1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
IDEX CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
[COMPANY NAME]
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
2
- --------------------------------------------------------------------------------
[IDEX LOGO]
IDEX CORPORATION
NOTICE AND PROXY STATEMENT
FOR
THE ANNUAL SHAREHOLDERS' MEETING
TO BE HELD
TUESDAY, MARCH 25, 1997
YOUR VOTE IS IMPORTANT
Please mark, date and sign the enclosed proxy card and promptly return it
to the Company in the enclosed envelope.
3
IDEX CORPORATION
630 DUNDEE ROAD
NORTHBROOK, ILLINOIS 60062
---------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------------------
DEAR IDEX SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of the shareholders
of IDEX Corporation which will be held on Tuesday, March 25, 1997, at Bank of
America Illinois, Shareholders Room, 21st Floor, 231 South LaSalle Street,
Chicago, Illinois 60697. The meeting will begin at 10:00 a.m.
At the meeting, shareholders will (a) elect three directors for a term of
three years, (b) vote on the recommendation of the Board of Directors that
Deloitte & Touche LLP be appointed auditors of the Company for 1997, and (c)
transact such other business as may properly come before the meeting.
Enclosed is a Proxy Statement which provides information concerning the
Company and the Board of Directors' nominees for election as directors. Also
enclosed is a copy of the Company's Annual Report which describes the results of
our operations during 1996 and provides other information about the Company
which will be of interest.
The Board of Directors fixed the close of business on February 5, 1997, as
the record date for the determination of shareholders owning the Company's
Common Stock, par value $.01 per share, entitled to notice of and to vote at the
Annual Meeting.
Enclosed is a proxy card which provides you with a convenient means of
voting on the matters to be considered at the meeting whether or not you attend
the meeting in person. All you need to do is mark the proxy card to indicate
your vote, sign and date the card, then return it to the Company in the enclosed
envelope as soon as conveniently possible. If you desire to vote to elect each
of the Company's nominees as directors, for the appointment of Deloitte & Touche
LLP as auditors of the Company for 1997, and in the discretion of the proxy
holders as to any other business which may properly come before the meeting, you
do not need to mark your votes on the proxy card. You only need to sign and date
the card and return it to the Company.
Management sincerely appreciates your support. We hope to see you at the
Annual Meeting.
By order of the Board of Directors,
WAYNE P. SAYATOVIC
Senior Vice President - Finance,
Chief Financial Officer and Secretary
February 12, 1997
Northbrook, Illinois
4
IDEX CORPORATION
630 DUNDEE ROAD
NORTHBROOK, ILLINOIS 60062
------------------------------------
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 25, 1997
------------------------------------
The Annual Meeting of the shareholders of IDEX Corporation (the "Company"
or "IDEX") will be held on Tuesday, March 25, 1997, at 10:00 a.m. at the
Shareholders Room of Bank of America Illinois, 231 South LaSalle Street,
Chicago, Illinois 60697. At the Annual Meeting, shareholders will (a) elect
three directors for a term of three years, (b) vote on the recommendation of the
Board of Directors that Deloitte & Touche LLP be appointed auditors of the
Company for 1997, and (c) transact such other business as may properly come
before the meeting.
This Proxy Statement has been prepared in connection with the solicitation
by the Company's Board of Directors of proxies for the Annual Meeting. It
provides information concerning the persons nominated by the Board of Directors
for election as directors and the other matters to be voted upon as well as
other information relevant to the Annual Meeting. The Company commenced
distribution of this Proxy Statement and the accompanying materials on February
12, 1997.
The record of shareholders entitled to notice of and to vote at the Annual
Meeting was taken as of the close of business on February 5, 1997 (the "record
date"), and each shareholder will be entitled to vote at the meeting any shares
of IDEX Common Stock, par value $.01 per share ("Common Stock"), held of record
at the record date.
Each shareholder of record is requested to complete, date and sign the
accompanying proxy card and return it promptly to the Company in the enclosed
envelope. The proxy card lists each person nominated by the Board of Directors
for election as director and provides spaces to vote on the appointment of
outside auditors. Proxies duly executed and received prior to or at the meeting
will be voted in accordance with shareholders' instructions. If no instructions
are given, proxies will be voted to elect each of the Company's nominees as
directors and in favor of the appointment of Deloitte & Touche LLP as auditors
of the Company, and in the discretion of the proxy holders as to any other
business which may properly come before the meeting.
Votes cast by proxy or in person at the Annual Meeting will be tabulated
by the election inspectors appointed for the meeting and will determine whether
or not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval of
any matter submitted to the shareholders for a vote. If a broker indicates on
the proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, then those shares will not be considered as present
and entitled to vote with respect to that matter.
On December 19, 1996 the Company's Board of Directors authorized a
three-for-two common stock split effected in the form of a 50% stock dividend
payable on January 31, 1997, to shareholders of record on
1
5
January 15, 1997. All references in this proxy statement to number of shares,
per share amounts and market prices of the Company's Common Stock have been
adjusted to reflect the split.
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation, as amended, provides
for a three-class Board, with one class being elected each year for a term of
three years. The Board of Directors currently consists of nine members, three of
whom are Class I directors whose terms will expire at the 1999 Annual Meeting,
three of whom are Class II directors whose terms will expire at this year's
Annual Meeting and three of whom are Class III directors whose terms will expire
at the 1998 Annual Meeting.
The Company's Board of Directors has nominated three persons for election
as Class II directors to serve for a three-year term expiring in 2000, upon the
election and qualification of their successors. The three nominees of the Board
of Directors are William H. Luers, George R. Roberts and Michael T. Tokarz, each
of whom is currently serving as a director of the Company.
If for any reason any of the nominees for a Class II directorship is
unavailable to serve, proxies solicited hereby may be voted for a substitute.
The Board, however, expects all of the nominees to be available.
The nominees and the directors whose terms of office continue after this
year's Annual Meeting are listed below with brief statements setting forth their
present principal occupations and other information, including directorships in
other public companies.
The affirmative vote of a majority of the shares present in person or by
proxy at the Annual Meeting, and entitled to vote, is required for election of
the nominees.
2
6
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE THREE NOMINEES IN CLASS II IDENTIFIED BELOW.
NOMINEES FOR DIRECTORSHIPS
CLASS II: NOMINEES FOR THREE-YEAR TERM
WILLIAM H. LUERS Director since 1989
President Age 67
The Metropolitan Museum of Art
Mr. Luers was appointed a director of IDEX by the Board on May 24, 1989,
effective June 2, 1989. Mr. Luers has been President of The Metropolitan Museum
of Art in New York, New York since prior to 1992. Formerly, he served as
Ambassador to Czechoslovakia and Venezuela. Mr. Luers has written extensively
for newspapers and magazines on the former Soviet Union and Eastern Europe, on
East/West relations and on Latin America. He serves on the boards of The Scudder
New Europe Fund, Inc., The Scudder Global/International Funds, Inc., and Wickes
Lumber Co. Mr. Luers is the Chairman of the Compensation Committee and a member
of the Audit Committee of the Board of Directors.
GEORGE R. ROBERTS Director since 1988
Member Age 53
Kohlberg Kravis Roberts & Co., L.L.C.
Mr. Roberts was elected director of IDEX on January 22, 1988. Since
January 1996 he has been a managing member of the limited liability company
which acts as the general partner of Kohlberg Kravis Roberts & Co. ("KKR"). He
is a general partner of KKR Associates and was a general partner of KKR from its
organization in 1976 to December 1995. Mr. Roberts is a director of Auto Zone,
Inc., Bruno's, Inc., Borden, Inc., Flagstar Companies, Inc., Flagstar
Corporation, K-III Communications Corp., Merit Behavioral Care Corporation,
Newsquest Capital, PLC, Owens-Illinois, Inc., Owens-Illinois Group, Inc.,
Safeway, Inc., Union Texas Petroleum Holdings, Inc., and World Color Press, Inc.
MICHAEL T. TOKARZ Director since 1987
Member Age 47
Kohlberg Kravis Roberts & Co., L.L.C.
Mr. Tokarz has been a director of IDEX since its organization in September
1987. Since January 1996 he has been a member of the limited liability company
which acts as the general partner of KKR. He has been a general partner of KKR
Associates since January 1993 and was a general partner of KKR from January 1993
to December 1995. From prior to 1992 to January 1993 he was an executive of KKR
and a limited partner of KKR Associates. Mr. Tokarz is a director of Flagstar
Companies, Inc., Flagstar Corporation, K-III Communications Corp., Safeway,
Inc., and Walter Industries, Inc. Mr. Tokarz is a member of the Executive
Committee of the Board of Directors.
3
7
OTHER INCUMBENT DIRECTORS
CLASS III: THREE-YEAR TERM EXPIRES IN 1998
PAUL E. RAETHER Director since 1988
Member Age 50
Kohlberg Kravis Roberts & Co., L.L.C.
Mr. Raether was elected director of IDEX on January 22, 1988. Since
January 1996 he has been a member of the limited liability company which acts as
the general partner of KKR. Mr. Raether has been a general partner of KKR
Associates since prior to 1992 and was a general partner of KKR from prior to
1992 to December 1995. Mr. Raether is a director of Bruno's, Inc., Flagstar
Companies, Inc., Flagstar Corporation, and FRD Acquisition Co.
CLIFTON S. ROBBINS Director since 1987
Member Age 38
Kohlberg Kravis Roberts & Co., L.L.C.
Mr. Robbins has been a director of IDEX since its organization in
September 1987. Since January 1996 he has been a member of the limited liability
company which acts as the general partner of KKR. He has been a general partner
of KKR Associates since December 1994 and was a general partner of KKR from
December 1994 to December 1995. From prior to 1992 to December 1994 he was an
executive of KKR and a limited partner of KKR Associates. Mr. Robbins is a
director of AEP Industries, Inc., Borden, Inc., Borden Chemicals & Plastics,
L.P., Kindercare Learning Centers, Inc., and Newsquest Capital, PLC. Mr. Robbins
is a member of the Executive Committee of the Board of Directors.
NEIL A. SPRINGER Director since 1990
Managing Director Age 58
Springer Souder & Associates, L.L.C.
Mr. Springer was appointed director of IDEX by the Board on February 27,
1990. He has been Managing Director of Springer Souder & Associates, L.L.C.
since June 1994. From September 1992 to June 1994 he was Senior Vice President
of Slayton International, Inc. and from August 1991 to August 1992 he was
President-Central Region of Alexander Proudfoot Company. Mr. Springer is a
director of Century Companies of America, CUNA Mutual Insurance Group, Dorsey
Trailer, Inc., and TNT Freightways Corporation. Mr. Springer is the chairman of
the Audit Committee and a member of the Compensation Committee of the Board of
Directors.
4
8
CLASS I: THREE-YEAR TERM EXPIRES IN 1999
DONALD N. BOYCE Director since 1988
Chairman of the Board, President Age 58
and Chief Executive Officer
IDEX Corporation
Mr. Boyce was elected Chairman of the Board, President and Chief Executive
Officer of IDEX on January 22, 1988, the date of the Company's acquisition of
its six original operating subsidiaries from Houdaille Industries, Inc.
("Houdaille"). Previously, he served as Chairman of the Board, President and
Chief Executive Officer of Houdaille. In total, Mr. Boyce has 27 years of
experience with IDEX and Houdaille. Mr. Boyce is the Chairman of the Executive
Committee and a member of the Pension and Retirement Committee.
RICHARD E. HEATH Director since 1989
Senior Partner Age 66
Hodgson, Russ, Andrews, Woods & Goodyear
Mr. Heath was appointed director of IDEX by the Board on April 19, 1989,
effective June 9, 1989. Mr. Heath has been a senior partner of the law firm
Hodgson, Russ, Andrews, Woods & Goodyear since prior to 1992.
HENRY R. KRAVIS Director since 1988
Member Age 53
Kohlberg Kravis Roberts & Co., L.L.C.
Mr. Kravis was elected director of IDEX on January 22, 1988. Since January
1996 he has been a managing member of the limited liability company which acts
as the general partner of KKR. Mr. Kravis is a general partner of KKR Associates
and was a general partner of KKR from its organization in 1976 to December 1995.
Mr. Kravis is a director of Auto Zone, Inc., Borden, Inc., Bruno's, Inc.,
Flagstar Companies, Inc., Flagstar Corporation, Gillette Co., K-III
Communications Corp., Merit Behavioral Care Corporation, Newsquest Capital, PLC,
Owens-Illinois, Inc., Owens-Illinois Group, Inc., Safeway, Inc., Sotheby's Inc.,
Union Texas Petroleum Holdings, Inc., and World Color Press, Inc. Mr. Kravis and
Mr. Roberts are first cousins.
FUNCTIONS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has the ultimate authority for the management of
the Company's business. The Board selects the Company's executive officers,
delegates responsibilities for the conduct of the Company's operations to those
officers, and monitors their performance. The Board of Directors held seven
meetings during 1996.
Important functions of the Board of Directors are performed by committees
comprised of members of the Board. Subject to applicable provisions of the
Company's By-Laws, the Board as a whole appoints the members of each committee
each year at its first meeting following the annual shareholders' meeting. The
Board may, at any time, appoint or remove committee members or change the
authority or responsibility delegated to any committee. There are four regularly
constituted committees of the Board of Directors: the Executive Committee, the
Audit Committee, the Compensation Committee, and the Pension and Retirement
Committee. The Company does not have a nominating committee or any regularly
constituted committee performing the functions of such a committee.
5
9
The Executive Committee is empowered to exercise the authority of the
Board of Directors in the management of the Company between meetings of the
Board of Directors, except that the Executive Committee may not fill vacancies
on the Board, amend the Company's By-Laws or exercise certain other powers
reserved to the Board or delegated to other Board committees. During 1996, the
Executive Committee held three meetings.
The Audit Committee recommends to the Board of Directors the firm of
independent public accountants to audit the Company's financial statements for
each fiscal year; reviews with the independent auditors the general scope of
this service; reviews the nature and extent of the non-audit services to be
performed by the independent auditors; and consults with management on the
activities of the Company's independent auditors and the Company's system of
internal accounting controls. During 1996, the Audit Committee held two
meetings.
The Compensation Committee makes recommendations to the Board of Directors
with respect to the compensation to be paid and benefits to be provided to
directors, officers and employees of the Company. During 1996, the Compensation
Committee held seven meetings.
The Pension and Retirement Committee makes recommendations to the Board of
Directors with respect to the adoption or amendment of the Company's pension and
retirement plans and reports to the Board with respect to the operation of such
plans. During 1996, the Pension and Retirement Committee held three meetings.
During 1996, each member of the Board of Directors attended more than 75%
of the aggregate number of meetings of the Board of Directors and of committees
of the Board of which he was a member, except for Messrs. Kravis, Robbins and
Roberts.
CERTAIN INTERESTS
LEGAL FEES. Mr. Heath is a senior partner of the law firm of Hodgson,
Russ, Andrews, Woods & Goodyear. Such firm is counsel to the Company on certain
matters.
6
10
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
Non-management directors of the Company receive an annual fee for their
services of $30,000. Under the IDEX Corporation Stock Option Plan for Outside
Directors (the "Plan") non-qualified stock options ("Options") are granted to
directors of the Company who are not (i) full-time employees of the Company or
its subsidiaries or (ii) partners or full-time employees of either KKR or KKR
Associates (any such director being an "Outside Director") to purchase, in the
aggregate, up to 337,500 shares of Common Stock. If any option expires or is
canceled without having been fully exercised, the shares covered thereby may be
subject to the grant of new Options.
In the year ended December 31, 1996, each of Messrs. Heath, Luers and
Springer received an Option to purchase 4,500 shares of Common Stock. In
addition, on January 1, 1997, Messrs. Heath, Luers and Springer each received an
Option to purchase 4,500 shares of Common Stock and, on each January 1 hereafter
for so long as they continue to serve as directors of the Company and the Plan
remains effective, will receive an additional Option for 4,500 shares of Common
Stock. For so long as the Plan remains effective, any person who becomes an
Outside Director will receive an Option to purchase 6,750 shares of Common Stock
upon his or her appointment as director and will receive an additional Option
for 4,500 shares of Common Stock on each January 1 thereafter. The per share
purchase price is specified in each Option and is equal to the fair market value
of a share of Common Stock on the date the Option is granted, as determined
under the Plan. The per share purchase price under the Options granted to
Messrs. Heath, Luers and Springer on January 1, 1996, and January 1, 1997, was
$27.94 and $26.03, respectively. The per share closing market price of the
Common Stock on January 1, 1996, and on January 1, 1997, was $27.17 and $26.58,
respectively. The Option price is based on the average closing price per share
of Common Stock on the New York Stock Exchange during the 30-day period
immediately preceding the date the Option was granted. Upon exercise of any
option, the purchase price of Common Stock must be paid in full in cash or
shares of Common Stock as provided in the Plan.
No Option may be granted during any period of suspension of the Plan, and
in no event may any Option be granted under the Plan after February 26, 2000.
7
11
SUMMARY COMPENSATION TABLE
The total compensation paid to the Company's five highest paid executive
officers for services rendered to the Company in 1996, 1995 and 1994 is
summarized as follows:
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
------------------------------ -----------------------------------
SHARES
OTHER RESTRICTED UNDERLYING LONG-TERM
ANNUAL STOCK OPTIONS INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMP.(2) AWARDS GRANTED PAYOUTS COMPENSATION(3)
--------------------------- ---- ------ ----- -------- ---------- ---------- --------- ---------------
Donald N. Boyce................... 1996 $420,000 $404,000 $0 $0 41,850 $0 $3,450
Chairman of the Board, President 1995 400,000 480,000 0 0 41,850 0 3,372
and Chief Executive Officer 1994 375,000 450,000 0 0 64,350 0 3,372
Frank J. Hansen................... 1996 200,000 160,800 0 0 20,588 0 3,450
Senior Vice President-- 1995 191,000 192,000 0 0 20,588 0 3,372
Operations and Chief Operating 1994 168,700 156,300 0 0 33,075 0 3,372
Officer
Wayne P. Sayatovic................ 1996 189,000 147,500 0 0 16,875 0 3,450
Senior Vice President--Finance, 1995 180,000 167,400 0 0 16,875 0 3,372
Chief Financial Officer and 1994 166,000 154,400 0 0 27,000 0 3,372
Secretary
Wade H. Roberts, Jr............... 1996 175,500 112,900 0 0 14,400 0 3,450
Vice President--Group Executive 1995 168,000 151,600 0 0 14,400 0 3,372
and President, Hale 1994 155,200 123,400 0 0 22,950 0 3,372
Mark W. Baker..................... 1996 158,400 118,800 0 0 10,875 0 3,450
Vice President--Group Executive 1995 151,200 137,700 0 0 10,125 0 3,372
and President, Lubriquip 1994 128,300 111,000 0 0 12,150 0 3,372
- ---------------
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) The value of perquisites provided to these individuals did not exceed the
lesser of $50,000 or 10% of base salary plus bonus.
(3) Company matching contributions to Savings Plan individual accounts.
OPTION GRANTS IN 1996
The following tables set forth certain information with respect to options
granted to the Company's five highest paid executive officers in 1996.
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
------------------------------------------------------- STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION FOR
SHARES OPTIONS OPTION TERM
UNDERLYING GRANTED ----------------------
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED IN FISCAL YEAR PRICE DATE 5% 10%
---- ---------- -------------- -------- ---------- -- ---
Donald N. Boyce......................... 41,850 9.7% $26.25 03/26/06 $691,875 $1,756,164
Frank J. Hansen......................... 20,588 4.8 26.25 03/26/06 340,358 863,919
Wayne P. Sayatovic...................... 16,875 3.9 26.25 03/26/06 278,982 708,131
Wade H. Roberts, Jr..................... 14,400 3.4 26.25 03/26/06 238,064 604,272
Mark W. Baker........................... 10,875 2.5 26.25 03/26/06 179,788 456,351
8
12
OPTION EXERCISES AND YEAR-END VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY
NUMBER OF OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR END YEAR END(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Donald N. Boyce.................... 0 $ 0 295,082 147,420 $6,609,881 $1,086,648
Frank J. Hansen.................... 3,230 82,158 41,873 69,503 537,374 486,278
Wayne P. Sayatovic................. 0 0 105,821 60,075 2,308,760 443,830
Wade H. Roberts, Jr................ 0 0 50,760 50,490 819,540 367,310
Mark W. Baker...................... 0 0 13,365 30,585 151,620 187,314
- ---------------
(1) Calculated using closing stock price of $26.58 on December 31, 1996.
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "Committee") of the Board of Directors of
IDEX Corporation reviews and approves base salary, annual management incentive
compensation, and long-term incentive awards for all corporate officers and
business unit presidents, with the objective of attracting and retaining
individuals of the necessary quality and stature to operate the business.
The Committee considers individual contributions, performance against
strategic goals and directions, and industry-wide pay practices in determining
the levels of base compensation for key executives. In addition, key executives
participate in the annual Management Incentive Compensation Plan, described
below, and they receive awards under the Company's long-term incentive plan
which takes the form of a stock option plan tied directly to the market value of
the Company's stock.
The Management Incentive Compensation Plan, in which key executives
participate, provides for payment of annual bonuses based upon performance of
the business units of the Company. Individual target bonus percentages are based
on base salaries and levels of responsibility. Actual awards are set as a
percentage of target based upon meeting certain quantitative performance
criteria set each year in connection with the annual business planning process
and rankings assigned to certain qualitative criteria measuring performance
against long-term objectives. The quantitative and qualitative components of the
plan each receive a 50% weighting in determining the total bonus. Actual payouts
under the plan since IDEX was formed in 1988 have ranged from 60% of target to
170% of target. The Committee believes that this plan is properly leveraged
relative to performance of the Company and its business units, and that the
Company's performance has been excellent relative to its peer group. This
performance differential is seen in the Company's operating profit margins, cash
flow generation capabilities, disciplined acquisition program and stock market
performance, among other factors.
The Committee believes that both the annual bonus plan and the long-term
incentive plan align the interests of management with the shareholders and focus
the attention of management on the long-term success of the Company. A
significant portion of the executives' compensation is at risk, based on the
financial performance of the Company and the value of the Company's stock in the
marketplace.
Compensation of the Company's Chief Executive Officer, Donald N. Boyce, is
set annually by the Compensation Committee based on Company performance, his
performance, and prevailing market conditions, and is then approved by the Board
of Directors. Mr. Boyce has a large personal stake in the Company through the
ownership by himself, his wife, certain family trusts, and a family foundation
of 506,911 shares of Common Stock
9
13
of the Company. He also has options to acquire an additional 442,502 shares of
Common Stock. With this sizeable ownership position, a very large percentage of
Mr. Boyce's personal net worth is tied directly to IDEX's performance.
The annual bonus paid to Mr. Boyce is based on IDEX's performance and is
made under the same Management Incentive Compensation Plan used for all other
Company executives. Mr. Boyce's target level of bonus has been set at 80% of his
base pay, and his actual bonus as a percent of target is generally set at the
average percentage of target paid to the other plan participants at the various
business units. For the year 1996, Mr. Boyce and the other senior executives at
the corporate level received bonuses ranging from 105% to 120% of the target
amount, which in Mr. Boyce's case was 120% of the target amount or 96% of his
base pay. His actual bonuses are comparable to those earned by his peers for
comparable performance.
Section 162(m) of the Internal Revenue Code limits to $1 million in a
taxable year the deduction publicly held companies may claim for compensation
paid to executive officers, unless certain requirements are met. The Committee
has reviewed this provision and has concluded that the Company is not impacted
by Section 162(m) because compensation paid to any executive officer does not
exceed $1 million. Accordingly, no changes to any of the compensation plans are
contemplated at this time.
William H Luers, Chairman
Neil A. Springer
10
14
COMMON STOCK PERFORMANCE
The following table compares total shareholder returns over the last five
fiscal years to the Standard & Poor's (the "S&P") 500 Index and the S&P
Manufacturing-Diversified Industrials Index assuming the value of the investment
in IDEX Common Stock and each index was $100 on December 31, 1991. Total return
values for IDEX Common Stock, the S&P 500 and the S&P Manufacturing-Diversified
Industrials were calculated on cumulative total return values assuming
reinvestment of dividends. The five-year total return for IDEX Common Stock
exceeded the S&P 500 and the S&P Manufacturing-Diversified Industrials by 82%
and 40%, respectively. The shareholder return shown on the graph below is not
necessarily indicative of future performance.
TOTAL SHAREHOLDER RETURNS -- DIVIDENDS REINVESTED
[GRAPH]
MEASUREMENT PERIOD MANU-DIVERSIFIED S&P 500 INDEX
(FISCAL YEAR COVERED) IDEX CORP INDUSTRIALS
12/91 $ 100.00 $ 100.00 $ 100.00
12/92 141.78 108.39 107.62
12/93 213.42 131.58 118.46
12/94 252.23 136.21 120.03
12/95 370.81 191.80 165.13
12/96 369.38 264.32 203.05
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Boyce,
Hansen and Sayatovic.
Mr. Boyce is currently serving as Chairman of the Board, President and
Chief Executive Officer of IDEX under an employment agreement with IDEX which
became effective upon the termination of his employment with Houdaille on August
31, 1988. Such agreement provided for an initial term which ended January 22,
1993 plus successive twelve-month periods thereafter. The agreement was amended
and restated on November 22, 1996. His annual base salary in 1997 is $445,000
subject to annual review and adjustment. If Mr. Boyce becomes disabled or dies
during the period of his full time employment, he, his wife if she survives him,
or his estate if she does not survive him, will receive his base salary as then
in effect for a period of eighteen months commencing on the first day of the
month immediately following the date of his disability or death, a full year's
bonus at no less than his target amount and accrued vacation pay. In addition,
if Mr. Boyce becomes disabled and ceases to be
11
15
employed by IDEX he shall be entitled to receive an eighteen-month continuance
of fringe benefits. If Mr. Boyce's employment is terminated or he resigns, he
will receive continuing salary payments and fringe benefits for a period of
twenty-four months. Such payments, which are in addition to any other death
benefits, will continue to be paid to Mr. Boyce's wife if she survives, or his
estate if he dies before the payments are complete. In addition, at such time as
Mr. Boyce ceases to be employed by IDEX, he will receive a lump sum payment of
$20,000 for each twelve-month period or portion thereof that he has been
employed by IDEX up to a maximum of $240,000.
The employment agreements with Messrs. Hansen and Sayatovic became
effective August 1, 1994, and March 1, 1988, respectively. Each provides for an
initial three-year term (during which the Company could terminate the agreement)
plus successive twelve-month periods thereafter. The agreements were amended and
restated on November 22, 1996. The annual base salaries for 1997, subject to
annual review and adjustment, are $210,800 for Mr. Hansen and $198,500 for Mr.
Sayatovic. In the event of termination by the Company, the executive will be
entitled to continuing salary payments and fringe benefits for twenty-four
months. Such payments will continue to the executive's wife if she survives, or
his estate if he dies before the payments are complete. In addition, the
agreement provides that in the event the executive dies during his full-time
employment, his wife if she survives him, or his estate if she does not, will be
entitled to a death benefit equal to his base salary for a continuing period of
nine months.
When Mr. Boyce ceases to be employed by IDEX he will be entitled to
receive a supplemental retirement benefit for three years (subject to an annual
cost of living adjustment) equal to 40% of his maximum annual base salary in
effect at any time during the term of his employment agreement, such payments to
commence after all other salary continuation payments have been paid and to be
reduced by the amount of the lump sum benefit described above. He will also be
entitled to receive a supplemental retirement benefit equal to 20% of his
maximum annual base salary for the remainder of his life (subject to an annual
cost of living adjustment) commencing upon completion of payment of the 40%
benefit. The supplemental retirement benefit referred to in the two preceding
sentences may, under certain circumstances on Mr. Boyce's death, be paid to his
spouse in the form of an actuarially equivalent joint and 50% surviving spouse
annuity. If payments under either or both of the supplemental retirement
provisions commence prior to Mr. Boyce attaining age 59, the payments are to be
actuarially adjusted such that the present value of such payments at that time
is equivalent to the present value of such payments as if such payments
commenced at age 59.
The agreement between Mr. Boyce and IDEX provides for reimbursement of all
medical, hospitalization, dental and similar benefits and expenses for himself
and his wife and dependents continuing for the longer of his life or his wife's
life. The employment agreements with each of Messrs. Hansen and Sayatovic
provide for reimbursement of all medical, hospitalization, dental and similar
benefits and expenses for him, his wife and dependents during the term of his
employment with IDEX and for the longer of his life or his wife's life, if he
remains employed by IDEX until his 55th birthday, if he dies, or he becomes
disabled while employed by IDEX, or he ceases to be employed at any time
following an acquisition of IDEX as defined in the employment agreement. If the
executive remains employed by IDEX until age 55 and subsequently leaves the
Company voluntarily or retires, reimbursements for medical expenses will be
reduced, until he attains age 59, to the extent reimbursement is available from
other programs sponsored by subsequent employers, if any. Also, should the
executive terminate his employment prior to age 55 following an acquisition of
IDEX, reimbursements for medical expenses will be reduced until age 55 to the
extent reimbursement is available from subsequent employers.
12
16
Bonuses provided for in the employment agreements will be calculated by
the Board of Directors. However, Mr. Boyce's target bonus must equal at least
80% of his base salary as of the end of the fiscal period for which the bonus is
calculated. Messrs. Hansen and Sayatovic each will receive a bonus of not less
than his target amount for the entire year in the event his employment is
terminated by the Company or by death or disability. Mr. Boyce will receive a
bonus of not less than his target amount for the entire year during which his
employment with IDEX ceases.
Each employment agreement also provides for payment of the 20% golden
parachute excise tax, increased for taxes due on the payment, in the event that
the Internal Revenue Service determines any such taxes to be payable due to a
change in control. Also, pursuant to the agreements, each executive will be
entitled to receive a guarantee of his pension benefits under the IDEX
Corporation Retirement Plan described below under "Pension and Retirement
Plans," without regard to the limitations on the maximum benefits that may be
paid under that plan under certain provisions of the Internal Revenue Code of
1986, as amended.
PENSION AND RETIREMENT PLANS
Most salaried employees of IDEX, including the executive officers and
certain hourly employees, are covered under the IDEX Corporation Retirement Plan
(the "IDEX Plan"). IDEX and the other sponsoring subsidiaries are required to
make an annual contribution to the IDEX Plan in such amounts as are actuarially
required to fund the benefits of the participants. The IDEX Plan is an ongoing
"career average" plan that provides a level of benefit times a participant's
compensation for a year, historically with periodic updates to average
compensation over a fixed five-year period. Under the IDEX Plan, participants
are entitled to receive an annual benefit on retirement equal to the sum of the
benefit earned through 1995 using the five-year average compensation of a
participant through 1995 plus the benefit earned under the current formula for
each year of employment after 1995. For each year of participation prior to
1996, a participant earns a benefit equal to 1.25% of the first $16,800 of such
average compensation through 1995 and 1.65% of such compensation in excess of
$16,800. Beginning with January 1, 1996, the benefit earned equals the sum of
1.6% of the first $16,800 of each year's total compensation plus 2.0% for such
compensation in excess of $16,800 for each full year of service credited after
1995 under the IDEX Plan. As required by law, compensation counted for purposes
of determining this benefit is limited to $150,000 per year. For all
participants in the IDEX Plan, the normal form of retirement benefit is payable
in the form of a life annuity with five years of payments guaranteed. Other
optional forms of benefits are available.
As of December 31, 1996, the total accrued monthly benefit under the IDEX
Plan for Messrs. Boyce, Hansen, Sayatovic, Roberts and Baker was $2,682, $4,376,
$3,155, $1,626 and $4,062, respectively. Assuming projected earnings in 1997 of
$849,000, $371,600, $346,000, $296,900 and $284,800 for Messrs. Boyce, Hansen,
Sayatovic, Roberts and Baker, respectively, and that such earnings remain level
until each person reaches age 65, the projected monthly benefit for Messrs.
Boyce, Hansen, Sayatovic, Roberts and Baker under this Plan would be $4,358,
$6,909, $6,854, $5,477 and $8,260, respectively, upon retirement at age 65.
Pursuant to the Company's Supplemental Executive Retirement Plan (the
"SERP"), employees of the Company are entitled to retirement benefits to
compensate for any reduction in benefits under the IDEX Plan arising from the
maximum benefit limitations under Sections 401 and 415 of the Internal Revenue
Code of 1986, as amended. Based on the above assumptions, the projected monthly
benefit at age 65 for Messrs. Boyce, Hansen, Sayatovic, Roberts and Baker under
the Company's SERP would be $23,989, $6,503, $6,772, $4,081 and $5,001,
respectively.
13
17
PRINCIPAL SHAREHOLDERS
The following table furnishes information, as of December 31, 1996, with
respect to the shares of Common Stock beneficially owned by (i) all directors,
(ii) the officers named in the Summary Compensation Table, (iii) all directors
and officers of IDEX as a group, and (iv) any person owning beneficially more
than five percent of the outstanding shares of Common Stock of the Company.
Except as indicated by the notes to the following table the holders listed below
have sole voting power and investment power over the shares beneficially held by
them. An * indicates ownership of less than 1 percent of the outstanding Common
Stock.
NUMBER OF
SHARES
NAME AND ADDRESS OF BENEFICIALLY
BENEFICIAL OWNER OWNED PERCENT OF CLASS
------------------- ------------ ----------------
KKR Associates(1) 8,753,592 29.6
9 West 57th Street
New York, NY 10018
Henry R. Kravis
Paul E. Raether
George R. Roberts
Clifton S. Robbins
Michael T. Tokarz
Mario J. Gabelli(2) 3,284,647 11.1
GAMCO Investors, Inc.
Gabelli & Company, Inc.
655 Third Avenue
New York, NY 10017
Fidelity Investments(3) 2,304,675 7.8
82 Devonshire Street
Boston, MA 02109
Donald N. Boyce(4) 801,993 2.7
Richard E. Heath(5)(6) 30,960 *
William H. Luers(6) 25,200 *
Clifton S. Robbins(1) 33,750 *
Neil A. Springer(6) 24,750 *
Michael T. Tokarz(1) 45,000 *
Mark W. Baker(7) 198,414 *
Frank J. Hansen(8) 59,778 *
Wade H. Roberts, Jr.(7) 51,370 *
Wayne P. Sayatovic(9) 371,246 1.3
All directors and officers as a 1,873,286 6.3
group (17 persons excluding shares
owned by KKR Associates)(1)(10)
- ---------------
(1) Shares of Common Stock shown as owned by KKR Associates are owned of record
by two partnerships, of which KKR Associates is the sole general partner
and as to which it possesses sole voting and investment power. KKR
Associates is a limited partnership of which Messrs. Kravis, Roberts,
Raether, Robbins and
14
18
Tokarz (each of whom is a director of the Company) and Messrs. Edward
Gilhuly, Perry Golkin, Robert I. MacDonnell, Michael W. Michelson, Saul
A. Fox and James H. Greene, Jr. are general partners. Such persons may be
deemed to share beneficial ownership of the shares shown as beneficially
owned by KKR Associates. All of the foregoing persons disclaim beneficial
ownership of any shares of the Company, listed above as beneficially
owned by KKR Associates.
(2) Mario J. Gabelli, GAMCO Investors, Inc. ("GAMCO") and Gabelli Fund, Inc.
("Gabelli Fund"), have filed a Form 13F with respect to Common Stock owned
by GAMCO, Gabelli Fund and certain other entities which Mr. Gabelli
directly or indirectly controls and for which he acts as chief investment
officer. IDEX has not attempted to independently verify any of the
foregoing information, which is based solely upon the information contained
in the Form 13F.
(3) Fidelity Investments has filed a Form 13F with respect to Common Stock
owned by certain portfolios for which Fidelity Investments is an investment
advisor on a discretionary basis. IDEX has not attempted to independently
verify any of the foregoing information, which is based solely upon the
information contained in the Form 13F.
(4) Includes: 355,500 shares owned by Mr. Boyce's wife as to which Mrs. Boyce
has sole investment power and as to which Mr. Boyce has sole voting power
over 351,000 of such shares; 45,000 shares held in separate trusts as to
which Mrs. Boyce is the trustee for the benefit of Mr. and Mrs. Boyce's
children; 49,500 shares held by The Boyce Family Foundation; and 295,082
shares which are eligible for exercise under the Officer Option Plan.
(5) Includes: 4,500 shares which are owned by various family trusts as to which
Mr. Heath is a co-trustee of each trust; and 900 shares which are owned by
Mr. Heath's wife.
(6) Includes for each of Messrs. Heath, Luers and Springer 24,750 shares under
option which are eligible for exercise under the IDEX Corporation Stock
Option Plan for Outside Directors.
(7) Of such shares, 13,365 and 50,760 are shares under option which are
eligible for exercise under the Company's Stock Option Plan for Non-Officer
Key Employees and the Officer Option Plan for Messrs. Baker and Roberts,
respectively.
(8) Includes: 17,905 shares which are owned directly by Mr. Hansen's wife and
41,873 shares which are eligible for exercise under the Company's Stock
Option Plan for Non-Officer Key Employees and the Officer Option Plan.
(9) Includes: 45,000 shares which are owned directly by Mr. Sayatovic's wife;
6,750 shares which are owned by Mrs. Sayatovic as custodian for their
children; and 105,821, shares which are eligible for exercise under the
Officer Option Plan.
(10) Includes 74,250 shares under option which are eligible for exercise under
the IDEX Corporation Stock Option Plan for Outside Directors, 492,273
shares under option which are eligible for exercise under the Officer
Option Plan, and 75,225 shares under option which are eligible for exercise
under the Stock Option Plan for Non-Officer Key Employees.
15
19
RATIFICATION OF AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee,
has recommended the selection of Deloitte & Touche LLP as the Company's
independent auditors for 1997.
Representatives of Deloitte & Touche LLP will attend the Annual Meeting of
shareholders and will have the opportunity to make a statement if they desire to
do so. They will also be available to respond to appropriate questions.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE RATIFICATION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR 1997.
GENERAL INFORMATION
OUTSTANDING STOCK
An aggregate of 29,146,410 shares of the Company's Common Stock was
outstanding at the close of business on February 5, 1997. Each share entitles
its holder of record to one vote on each matter upon which votes are taken at
the Annual Meeting. No other securities are entitled to be voted at the Annual
Meeting.
REVOCABILITY OF PROXIES
Any proxy solicited hereby may be revoked by the person or persons giving
it at any time before it has been exercised at the Annual Meeting by giving
notice of revocation to the Company in writing or in open meeting.
SOLICITATION COSTS
The Company will pay the cost of preparing and mailing this Proxy
Statement and other costs of the proxy solicitation made by the Company's Board
of Directors. Certain of the Company's officers and employees may solicit the
submission of proxies authorizing the voting of shares in accordance with the
Board of Directors' recommendations, but no additional remuneration will be paid
by the Company for the solicitation of those proxies. Such solicitations may be
made by personal interview, telephone and facsimile transmission. Arrangements
have also been made with brokerage firms and others for the forwarding of proxy
solicitation materials to the beneficial owners of Common Stock, and the Company
will reimburse them for reasonable out-of-pocket expenses incurred in connection
therewith. In addition, the Company has retained Morrow & Co. to assist in proxy
solicitation and collection for an anticipated fee of $5,000 plus out-of-pocket
expenses.
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR 1997 ANNUAL MEETING
A shareholder desiring to submit a proposal for inclusion in the Company's
Proxy Statement for the 1998 Annual Meeting must deliver the proposal so that it
is received by the Company no later than November 28, 1997. The Company requests
that all such proposals be addressed to Wayne P. Sayatovic, Senior Vice
President-Finance, Chief Financial Officer and Secretary, IDEX Corporation, 630
Dundee Road, Northbrook, Illinois 60062, and mailed by certified mail, return
receipt requested. In addition, the Company's By-Laws require that notice of
shareholder nominations for directors and related information be received by the
Secretary of the Company not later than 60 days before the anniversary of the
1997 Annual Meeting which, for the 1998 Annual Meeting will be January 24, 1998.
16
20
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than 10% of the Company's
Common Stock to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC"), the New York Stock Exchange, and
the Chicago Stock Exchange. Officers, directors and greater than 10%
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5's were
required for such persons, the Company believes that during the year ended
December 31, 1996 all filing requirements applicable to its officers, directors
and greater than 10% shareholders were complied with.
REPORTS TO SHAREHOLDERS
The Company has mailed this Proxy Statement and a copy of its 1996 Annual
Report to each shareholder entitled to vote at the Annual Meeting. Included in
the 1996 Annual Report are the Company's financial statements for the year ended
December 31, 1996.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996, INCLUDING THE FINANCIAL STATEMENT SCHEDULES, AS FILED WITH
THE SEC MAY BE OBTAINED BY SHAREHOLDERS WITHOUT CHARGE BY SENDING A WRITTEN
REQUEST THEREFOR TO WAYNE P. SAYATOVIC, SENIOR VICE PRESIDENT-FINANCE, CHIEF
FINANCIAL OFFICER AND SECRETARY, IDEX CORPORATION, 630 DUNDEE ROAD, NORTHBROOK,
ILLINOIS 60062.
Northbrook, Illinois
February 12, 1997
17
21
[Face of Proxy Card]:[DRAFT - see actual Proxy Card for Final]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IDEX CORPORATION The undersigned hereby appoints Donald N.
630 Dundee Road Boyce, Clifton S. Robbins, Wayne P. Sayatovic
Northbrook, Illinois 60062 and Michael T. Tokarz and each of them, as
Proxies with full power of substitution, and
hereby authorize(s) them to represent and to
vote, as designated below, all the shares of
common stock of IDEX Corporation held of
record by the undersigned on February 5, 1997,
at the Annual Meeting of shareholders to be
held on March 25, 1997, or at any adjournment
thereof.
1. ELECTION OF DIRECTORS FOR ALL NOMINEES LISTED WITHHOLD AUTHORITY
BELOW
(except as marked to the to vote for all nominees
contrary below) listed below
Class II: William H. Luers
George R. Roberts
and Michael T. Tokarz
(INSTRUCTION: To withhold authority to vote for any individual nominee write that nominee's name on the space provided below.)
2. SELECTION OF FOR approval of AGAINST ABSTAIN
AUDITORS Deloitte & Touche approval of with respect to
LLP Deloitte approval of
& Touche LLP Deloitte & Touche
LLP
3. In their discretion, the Proxies are authorized to vote upon such other business as may properly
come before the meeting
[Reverse Side of Proxy Card]:
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign if full corporate name by President or other
authorized officer. If a partnership please sign in partnership name by
authorized person.
DATED: ,1997 ------------------------------
---------------------- Signature
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE. ------------------------------
Signature, if held jointly
