAAP less payments for additions to property, plant and equipment. Management believes that such non-GAAP measure provides useful information to investors in assessing our ability to generate cash without external financing, fund acquisitions and other investments and, in the absence of refinancing, repay our debt obligations. However, it should be noted that free cash flow as a liquidity measure has material limitations because it excludes certain expenditures that are required or that we have committed to, such as debt service requirements and other non-discretionary expenditures. Such non-GAAP measure should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measure, and may not be comparable to similarly titled measures reported by other companies. Forward-Looking Non-GAAP Financial Measures We have not reconciled forward-looking projections on core revenue growth and adjusted gross profit margin, each of which are non-GAAP financial measures, because any corresponding GAAP measures and the reconciliations thereto would require us to make estimates or assumptions about unidentified and unknown acquisitions and similar adjustments during the relevant period. 2022 PROXY STATEMENT
Table of Contents | 98 | | Non-GAAP Financial Measures |
Core Revenue Growth | | % Change Twelve Months Ended
December 31, 2021 vs.
Comparable 2020 Period | | Total Revenue Growth (GAAP) | | 13.4% | | Core (Non-GAAP) | | | 9.5% | | | 2.4% | | Impact of currency translation (Non-GAAP) | | 1.5% |
Adjusted EPS and Adjusted EPS Growth | | Twelve Months Ended(a) | | | December 31,
2021 | | December 31,
2020 | | Diluted Net Earnings Per Share from Continuing Operations (GAAP)(b) | | $ | 1.65 | | $ | 4.05 | | Dividends on the mandatory convertible preferred stock to apply if-converted method(b) | | | 0.10 | | | — | Assumed dilutive impact on the Diluted Net Earnings Per Share Attributable to Common
Stockholders if the MCPS Converted Shares had been outstanding(b) | | | (0.05) | | | — | | Pretax amortization of acquisition-related intangible assets | | | 0.89 | | | 0.86 | | Pretax acquisition and other transaction costs | | | 0.17 | | | 0.20 | Pretax acquisition-related fair value adjustments to deferred revenue and inventory related to
significant acquisitions | | | 0.02 | | | 0.08 | | Pretax losses from equity method investments | | | 0.03 | | | 0.01 | | Pretax loss on debt extinguishment, net of gain on Vontier common stock | | | 0.13 | | | (3.12) | | Pretax non-cash interest expense associated with our 0.875% convertible notes | | | 0.08 | | | 0.09 | | Pretax discrete restructuring charges | | | 0.03 | | | 0.08 | | Pretax gain on the disposition of assets | | | — | | | (0.01) | | Pretax gain on litigation resolution | | | (0.08) | | | — | | Tax effect of the adjustments reflected above(c) | | | (0.21) | | | (0.20) | | Noncash discrete tax expense adjustment resulting from the Separation of Vontier | | | — | | | 0.06 | | Adjusted EPS (Non-GAAP) | | $ | 2.75 | | $ | 2.09 | | Adjusted EPS (Non-GAAP) Growth | | | 32% | | | |
| (a) | Each of the per share adjustments below was calculated assuming the MCPS Converted Shares had converted at the beginning of the period prior to their conversion on July 1, 2021. The 0.875% convertible notes did not have an impact on the adjusted diluted shares outstanding. | | (b) | Prior to their conversion on July 1, 2021, the MCPS were anti-dilutive during the year ended December 31, 2021 and were dilutive during the three and twelve month periods ended December 31, 2020. As such, GAAP net EPS for the year ended December 31, 2021 was calculated using net earnings from continuing operations attributable to common stockholders. | | (c) | The dividend on the MCPS is not tax deductible and therefore the tax effect of the adjustments includes only the amortization of acquisition-related intangible assets, acquisition and other transaction costs, acquisition-related fair value adjustments to deferred revenue and inventory, discrete restructuring, losses from equity method investments, the gain on the disposition of assets, the loss on extinguishment of debt, the gain on litigation resolution, and the non-cash interest expense associated with the 0.875% convertible notes. The gain on the fair value change in Vontier common stock had no tax effect. The sum of the components of adjusted diluted net EPS from continuing operations may not equal due to rounding. |
Table of Contents | Non-GAAP Financial Measures | | 2021 Proxy Statement 99 | | A-1 |
Adjusted Operating Profit and Adjusted Operating Profit Margin Expansion | Twelve Months Ended | | $ in millions | December 31,
2021 | | December 31,
2020 | | Revenue (GAAP) | $ | 5,254.7 | | $ | 4,634.4 | | Acquisition-Related Fair Value Adjustments to Deferred Revenue | $ | — | | | 12.9 | | Adjusted Revenue (Non-GAAP) | $ | 5,254.7 | | $ | 4,647.3 | | | | | | | | | Operating Profit (GAAP) | $ | 812.8 | | $ | 539.4 | | Acquisition and Other Transaction Costs | | 59.9 | | | 71.6 | | Acquisition-Related Fair Value Adjustments to Deferred Revenue and Inventory | | 6.9 | | | 27.3 | | Amortization of Acquisition-Related Intangible Assets | | 320.8 | | | 309.9 | | Restructuring | | 12.2 | | | 27.6 | | Adjusted Operating Profit (Non-GAAP) | $ | 1,212.6 | | $ | 975.8 | | | | | | | | | Operating Profit Margin (GAAP) | | 15.5% | | | 11.6% | | Adjusted Operating Profit Margin (Non-GAAP) | | 23.1% | | | 21.0% | | Adjusted Operating Profit Margin Expansion (Non-GAAP) | | +210 BPS | | | |
Free Cash Flow | ($ in millions) | December 31,
2021 | | December 31,
2020 | | % Change | | Operating Cash Flows from Continuing Operations (GAAP) | $ | 992.9 | | $ | 977.7 | | 1.6% | Less: purchases of property, plant & equipment (capital
expenditures) from continuing operations (GAAP) | | (50.0) | | | (75.7) | | | | Free Cash Flow (Non-GAAP) | | 942.9 | | | 902.0 | | 4.5% |
2022 PROXY STATEMENT
Table of Contents 
Table of Contents
FORTIVE CORPORATION
6920 SEAWAY BLVD
EVERETT, WA 98203
 VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com
or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on June 7, 20216, 2022 for shares held directly and by 11:59 p.m. Eastern Time on June 2, 20211, 2022 for shares held in a Plan. Have your proxy card in hand when you access the web sitewebsite and follow the instructions to obtain your records and to create an electronic voting instruction form.
card. During The Meeting—Meeting - Go to www.virtualshareholdermeeting.com/FTV2021FTV2022
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE—PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on June 7, 20216, 2022 for shares held directly and by 11:59 p.m. Eastern Time on June 2, 20211, 2022 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge,
51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:D44089-P48846-Z78999THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.KEEP THIS PORTION FOR YOUR RECORDSDETACH AND RETURN THIS PORTION ONLY| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | D76709-P64936 | KEEP THIS PORTION FOR YOUR RECORDS | | DETACH AND RETURN THIS PORTION ONLY | | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
FORTIVE CORPORATION
The Board of Directors recommends you vote FOR
the following: | | | | | | | | | 1. | | To elect the following nominees to serve as Directors, each for a one-year term expiring at the 2023 annual meeting of shareholders and until his or her successor is duly elected and qualified: | | | | | | | | | | | | Nominees: | For | Against | Abstain | | | 1a. | | Daniel L. Comas | ☐ | ☐ | ☐ | | | 1b. | | Sharmistha Dubey | ☐ | ☐ | ☐ | | | 1c. | | Rejji P. Hayes | ☐ | ☐ | ☐ | | | 1d. | | Wright Lassiter III | ☐ | ☐ | ☐ | | | 1e. | | James A. Lico | ☐ | ☐ | ☐ | | | 1f. | | Kate D. Mitchell | ☐ | ☐ | ☐ | | | 1g. | | Jeannine P. Sargent | ☐ | ☐ | ☐ | | | 1h. | | Alan G. Spoon | ☐ | ☐ | ☐ |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR Proposals 2, 3 and 4. | For | Against | Abstain | | 2. | | To approve on an advisory basis Fortive's named executive officer compensation. | ☐ | ☐ | ☐ | | 3. | | To ratify the appointment of Ernst & Young LLP as Fortive's independent registered public accounting firm for the year ending December 31, 2022. | ☐ | ☐ | ☐ | | 4. | | To approve amendments to Fortive's Restated Certificate of Incorporation to eliminate the supermajority voting requirements. | ☐ | ☐ | ☐ | | NOTE: To consider and act upon such other business as may properly come before the meeting or any adjournment or postponement thereof. | | | |
1. To elect the following nominees to serve as Directors, eachfor a one-year term expiring at the 2022 annual meetingand until their successors are elected and qualified.Nominees:1a. Daniel L. Comas1b. Feroz Dewan1c. Sharmistha Dubey1d. Rejji P. Hayes1e. James A. Lico1f. Kate D. Mitchell1g. Jeannine P. Sargent1h. Alan G. SpoonFor Against AbstainThe Board of Directors recommends you vote FOR proposals 2, 3 and 4.2. To ratify the selection of Ernst & Young LLP as Fortive’s independent registered public accounting firm for the year ending December 31, 2021.3. To approve on an advisory basis Fortive’s named executive officer compensation.4. To approve Fortive’s Amendment to Amended and Restated Certificate of Incorporation to allow holders of at least 25% of Fortive’s outstanding shares of common stock to call a special meeting of the shareholders.The Board of Directors recommends you vote AGAINST proposal 5.5. To consider and act upon a shareholder proposal regarding shareholders’ ability to act by written consent.NOTE: To consider and act upon such other business as may properly come before the meeting or any adjournment thereof.For Against AbstainPlease sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | Date | | Signature (Joint Owners) | Date | |
Signature [PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners)
DateTable of Contents
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.www.proxyvote.com D44090-P48846-Z78999
FORTIVE CORPORATION
Annual Meeting of Shareholders
June 8, 2021 3:00 PM PDT7, 2022
This proxy is solicited by the Board of Directors
The shareholder(s) hereby appoint(s) Peter C. Underwood and Daniel B. Kim, and each of them, as proxies,proxy holders, each with the power to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of FORTIVE CORPORATION that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders to be held in virtual only meeting format at 3:00 PM,p.m., PDT on June 8, 2021,7, 2022, via www.virtualshareholdermeeting.com/FTV2022 and any adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be votedvoted: FOR the election of each of the director nominees listed in accordance with the Board of Directors’ recommendations.Proposal 1 and FOR Proposals 2, 3, and 4 Continued and to be signed on reverse side
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