UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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☒ | Definitive Proxy Statement | |
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☐ | Soliciting Material Pursuant to §240.14a-12 |
IDEX Corporation (Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than The Registrant)
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1925 West Field Court, Suite 200
Lake Forest, IL 60045
March 20, 2020
Dear Stockholders,
You are cordially invited to attend the Annual Meeting of Stockholders of IDEX Corporation (the Company), which will be held on Thursday, May 7, 2020 , at 9:00 a.m. Central Time, at the DoubleTree Hotel, 5460 N. River Road, Rosemont, Illinois 60018.
We intend to hold our annual meeting in person. However, we are actively monitoring the novel coronavirus disease, COVID-19, as part of our effort to maintain a safe and healthy environment at our annual meeting. In the event it is not possible or advisable to hold our annual meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. If we take this step, details on how to participate will be issued by press release, posted on our website, and filed with the Securities and Exchange Commission as additional proxy material. We also encourage attendees to review guidance from public health authorities on this issue.
The following pages contain our notice of annual meeting and proxy statement. Please review this material for information concerning the business to be conducted at the 2020 Annual Meeting, including the nominees for election as directors.
As we did last year, we have elected to provide access to our proxy materials and 2019 Annual Report on the Internet and are mailing paper copies to stockholders who have requested them. For further details, please refer to the section entitled Summary beginning on page 1 of the proxy statement.
Whether or not you plan to attend the 2020 Annual Meeting, it is important that your shares be represented. Please vote via telephone, the Internet or proxy card. If you own shares through a bank, broker or other nominee, please execute your vote by following the instructions provided by such nominee.
On behalf of the Board of Directors, I would like to express our appreciation for your continued interest in the Company.
Sincerely,
ANDREW K. SILVERNAIL
Chairman of the Board and
Chief Executive Officer
NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
Date and Time | Thursday, May 7, 2020 at 9:00 a.m. Central Time
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Place | DoubleTree Hotel, 5460 N. River Road, Rosemont, Illinois 60018*
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Agenda | 1. Election of four members of the IDEX Board of Directors, each for a term of three years
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2. Advisory vote to approve named executive officer compensation
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3. Ratification of the appointment of Deloitte & Touche LLP as our independent registered accounting firm for 2020
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4. To consider a stockholder proposal regarding a report related to employee representation on the Companys Board of Directors, if properly presented at the meeting
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5. To transact such other business as may properly come before the 2020 Annual Meeting or any adjournment or postponement thereof
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Voting Recommendations | The Companys Board of Directors recommends that you vote:
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1. FOR all the director nominees
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2. FOR the approval of the compensation of our named executive officers
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3. FOR the ratification of the appointment of Deloitte & Touche LLP
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4. AGAINST the stockholder proposal regarding a report related to employee representation on the Companys Board of Directors
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Proxy Voting | Your vote is important. You can vote your shares by Internet, by telephone, or by mail. Instructions for each of these methods and the control number that you will need are provided on the proxy card. If your shares are held in street name in a stock brokerage account, or by a bank or other nominee, you must provide your broker with instructions on how to vote your shares in order for your shares to be voted on important matters presented at the 2020 Annual Meeting.
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March 20, 2019 | By Order of the Board of Directors,
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DENISE R. CADE Senior Vice President, General Counsel and Corporate Secretary
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* | We intend to hold our annual meeting in person. However, we are actively monitoring the novel coronavirus disease, COVID-19, as part of our effort to maintain a safe and healthy environment at our annual meeting. In the event it is not possible or advisable to hold our annual meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. If we take this step, details on how to participate will be issued by press release, posted on our website, and filed with the Securities and Exchange Commission as additional proxy material. We also encourage attendees to review guidance from public health authorities on this issue. |
Important Notice Regarding the Availability of Proxy Materials for the 2020 Annual Meeting The Proxy Statement and 2019 Annual Report are available online at: http://phx.corporate-ir.net/phoenix.zhtml?c=83305&p=irol-reportsAnnual
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Corporate Governance Guidelines and Code of Business Conduct and Ethics |
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Directors Outstanding Equity Awards at 2019 Fiscal Year End |
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Narrative to Nonqualified Deferred Compensation at 2019 Fiscal Year End Table |
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STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2021 ANNUAL MEETING OF STOCKHOLDERS |
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IDEX Corporation (the Company or IDEX) has prepared this proxy statement (Proxy Statement) in connection with the solicitation by the Companys Board of Directors (the Board) of proxies for the Annual Meeting of Stockholders to be held on Thursday, May 7, 2020, at 9:00 a.m. Central Time, at the DoubleTree Hotel, 5460 N. River Road, Rosemont, Illinois 60018 (the Annual Meeting). The Company commenced distribution of, or otherwise made available, this Proxy Statement and the accompanying materials on March 20, 2020.
Who is entitled to vote at the Annual Meeting?
You are entitled to vote if you owned shares of IDEXs common stock, par value $0.01 per share (Common Stock) as of the close of business on March 13, 2020, the record date of the Annual Meeting. On the record date, a total of 76,239,242 shares of Common Stock were outstanding. Each share of Common Stock entitles its holder of record to one vote on each matter upon which votes are taken at the Annual Meeting. There is no cumulative voting. No other securities are entitled to be voted at the Annual Meeting.
How do I vote?
Even if you plan to attend the Annual Meeting in person, we encourage you to vote as soon as possible, using one of the methods listed below.
By Internet
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By Telephone
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By Mail
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In Person
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www.proxyvote.com Open until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the website and follow the instructions. |
1-800-690-6903 Open until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and follow the instructions. |
Mark, sign and date your proxy card and return it in the postage-paid envelope or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717 |
If you decide to attend the Annual Meeting, you will be able to vote in person, even if you have previously voted by Internet, telephone or mail. |
If you vote by telephone or over the Internet, you should not mail your proxy card. If your completed proxy card or telephone or Internet voting instructions are received prior to the Annual Meeting, your shares will be voted in accordance with your voting instructions.
If your shares are held in street name (that is, they are held in the name of a broker, financial institution or other nominee), you will receive instructions with your materials that you must follow in order to have your shares voted. Please review your voting instruction form to determine whether you will be able to vote by telephone or over the Internet.
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What is a quorum for the Annual Meeting?
A quorum of stockholders is necessary to take action at the Annual Meeting. A majority of outstanding shares of Common Stock present in person or represented by proxy will constitute a quorum. The Company will appoint election inspectors to determine whether or not a quorum is present, and to tabulate votes cast by proxy or in person. Under certain circumstances, a broker or other nominee may have discretionary authority to vote shares of Common Stock if instructions have not been received from the beneficial owner or other person entitled to vote.
The election inspectors will treat directions to withhold authority, abstentions and broker non-votes (which occur when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because such broker or other nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner) as present and entitled to vote for purposes of determining the presence of a quorum for the transaction of business at the Annual Meeting.
What are the voting requirements?
Proposal | Vote Required | Effect of Broker Non-Votes |
Effect of Abstentions | |||
Election of Directors |
Plurality Plus Standard | No effect | No effect | |||
Advisory Vote on Executive Compensation |
The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote on the matter | No effect | Against | |||
Ratification of Auditors | The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote on the matter | No effect | Against | |||
Stockholder Proposal Regarding a Report Related to Employee Representation on the Companys Board of Directors | The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote on the matter | No effect | Against |
What is the Plurality Plus Standard?
The Companys Corporate Governance Guidelines provide for a Plurality Plus Standard with respect to the election of directors. Any nominee who receives a greater number of withhold votes than affirmative votes in an uncontested election is required to submit an offer of resignation for consideration by the Nominating and Corporate Governance Committee of the Board within 90 days from the date of election.
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The Nominating and Corporate Governance Committee must then consider all of the relevant facts and circumstances and recommend to the Board the action to be taken with respect to the offer of resignation.
How does the Board recommend that I vote?
The Board recommends that you vote:
1. FOR the election of the Companys nominees as directors.
2. FOR the approval of the compensation of the Companys named executive officers.
3. FOR the ratification of the appointment of auditors.
4. AGAINST the stockholder proposal regarding a report related to employee representation on the Companys Board of Directors.
What happens if I do not specify a choice for a matter when returning my proxy card?
If you sign and return your proxy card but do not give voting instructions, your shares will be voted as recommended by the Board, and in the discretion of the proxy holders as to any other business which may properly come before the Annual Meeting.
What can I do if I change my mind after I vote my shares?
You can revoke a proxy prior to the completion of voting at the Annual Meeting by:
1. | Mailing a new proxy card with a later date. |
2. | Casting a new vote on the Internet or by telephone. |
3. | Sending a written notice of revocation addressed to Denise R. Cade, Senior Vice President, General Counsel and Corporate Secretary, IDEX Corporation, 1925 West Field Court, Suite 200, Lake Forest, Illinois 60045. |
4. | Voting in person at the Annual Meeting. |
If your shares are held in street name, please contact your broker, financial institution or other nominee and comply with such nominees procedures if you want to change or revoke your previous voting instructions.
Who will solicit the proxies and who will pay the cost of this proxy solicitation?
The Company will bear the costs of preparing and mailing this Proxy Statement and other costs of the proxy solicitation made by the Board. Certain of the Companys officers and employees may solicit the submission of proxies authorizing the voting of shares in accordance with the Boards recommendations, but no additional remuneration will be paid by the Company for the solicitation of those proxies. Any such solicitations may be made by personal interview, telephone, email or facsimile transmission.
The Company has made arrangements with brokerage firms and other record holders of its Common Stock to forward proxy solicitation materials to the beneficial owners of such Common Stock. The Company will reimburse those brokerage firms and others for their reasonable out-of-pocket expenses in connection with this work.
In addition, the Company has engaged Morrow Sodali LLC, 470 West Avenue, Stamford, Connecticut, to assist in proxy solicitation and collection at a cost of $6,500, plus out-of-pocket expenses.
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Why did I receive a Notice of Internet Availability of Proxy Materials but no proxy materials?
As permitted under rules of the Securities and Exchange Commission (SEC), we are making our proxy materials available to stockholders electronically via the Internet. We believe electronic delivery expedites receipt of our proxy materials by stockholders, while lowering the costs and reducing the environmental impact of the Annual Meeting.
If you receive a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials by mail unless you specifically request them. Instead, the Notice of Internet Availability will provide instructions as to how you may review the proxy materials and submit your voting instructions over the Internet.
If you receive the Notice of Internet Availability by mail and would like to receive a printed copy of the proxy materials, you should follow the instructions in the notice for requesting a printed copy. In addition, the proxy card contains instructions for electing to receive proxy materials over the Internet or by mail in future years.
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PROPOSALS TO BE VOTED ON AT THE 2020 ANNUAL MEETING
PROPOSAL 1 ELECTION OF DIRECTORS
The Companys Restated Certificate of Incorporation, as amended, provides for a three-class Board of Directors, with one class being elected each year for a term of three years. The Board currently consists of ten members, four of whom are Class I directors whose terms will expire at this years Annual Meeting, three of whom are Class II directors whose terms will expire at the Annual Meeting to be held in 2021, and three of whom are Class III directors whose terms will expire at the Annual Meeting to be held in 2022.
Overview of IDEX Board of Directors
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Our Directors Exhibit:
High integrity
Loyalty to the Company and commitment to its success
Proven record of success
Knowledge of corporate governance and practices
Our Directors Bring to the Boardroom:
High level of leadership experience
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Board Composition
Independent Directors: 9 of 10
Average IDEX Board Tenure: 6.5 years
Average Age: 59
Diversity of gender, race or ethnicity: 2 of 10 |
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Specialized industry expertise
Financial expertise
Extensive knowledge of the Company |
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Set forth below is a summary of the Boards collective qualifications, experiences and backgrounds.
Senior Leadership Experience Current or Former CEO Other Public Company Board Experience Broad International Experience Extensive M&A Experience Extensive Knowledge of IDEX's Business and Industry High Level of Financial Literacy Number of Directors 0 1 2 3 4 5 6 7 8 9 10
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The Board has nominated four individuals for election as Class I directors to serve for a three-year term expiring at the Annual Meeting to be held in 2023, or upon the election and qualification of their successors. The nominees of the Board are Andrew K. Silvernail, Katrina L. Helmkamp, Mark A. Beck and Carl R. Christenson, each of whom is currently serving as a director of the Company.
The nominees and the directors serving in Class II and Class III whose terms expire in future years and who will continue to serve after the Annual Meeting are listed below with brief statements setting forth their present principal occupations and other information, including any directorships in other public companies, and their particular experiences, qualifications, attributes and skills that led to the conclusion they should serve as directors. If for any reason any of the nominees are unavailable to serve, proxies solicited hereby may be voted for a substitute. The Board, however, expects the nominees to be available.
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Our Board of Directors recommends that you vote FOR the election of each of the 2020 Class I director nominees
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2020 DIRECTOR NOMINEES
Mr. Silvernail was appointed Chairman of the Board effective January 1, 2012. Mr. Silvernail has served as Chief Executive Officer and a director of the Company since August 10, 2011. From August 10, 2011 to February 21, 2020, Mr. Silvernail also served as President of the Company. Prior to that, Mr. Silvernail served since January 2011 as Vice President Group Executive of the Companys Health & Science Technologies, Global Dispensing and Fire & Safety/Diversified Products business segments. From February 2010 to December 2010, Mr. Silvernail was Vice President Group Executive of the Companys Health & Sciences Technologies and Global Dispensing business segments. Mr. Silvernail joined IDEX in January 2009 as Vice President Group Executive of Health & Science Technologies.
Andrew K. Silvernail Age: 48 Director since August 2011 Chairman, President and Chief Executive Officer
Mr. Silvernails relevant experience with engineering and technology industries in general, together with his extensive management experience, led to the conclusion that he should serve on the Board of Directors.
Mr. Silvernail received a bachelor of science degree in government from Dartmouth College and a master of business administration degree from Harvard University.
Mr. Silvernail is a director of Stryker Corporation.
Ms. Helmkamp has served as Chief Executive Officer of Cartus Corporation, the relocation services subsidiary of Realogy Holdings Corp., the largest full-service residential real estate services company in the United States, since June 2018. Previously, Ms. Helmkamp served as Chief Executive Officer of Lenox Corporation from November 2016 to June 2018. Prior to Lenox Corporation, Ms. Helmkamp served as Chief Executive Officer of SVP Worldwide from 2010 through 2014, and as Senior Vice President, North America Product for Whirlpool Corporation from 2008 to 2010.
Katrina L. Helmkamp Age: 53 Director since November 2015 Independent Committees: Compensation Nominating and Corporate Governance
Ms. Helmkamps operating leadership skills and her experience across multiple markets and technologies led to the conclusion that she should serve on the Board of Directors. During her time at SVP Worldwide and Whirlpool Corporation, Ms. Helmkamp was responsible for managing the operations and profitability of global businesses that derived a substantial portion of their revenues from outside of the United States.
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In addition, Ms. Helmkamp successfully oversaw numerous new product development and technology initiatives, including the launch of new products and service categories with improved margins and quality. Ms. Helmkamp also has significant mergers and acquisitions experience, both in identifying and evaluating potential targets, as well as leading post-acquisition integration activities.
Ms. Helmkamp received a bachelor of science degree in industrial engineering and a master of business administration degree from Northwestern University.
Mr. Beck is the co-founder and Chief Executive Officer of B-Square Precision, LLC, a private company engaged in the acquisition and management of companies that manufacture high-precision tools, dies, molds and components. Previously, Mr. Beck served as President and Chief Executive Officer of JELD-WEN Holding, Inc. (JELD-WEN), one of the worlds largest door and window manufacturers, from November 2015 to February 2018, and was a director of JELD-WEN from May 2016 to February 2018. Prior to JELD-WEN, Mr. Beck served as an Executive Vice President at Danaher Corporation, leading Danahers water quality and dental programs, beginning in April 2014. Previously, he spent 18 years with Corning Incorporated in a series of management positions with increasing responsibility, culminating in his appointment as Executive Vice President overseeing Cornings environmental technologies and life science units in July 2012. He also served on the board of directors of Dow-Corning Corporation from 2010 to 2014.
Mark A. Beck Age: 53 Director since January 2018 Independent Committees: Audit
Mr. Becks experience as a chief executive officer of a public company with significant international operations and his track record of innovation and successfully integrating acquired businesses led to the conclusion that he should serve on the Board of Directors.
Mr. Beck received a bachelor of arts degree in business management from Pacific University and a master of business administration degree from Harvard University.
Mr. Beck is a director of Owens & Minor, Inc.
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Mr. Christenson has served since April 2014 as Chief Executive Officer and Chairman of the Board of Directors of Altra Industrial Motion Corp. (Altra), a leading global designer, producer and marketer of a wide range of electromechanical power transmission motion control products. From January 2009 to April 2014, Mr. Christenson served as President and Chief Executive Officer of Altra. Prior to that, Mr. Christenson served as President and Chief Operating Officer of Altra from January 2005 to December 2008. From 2001 to 2005, Mr. Christenson was President of Kaydon Bearings, a manufacturer of custom-engineered bearings and a division of Kaydon Corporation. Prior to joining Kaydon, Mr. Christenson held several management positions at TB Woods Incorporated and several positions at the Torrington Company, a division of Ingersoll Rand.
Carl R. Christenson Age: 60 Director since June 2019 Independent Committees: Compensation
Mr. Christensons extensive experience leading industrial businesses and executing strategic acquisitions, including in his current role as chief executive officer of a public company with global operations, led to the conclusion that he should serve on the Board of Directors.
Mr. Christenson received bachelor of science and master of science degrees in Mechanical Engineering from the University of Massachusetts and a master of business administration degree from Rensselaer Polytechnic Institute.
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OTHER INCUMBENT DIRECTORS
Class II: Three-Year Term Expires in 2021
Mr. Cook is our Lead Director. He served as Chairman of the Board of Donaldson Company, Inc. from prior to 2009 to April 2016. Mr. Cook retired as the President and Chief Executive Officer of Donaldson in April 2015, having served since prior to 2009.
Mr. Cooks strong business and organizational leadership skills and his relevant experience in technology industries led to the conclusion that he should serve on the Board of Directors. Throughout his 35-year career at Donaldson, a technology-driven global company that manufactures filtration systems designed to remove contaminants from air and liquids, Mr. Cook served in several senior executive positions, and was elected as a director in 2004.
William M. Cook Age: 65 Director since April 2008 Independent Committees: Audit
Mr. Cook received a bachelor of science degree in business administration and a master of business administration degree from Virginia Polytechnic Institute and State University.
Mr. Cook is a director of Neenah, Inc. and Axalta Coating Systems, Ltd.
Ms. Warner has served as President and Chief Executive Officer and as a director of Renewable Energy Group, Inc., an advanced biofuel producer, since January 2019. Previously, Ms. Warner served as Executive Vice President, Operations for Andeavor (formerly known as Tesoro Corporation) from August 2016 until October 2018, when Andeavor was acquired by Marathon Petroleum Corp. Prior to that, Ms. Warner served as Andeavors Executive Vice President, Strategy and Business Development, since October 2014. From 2012 to 2014, Ms. Warner was Chairman and Chief Executive Officer of Sapphire Energy, Inc. From 2009 to 2011, Ms. Warner was Chairman and President of Sapphire Energy. Prior to 2009, Ms. Warner was Group Vice President, Global Refining, at BP plc.
Cynthia J. Warner Age: 60 Director since February 2013 Independent Committees: Compensation Nominating and Corporate Governance (Chair)
Ms. Warners operating leadership skills, international experience and extensive experience in the energy, refining and transportation industries led to the conclusion that she should serve on the Board of Directors. During her 25 years at BP and Amoco, Inc. (prior to its acquisition by BP), Ms. Warner gained significant knowledge of the global energy industry and served in numerous leadership roles, including overseeing BPs Global Refining business and its health, safety, security and environmental efforts, with a consistent record of success in coordinating the operations of thousands of employees across BPs global facilities.
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In her role as Chief Executive Officer of Sapphire Energy, an alternative energy venture, Ms. Warner had oversight responsibility for the raising of substantial investment capital and the successful completion of a new demonstration facility for the company.
Ms. Warner received a bachelor of engineering degree in chemical engineering from Vanderbilt University and a master of business administration degree from Illinois Institute of Technology.
Ms. Warner is a director of Sempra Energy.
Mr. Buthman retired from Kimberly-Clark Corporation, a leading global manufacturer of consumer packaged goods and personal care products, in 2015, where he was Executive Vice President and Chief Financial Officer from January 2003 to April 2015. During his 33-year career at Kimberly-Clark, Mr. Buthman held a wide range of leadership roles, led or participated in more than 50 acquisition transactions totaling more than $10 billion in value and was part of an executive team that created more than $20 billion in shareholder value during his tenure as Chief Financial Officer.
Mark A. Buthman Age: 58 Director since April 2016 Independent Committees: Audit (Chair)
Mr. Buthmans experience as a Chief Financial Officer of a Fortune 150 company with significant international operations and as a public company director led to the conclusion that he should serve on the Board of Directors. Mr. Buthman is a disciplined financial leader with a track record of allocating capital in shareholder-friendly ways and his insight is extremely valuable to our Board of Directors and management.
Mr. Buthman received a bachelor of business administration degree in finance from the University of Iowa.
Mr. Buthman is a director of West Pharmaceutical Services, Inc.
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Class III: Three-Year Term Expires in 2022
Mr. Mrozek served as Vice Chairman and Chief Financial Officer of The ServiceMaster Company, a residential and commercial service company, until his retirement in March 2008.
Mr. Mrozeks strategic and operating leadership skills, his extensive experience and expertise in the business services industry and his financial reporting expertise led to the conclusion that he should serve on the Board of Directors. Through over 20 years of executive experience in various senior positions in general management, operations and finance at ServiceMaster, including more than eight years as President and Chief Operating Officer of ServiceMaster or one of its largest segments, Mr. Mrozek developed extensive knowledge of the business services industry and gained valuable financial expertise and experience in mergers and acquisitions.
Ernest J. Mrozek Age: 65 Director since July 2010 Independent Committees: Audit
Prior to joining ServiceMaster in 1987, Mr. Mrozek spent 12 years in public accounting with Arthur Andersen & Co. Mr. Mrozek has also acquired substantial experience in corporate governance as a director on the boards of several public and private companies.
Mr. Mrozek received a bachelor of science degree in accountancy with honors from the University of Illinois and is a certified public accountant, on inactive status.
Mr. Mrozek is a director of Advanced Disposal Services, Inc.
Mr. Satterthwaite has served since October 2019 as President and Chief Operating Officer of Cummins, Inc., a global power leader that designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products. From April 2015 through October 2019, Mr. Satterthwaite served as President of Cummins Distribution Business, a unit of Cummins. Prior to that, Mr. Satterthwaite served as President of Cummins Power Generation from June 2008 to April 2015.
Livingston L. Satterthwaite Age: 58 Director since April 2011 Independent Committees: Compensation (Chair) Nominating and Corporate Governance
Mr. Satterthwaites business leadership and sales skills, international experience and extensive experience in industrial manufacturing led to the conclusion that he should serve on the Board of Directors. Since joining Cummins in 1988, Mr. Satterthwaite has held various positions at Cummins Power Generation and other divisions of Cummins, including 14 years in managerial and sales positions in the United Kingdom and Singapore.
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Prior to joining Cummins, Mr. Satterthwaite spent four years at Schlumberger Limited, an oil field services provider, as a general field engineer.
Mr. Satterthwaite received a bachelor of science degree in civil engineering from Cornell University and a master of business administration degree from Stanford University.
Mr. Parry served as Vice Chairman of Illinois Tool Works Inc. (ITW) from 2010 until his retirement in April 2017. From prior to 2009 until 2010, Mr. Parry was Executive Vice President of ITW with responsibility for the Polymers and Fluids Group.
Mr. Parrys strategic and operating leadership skills and global commercial perspective gained from over 30 years of international business leadership experience, his significant acquisition experience and his extensive
expertise in the industrial products manufacturing industry led to the conclusion that he should serve on the Board of Directors. During 18 years of executive and management experience in various senior management positions at ITW, a multinational manufacturer of a diversified range of industrial products and equipment, Mr. Parry successfully grew the operations and profitability of multiple business units and helped ITW complete numerous acquisitions.
David C. Parry Age: 65 Director since December 2012 Independent Committees: Compensation Nominating and Corporate Governance
Prior to joining ITW in 1994, Mr. Parry spent 17 years in various executive and management positions at Imperial Chemical Industries, which at the time was one of the largest chemical producers in the world.
Mr. Parry received a bachelor of science degree in chemistry, a master of science degree in chemistry and a Ph.D. in polymer chemistry from Victoria University of Manchester, Manchester, England.
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The objectives of our director compensation program are to attract highly-qualified individuals to serve on our Board and to align our directors interests with the interests of our stockholders. The Compensation Committee periodically reviews the program to ensure that it continues to meet these objectives.
The Company believes that to attract and retain qualified directors, pay levels should be targeted at the 50th percentile (or median) of pay levels for directors at comparable companies. On at least a biennial basis, the Compensation Committee, with the assistance of F.W. Cook, evaluates the competitiveness of director compensation. The primary reference point for the determination of market pay is the peer group of companies. The peer group used in this analysis was the same peer group used for the Companys executive compensation analysis.
For further details on this topic, refer to Peer Companies under Setting Executive Compensation in the Compensation Discussion and Analysis below. Market composite data derived from pay surveys available to F.W. Cook and to the Company is also used.
Our director compensation for 2019 and 2020 is set forth below. The changes for 2020 are detailed in the Companys Amended and Restated Non-Employee Director Compensation Policy (Director Compensation Policy) and reflect market-based adjustments as a result of the analysis described above.
2019
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2020 | |||
Annual Retainer and Meeting Fees |
$ 85,000 |
$ 90,000 | ||
Committee Chair Retainer |
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Audit Committee |
$ 15,000 |
$ 18,000 | ||
Compensation Committee |
$ 10,000 |
$ 12,500 | ||
Nominating and Corporate Governance Committee |
$ 10,000 |
$ 10,000 | ||
Additional Lead Director Fees |
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Annual Retainer |
$ 15,000 |
$ 15,000 | ||
Annual Equity Grant (100% Restricted Stock Units) |
$ 15,000 |
$ 15,000 | ||
Value of Equity Grants Upon Initial Election to the Board (100% Restricted Stock Units)
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Pro-rated annual
grant |
Pro-rated annual
grant | ||
Value of Annual Equity Grants (100% Restricted Stock Units) |
$130,000 |
$145,000 |
22
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The following table summarizes the total compensation earned in 2019 for the Companys non-management directors. Mr. Silvernail receives no additional compensation for his service as a director.
Name |
Fees Earned or Paid in Cash ($) |
Stock Awards ($) (1) |
All Other Compensation ($) (2) |
Total ($) | ||||
Mark A. Beck
|
85,000
|
130,000
|
1,000
|
216,000
| ||||
Mark A. Buthman
|
97,500
|
130,000
|
|
227,500
| ||||
Carl R. Christenson
|
45,770
|
115,913(3)
|
|
161,683
| ||||
William M. Cook
|
100,000
|
145,000
|
|
245,000
| ||||
Katrina L. Helmkamp
|
88,995
|
130,000
|
|
218,995
| ||||
Ernest J. Mrozek
|
87,500
|
130,000
|
10,000
|
227,500
| ||||
David C. Parry
|
85,000
|
130,000
|
10,000
|
225,000
| ||||
Livingston L. Satterthwaite
|
95,000
|
130,000
|
10,000
|
235,000
| ||||
Cynthia J. Warner
|
91,005
|
130,000
|
|
221,005
|
(1) | Reflects the aggregate grant date fair value of the restricted stock units granted in 2019, determined in accordance with FASB ASC Topic 718 using the assumptions set forth in the footnotes to financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2019, assuming no forfeitures. |
(2) | Reflects matching gifts of up to $10,000 per year directed to Internal Revenue Code 501(c)(3) tax-exempt, non-profit organizations under the IDEX Corporation Matching Gift Program. |
(3) | Reflects Mr. Christensons prorated initial grant awarded upon his election to the Board on June 17, 2019. |
24
Directors Outstanding Equity Awards at 2019 Fiscal Year End
The following table provides information on restricted stock units and stock option awards held by the Companys non-management directors and the value of those awards as of December 31, 2019. All outstanding awards are in or exercisable for shares of Common Stock.
Option Awards |
Stock Awards | |||||||||||||||||||||||||
Number of Securities
|
Number of Shares or Units of Stock that Have Not Vested (#) (b)
|
Market Value
| ||||||||||||||||||||||||
Name | Grant Date | Type | # Shares (#) |
Shares Exercised (#)
|
Exercisable (#) (a)
|
Unexercisable (#) (a)
|
Option Exercise Price ($)
|
Option Expiration Date
|
||||||||||||||||||
Mark A. Beck |
01/02/18 | RSU | 310 | 53,320 | ||||||||||||||||||||||
04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
Mark A. Buthman |
04/06/16 | RSU | 1,290 | 221,880 | ||||||||||||||||||||||
02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
Carl R. Christenson |
06/17/19 | RSU | 725 | 124,700 | ||||||||||||||||||||||
William M. Cook |
02/22/11 | NQSO | 3,190 | 0 | 3,190 | 0 | 40.89 | 02/22/2021 | ||||||||||||||||||
02/21/12 | NQSO | 3,530 | 0 | 3,530 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||
02/15/13 | NQSO | 3,075 | 0 | 3,075 | 0 | 50.45 | 02/15/2023 | |||||||||||||||||||
02/22/17 | RSU | 1,450 | 249,400 | |||||||||||||||||||||||
04/25/18 | RSU | 1,055 | 181,460 | |||||||||||||||||||||||
05/10/19 | RSU | 940 | 161,680 | |||||||||||||||||||||||
Katrina L. Helmkamp |
02/19/16 | RSU | 1,610 | 276,920 | ||||||||||||||||||||||
02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
Ernest J. Mrozek |
02/22/11 | NQSO | 3,190 | 0 | 3,190 | 0 | 40.89 | 02/22/2021 | ||||||||||||||||||
02/21/12 | NQSO | 3,530 | 0 | 3,530 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||
02/15/13 | NQSO | 3,075 | 0 | 3,075 | 0 | 50.45 | 02/15/2023 | |||||||||||||||||||
02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
David C. Parry |
12/06/12 | NQSO | 4,930 | 0 | 4,930 | 0 | 45.08 | 12/06/2022 | ||||||||||||||||||
02/15/13 | NQSO | 3,075 | 0 | 3,075 | 0 | 50.45 | 02/15/2023 | |||||||||||||||||||
02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
Livingston L. Satterthwaite |
04/05/11 | NQSO | 4,800 | 0 | 4,800 | 0 | 45.16 | 04/05/2021 | ||||||||||||||||||
02/21/12 | NQSO | 3,530 | 0 | 3,530 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||
02/15/13 | NQSO | 3,075 | 0 | 3,075 | 0 | 50.45 | 02/15/2023 | |||||||||||||||||||
02/20/15 | RSU | 1,405 | 241,660 | |||||||||||||||||||||||
02/19/16 | RSU | 1,610 | 276,920 | |||||||||||||||||||||||
02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
Cynthia J. Warner |
02/15/13 | NQSO | 4,610 | 0 | 4,610 | 0 | 50.45 | 02/15/2023 | ||||||||||||||||||
02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
05/10/19 | RSU | 845 | 145,340 |
(a) | All options expire on the 10th anniversary of the grant date. |
(b) | See footnote 1 to table under SECURITY OWNERSHIP below for vesting provisions. |
(c) | Determined based upon the closing price of the Companys Common Stock on December 31, 2019. |
25
The following table furnishes information as of March 13, 2020, except as otherwise noted, with respect to shares of Common Stock beneficially owned by (i) each director and nominee for director, (ii) each executive officer named in the Summary Compensation Table, (iii) directors, nominees and executive officers of the Company as a group, and (iv) any person who is known by the Company to be a beneficial owner of more than five percent of the outstanding shares of Common Stock.
Except as indicated by the notes to the following table, the holders listed below have sole voting power and investment power over the shares beneficially held by them. Under SEC rules, the number of shares shown as beneficially owned includes shares of Common Stock subject to options that are exercisable currently or will be exercisable within 60 days of March 13, 2020. Shares of Common Stock subject to options that are exercisable within 60 days of March 13, 2020, are considered to be outstanding for the purpose of determining the percentage of shares held by a holder, but not for the purpose of computing the percentage held by others. An * indicates ownership of less than one percent of the outstanding Common Stock.
For purposes of the following table, the address for each of the directors, nominees for director and executive officers of the Company is c/o 1925 West Field Court, Suite 200, Lake Forest, Illinois 60045.
Name and Address of Beneficial Owner |
Shares Beneficially Owned |
Percent of Class | ||
Directors and Nominees (other than Named Executive Officers):
|
||||
Mark A. Beck(1)
|
2,100
|
*
| ||
Mark A. Buthman(1)
|
4,370
|
*
| ||
Carl R. Christenson(1)
|
725
|
*
| ||
William M. Cook(1)
|
28,023
|
*
| ||
Katrina L. Helmkamp(1)
|
5,105
|
*
| ||
Ernest J. Mrozek(1)
|
19,400
|
*
| ||
David C. Parry(1)
|
17,878
|
*
| ||
Livingston L. Satterthwaite(1)
|
22,197
|
*
| ||
Cynthia J. Warner(1)
|
13,485
|
*
| ||
Named Executive Officers:
|
||||
Andrew K. Silvernail(2)
|
463,962
|
*
| ||
William K. Grogan(2)
|
59,758
|
*
| ||
Eric D. Ashleman(2)
|
80,970
|
*
| ||
Denise R. Cade(2)
|
30,766
|
*
| ||
Jeffrey D. Bucklew(2)
|
34,621
|
*
| ||
Directors, Nominees and All Executive Officers as a Group: (16 persons)(3)
|
754,135
|
1.1%
| ||
Other Beneficial Owners:
|
||||
The Vanguard Group(4)
|
8,279,685
|
10.9%
| ||
100 Vanguard Blvd. Malvern, PA 19355
|
||||
BlackRock Inc.(5)
|
6,677,748
|
8.8%
| ||
55 East 52nd Street New York, NY 10055
|
||||
Capital World Investors(6)
|
5,751,716
|
7.5%
| ||
333 South Hope Street, Los Angeles, CA 90071
|
||||
T. Rowe Price Associates, Inc.(7)
|
5,358,445
|
7.0%
| ||
100 East Pratt Street, Baltimore, MD 21202
|
26
(1) | Includes 9,795, 9,795, 8,005, 11,405 and 4,610 shares under exercisable options for Messrs. Cook, Mrozek, Parry and Satterthwaite, and Ms. Warner, respectively. Ms. Helmkamp and Messrs. Buthman, Beck and Christenson do not have any options. Includes 1,405 restricted stock units issued to Mr. Satterthwaite on February 20, 2015 for which Mr. Satterthwaite elected to defer vesting; 1,610 restricted stock units issued to Ms. Helmkamp and Mr. Satterthwaite on February 19, 2016, who each elected to defer vesting; 1,290 restricted stock units issued to Mr. Buthman on April 6, 2016, for which Mr. Buthman elected to defer vesting; 310 restricted stock units issued to Mr. Beck on January 2, 2018, for which Mr. Beck elected to defer vesting; 945 restricted stock units issued to each of Mss. Helmkamp and Warner and Messrs. Beck, Buthman, Mrozek, Parry and Satterthwaite on April 25, 2018, which vest on April 25, 2021 (except Messrs. Beck, Buthman and Satterthwaite, who each elected to defer vesting); 1,055 restricted stock units issued to Mr. Cook on April 25, 2018, which vest on April 25, 2021; 845 restricted stock units issued to each of Mss. Helmkamp and Warner and Messrs. Beck, Buthman, Mrozek, Parry and Satterthwaite on May 10, 2019, which vest on May 10, 2022 (except Messrs. Beck, Buthman and Satterthwaite, who each elected to defer vesting); 940 restricted stock units issued to Mr. Cook on May 10, 2019, which vest on May 10, 2022; and 725 restricted stock units issued to Mr. Christenson on June 17, 2019, for which Mr. Christenson elected to defer vesting. The restricted shares and restricted stock units held by the directors may vest earlier than the dates indicated above upon a change in control of the Company, retirement, or failure to be re-elected to the Board. All shares of restricted stock and restricted stock units are eligible for dividends. |
(2) | Includes 258,296, 49,024, 49,394, 29,187 and 18,041 shares under exercisable options for Messrs. Silvernail, Grogan, Ashleman and Bucklew and Ms. Cade, respectively. |
(3) | Includes 432,268 shares under options that are exercisable currently or will be exercisable within 60 days of March 13, 2020. |
(4) | Based solely on information in Schedule 13G, as of December 31, 2019, filed by Vanguard Group (Vanguard) with respect to Common Stock owned by Vanguard and certain subsidiaries. Vanguard reports beneficial ownership of shares for itself, Vanguard Fiduciary Trust Company, a wholly-owned subsidiary, and Vanguard Investments Australia, Ltd., a wholly-owned subsidiary. Vanguard has sole power to vote or to direct the vote of 117,928 shares of Common Stock, shared power to vote or direct the vote of 21,431 shares of Common Stock, sole power to dispose or to direct the disposition of 8,150,543 shares of Common Stock and shared power to dispose or to direct the disposition of 129,142 shares of Common Stock. |
(5) | Based solely on information in Schedule 13G, as of December 31, 2019, filed by BlackRock Inc. (BlackRock) with respect to Common Stock owned by BlackRock and certain subsidiaries, including BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited and BlackRock Fund Managers Ltd. BlackRock has sole power to vote or to direct the vote of 5,778,181 shares of Common Stock and sole power to dispose or to direct the disposition of all 6,677,748 shares of Common Stock. |
(6) | Based solely on information in Schedule 13G, as of December 31, 2019, filed by Capital World Investors, a division of Capital Research and Management Company (Capital World). Capital World has sole power to vote or to direct the vote of 5,664,584 shares of Common Stock and sole power to dispose or to direct the disposition of all 5,751,716 shares of Common Stock. |
(7) | Based solely on information in Schedule 13G, as of December 31, 2019, filed by T. Rowe Price Associates, Inc. (Price Associates). Price Associates has sole power to vote or to direct the vote of 1,991,663 shares of Common Stock and sole power to dispose or to direct the disposition of all 5,358,445 shares of Common Stock. |
27
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes our executive compensation philosophy and programs, and compensation decisions made under those programs for our named executive officers (NEOs) for fiscal year 2019, who are listed below.
Name |
Title | |
Andrew K. Silvernail |
Chairman, President and Chief Executive Officer(1) | |
William K. Grogan |
Senior Vice President and Chief Financial Officer | |
Eric D. Ashleman |
Senior Vice President and Chief Operating Officer(1) | |
Denise R. Cade |
Senior Vice President, General Counsel and Corporate Secretary | |
Jeffrey D. Bucklew |
Senior Vice President and Chief Human Resources Officer |
(1) | On February 21, 2020, the Board voted Mr. Ashleman President and Chief Operating Officer. Mr. Silvernail retained his positions as Chairman and Chief Executive Officer. |
Principles of Our Compensation Programs
Pay-for-Performance |
The key principle of our compensation philosophy is
| |
Alignment with Stockholders |
We reward performance that meets or exceeds the performance
| |
Variation Based on Performance |
We favor variable pay opportunities that are based on
|
Compensation Philosophy
The following table describes our compensation philosophy that guides our pay programs, structure and decisions.
Compensation Philosophy |
How We Deliver | |
Attract and retain an effective management team |
We offer a total pay package that consists of both compensation and benefits that are targeted to be competitive with the market. We seek to retain our executives by regularly benchmarking our total compensation package relative to companies of similar size, scope and complexity our peer group is constructed to include companies within an appropriate range of revenue and market capitalization values.
|
28
Compensation Philosophy |
How We Deliver | |
Motivate and reward management team with a focus on pay-for-performance |
We tie a meaningful portion of total compensation to financial and stock price performance between 70% to 80% of our compensation mix is tied to performance. Our compensation program provides a mix of base salary, short-term incentives and long-term incentives the balance of our compensation elements provides direct line of sight with our objectives, motivating executives to outperform on our goals. In line with our compensation philosophy to align pay and performance, when the Company outperforms or underperforms the goals in our incentive plans, payouts can result in above or below target levels, respectively.
| |
Create a strong financial incentive that aligns with our stockholders and long-term objectives |
Through a combination of appropriate performance metrics and targets, executives are paid according to how the Company performs. Specific financial measures used in our incentive programs include: Earnings per share (EPS), cash flow conversion, and organic sales growth in our short-term incentive plan; and Total stockholder return (TSR) relative to companies in the relevant market index used in our long-term incentive plan.
| |
Align the interests of management and stockholders |
In order to emphasize long-term stockholder returns, we require our executives to maintain significant stock ownership levels through the use of stock ownership guidelines.
|
Governance Best Practices
The Company employs compensation principles in delivering executive pay that we believe are supportive of the business strategy and governance best practices.
What We Do
Ö | Annual Say-on-Pay Vote: We conduct an annual say-on-pay advisory vote. At our 2019 Annual Meeting of Stockholders, more than 96% of the votes cast on the say-on-pay proposal were in favor of the fiscal year 2018 compensation of our NEOs. |
Ö | Clawback Policy: Our clawback policy allows the Board to recoup any excess incentive compensation paid to our executive officers and other employees if the financial results on which the awards were based are materially restated due to fraud, intentional misconduct or gross negligence of the executive officer or other employee. |
Ö | Short-Term and Long-Term Incentives/Measures: Our annual and long-term plans provide a balance of incentives and include different measures of performance. |
29
Ö | Independent Compensation Consultant: The Compensation Committee engages an independent compensation consultant, who does not provide any services to management. |
Ö | Stock Ownership Guidelines: To further align the interests of management and our directors with our stockholders, we have significant stock ownership guidelines, which require our executive officers and directors to hold a multiple of their annual compensation in Common Stock. |
Ö | Limited Perquisites and Related Tax Gross-Ups: We provide limited perquisites and tax gross-ups. |
Ö | Mitigate Inappropriate Risk Taking: In addition to our clawback policy, stock ownership guidelines and prohibition of hedging and pledging, we structure our compensation programs so that they minimize inappropriate risk taking by our executive officers and other employees, including using multiple performance metrics and multi-year performance periods and capping our annual incentive awards and performance share awards. |
What We Dont Do
× | Gross-ups for Excise Taxes: Our executive severance agreements do not contain a gross-up for excise taxes that may be imposed as a result of severance or other payments deemed made in connection with a change in control. |
× | Reprice Stock Options: Our equity incentive plan prohibits the repricing of stock options and stock appreciation rights without prior stockholder approval. |
× | Fixed Term Employment Agreements: Employment of our executive officers (other than our CEO) is at will and may be terminated by either the Company or the employee at any time. |
× | Hedging and Pledging: Our insider trading policy prohibits all employees and directors from hedging and pledging their economic interest in the Common Stock they hold. |
30
Performance Highlights and Impact on Incentive Compensation
Despite facing challenging market conditions in 2019, the Company continued to perform against its strategic and business plans, with full year organic sales increasing for the third year in a row and gross margin of 45%, up 10 basis points. The performance highlights and accomplishments indicated in the chart below are closely related to performance metrics under our executive compensation programs.
2019 Performance Highlights* Orders and sales were flat Adjusted EPS up 7% Cash from operations of $528.1 million, up 10% from the prior year, led to free cash flow of $477.2 million, up 13%, 107% of Adjusted Net Income Increased quarterly dividend by 16% Acquired Velcora Holding AB and its operating subsidiaries, Roplan and Steridose Annual TSR of 38% How Incentives Support Performance Short-Term Goals Adjusted EPS Adjusted Cash Flow Conversion Organic Sales Growth Long-Term Goals Relative TSR Incentive Plan Results 2019 Bonus Payout of 87% Adjusted EPS of $5.70 Adjusted Cash Flow Conversion of 107% of Adjusted Net Income Organic Sales Growth of 1.1% 2017-2019 PSU Payout of 250% Three-year TSR of 88% (82 nd percentile relative ranking)
* | A reconciliation from GAAP to non-GAAP financial measures and other related information is included in Item 6 of the Companys Annual Report on Form 10-K for the year ended December 31, 2019. In addition to the adjustments noted in the Form 10-K, additional adjustments are used to determine the short-term incentive payouts, including adjustments related to acquisitions and divestitures, actual capital expenditures and actual share count compared to the annual plan. |
Key Takeaways of our 2019 Executive Compensation Program
For 2019, our executive compensation programs were designed to directly link compensation opportunities to the financial performance metrics that we believe are the best measures of success in our business: EPS, cash flow conversion, organic sales growth and relative TSR.
| The 2019 bonus payouts were 87% of target. |
| Our TSR for the 2017-2019 period was 88%, which resulted in an 82nd percentile performance compared to the companies in the Russell Midcap Index and resulted in a 250% payout of performance stock units (PSUs). |
31
NEO Compensation Aligns with Company Performance
The compensation opportunities of our executives are directly tied to the performance of the Company. Our pay-for-performance philosophy is demonstrated by the following elements of our executive compensation program for 2019:
Approximately 83% of our CEOs 2019 total targeted pay was performance-based, and an average of approximately 71% of our other NEOs total targeted pay in 2019 was performance-based. The charts
below show the allocation of 2019 targeted pay across base salary, the annual cash incentive award, and the long-term incentive award for our CEO and other NEOs.
In 2019, our long-term incentives continued to represent the single largest component of our CEOs and other NEOs targeted pay, representing approximately 63% and 50% of total targeted pay, respectively.
Maintaining a balanced perspective is a core part of the Companys business strategy, which requires employees to take calculated risks to capitalize on anticipated changes in the Companys numerous businesses. The Compensation Committee believes that balancing the proportion of cash and non-cash awards, as well as short-term versus long-term awards, is important to motivate performance while mitigating risk. Cash-based awards are important in motivating executives for the short-term, while long-term incentives focus executives who have the greatest ability to impact business results on managing the business for the long-term and reinforce the link between their earnings opportunity and the long-term growth of the Company.
Our 2019 incentive awards are directly tied to performance metrics that balance absolute and relative performance goals: EPS, cash flow conversion, organic sales growth and TSR (measured on a relative basis). We believe these are the best measures of our financial success and support the creation of stockholder value.
Role of Say-on-Pay
The Company held an advisory vote on executive compensation (say-on-pay) at the Companys 2019 Annual Meeting of Stockholders. The say-on-pay advisory vote received support from over 96% of the shares voted at the 2019 Annual Meeting. The Compensation Committee believes this affirms stockholders support of the Companys approach to executive compensation. Accordingly, the Compensation Committee did not make any material changes to the underlying structure of our executive compensation program for fiscal year 2019. The Compensation Committee will continue to
32
review and consider the outcome of the Companys say-on-pay votes when making future compensation decisions for the NEOs.
2019 Executive Compensation Program
The following discussion describes our 2019 compensation elements and 2019 compensation decisions related to our NEOs.
2019 Key Compensation Elements
The material elements of 2019 compensation for the NEOs are outlined below:
Element |
Type of Pay |
Purpose |
General Characteristics | |||
Base Salary |
Fixed |
Provides a fixed level of current cash compensation consonant with the executives primary duties and responsibilities and necessary to attract, retain and reward NEOs.
|
Reviewed annually and adjusted as necessary to reflect market changes, salary budgets and individual performance. | |||
Short-Term |
Performance- |
Focuses NEOs on annual performance by rewarding corporate and individual performance and achievement of pre-determined goals.
|
Variable cash payments. Annual awards based on performance against pre-determined individual and corporate performance goals.
| |||
Long-Term |
Performance- |
Provides retention through vesting schedules and aligns each NEOs interests with long-term stockholder interests by linking a substantial portion of each executives compensation to increases in the price of Common Stock.
|
Variable compensation based on stock value. Options are granted with exercise prices not less than fair market value at grant date and vest ratably over four years. | |||
Long-Term |
Performance- |
Ties long-term compensation to relative performance, further aligning the interests of NEOs with stockholders. |
PSUs vest based on continued service and relative TSR compared to companies in the Russell Midcap Index over a cumulative three-year period.
| |||
Retirement/Other |
Fixed/
|
Provides overall wealth accumulation and retention.
|
Various market-based retirement and welfare benefits and perquisites.
|
Base Salary
Base salaries are reviewed annually and may be adjusted to reflect market data, as well as individual responsibility, experience and performance. The table below highlights the change in 2019 base salary for each NEO, reflecting one or more of the following: annual merit increase, market and/or performance-related adjustments.
NEO
|
2018
|
2019 ($)
|
Percentage
|
|||||||||
Andrew K. Silvernail |
|
1,000,000 |
|
|
1,030,000 |
|
|
3 |
% | |||
William K. Grogan |
|
470,000 |
|
|
515,000 |
|
|
10 |
% | |||
Eric D. Ashleman |
|
585,000 |
|
|
630,000 |
|
|
8 |
% | |||
Denise R. Cade |
|
460,000 |
|
|
474,000 |
|
|
3 |
% | |||
Jeffrey D. Bucklew |
|
400,000 |
|
|
412,000 |
|
|
3 |
% |
33
Short-Term Incentives
For 2019, the relative weightings and the performance against the quantitative and strategic measures resulted in a recommended Business Performance Factor of 87%, as shown in the table below.
MICP Objective | Goal | Actual* | Payout | MICP Weighting |
Business Performance Factor |
|||||||||||||||
Adjusted EPS
|
|
$5.60
|
|
$
|
5.70
|
|
|
112.5%
|
|
|
50%
|
|
|
56.3%
|
| |||||
Adjusted Cash Flow Conversion
|
|
105%
|
|
|
107%
|
|
|
110.0%
|
|
|
20%
|
|
|
22.0%
|
| |||||
Organic Sales Growth
|
|
4.0%
|
|
|
1.1%
|
|
|
27.5%
|
|
|
30%
|
|
|
8.3%
|
| |||||
Total
|
|
|
|
|
|
|
|
|
|
|
100%
|
|
|
86.6%
|
|
* | A reconciliation from GAAP to non-GAAP financial measures and other related information is included in Item 6 of the Companys Annual Report on Form 10-K for the year ended December 31, 2019. In addition to the adjustments noted in the Form 10-K, additional adjustments are used to determine the short-term incentive payouts, including adjustments related to acquisitions and divestitures, actual capital expenditures and actual share count compared to the annual plan. |
34
The short-term incentive payments are included in the 2019 Summary Compensation Table under the Non-Equity Incentive Plan Compensation column and summarized in the table below.
NEO
|
Base Salary Rate
|
Individual
Target
|
Business
|
Actual 2019 Short-
|
||||||||||||
Andrew K. Silvernail |
|
1,030,000 |
|
|
120 |
% |
|
87% |
|
|
1,075,320 |
| ||||
William K. Grogan |
|
515,000 |
|
|
75 |
% |
|
87% |
|
|
336,038 |
| ||||
Eric D. Ashleman |
|
630,000 |
|
|
80 |
% |
|
87% |
|
|
438,480 |
| ||||
Denise R. Cade |
|
474,000 |
|
|
70 |
% |
|
87% |
|
|
288,666 |
| ||||
Jeffrey D. Bucklew |
|
412,000 |
|
|
70 |
% |
|
87% |
|
|
250,908 |
|
Prior to 2018, the Company also provided short-term incentive payments under the Incentive Award Plan (IAP) to allow performance-based bonuses to certain executives to be fully deductible under Internal Revenue Code (IRC) Section 162(m). The Tax Cut and Jobs Act eliminated the deductibility of excess qualified performance-based compensation under IRC Section 162(m). The MICP, under which the 2019 short-term incentives were administered, is the plan that has historically governed annual incentives for the broader executive population and also the plan under which the CFO received short-term incentive awards prior to 2018. Final awards under the MICP are calculated the same as awards under the IAP had been calculated.
35
36
37
38
39
40
41
42
2019 Summary Compensation Table
The table below and related footnotes summarize the total compensation earned or paid in 2019, 2018 and 2017 for the Companys CEO, CFO, and each of the three most highly compensated executive officers other than the CEO and CFO.
Name and Principal Position | Year | Salary ($) |
Bonus ($) |
Stock Awards ($) (1) |
Option Awards ($) (2) |
Non-Equity Incentive Compensation Plan ($) (3) |
All Other ($) (4) |
Total ($) | ||||||||||||||||||||||||||||||||
Andrew K. Silvernail, Chairman, President and Chief Executive Officer |
|
2019 |
|
|
1,023,654 |
|
|
3,837,834 |
|
|
2,737,633 |
|
|
1,075,320 |
|
|
445,155 |
|
|
9,119,596 |
| |||||||||||||||||||
|
2018 |
|
|
996,808 |
|
|
4,117,376 |
|
|
2,625,002 |
|
|
1,968,000 |
|
|
418,464 |
|
|
10,125,650 |
| ||||||||||||||||||||
|
2017 |
|
|
977,900 |
|
|
2,730,307 |
|
|
2,200,053 |
|
|
1,779,954 |
|
|
343,028 |
|
|
8,031,242 |
| ||||||||||||||||||||
William K. Grogan, Senior Vice President and Chief Financial Officer |
|
2019 |
|
|
505,481 |
|
|
792,949 |
|
|
565,006 |
|
|
336,038 |
|
|
130,315 |
|
|
2,329,789 |
| |||||||||||||||||||
|
2018 |
|
|
463,808 |
|
|
785,139 |
|
|
500,181 |
|
|
578,100 |
|
|
123,367 |
|
|
2,450,595 |
| ||||||||||||||||||||
|
2017 |
|
|
429,688 |
|
|
921,635 |
|
|
839,392 |
|
|
554,693 |
|
|
79,829 |
|
|
2,825,237 |
| ||||||||||||||||||||
Eric D. Ashleman, Operating Officer |
|
2019 |
|
|
620,481 |
|
|
2,597,181 |
|
|
725,030 |
|
|
438,480 |
|
|
165,614 |
|
|
4,546,786 |
| |||||||||||||||||||
|
2018 |
|
|
574,519 |
|
|
1,114,356 |
|
|
710,045 |
|
|
767,520 |
|
|
156,558 |
|
|
3,322,998 |
| ||||||||||||||||||||
|
2017 |
|
|
527,519 |
|
|
760,412 |
|
|
612,540 |
|
|
720,154 |
|
|
129,352 |
|
|
2,749,977 |
| ||||||||||||||||||||
Denise R. Cade, and Corporate Secretary |
|
2019 |
|
|
471,038 |
|
|
634,563 |
|
|
452,638 |
|
|
288,666 |
|
|
128,824 |
|
|
1,975,729 |
| |||||||||||||||||||
|
2018 |
|
|
457,231 |
|
|
701,752 |
|
|
447,620 |
|
|
528,080 |
|
|
127,374 |
|
|
2,262,057 |
| ||||||||||||||||||||
|
2017 |
|
|
443,100 |
|
|
431,710 |
|
|
347,593 |
|
|
524,248 |
|
|
104,609 |
|
|
1,851,260 |
| ||||||||||||||||||||
Jeffrey D. Bucklew, Senior Vice President and Chief Human Resources Officer |
|
2019 |
|
|
409,461 |
|
|
484,298 |
|
|
345,018 |
|
|
250,908 |
|
|
111,339 |
|
|
1,601,024 |
| |||||||||||||||||||
|
2018 |
|
|
395,635 |
|
|
533,894 |
|
|
340,032 |
|
|
459,200 |
|
|
109,081 |
|
|
1,837,842 |
| ||||||||||||||||||||
|
2017 |
|
|
375,185 |
|
|
359,951 |
|
|
290,043 |
|
|
478,039 |
|
|
91,305 |
|
|
1,594,523 |
|
(1) | Reflects the aggregate grant date fair value of restricted stock awards and PSUs for the year indicated in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation of those awards granted in 2019, see note 15 Share-Based Compensation of the financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2019. For PSUs granted in 2019, the grant date fair value is based on the probable outcome of the related performance conditions which reflects the target level of performance. The grant date fair value of the PSUs granted in 2019 based on the maximum level of performance is as follows: Mr. Silvernail, $9,594,585; Mr. Grogan, $1,982,373; Mr. Ashleman, $6,492,952; Ms. Cade, $1,586,406; and Mr. Bucklew, $1,210,745. All shares of restricted stock are eligible for dividend equivalent payments when paid on Common Stock and, with respect to PSUs, cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the performance period. |
(2) | Reflects the aggregate grant date fair value for the year indicated in accordance with FASB ASC Topic 718. For a discussion of assumptions made in the valuation of stock options granted in 2019, see note 15 Share-Based Compensation of the financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2019. |
(3) | For 2019 and 2018, reflects the annual cash bonus under the MICP; for 2017, reflects Messrs. Silvernails, Ashlemans and Bucklews, and Ms. Cades annual cash performance award under the IAP and the annual cash bonus under the MICP for Mr. Grogan. |
43
(4) | Consists of the following for 2019: |
Name
|
Company Contribution to Defined SERP Benefits
|
Automotive,
|
Aircraft ($) (b)
|
Total ($)
|
||||||||||||
Andrew K. Silvernail
|
|
311,816
|
|
|
27,551
|
|
|
105,788
|
|
|
445,155
|
| ||||
William K. Grogan
|
|
108,358
|
|
|
21,957
|
|
|
-
|
|
|
130,315
|
| ||||
Eric D. Ashleman
|
|
144,053
|
|
|
21,561
|
|
|
-
|
|
|
165,614
|
| ||||
Denise R. Cade
|
|
104,465
|
|
|
24,359
|
|
|
-
|
|
|
128,824
|
| ||||
Jeffrey D. Bucklew
|
|
90,441
|
|
|
20,898
|
|
|
-
|
|
|
111,339
|
|
(a) | Consists of auto and gas allowance and supplemental disability premiums. |
(b) | Represents Mr. Silvernails personal use of the Companys leased aircraft. The Companys methodology for calculating the value of the personal use of the Company leased aircraft is to calculate the incremental costs of such usage to the Company, which includes fuel, landing fees, hangar fees, catering, additional expenses related to the crew and other expenses which would not have otherwise been incurred by the Company if the aircraft had not been used for personal travel. |
44
45
2019 Grants of Plan-Based Awards
The following table provides information on plan-based awards for all NEOs for 2019.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) |
Estimated Future Payouts Under Equity Incentive Plan Awards (2) |
All Other Stock Awards: Number of Shares of Stock (#) |
All Other Option Awards: Number of Securities Underlying Options (#) |
Exercise or Base Price of Option Awards ($/Sh) (3) |
Grant Date Fair Value of Stock and Option Awards ($) (4) |
|||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||||||||||||||
Andrew K. Silvernail
|
|
03/01/2019
|
|
0
|
|
1,236,000
|
|
2,472,000
|
|
6,300
|
|
|
18,900
|
|
|
47,250
|
|
|
-
|
|
|
77,840
|
|
|
144.85
|
|
|
6,575,467
|
| |||||||||||
William K. Grogan
|
|
03/01/2019
|
|
0
|
|
386,250
|
|
772,500
|
|
1,302
|
|
|
3,905
|
|
|
9,763
|
|
|
-
|
|
|
16,065
|
|
|
144.85
|
|
|
1,357,955
|
| |||||||||||
Eric D. Ashleman
|
|
03/01/2019
|
|
0
|
|
504,000
|
|
1,008,000
|
|
1,670
|
|
|
5,010
|
|
|
12,525
|
|
|
-
|
|
|
20,615
|
|
|
144.85
|
|
|
1,742,361
|
| |||||||||||
|
03/28/2019
|
(5)
|
-
|
|
-
|
|
-
|
|
2,202
|
|
|
6,605
|
|
|
16,513
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,579,850
|
| ||||||||||||
Denise R. Cade
|
|
03/01/2019
|
|
0
|
|
331,800
|
|
663,600
|
|
1,042
|
|
|
3,125
|
|
|
7,813
|
|
|
-
|
|
|
12,870
|
|
|
144.85
|
|
|
1,087,201
|
| |||||||||||
Jeffrey D. Bucklew
|
|
03/01/2019
|
|
0
|
|
288,400
|
|
576,800
|
|
795
|
|
|
2,385
|
|
|
5,963
|
|
|
-
|
|
|
9,810
|
|
|
144.85
|
|
|
829,316
|
|
(1) | Amounts reflect payment levels under the MICP at a percentage of base salary for each executive and a Business Performance Factor of 0% for threshold, 100% for target and 200% for maximum. See Short-Term Incentives under Compensation Discussion and Analysis 2019 Executive Compensation Program. The amounts actually earned by the NEOs are reflected in the Non-Equity Incentive Plan Compensation column in the 2019 Summary Compensation Table. |
(2) | Reflects the range of the number of shares of Common Stock that could be issued pertaining to the PSUs awarded in 2019 under the IAP. The target number of PSUs is used to determine the grant date fair value for this award. |
(3) | Reflects closing price of Common Stock on the grant date, which is the fair market value of the stock under the terms of the IAP. |
(4) | Represents the grant date fair value of PSUs and stock options granted under the IAP to each NEO in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation of those awards, see note 15 Share-Based Compensation of the financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2019. For PSUs, the grant date fair value is based on the probable outcome of the related performance conditions which reflects the target level of performance. The grant date fair value of the PSUs granted in 2019 based on the maximum level of performance is as follows: Mr. Silvernail, $9,594,585; Mr. Grogan, $1,982,373; Mr. Ashleman, $6,492,952; Ms. Cade, $1,586,406; and Mr. Bucklew, $1,210,745. With respect to PSUs, cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the performance period. For options, the actual value a NEO realizes from the stock option will depend on the difference between the market price of the underlying share at exercise and the exercise price of the stock option established at the time of the grant. |
(5) | Reflects the special performance grant awarded to Mr. Ashleman. See 2019 COO Award under 2019 Long-Term Incentive Awards. |
Narrative to 2019 Grants of Plan-Based Awards Table
Stock options awarded to the NEOs in 2019 had the following characteristics:
| all are nonqualified stock options; |
| all have an exercise price equal to the closing price of Common Stock on the grant date; |
| all vest annually in equal amounts over a four-year period based on the NEOs continued service; |
| all vest upon retirement if retirement eligible (for the CEO as defined in his employment agreement and for NEOs other than the CEO, NEO is at least age 50, with a minimum of five years of service, and the NEOs age plus years of service equals 70); and |
| all expire 10 years after the date of grant. |
46
PSUs awarded to the NEOs in 2019 had the following characteristics:
| all have a three-year performance period with vesting based on relative TSR and the NEOs continued service; |
| all shares vest upon retirement if the NEO is retirement eligible (for the CEO as defined in his employment agreement and for NEOs other than the CEO, the NEO is retirement eligible when he or she is at least age 50, with a minimum of five years of service, and the NEOs age plus years of service equals 70); but are paid out only based on the Companys actual TSR as compared to the companies in the Russell Midcap Index determined as of the last day of the performance period; and |
| cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the performance period. |
47
Outstanding Equity Awards at 2019 Fiscal Year End
The following table provides information on all PSU, restricted stock and stock option awards held by the NEOs as of December 31, 2019.
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options |
Option ($) |
Option Expiration Date |
Number of Shares of Stock that Have Not Vested (#) (2) |
Market Value of Shares of Stock that Have Not Vested ($) (3) |
Equity Incentive
|
Equity Incentive
|
||||||||||||||||||||||||||
Name
|
Exercisable (#) (1)
|
Unexercisable (#) (1)
|
||||||||||||||||||||||||||||||
Andrew K. Silvernail |
|
101,902 |
|
|
33,968 |
|
|
74.74 |
|
|
02/19/2026 |
|
|
- |
|
|
- |
|
|
64,846 |
|
|
11,153,512 |
| ||||||||
|
45,587 |
|
|
45,588 |
|
|
93.27 |
|
|
02/22/2027 |
|
|||||||||||||||||||||
|
17,292 |
|
|
51,878 |
|
|
138.12 |
|
|
02/22/2028 |
|
|||||||||||||||||||||
|
-
|
|
|
77,840
|
|
|
144.85
|
|
|
03/01/2029
|
|
|||||||||||||||||||||
William K. Grogan |
|
843 |
|
|
- |
|
|
50.45 |
|
|
02/15/2023 |
|
|
5,485 |
|
|
943,420 |
|
|
12,827 |
|
|
2,206,244 |
| ||||||||
|
1,798 |
|
|
- |
|
|
72.73 |
|
|
02/13/2024 |
|
|||||||||||||||||||||
|
1,383 |
|
|
- |
|
|
67.49 |
|
|
10/15/2024 |
|
|||||||||||||||||||||
|
2,575 |
|
|
- |
|
|
78.43 |
|
|
02/20/2025 |
|
|||||||||||||||||||||
|
4,076 |
|
|
1,359 |
|
|
74.74 |
|
|
02/19/2026 |
|
|||||||||||||||||||||
|
10,557 |
|
|
10,558 |
|
|
91.22 |
|
|
01/03/2027 |
|
|||||||||||||||||||||
|
7,032 |
|
|
7,033 |
|
|
93.27 |
|
|
02/22/2027 |
|
|||||||||||||||||||||
|
3,295 |
|
|
9,885 |
|
|
138.12 |
|
|
02/22/2028 |
|
|||||||||||||||||||||
|
-
|
|
|
16,065
|
|
|
144.85
|
|
|
03/01/2029
|
|
|||||||||||||||||||||
Eric D. Ashleman |
|
8,850 |
|
|
- |
|
|
77.61 |
|
|
07/15/2025 |
|
|
- |
|
|
- |
|
|
27,497 |
|
|
4,729,484 |
| ||||||||
|
- |
|
6,998 |
|
|
74.74 |
|
|
02/19/2026 |
|
||||||||||||||||||||||
|
12,692 |
|
|
12,693 |
|
|
93.27 |
|
|
02/22/2027 |
|
|||||||||||||||||||||
|
4,677 |
|
|
14,033 |
|
|
138.12 |
|
|
02/22/2028 |
|
|||||||||||||||||||||
|
-
|
|
|
20,615
|
|
|
144.85
|
|
|
03/01/2029
|
|
|||||||||||||||||||||
Denise R. Cade |
|
2,092 |
|
|
- |
|
|
76.79 |
|
|
10/26/2025 |
|
|
- |
|
|
- |
|
|
10,906 |
|
|
1,875,832 |
| ||||||||
|
- |
|
3,234 |
|
|
74.74 |
|
|
02/19/2026 |
|
||||||||||||||||||||||
|
- |
|
7,203 |
|
|
93.27 |
|
|
02/22/2027 |
|
||||||||||||||||||||||
|
2,948 |
|
|
8,847 |
|
|
138.12 |
|
|
02/22/2028 |
|
|||||||||||||||||||||
|
-
|
|
|
12,870
|
|
|
144.85
|
|
|
03/01/2029
|
|
|||||||||||||||||||||
Jeffrey D. Bucklew |
|
9,930 |
|
|
3,310 |
|
|
74.74 |
|
|
02/19/2026 |
|
|
- |
|
|
- |
|
|
8,309 |
|
|
1,429,148 |
| ||||||||
|
6,010 |
|
|
6,010 |
|
|
93.27 |
|
|
02/22/2027 |
|
|||||||||||||||||||||
|
2,240 |
|
|
6,720 |
|
|
138.12 |
|
|
02/22/2028 |
|
|||||||||||||||||||||
|
-
|
|
|
9,810
|
|
|
144.85
|
|
|
03/01/2029 |
|
(1) | All options expire on the 10th anniversary of the grant date and vest 25% per year on the anniversary of the grant date. As discussed in Potential Payments upon Termination or Change in Control, all stock options vest 100% upon a qualifying termination of employment following a change in control. |
48
(2) | The following table sets forth grant and vesting information for the outstanding restricted stock awards for Mr. Grogan, the only NEO who held an outstanding restricted stock award as of December 31, 2019. The award will vest 100% upon a qualifying termination of employment following a change in control. |
|
Grant Date |
Shares (#) |
Market Value Per Share at Grant ($) |
Number of
|
Market Value
|
Vesting | ||||||||||||||||||
William K. Grogan
|
|
01/03/2017
|
|
|
5,485
|
|
|
91.22
|
|
|
5,485
|
|
|
943,420
|
|
|
100% vest on 01/03/2020
|
|
(3) | Determined based upon the closing price of the Companys Common Stock on December 31, 2019 of $172.00. |
(4) | Represents the number and value of outstanding PSU awards based on performance as of December 31, 2019 as set forth in the following table. Actual number of shares delivered upon vesting will be based on performance through December 31, 2020 for the 2018 PSU award and performance through December 31, 2021 for the 2019 PSU award. The 2018 PSU awards are disclosed at 189% of the target and the 2019 PSU awards are disclosed at 153% of the target based on performance through December 31, 2019. |
|
Grant Date |
Number of (#) |
Market or
|
Vesting | ||||||||||||
Andrew K. Silvernail |
|
02/22/2018 |
|
|
19,010 |
|
|
6,179,788 |
|
|
Award vests on 12/31/2020 |
| ||||
|
03/01/2019
|
|
|
18,900
|
|
|
4,973,724
|
|
|
Award vests on 12/31/2021
|
| |||||
William K. Grogan |
|
02/22/2018 |
|
|
3,625 |
|
|
1,178,544 |
|
|
Award vests on 12/31/2020 |
| ||||
|
03/01/2019 |
|
|
3,905 |
|
|
1,027,700 |
|
|
Award vests on 12/31/2021 |
| |||||
Eric D. Ashleman |
|
02/22/2018 |
|
|
5,145 |
|
|
1,672,700 |
|
|
Award vests on 12/31/2020 |
| ||||
|
03/01/2019 |
|
|
5,010 |
|
|
1,318,552 |
|
|
Award vests on 12/31/2021 |
| |||||
|
03/28/2019
|
|
|
6,605
|
|
|
1,738,232
|
|
|
Award vests on 12/31/2021
|
| |||||
Denise R. Cade |
|
02/22/2018 |
|
|
3,240 |
|
|
1,053,328 |
|
|
Award vests on 12/31/2020 |
| ||||
|
03/01/2019
|
|
|
3,125
|
|
|
822,504
|
|
|
Award vests on 12/31/2021
|
| |||||
Jeffrey D. Bucklew |
|
02/22/2018 |
|
|
2,465 |
|
|
801,348 |
|
|
Award vests on 12/31/2020 |
| ||||
|
03/01/2019
|
|
|
2,385
|
|
|
627,800
|
|
|
Award vests on 12/31/2021
|
|
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2019 Option Exercises and Stock Vested
The following table provides information on stock option exercises and stock vesting for all NEOs in 2019.
Option Awards
|
Stock Awards
|
|||||||||||||||
Name
|
Number of Shares
|
Value Realized
|
Number of Shares
|
Value Realized
|
||||||||||||
Andrew K. Silvernail |
|
166,905 |
|
|
14,344,221 |
|
|
58,975 |
|
|
10,143,700 |
| ||||
William K. Grogan |
|
- |
|
|
- |
|
|
9,100 |
|
|
1,565,200 |
| ||||
Eric D. Ashleman |
|
10,644 |
|
|
722,298 |
|
|
16,425 |
|
|
2,825,100 |
| ||||
Denise R. Cade |
|
12,527 |
|
|
922,597 |
|
|
9,325 |
|
|
1,603,900 |
| ||||
Jeffrey D. Bucklew |
|
17,935 |
|
|
1,613,871 |
|
|
7,775 |
|
|
1,337,300 |
|
(1) | Calculated based on the difference between the closing price of Common Stock on the date of exercise and the exercise price. |
(2) | Calculated based on the closing price of Common Stock on the vesting date or the previous trading day. For 2017 PSUs vesting on December 31, 2019 after the end of the three-year performance period with a vesting price of $172.00 and a multiplier of 250% due to IDEXs 3-year relative TSR performance at the 82nd percentile as compared to companies in the Russell Midcap Index, Mr. Silvernail had 58,975 shares vest, Mr. Grogan had 9,100 shares vest, Mr. Ashleman had 16,425 shares vest, Ms. Cade had 9,325 shares vest and Mr. Bucklew had 7,775 shares vest. |
Nonqualified Deferred Compensation at 2019 Fiscal Year End
The Supplemental Executive Retirement and Deferred Compensation Plan (SERP) is an unfunded, nonqualified plan designed to provide supplemental executive retirement benefits. The following table provides information related to the benefits payable to each NEO under the defined contribution portion of the SERP, which is the Companys only defined contribution nonqualified deferred compensation plan:
Name |
Executive
|
Registrant
|
Aggregate |
Aggregate
|
Aggregate
|
|||||||||||||||
Andrew K. Silvernail |
|
- |
|
|
292,024 |
|
|
569,999 |
|
|
10,959 |
|
|
2,642,638 |
| |||||
William K. Grogan |
|
- |
|
|
87,658 |
|
|
50,564 |
|
|
3,162 |
|
|
282,241 |
| |||||
Eric D. Ashleman |
|
- |
|
|
123,640 |
|
|
148,008 |
|
|
4,505 |
|
|
859,237 |
| |||||
Denise R. Cade |
|
- |
|
|
82,808 |
|
|
60,536 |
|
|
2,989 |
|
|
314,398 |
| |||||
Jeffrey D. Bucklew |
|
- |
|
|
69,110 |
|
|
13,351 |
|
|
2,478 |
|
|
385,138 |
|
(1) | None of the NEOs contributed to the SERP in 2019. |
(2) | Amounts are reflected in All Other Compensation column of the Summary Compensation Table. |
(3) | The following amounts have been previously reported as All Other Compensation in the Summary Compensation Table for prior years: Mr. Silvernail $1,408,397; Mr. Grogan $122,075; Mr. Ashleman $374,500; Ms. Cade $178,232; and Mr. Bucklew $117,145. |
50
51
52
53
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Change in Control and Termination Payments and Benefits for Andrew K. Silvernail
Incremental Benefits Due to Termination Event |
Involuntary Not for Cause Termination ($) |
Disability or Death ($) |
Change in Control ($) |
Involuntary Not for Cause Termination or Voluntary Good Reason
|
||||||||||||
Cash Severance (incl. Incentives) |
4,120,000 | - | - | 6,180,000 | ||||||||||||
Unvested Restricted Stock |
- | - | - | - | ||||||||||||
Unvested Options |
10,763,854 | 10,763,854 | - | 10,763,854 | ||||||||||||
Unvested Performance Shares (1) |
11,558,256 | 11,558,256 | - | 11,338,307 | ||||||||||||
SERP |
2,642,638 | 2,642,638 | 2,642,638 | 2,642,638 | ||||||||||||
Health and Welfare Benefits |
45,360 | - | - | 68,040 | ||||||||||||
Total |
29,130,108 | 24,964,748 | 2,642,638 | 30,992,839 |
Change in Control and Termination Payments and Benefits for William K. Grogan
Incremental Benefits Due to Termination Event |
Involuntary Not for Cause Termination ($) |
Disability or Death ($) |
Change in Control ($) |
Involuntary Not for Cause Termination or Voluntary Good Reason
|
||||||||||||
Cash Severance (incl. Incentives) |
901,250 | - | - | 1,802,500 | ||||||||||||
Unvested Restricted Stock |
- | 943,420 | - | 943,420 | ||||||||||||
Unvested Options |
- | 2,309,828 | - | 2,309,828 | ||||||||||||
Unvested Performance Shares (1) |
- | 2,286,392 | - | 2,242,374 | ||||||||||||
SERP |
282,241 | 282,241 | 282,241 | 282,241 | ||||||||||||
Total |
1,183,491 | 5,821,881 | 282,241 | 7,580,363 |
Change in Control and Termination Payments and Benefits for Eric D. Ashleman
Incremental Benefits Due to Termination Event |
Involuntary Not for Cause Termination ($) |
Disability or Death ($) |
Change in Control ($) |
Involuntary Not for Cause Termination or Voluntary Good Reason
|
||||||||||||
Cash Severance (incl. Incentives) |
1,134,000 | - | - | 2,268,000 | ||||||||||||
Unvested Restricted Stock |
- | - | - | - | ||||||||||||
Unvested Options |
- | 2,715,081 | - | 2,715,081 | ||||||||||||
Unvested Performance Shares (1) |
- | 4,902,977 | - | 4,798,695 | ||||||||||||
SERP |
859,237 | 859,237 | 859,237 | 859,237 | ||||||||||||
Total |
1,993,237 | 8,477,295 | 859,237 | 10,641,013 |
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Change in Control and Termination Payments and Benefits for Denise R. Cade
Incremental Benefits Due to Termination Event |
Involuntary Not for Cause Termination ($) |
Disability or Death ($) |
Change in Control ($) |
Involuntary Not for Cause Termination or Voluntary Good Reason
|
||||||||||||
Cash Severance (incl. Incentives) |
805,800 | - | - | 1,611,600 | ||||||||||||
Unvested Restricted Stock |
- | - | - | - | ||||||||||||
Unvested Options |
- | 1,530,788 | - | 1,530,788 | ||||||||||||
Unvested Performance Shares (1) |
- | 1,943,875 | - | 1,907,046 | ||||||||||||
SERP |
314,398 | 314,398 | 314,398 | 314,398 | ||||||||||||
Total |
1,120,198 | 3,789,061 | 314,398 | 5,363,832 |
Change in Control and Termination Payments and Benefits for Jeffrey D. Bucklew
Incremental Benefits Due to Termination Event |
Involuntary Not for Cause Termination ($) |
Disability or Death ($) |
Change in Control ($) |
Involuntary Not for Cause Termination or Voluntary Good Reason |
||||||||||||
Cash Severance (incl. Incentives) |
700,400 | - | - | 1,400,800 | ||||||||||||
Unvested Restricted Stock |
- | - | - | - | ||||||||||||
Unvested Options |
- | 1,289,113 | - | 1,289,113 | ||||||||||||
Unvested Performance Shares (1) |
- | 1,480,991 | - | 1,452,918 | ||||||||||||
SERP |
385,138 | 385,138 | 385,138 | 385,138 | ||||||||||||
Total |
1,085,538 | 3,155,242 | 385,138 | 4,527,969 |
(1) | In the event of a termination for disability or death, PSU grants and cumulative dividend equivalents will become fully vested at the end of the applicable performance period. For purposes of the termination payment calculation, PSU grants have been valued based on performance as of December 31, 2019. |
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CEO and Median Employee Pay Ratio
We believe our executive compensation program must be consistent and internally equitable to motivate our employees to perform in ways that enhance stockholder value. We are committed to providing market-competitive compensation and to internal pay equity. The following CEO to median employee pay ratio is provided pursuant to Item 402(u) of SEC Regulation S-K.
Methodology for Identifying the Median Employee
The Compensation Committee reviewed a comparison of our CEOs annual total compensation in 2019 to that of the median employee for the same period. The Company used total annual cash compensation (salary/hourly earnings, commissions, bonuses paid, and allowances/fixed payments) as of December 31, 2017 to determine the median employee. The Company determined there were no changes to the employee population or employee compensation arrangements over the last two fiscal years that would result in a significant change to the pay ratio disclosure and as permitted under the Item 402(u) median employee identification instructions, elected to use the same median employee in the 2019 calculation. Under the Item 402(u)(4)(ii) (de minimis) exemption, the Company may exclude non-U.S. employees up to a 5% threshold when identifying the median employee. As noted in the Companys 2018 Proxy Statement, in determining such median employee, the Company excluded 220 employees from the following jurisdictions, comprising less than 5% of the 6,957 total Company population (with number of employees):
Australia (33) | Columbia (1) | Japan (33) | Singapore (15) | |||
Austria (44) | Czech Republic (1) | Korea (4) | South Africa (1) | |||
Belgium (15) | France (5) | Mexico (10) | Taiwan (1) | |||
Brazil (9)
|
Ireland (33)
|
Poland (2)
|
United Arab Emirates (13)
|
The 6,737 employees who were included in identifying the median employee are located in the following countries:
Canada | India | The Netherlands | ||||
China | Italy | United Kingdom | ||||
Germany
|
Switzerland
|
United States of America
|
Pay Ratio
We calculated annual total compensation for the median employee consistent with the same methodology we use for our NEOs as set forth in the 2019 Summary Compensation Table. The annual total compensation of the CEO is $9,119,596. The median of the annual total compensation of all employees, except the CEO, is $66,703. The pay ratio is 137:1.
57
Our Board of Directors recommends that you vote FOR the approval of the Companys executive compensation
|
PROPOSAL 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are soliciting a non-binding advisory vote (say-on-pay) on the compensation of the Companys NEOs, as described in the Compensation Discussion and Analysis, the compensation tables, and the accompanying narrative disclosure set forth in this Proxy Statement, as required under Section 14A of the Securities Exchange Act of 1934, as amended.
The Company maintains a balanced approach to executive compensation with a mix of both cash and non-cash awards and short- and long-term incentives, with total direct compensation targeted within a range that includes market median for comparable positions at comparable companies. Where an individual executives target compensation is positioned within the competitive range is based on the individual factors listed in the Compensation Discussion and Analysis. Actual compensation in any given year should and does vary from target based on Company and individual performance. In this way, the Company motivates and rewards both vital short-term performance and long-term value creation. The Board of Directors strongly endorses the Companys executive compensation program and recommends that the stockholders vote in favor of the following resolution:
RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to the Companys named executive officers as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and accompanying narrative discussion contained in this Proxy Statement.
Because the vote is advisory, it will not be binding on the Company. However, the Compensation Committee will consider the outcome of the vote in determining future compensation policies and decisions. Currently, stockholders are given an opportunity to cast an advisory vote on this topic annually, with the next opportunity occurring in connection with the Companys 2021 Annual Meeting of Stockholders.
58
For the year ended December 31, 2019, the Audit Committee has reviewed and discussed the audited financial statements with management and the Companys independent registered public accounting firm, Deloitte & Touche LLP. The Committee discussed with Deloitte & Touche LLP the matters required to be discussed by the Auditing Standard No. 16, as adopted by the Public Company Accounting Oversight Board in PCAOB Release No. 2012-004 and approved by the SEC in Release No. 34-68453, and reviewed the results of the independent registered public accounting firms examination of the financial statements.
The Audit Committee also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte & Touche LLPs communications with the Audit Committee concerning independence, discussed with the auditors their independence, and satisfied itself as to the auditors independence.
Based on the above reviews and discussions, the Audit Committee recommends to the Board of Directors that the financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2019, for filing with the SEC.
Notwithstanding anything to the contrary set forth in any of the Companys previous filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate future filings made by the Company under those statutes, in whole or in part, this report shall not be deemed to be incorporated by reference into any such filings, nor will this report be incorporated by reference into any future filings made by the Company under those statutes.
Mark A. Buthman, Chair
Mark A. Beck
William M. Cook
Ernest J. Mrozek
59
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The aggregate fees billed to the Company for each of the last two fiscal years for professional services rendered by the Companys principal accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, the Deloitte Entities), are set forth in the table below. All such fees were pre-approved by the Audit Committee in accordance with the pre-approval policy discussed below.
2019 | 2018 | |||||||||
Audit fees(1) |
$ 3,448,291 | $ | 4,129,916(2) | |||||||
Audit-related fees(3) |
- | - | ||||||||
Tax fees(4) |
$ 1,722,719 | $ | 1,207,429 | |||||||
All other fees(5) |
- | - | ||||||||
Total |
$ 5,171,010 | $ | 5,337,345 |
(1) | Audit fees represent the aggregate fees billed for the audit of the Companys financial statements, review of the financial statements included in the Companys quarterly reports, and services in connection with statutory and regulatory filings or engagements. |
(2) | Audit fees include $655,354 of additional fees related to the 2017 audit of the Companys financial statements that were billed after the Companys 2018 Proxy Statement was filed on March 16, 2018. |
(3) | Audit-related fees represent the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Companys financial statements and are not reported under audit fees. |
(4) | Tax fees represent the aggregate fees billed for professional services for tax compliance, tax advice and tax planning. |
(5) | All other fees represent the aggregate fees billed for products and services that are not included in the audit fees, audit-related fees, and tax fees. The Audit Committee has determined that the provision of these services is not incompatible with maintaining the Deloitte Entities independence. |
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy that requires the pre-approval of audit and non-audit services rendered by the Deloitte Entities. For audit services, the accounting firm provides the Audit Committee with an audit services plan during the second quarter of each fiscal year outlining the scope of the audit services proposed to be performed for the fiscal year and the associated fees. This audit services plan must be formally accepted by the Audit Committee.
For non-audit services, management submits to the Audit Committee for approval during the second quarter of each fiscal year and from time-to-time during the fiscal year a list of non-audit services that it recommends the Audit Committee engage the accounting firm to provide for the current year, along with the associated fees. Company management and the accounting firm each confirm to the Audit Committee that any non-audit service on the list is permissible under all applicable legal requirements.
The Audit Committee approves both the list of permissible non-audit services and the budget for such services. The Audit Committee delegates to its Chair the authority to amend or modify the list of approved permissible non-audit services and fees. The Chair reports any such actions taken to the Audit Committee at a subsequent Audit Committee meeting.
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Our Board of Directors recommends that you vote FOR the ratification of the appointment of Deloitte & Touche LLP
|
PROPOSAL 3 APPROVAL OF AUDITORS
The Audit Committee has appointed Deloitte & Touche LLP as the Companys independent registered public accounting firm for 2020. Representatives of Deloitte & Touche LLP will attend the Annual Meeting and will have the opportunity to make a statement if they desire to do so. They will also be available to respond to appropriate questions.
Although the rules of the U.S. Securities and Exchange Commission and the corporate governance listing standards of the New York Stock Exchange require that the Audit Committee be directly responsible for selecting and retaining the independent registered public accounting firm, we are providing stockholders with the opportunity to express their views on this issue. While this vote cannot be binding, if the stockholders do not ratify the appointment of Deloitte & Touche LLP, the Audit Committee will take the vote into account in making future appointments.
61
Our Board of Directors recommends that you
vote
|
PROPOSAL 4 STOCKHOLDER PROPOSAL REGARDING A REPORT RELATED TO EMPLOYEE REPRESENTATION ON THE COMPANYS BOARD OF DIRECTORS
NorthStar Asset Management, Inc. Funded Pension Plan, P.O. Box 301840 Boston, MA 02130, the beneficial owner of 441 shares of IDEX Corporation common stock, intends to propose the following resolution at the Annual Meeting.
Employee Representation on the Board of Directors
WHEREAS: Our companys employees are crucial to our ability to offer shareholders continued return on their investment. A 2018 Forbes article emphasized the need for retaining top employees by focus[ing] on excellence in engagement;
In August 2019, the Business Roundtable, an association of chief executive officers of Americas leading companies, issued a new Statement on the Purpose of a Corporation which emphasized a fundamental commitment to all of our stakeholders. Shareholders believe that part of fulfilling the Roundtables commitment to invest[ ] in our employees could come from a direct line of communication between employees and the board;
In 2018, the Accountable Capitalism Act was introduced into the U.S. Congress to combat Americas fundamental economic problems such as companies failure to reinvest proceeds in their operations, including employees. The Act would require that boards include substantial employee participation ensur[ing] that no fewer than 40% of [a boards] directors are selected by the corporations employees;
Several European countries require employee representation on boards. Academic analysis of one such policy stated that it offer[s] advantages for technical efficiency, skill development and knowledge generation through its protection of specific human capital investments;
A recent poll found that a majority of Americans would support allowing employees at large companies to elect representatives to those companies boards of directors ;
Competitiveness in our sector is evolving quickly due to technology such as artificial intelligence, machine learning, and cognitive analytics. The Manufacturing Leadership Council lists the need to attract, develop, train, retain, and inspire both the current workforce and the next generation of employees as a critical issue for the manufacturing industry; Shareholders believe that our company can advance long-term value creation through a board that includes non-management employee representation.
RESOLVED: Shareholders of IDEX Corporation urge the Board of Directors to prepare a report to shareholders describing opportunities for the company to encourage the inclusion of non-management employee representation on the Board.
62
SUPPORTING STATEMENT: The report should be prepared within one year, at reasonable cost and excluding proprietary and privileged information. The Board is encouraged to assess:
1. | Any legal, technical, practical, or organizational impediments to non-management employees gaining board nomination; |
2. | Benefits and challenges associated with board membership of non-management employees; |
3. | Opportunities or procedures through which non-management employees could gain nomination to the board, such as allocation of board slots or special board nomination processes for non-management employees, and any needed changes to corporate governance documents to accomplish such changes. |
For purposes of this proposal, the term non-management employees should be understood to be employees that are neither management nor company executives.
63
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
|
COMPANY STATEMENT IN OPPOSITION TO THE PROPOSAL
We have best-in-class employee engagement. Engagement is a combination of satisfaction, advocacy, retention and pride, and we conduct an anonymous companywide iSay engagement survey on an annual basis to measure our employee engagement, as well as manager effectiveness and performance enablement. In 2019, we were in the top quartile (25%) of manufacturing companies in all three indices, with a response rate of 88% (best in class is 80% and above). Last year, we were in the top quartile on employee engagement and manager effectiveness. Results are shared with departmental groups and also reviewed by function and by business unit to enable targeted focus on matters of local importance to particular teams (which avoids a one size fits all approach). Our latest CSR Report, which is available under the Corporate Social Responsibility link on our website at www.idexcorp.com encapsulates the many ways we are actively invested in and engage our employees in the office and in their communities.
We have many avenues for employee engagement with management and our Board. We believe a key element of our continued success is our ability to establish a work environment where employees feel connected to the Company and recognize that their role matters. We offer numerous ways for employees to be heard and exert influence outside of Board representation. For example, our CEO, COO and senior leaders regularly host meetings to provide business updates and answer questions posed by employees. Those questions can be presented anonymously prior to the meetings or at the meetings themselves. Employees can provide feedback and raise any questions on any topic when completing our annual iSay survey. Our CEO regularly asks employees to email him directly with concerns or suggestions and has a blog where he speaks on topics of interest and welcomes feedback.
We have an Open Door Policy under which we encourage employees to report concerns, ask for guidance and voice their opinions to any member of management or Human Resources. We also have a hotline in place that allows employees to raise concerns they may have about the Company on an anonymous and confidential basis (except where prohibited by local privacy laws) 24 hours a day anywhere in the world. Management regularly, as well as Board members numerous times a year, visit manufacturing facilities and interact with employees, who have an opportunity to ask questions and give feedback. Finally, employees and all other stakeholders may contact directors in writing. We take information communicated through these multiple avenues very seriously and regularly provide responses and updates on issues that employees raise. In addition, we believe that information collected from employees can be valuable to decision making.
Further, we continually invest in the training of our people, from on-the-ground learning and mentorships at our business units around the world, to our IDEX Academy programs that help develop team members at all levels so they can advance in their careers.
We have a thoughtful and inclusive director nominee selection process. Our existing director selection process is designed to identify and nominate the strongest director candidates from all available sources, including our employees, and is motivated by our focus on long-term value creation. Although we currently only have one employee (our CEO, Andrew Silvernail) serving on the Board, our nominating process permits other employees, including those who are not members of management, to
64
serve on the Board. Stockholders may recommend Board candidates to be considered by the Nominating and Corporate Governance Committee (Nominating Committee). The Nominating Committee is committed to giving the same consideration toward stockholder-recommended nominees as those recommended from other sources. We describe in this Proxy Statement, the process for making director nominee recommendations to the Nominating Committee.
From a process standpoint, we believe the Board and the Nominating Committee are best situated to assess the particular qualifications of potential director nominees. In selecting potential nominees for the Board, the Nominating Committee considers several qualities, including specialized expertise in the industries in which we compete, a breadth of knowledge about issues affecting us, executive leadership in business or administrative activities, financial expertise, personal integrity, and a willingness to assume fiduciary responsibilities.
Our current process for selecting director nominees has resulted in an effective Board composed of a diverse group of leaders with a complementary blend of backgrounds, experiences, skills, expertise and perspectives. Collectively, the current members of the Board have senior leadership experience at major domestic and international companies, key management skills, such as financial expertise in mergers and acquisitions, industrial manufacturing, organizational leadership, and expertise in international business; and experience on boards of other global public companies.
The proposal suggests that we allocate board slots or use a special board nomination process for non-management employees. This would require us to deviate from our existing thoughtful and inclusive process and seriously undercut the role of our Nominating Committee and Board in one of the most crucial elements of corporate governancethe election of directors. This could diminish the effectiveness of our Board and would decrease the number of directors who qualify as independent.
CONCLUSION
As a result of our best-in-class employee engagement, the methods we make available to employees to communicate with management and the Board, our continual investment in the training of our people, and our thoughtful and inclusive director nominee selection process (which permits employees to be recommended as potential director candidates), we believe our current director nominee selection process is sufficient and that the report requested by your proposal is not necessary.
65
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR 2021 ANNUAL MEETING OF STOCKHOLDERS
A stockholder desiring to submit a proposal for inclusion in the Companys proxy statement for the 2021 Annual Meeting of Stockholders must deliver the proposal so that it is received by the Company no later than November 20, 2020. The Company requests that all such proposals be addressed to Denise R. Cade, Senior Vice President, General Counsel and Corporate Secretary, IDEX Corporation, 1925 West Field Court, Suite 200, Lake Forest, Illinois 60045, and mailed by certified mail, return receipt requested.
In addition, the Companys Bylaws require that any stockholder desiring to nominate a director for election or propose other business for consideration at the 2021 Annual Meeting of Stockholders must provide written notice. Such notice must contain the information required by the Bylaws and must be received by the Corporate Secretary not less than 90 nor more than 120 days before the first anniversary of the preceding years annual meeting of stockholders. To be timely for the 2021 Annual Meeting of Stockholders, any such notice must be received by the Corporate Secretary, at the address above, on any date beginning on January 7, 2021 and ending on February 6, 2021.
The Board of Directors does not know of any business to be brought before the Annual Meeting other than the matters described in the Notice of Annual Meeting. However, if any other matters are properly presented for action, it is the intention of each person named in the accompanying proxy to vote said proxy in accordance with his or her judgment on those matters.
By Order of the Board of Directors,
DENISE R. CADE
Senior Vice President, General Counsel
and Corporate Secretary
March 20, 2020
Lake Forest, Illinois
A copy of the Companys Annual Report on Form 10-K for the year ended December 31, 2019, including the financial statement schedules, as filed with the Securities and Exchange Commission, may be obtained by stockholders without charge by sending a written request to Chief Financial Officer, IDEX Corporation, 1925 West Field Court, Suite 200, Lake Forest, Illinois 60045.
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1925 W. FIELD CT, SUITE 200 LAKE FOREST, IL 60045 SCAN TO VIEW MATERIALS & VOTE VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. 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: E97707-P32565 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 AND AGAINST PROPOSAL 4. IF ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING, THE PERSONS NAMED IN THIS PROXY WILL VOTE IN THEIR DISCRETION. 1. To elect four directors each for a term of three years Nominees: 01) ANDREW K. SILVERNAIL 02) KATRINA L. HELMKAMP 03) MARK A. BECK 04) CARL R. CHRISTENSON 2. Advisory vote to approve named executive officer compensation. 3. Ratification of the appointment of Deloitte & Touche LLP as our independent registered accounting firm for 2020. 4. To consider a stockholder proposal regarding a report related to employee representation on the Companys Board of Directors, if properly presented at the meeting. For address changes and/or comments, please check this box and write them on the back where indicated. Yes No Please indicate if you plan to attend this meeting. For All Withhold All For All Except To withhold authority to vote for any individual nominee(s), mark For All Except and write the name(s) of the nominee(s) on the line below. For Against Abstain Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signed as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. Signature [PLEASE SIGN WITHIN BOX] Date Signature [Joint Owners] Date
IDEX CORPORATION NOTICE OF ANNUAL MEETING OF STOCKHOLDERS MAY 7, 2020 The Annual Meeting of Stockholders of IDEX Corporation (the Company) will be held on Thursday, May 7, 2020, at 9:00 a.m., Central Time, at the DoubleTree Hotel, 5460 N. River Road, Rosemont, Illinois 60018, for the purposes listed on the reverse side. The Board of Directors fixed the close of business on March 13, 2020, as the record date for the determination of Stockholders entitled to notice of, and to vote at, the Annual Meeting. You may obtain directions to the location of the Annual Meeting by visiting our website at www.idexcorp.com. YOUR VOTE IS IMPORTANT Regardless of whether you plan to attend the Annual Meeting of Stockholders, you can be sure these shares are represented at the meeting by promptly returning your proxy in the enclosed envelope. Important Notice Regarding the Availability of Proxy Materials for the 2020 Annual Meeting The Notice and Proxy Statement and Form 10-K of IDEX Corporation are available at: http://phx.corporate-ir.net/phoenix.zhtml?c=83305&p=irol-reportsAnnual Proxy card must be signed and dated on the reverse side. Please fold and detach card at perforation before mailing. E97708-P32565 IDEX CORPORATION 1925 West Field Court, Suite 200 Lake Forest, Illinois 60045-4824 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints William M. Cook, Eric D. Ashleman and Denise R. Cade, and each of them, as Proxies, with full power of substitution, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of common stock of IDEX Corporation held of record by the undersigned on March 13, 2020, at the Annual Meeting of Stockholders to be held on May 7, 2020, at 9:00 a.m. Central Time, at the DoubleTree Hotel, 5460 N. River Road, Rosemont, Illinois 60018, or at any adjournment thereof. Address Changes/Comments: (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side