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. )
Filed by the Registrant ☒ Filed by a party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to §240.14a-12 |
IDEX Corporation (Name of Registrant as Specified In Its Charter)
| ||||
(Name of Person(s) Filing Proxy Statement, if Other Than The Registrant)
| ||||
Payment of Filing Fee (Check the appropriate box): | ||||
☒ | No fee required. | |||
☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies: | |||
| ||||
(2) | Aggregate number of securities to which transaction applies: | |||
| ||||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
| ||||
(4) | Proposed maximum aggregate value of transaction: | |||
| ||||
(5) | Total fee paid: | |||
| ||||
☐ | Fee paid previously with preliminary materials. | |||
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid: | |||
(2) | Form, Schedule or Registration Statement No.: | |||
(3) | Filing Party: | |||
(4) | Date Filed: |
1925 West Field Court, Suite 200
Lake Forest, IL 60045
March 22, 2019
Dear Stockholders,
You are cordially invited to attend the Annual Meeting of Stockholders of IDEX Corporation (the Company), which will be held on Friday, May 10, 2019, at 9:00 a.m. Central Time, at the DoubleTree Hotel, 5460 N. River Road, Rosemont, Illinois 60018.
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 2019 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 2018 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 2019 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, President and
Chief Executive Officer
NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
Date and Time | Friday, May 10, 2019 at 9:00 a.m. Central Time
| |
Place | DoubleTree Hotel, 5460 N. River Road, Rosemont, Illinois 60018
| |
Agenda | 1. Election of three members of the IDEX Board of Directors, each for a term of three years
| |
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 2019
| ||
4. To transact such other business as may properly come before the 2019 Annual Meeting or any adjournment or postponement thereof
| ||
Voting Recommendations | The Companys Board of Directors recommends that you vote:
| |
1. FOR all the director nominees
| ||
2. FOR the approval of the compensation of our named executive officers
| ||
3. FOR the ratification of the appointment of Deloitte & Touche LLP
| ||
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 2019 Annual Meeting.
| |
March 22, 2019 | By Order of the Board of Directors
| |
DENISE R. CADE Senior Vice President, General Counsel and Corporate Secretary |
Important Notice Regarding the Availability of Proxy Materials for the 2019 Annual Meeting The Proxy Statement and 2018 Annual Report are available online at: http://phx.corporate-ir.net/phoenix.zhtml?c=83305&p=irol-reportsAnnual
|
Page |
1 | ||||
5 |
12 | ||||
12 | ||||
Corporate Governance Guidelines and Code of Business Conduct and Ethics |
12 | |||
12 | ||||
12 | ||||
13 | ||||
14 | ||||
14 | ||||
14 | ||||
14 | ||||
15 | ||||
15 | ||||
15 | ||||
15 | ||||
15 | ||||
16 | ||||
17 | ||||
18 | ||||
19 | ||||
19 | ||||
20 | ||||
20 | ||||
21 | ||||
Directors Outstanding Equity Awards at 2018 Fiscal Year End |
22 | |||
23 | ||||
25 | ||||
25 | ||||
30 | ||||
34 | ||||
36 | ||||
37 | ||||
39 | ||||
39 | ||||
40 | ||||
42 | ||||
43 | ||||
43 | ||||
45 | ||||
47 | ||||
47 | ||||
Narrative to Nonqualified Deferred Compensation at 2018 Fiscal Year End Table |
48 | |||
48 | ||||
54 | ||||
55 | ||||
56 | ||||
57 | ||||
57 | ||||
58 | ||||
59 | ||||
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2020 ANNUAL MEETING OF STOCKHOLDERS |
59 | |||
59 |
i
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 Friday, May 10, 2019, 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 22, 2019.
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 15, 2019, the record date of the Annual Meeting. On the record date, a total of 75,793,975 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
|
By Telephone
|
By Mail
|
In Person
| |||
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.
1
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 |
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.
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.
2
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.
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.
3
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.
4
PROPOSALS TO BE VOTED ON AT THE 2019 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 nine members, three of whom are Class III directors whose terms will expire at this years Annual Meeting, three of whom are Class I directors whose terms will expire at the Annual Meeting to be held in 2020, and three of whom are Class II directors whose terms will expire at the Annual Meeting to be held in 2021.
Overview of IDEX Board of Directors
|
||||||||||
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
|
Board Composition
Independent Directors: 8 of 9
Average IDEX Board Tenure: 6.1 years
Average Age: 58
Diversity of gender, race or ethnicity: 2 of 9 |
| ||||||||
Specialized industry expertise
Financial expertise
Extensive knowledge of the Company |
||||||||||
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
5
The Board has nominated three individuals for election as Class III directors to serve for a three-year term expiring at the Annual Meeting to be held in 2022, or upon the election and qualification of their successors. The nominees of the Board are Ernest J. Mrozek, Livingston L. Satterthwaite and David C. Parry, each of whom is currently serving as a director of the Company.
The nominees and the directors serving in Class I and Class II 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.
6
|
Our Board of Directors recommends that you vote FOR the election of each of the 2019 Class III director nominees
|
|
2019 DIRECTOR NOMINEES
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: 64 Director since July 2010 Independent Committees: Audit (Chair)
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 April 2015 as President of Cummins Distribution Business, a unit of Cummins, Inc., a global power leader that designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products. Prior to that, Mr. Satterthwaite served as President of Cummins Power Generation from June 2008 to April 2015.
Livingston L. Satterthwaite Age: 57 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.
7
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: 64 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.
8
OTHER INCUMBENT DIRECTORS
Class I: Three-Year Term Expires in 2020
Mr. Silvernail was appointed Chairman of the Board effective January 1, 2012. Mr. Silvernail has served as President and Chief Executive Officer and a director of the Company since August 10, 2011. Prior to his appointment as President and Chief Executive Officer, 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: 47 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: 52 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.
9
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 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.
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.
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.
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.
10
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.
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.
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.
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.
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.
11
12
13
14
15
16
17
18
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 2018 was as follows:
2018
| ||
Annual Retainer and Meeting Fees
|
$ 85,000
| |
Committee Chair Retainer
|
||
Audit Committee
|
$ 15,000
| |
Compensation Committee
|
$ 10,000
| |
Nominating and Corporate Governance Committee
|
$ 10,000
| |
Additional Lead Director Fees
|
||
Annual Retainer
|
$ 15,000
| |
Annual Equity Grant (100% Restricted Stock Units)
|
$ 15,000
| |
Value of Equity Grants Upon Initial Election to the Board (100% Restricted Stock Units)
|
Pro-rated annual grant
| |
Value of Annual Equity Grants (100% Restricted Stock Units)
|
$130,000
|
19
20
The following table summarizes the total compensation earned in 2018 for the Companys non-management directors. Mr. Silvernail receives no additional compensation for his service as a director.
Name |
Fees Earned or Paid in Cash ($) |
Stock Awards ($) (1) |
All Other Compensation ($) (2) |
Total ($) | ||||
Mark A. Beck
|
85,000
|
170,247(3)
|
|
255,247
| ||||
Mark A. Buthman
|
85,000
|
130,000
|
|
215,000
| ||||
William M. Cook
|
100,000
|
145,000
|
6,500
|
251,500
| ||||
Katrina L. Helmkamp
|
85,000
|
130,000
|
|
215,000
| ||||
Ernest J. Mrozek
|
100,000
|
130,000
|
10,000
|
240,000
| ||||
David C. Parry
|
85,000
|
130,000
|
10,000
|
225,000
| ||||
Livingston L. Satterthwaite
|
95,000
|
130,000
|
|
225,000
| ||||
Cynthia J. Warner
|
95,000
|
130,000
|
|
225,000
|
(1) | Reflects the aggregate grant date fair value of the restricted stock units granted in 2018, 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, 2018, 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) | Includes Mr. Becks prorated initial grant awarded upon his election to the Board, valued at $40,247. |
21
Directors Outstanding Equity Awards at 2018 Fiscal Year End
The following table provides information on restricted stock units and stock option awards held by the Companys non-management directors and the value of those awards as of December 31, 2018. All outstanding awards are in or exercisable for shares of Common Stock.
Option Awards |
Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||
Number of
Securities
|
Number of
|
Market Value
| ||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Type | # Shares (#) |
Shares
|
Exercisable (#) (a)
|
Unexercisable (#) (a)
|
Option Exercise Price ($)
|
Option Expiration Date
| ||||||||||||||||||||||||||||||||||||||||||
Mark A. Beck |
01/02/18 | RSU | 310 | 39,141 | ||||||||||||||||||||||||||||||||||||||||||||||
04/25/18 | RSU | 945 | 119,316 | |||||||||||||||||||||||||||||||||||||||||||||||
Mark A. Buthman |
04/06/16 | RSU | 1,290 | 162,875 | ||||||||||||||||||||||||||||||||||||||||||||||
02/22/17 | RSU | 1,290 | 162,875 | |||||||||||||||||||||||||||||||||||||||||||||||
04/25/18 | RSU | 945 | 119,316 | |||||||||||||||||||||||||||||||||||||||||||||||
William M. Cook |
02/23/10 | NQSO | 4,080 | 0 | 4,080 | 0 | 30.82 | 02/23/2020 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||
02/19/16 | RSU | 1,810 | 228,531 | |||||||||||||||||||||||||||||||||||||||||||||||
02/22/17 | RSU | 1,450 | 183,077 | |||||||||||||||||||||||||||||||||||||||||||||||
04/25/18 | RSU | 1,055 | 133,204 | |||||||||||||||||||||||||||||||||||||||||||||||
Katrina L. Helmkamp |
02/19/16 | RSU | 1,610 | 203,279 | ||||||||||||||||||||||||||||||||||||||||||||||
02/22/17 | RSU | 1,290 | 162,875 | |||||||||||||||||||||||||||||||||||||||||||||||
04/25/18 | RSU | 945 | 119,316 | |||||||||||||||||||||||||||||||||||||||||||||||
Ernest J. Mrozek |
07/01/10 | NQSO | 6,650 | 0 | 6,650 | 0 | 28.20 | 07/01/2020 | ||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||
02/19/16 | RSU | 1,610 | 203,279 | |||||||||||||||||||||||||||||||||||||||||||||||
02/22/17 | RSU | 1,290 | 162,875 | |||||||||||||||||||||||||||||||||||||||||||||||
04/25/18 | RSU | 945 | 119,316 | |||||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||
02/19/16 | RSU | 1,610 | 203,279 | |||||||||||||||||||||||||||||||||||||||||||||||
02/22/17 | RSU | 1,290 | 162,875 | |||||||||||||||||||||||||||||||||||||||||||||||
04/25/18 | RSU | 945 | 119,316 | |||||||||||||||||||||||||||||||||||||||||||||||
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 | 177,395 | |||||||||||||||||||||||||||||||||||||||||||||||
02/19/16 | RSU | 1,610 | 203,279 | |||||||||||||||||||||||||||||||||||||||||||||||
02/22/17 | RSU | 1,290 | 162,875 | |||||||||||||||||||||||||||||||||||||||||||||||
04/25/18 | RSU | 945 | 119,316 | |||||||||||||||||||||||||||||||||||||||||||||||
Cynthia J. Warner |
02/15/13 | NQSO | 4,610 | 0 | 4,610 | 0 | 50.45 | 02/15/2023 | ||||||||||||||||||||||||||||||||||||||||||
02/19/16 | RSU | 1,610 | 203,279 | |||||||||||||||||||||||||||||||||||||||||||||||
02/22/17 | RSU | 1,290 | 162,875 | |||||||||||||||||||||||||||||||||||||||||||||||
04/25/18 | RSU | 945 | 119,316 |
(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, 2018. |
22
The following table furnishes information as of March 15, 2019, 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 15, 2019. Shares of Common Stock subject to options that are exercisable within 60 days of March 15, 2019, 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)
|
1,255
|
*
| ||
Mark A. Buthman(1)
|
3,525
|
*
| ||
William M. Cook(1)
|
31,163
|
*
| ||
Katrina L. Helmkamp(1)
|
4,260
|
*
| ||
Ernest J. Mrozek(1)
|
25,205
|
*
| ||
David C. Parry(1)
|
17,030
|
*
| ||
Livingston L. Satterthwaite(1)
|
21,352
|
*
| ||
Cynthia J. Warner(1)
|
12,640
|
*
| ||
Named Executive Officers:
|
||||
Andrew K. Silvernail(2)
|
505,794
|
*
| ||
William K. Grogan(2)(3)
|
38,885
|
*
| ||
Eric D. Ashleman(2)(3)
|
46,274
|
*
| ||
Denise R. Cade(2)(3)
|
16,827
|
*
| ||
Jeffrey D. Bucklew(2)
|
37,243
|
*
| ||
Directors, Nominees and All Executive Officers as a Group: (16 persons)(4)
|
945,651
|
1.2%
| ||
Other Beneficial Owners:
|
||||
BlackRock Inc.(5)
|
7,982,637
|
10.4%
| ||
55 East 52nd Street New York, NY 10055
|
||||
The Vanguard Group(6)
|
7,202,621
|
9.4%
| ||
100 Vanguard Blvd. Malvern, PA 19355
|
||||
T. Rowe Price Associates, Inc.(7)
|
6,018,367
|
7.8%
| ||
100 East Pratt Street, Baltimore, MD 21202
|
||||
Capital World Investors(8)
|
5,666,228
|
7.3%
| ||
333 South Hope Street, Los Angeles, CA 90071
|
23
(1) | Includes 13,875, 16,445, 8,005, 11,405 and 4,610 shares under exercisable options for Messrs. Cook, Mrozek, Parry and Satterthwaite, and Ms. Warner, respectively. Ms. Helmkamp, Mr. Buthman and Mr. Beck do not have any options. Includes 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; 1,290 restricted stock units issued to each of Ms. Helmkamp and Messrs. Buthman, Mrozek, Parry and Satterthwaite and Ms. Warner on February 22, 2017, which vest on February 22, 2020 (except for Messrs. Buthman and Satterthwaite, who each elected to defer vesting); 1,450 restricted stock units issued to Mr. Cook on February 22, 2017, which vest on February 22, 2020; 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 Ms. Helmkamp and Messrs. Beck and Buthman, Mrozek, Parry and Satterthwaite and Ms. Warner on April 25, 2018, which vest on April 25, 2021 (except Messrs. Beck, Buthman and Satterthwaite, who each elected to defer vesting); and 1,055 restricted stock units issued to Mr. Cook on April 25, 2018, which vest on April 25, 2021. The restricted shares and restricted stock units held by Messrs. Beck, Buthman and Cook, Ms. Helmkamp, Messrs. Mrozek, Parry, and Satterthwaite, and Ms. Warner 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 331,686, 31,559, 17,369, 36,115 and 10,150 shares under exercisable options for Messrs. Silvernail, Grogan, Ashleman and Bucklew and Ms. Cade, respectively. |
(3) | Includes 5,485 shares of restricted stock issued to Mr. Grogan on January 3, 2017, which vest on January 3, 2020. Such shares of restricted stock are eligible for dividends and shall vest provided that Mr. Grogan is employed on the vesting date. The restricted shares may vest earlier than the dates indicated below upon a change in control of the Company and certain other events. See Outstanding Equity Awards at 2018 Fiscal Year End under EXECUTIVE COMPENSATION. |
(4) | Includes 593,670 shares under options that are exercisable currently or will be exercisable within 60 days of March 15, 2019, and 31,980 unvested shares of restricted stock or restricted stock units. |
(5) | Based solely on information in Schedule 13G, as of December 31, 2018, 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 (Singapore) Limited and BlackRock Fund Managers Ltd. BlackRock has sole power to vote or to direct the vote of 7,459,538 shares of Common Stock and sole power to dispose or to direct the disposition of all 7,982,637 shares of Common Stock. |
(6) | Based solely on information in Schedule 13G, as of December 31, 2018, 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 58,192 shares of Common Stock, shared power to vote or direct the vote of 14,851 shares of Common Stock, sole power to dispose or to direct the disposition of 7,134,363 shares of Common Stock and shared power to dispose or to direct the disposition of 68,258 shares of Common Stock. |
(7) | Based solely on information in Schedule 13G, as of December 31, 2018, filed by T. Rowe Price Associates, Inc. (Price Associates). Price Associates has sole power to vote or to direct the vote of 2,173,360 shares of Common Stock and sole power to dispose or to direct the disposition of all 6,018,367 shares of Common Stock. |
(8) | Based solely on information in Schedule 13G, as of December 31, 2018, 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 5,647,437 shares of Common Stock and sole power to dispose or to direct the disposition of all 5,666,228 shares of Common Stock. |
24
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 2018, who are listed below.
Name | Title | |
Andrew K. Silvernail
|
Chairman, President and Chief Executive Officer
| |
William K. Grogan
|
Senior Vice President and Chief Financial Officer
| |
Eric D. Ashleman
|
Senior Vice President and Chief Operating Officer
| |
Denise R. Cade
|
Senior Vice President, General Counsel and Corporate Secretary
| |
Jeffrey D. Bucklew
|
Senior Vice President and Chief Human Resources Officer
|
Principles of Our Compensation Programs
Pay-for-Performance | The key principle
of our compensation philosophy is
| |
Alignment with Stockholders Interests |
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.
| |
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 |
25
Compensation Philosophy | How We Deliver | |
|
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 the goals in our incentive plans, payouts can result in above market median levels.
| |
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 Russell Midcap Index 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 2018 Annual Meeting of Stockholders, more than 98% of the votes cast on the say-on-pay proposal were in favor of the fiscal year 2017 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. |
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. |
26
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 their economic interest in the Common Stock they hold. |
Performance Highlights and Impact on Incentive Compensation
On a three-year basis, IDEXs TSR was 76%, versus 30% for the median of the companies in the Russell Midcap Index and 42% for the median of Companys peer group.
IDEX had a record year in 2018, as the Company continued to perform against its strategic and business plans, with orders and sales up 7% and 9%, respectively, compared to the prior year. The performance highlights and significant recent accomplishments highlighted in the chart below are closely related to performance metrics under our executive compensation programs.
27
* | 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 fiscal year-ended December 31, 2018. 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 2018 Executive Compensation Program
For 2018, 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 2018 bonus payouts were 164% of target, which reflect record performance. |
| Our TSR for the 2016-2018 period was 76%, which resulted in an 83rd percentile performance compared to the companies in the Russell Midcap Index and resulted in a 250% payout of performance stock units (PSUs). |
| The 2018 long-term incentive awards were granted at values greater than the 2017 awards, reflecting financial and operational outperformance against peers and prior-year goals, including historically strong stock price performance. This resulted in a 2018 long-term incentive grant value for Mr. Silvernail that was 19% greater than his 2017 grant. See 2018 Long-Term Incentive Awards under Compensation Discussion and Analysis 2018 Executive Compensation Program for further details. |
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 2018:
Approximately 83% of our CEOs 2018 total targeted pay was performance-based, and an average of approximately 71% of our other NEOs total targeted pay in 2018 was performance-based. The charts
28
below show the allocation of 2018 targeted pay across base salary, the annual cash incentive award, and the long-term incentive award for our CEO and other NEOs.
In 2018, 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 2018 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 2018 Annual Meeting of Stockholders. The say-on-pay advisory vote received support from over 98% of the shares voted at the 2018 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 2018. The Compensation Committee will continue to review and consider the outcome of the Companys say-on-pay votes when making future compensation decisions for the NEOs.
29
2018 Executive Compensation Program
The following discussion describes our 2018 compensation elements and 2018 compensation decisions related to our NEOs.
2018 Key Compensation Elements
The material elements of 2018 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 Incentives Annual Bonus |
Performance- Based |
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 Incentives Stock Options |
Performance- Based |
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 Incentives PSUs |
Performance- Based |
Ties long-term compensation to relative performance, further aligning the interests of NEOs with stockholders. | PSUs vest based on continued service and relative total shareholder return compared to companies in the Russell Midcap Index over a cumulative three-year period. | |||
Retirement/Other | Fixed/ Voluntary |
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 2018 base salary for each NEO, reflecting one or more of the following: annual merit increase, market and performance-related adjustments.
NEO | 2017 Base Salary Rate ($) |
2018 ($) |
Percentage Increase |
|||||||||
Andrew K. Silvernail | 983,400 | 1,000,000 | 2 | % | ||||||||
William K. Grogan | 437,800 | 470,000 | 7 | % | ||||||||
Eric D. Ashleman | 530,500 | 585,000 | 10 | % | ||||||||
Denise R. Cade | 445,600 | 460,000 | 3 | % | ||||||||
Jeffrey D. Bucklew | 377,300 | 400,000 | 6 | % |
30
Short-Term Incentives
For 2018, the relative weightings and the performance against the quantitative and strategic measures resulted in a recommended Business Performance Factor of 164%, as shown in the table below.
MICP Objective | Goal | Actual* | Payout | MICP Weighting |
Business Performance Factor |
|||||||||||||||
Adjusted EPS |
$4.90 | $ | 5.41 | 180.8% | 50% | 90.4% | ||||||||||||||
Adjusted Cash Flow Conversion | 115% | 107% | 85.7% | 20% | 17.1% | |||||||||||||||
Organic Sales Growth | 4.0% | 7.5% | 187.5% | 30% | 56.3% | |||||||||||||||
Total |
100% | 163.8% |
* | 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 fiscal year-ended December 31, 2018. 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. |
31
The short-term incentive payments are included in the 2018 Summary Compensation Table under the Non-Equity Incentive Plan Compensation column and summarized in the table below.
NEO | Base Salary Rate ($) |
Target Incentive | Business Performance Factor |
Actual 2018 Short- |
||||||||||||
Andrew K. Silvernail |
1,000,000 | 120 | % | 164% | 1,968,000 | |||||||||||
William K. Grogan |
470,000 | 75 | % | 164% | 578,100 | |||||||||||
Eric D. Ashleman |
585,000 | 80 | % | 164% | 767,520 | |||||||||||
Denise R. Cade |
460,000 | 70 | % | 164% | 528,080 | |||||||||||
Jeffrey D. Bucklew |
400,000 | 70 | % | 164% | 459,200 |
Prior to 2018, the Company also provided short-term incentive payments under the Incentive Award Plan (IAP) to allow performance-based bonuses to certain executives to be fully deductible under Internal Revenue Code (IRC) Section 162(m). The Tax Cut and Jobs Act eliminated the deductibility of excess qualified performance-based compensation under IRC Section 162(m). The MICP, under which the 2018 short-term incentives were administered, is the plan that governs annual incentives for the broader executive population and also the plan under which the CFO received short-term incentive awards prior to 2018 and final awards are calculated the same as those under the IAP.
32
33
34
35
36
37
38
39
2018 Summary Compensation Table
The table below and related footnotes summarize the total compensation earned or paid in 2018, 2017 and 2016 for the Companys CEO, CFO, and each of the three most highly compensated executive officers other than the CEO and CFO.
Name and Principal Position | Year | Salary ($) |
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 |
|
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 |
| ||||||||||||
|
2016 |
|
|
949,347 |
|
|
3,726,999 |
|
|
2,500,008 |
|
|
1,203,048 |
|
|
268,444 |
|
|
8,647,846 |
| ||||||||||||
William K. Grogan, Senior Vice President and Chief Financial Officer (5) |
|
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, Senior Vice President and Chief Operating Officer |
|
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 |
| ||||||||||||
|
2016 |
|
|
512,058 |
|
|
768,241 |
|
|
515,016 |
|
|
486,675 |
|
|
129,653 |
|
|
2,411,643 |
| ||||||||||||
Denise R. Cade, Senior Vice President, General Counsel and Corporate Secretary |
|
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 | ||||||||||||||||||||||||||
2016 | 430,128 | 228,000 | 354,873 | 238,004 | 327,046 | 72,659 | 1,650,710 | |||||||||||||||||||||||||
Jeffrey D. Bucklew, Senior Vice President and Chief Human Resources Officer (5) |
|
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 2018, see note 14 Share-Based Compensation of the financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2018. For PSUs granted in 2018, 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 2018 based on the maximum level of performance is as follows: Mr. Silvernail, $10,293,440; Mr. Grogan, $1,962,847; Mr. Ashleman, $2,785,889; Ms. Cade, $1,754,379; and Mr. Bucklew, $1,334,736. All shares of restricted stock are eligible for dividend equivalent payments when paid on Common Stock and, with respect to PSUs, cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the performance period. |
(2) | Reflects the aggregate grant date fair value for the year indicated in accordance with FASB ASC Topic 718. For a discussion of assumptions made in the valuation of stock options granted in 2018, see note 14 Share-Based Compensation of the financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2018. |
(3) | For 2018, reflects the annual cash bonus under the MICP; for prior years, reflects Messrs. Silvernails, Ashlemans and Bucklews, and Ms. Cades annual cash performance award under the IAP and the annual cash bonus under the MICP for Mr. Grogan, in each case, earned in the year reported. |
40
(4) | Consists of the following for 2018: |
Name
|
Company Contribution to Defined SERP Benefits
|
Automotive,
|
Aircraft ($) (b)
|
Total ($)
|
||||||||||||
Andrew K. Silvernail
|
|
289,291
|
|
|
28,191
|
|
|
100,982
|
|
|
418,464
|
| ||||
William K. Grogan
|
|
101,850
|
|
|
21,517
|
|
|
-
|
|
|
123,367
|
| ||||
Eric D. Ashleman
|
|
134,716
|
|
|
21,842
|
|
|
-
|
|
|
156,558
|
| ||||
Denise R. Cade
|
|
102,713
|
|
|
24,661
|
|
|
-
|
|
|
127,374
|
| ||||
Jeffrey D. Bucklew
|
|
86,787
|
|
|
22,294
|
|
|
-
|
|
|
109,081
|
|
(a) | Consists of auto and gas allowance and supplemental disability premiums. |
(b) | Represents Mr. Silvernails personal use of the Companys leased aircraft. The Companys methodology for calculating the value of the personal use of the Company leased aircraft is to calculate the incremental costs of such usage to the Company, which includes fuel, landing fees, hangar fees, catering, additional expenses related to the crew and other expenses which would not have otherwise been incurred by the Company if the aircraft had not been used for personal travel. |
(5) | Messrs. Grogan and Bucklew were not NEOs in 2016. |
41
42
2018 Grants of Plan-Based Awards
The following table provides information on plan-based awards for all NEOs for 2018.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) |
Estimated Future Payouts Under Equity Incentive Plan Awards (2) |
All Other Stock Awards: Number of Shares of Stock (#) |
All Other |
Exercise or |
Grant Date |
|||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||||||||||||||
Andrew K. Silvernail
|
|
02/22/2018
|
|
0
|
|
1,200,000
|
|
2,400,000
|
|
6,337
|
|
|
19,010
|
|
|
47,525
|
|
|
-
|
|
|
69,170
|
|
|
138.12
|
|
|
6,742,378
|
| |||||||||||
William K. Grogan
|
|
02/22/2018
|
|
0
|
|
352,500
|
|
705,000
|
|
1,208
|
|
|
3,625
|
|
|
9,063
|
|
|
-
|
|
|
13,180
|
|
|
138.12
|
|
|
1,285,320
|
| |||||||||||
Eric D. Ashleman
|
|
02/22/2018
|
|
0
|
|
468,000
|
|
936,000
|
|
1,715
|
|
|
5,145
|
|
|
12,863
|
|
|
-
|
|
|
18,710
|
|
|
138.12
|
|
|
1,824,401
|
| |||||||||||
Denise R. Cade
|
|
02/22/2018
|
|
0
|
|
322,000
|
|
644,000
|
|
1,080
|
|
|
3,240
|
|
|
8,100
|
|
|
-
|
|
|
11,795
|
|
|
138.12
|
|
|
1,149,372
|
| |||||||||||
Jeffrey D. Bucklew
|
|
02/22/2018
|
|
0
|
|
280,000
|
|
560,000
|
|
822
|
|
|
2,465
|
|
|
6,163
|
|
|
-
|
|
|
8,960
|
|
|
138.12
|
|
|
873,926
|
|
(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 2018 Executive Compensation Program. The amounts actually earned by the NEOs are reflected in the Non-Equity Incentive Plan Compensation column in the 2018 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 2018 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 14 Share-Based Compensation of the financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2018. 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 2018 based on the maximum level of performance is as follows: Mr. Silvernail, $10,293,440; Mr. Grogan, $1,962,847; Mr. Ashleman, $2,785,889; Ms. Cade, $1,754,379; and Mr. Bucklew, $1,334,736. 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 an 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. |
Narrative to 2018 Grants of Plan-Based Awards Table
Stock options awarded to the NEOs in 2018 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. |
43
PSUs awarded to the NEOs in 2018 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. |
44
Outstanding Equity Awards at 2018 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, 2018.
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 ($) (3) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (4) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (4) |
||||||||||||||||||||||||||
Name
|
Exercisable (#) (1)
|
Unexercisable (#) (1)
|
||||||||||||||||||||||||||||||
Andrew K. Silvernail |
|
81,120 |
|
|
- |
|
|
72.73 |
|
|
02/13/2024 |
|
|
- |
|
|
- |
|
|
77,985 |
|
|
9,846,387 |
| ||||||||
|
64,338 |
|
|
21,447 |
|
|
78.43 |
|
|
02/20/2025 |
|
|||||||||||||||||||||
|
67,935 |
|
|
67,935 |
|
|
74.74 |
|
|
02/19/2026 |
|
|||||||||||||||||||||
|
22,793 |
|
|
68,382 |
|
|
93.27 |
|
|
02/22/2027 |
|
|||||||||||||||||||||
|
- |
|
|
69,170 |
|
|
138.12 |
|
|
02/22/2028 |
|
|||||||||||||||||||||
William K. Grogan |
|
843 |
|
|
- |
|
|
50.45 |
|
|
02/15/2023 |
|
|
5,485 |
|
|
692,536 |
|
|
12,725 |
|
|
1,606,659 |
| ||||||||
|
1,798 |
|
|
- |
|
|
72.73 |
|
|
02/13/2024 |
|
|||||||||||||||||||||
|
1,383 |
|
|
67.49 |
|
|
10/15/2024 |
|
||||||||||||||||||||||||
|
1,931 |
|
|
644 |
|
|
78.43 |
|
|
02/20/2025 |
|
|||||||||||||||||||||
|
2,717 |
|
|
2,718 |
|
|
74.74 |
|
|
02/19/2026 |
|
|||||||||||||||||||||
|
5,278 |
|
|
15,837 |
|
|
91.22 |
|
|
01/03/2027 |
|
|||||||||||||||||||||
|
3,516 |
|
|
10,549 |
|
|
93.27 |
|
|
02/22/2027 |
|
|||||||||||||||||||||
|
- |
|
|
13,180 |
|
|
138.12 |
|
|
02/22/2028 |
|
|||||||||||||||||||||
Eric D. Ashleman |
|
- |
|
|
3,647 |
|
|
78.43 |
|
|
02/20/2025 |
|
|
- |
|
|
- |
|
|
21,570 |
|
|
2,723,429 |
| ||||||||
|
- |
|
|
8,850 |
|
|
77.61 |
|
|
07/15/2025 |
|
|||||||||||||||||||||
|
- |
|
|
13,995 |
|
|
74.74 |
|
|
02/19/2026 |
|
|||||||||||||||||||||
|
6,346 |
|
|
19,039 |
|
|
93.27 |
|
|
02/22/2027 |
|
|||||||||||||||||||||
|
- |
|
|
18,710 |
|
|
138.12 |
|
|
02/22/2028 |
|
|||||||||||||||||||||
Denise R. Cade |
|
2,091 |
|
|
2,092 |
|
|
76.79 |
|
|
10/26/2025 |
|
|
- |
|
|
- |
|
|
12,565 |
|
|
1,586,457 |
| ||||||||
|
- |
|
|
6,468 |
|
|
74.74 |
|
|
02/19/2026 |
|
|||||||||||||||||||||
|
3,601 |
|
|
10,804 |
|
|
93.27 |
|
|
02/22/2027 |
|
|||||||||||||||||||||
|
- |
|
|
11,795 |
|
|
138.12 |
|
|
02/22/2028 |
|
|||||||||||||||||||||
Jeffrey D. Bucklew |
|
8,755 |
|
|
- |
|
|
72.73 |
|
|
02/13/2024 |
|
|
- |
|
|
- |
|
|
10,240 |
|
|
1,292,903 |
| ||||||||
|
6,885 |
|
|
2,295 |
|
|
78.43 |
|
|
02/20/2025 |
|
|||||||||||||||||||||
|
6,620 |
|
|
6,620 |
|
|
74.74 |
|
|
02/19/2026 |
|
|||||||||||||||||||||
|
3,005 |
|
|
9,015 |
|
|
93.27 |
|
|
02/22/2027 |
|
|||||||||||||||||||||
|
- |
|
|
8,960 |
|
|
138.12 |
|
|
02/22/2028 |
|
(1) | All options expire on the 10th anniversary of the grant date. Except as provided in the following sentence, all options vest 25% per year on the anniversary of the grant date. Mr. Ashlemans July 15, 2015 grant vested 50% on July 15, 2018 and will vest 50% on July 15, 2019. Except with respect to Mr. Silvernails stock option grants (as discussed in Potential Payments upon Termination or Change in Control), all stock options granted prior to 2015 will vest 100% upon a change in control. Stock options granted in or after 2015 vest 100% upon a qualifying termination of employment following a change in control. |
45
(2) | The following table sets forth grant and vesting information for the outstanding restricted stock awards for Mr. Grogan, the only NEO who holds an outstanding restricted stock award. 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
|
|
|
692,536
|
|
100% vest on 01/03/2020
|
(3) | Determined based upon the closing price of the Companys Common Stock on December 31, 2018 of $126.26. |
(4) | Represents the number and value of outstanding PSU awards based on performance as of December 31, 2018 as set forth in the following table. Actual number of shares delivered upon vesting will be based on performance through December 31, 2019 for the 2017 PSU award and performance through December 31, 2020 for the 2018 PSU award. The 2017 PSU awards are disclosed at the maximum 250% of the target and the 2018 PSU awards are disclosed at 100% of the target based on performance through December 31, 2018. |
|
Grant Date |
Number of (#) |
Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
Vesting | ||||||||||
Andrew K. Silvernail |
|
02/22/2017 |
|
|
23,590 |
|
|
7,446,184 |
|
Award vests on 12/31/2019 | ||||
|
02/22/2018 |
|
|
19,010 |
|
|
2,400,203 |
|
Award vests on 12/31/2020 | |||||
William K. Grogan |
|
02/22/2017 |
|
|
3,640 |
|
|
1,148,966 |
|
Award vests on 12/31/2019 | ||||
|
02/22/2018 |
|
|
3,625 |
|
|
457,693 |
|
Award vests on 12/31/2020 | |||||
Eric D. Ashleman |
|
02/22/2017 |
|
|
6,570 |
|
|
2,073,821 |
|
Award vests on 12/31/2019 | ||||
|
02/22/2018 |
|
|
5,145 |
|
|
649,608 |
|
Award vests on 12/31/2020 | |||||
Denise R. Cade |
|
02/22/2017 |
|
|
3,730 |
|
|
1,177,375 |
|
Award vests on 12/31/2019 | ||||
|
02/22/2018 |
|
|
3,240 |
|
|
409,082 |
|
Award vests on 12/31/2020 | |||||
Jeffrey D. Bucklew |
|
02/22/2017 |
|
|
3,110 |
|
|
981,672 |
|
Award vests on 12/31/2019 | ||||
|
02/22/2018 |
|
|
2,465 |
|
|
311,231 |
|
Award vests on 12/31/2020 |
46
2018 Option Exercises and Stock Vested
The following table provides information on stock option exercises and stock vesting for all NEOs in 2018.
Option Awards | Stock Awards | |||||||||||||||
Name
|
Number of Shares
|
Value Realized
|
Number of Shares
|
Value Realized
|
||||||||||||
Andrew K. Silvernail |
94,045 | 9,055,292 | 93,190 | 11,867,271 | ||||||||||||
William K. Grogan |
- | - | 3,640 | 462,652 | ||||||||||||
Eric D. Ashleman |
44,283 | 2,987,496 | 23,703 | 3,069,876 | ||||||||||||
Denise R. Cade |
10,649 | 708,397 | 10,083 | 1,274,352 | ||||||||||||
Jeffrey D. Bucklew |
5,775 | 551,017 | 9,175 | 1,169,270 |
(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 shares vesting on February 20, 2018 with a vesting price of $136.83, Mr. Silvernail had 9,565 shares vest, Mr. Grogan had 290 shares vest, Mr. Ashleman had 1,630 shares vest and Mr. Bucklew had 1,025 shares vest. For shares vesting on July 15, 2018 with a vesting price of $138.65, Mr. Ashleman had 4,835 shares vest. For shares vesting on October 26, 2018 with a vesting price of $126.86, Ms. Cade had 2,120 shares vest. For 2016 PSUs vesting on December 31, 2018 after the end of the three-year performance period with a vesting price of $126.26 and a multiplier of 250% due to IDEXs 3-year relative TSR performance at the 83rd percentile as compared to companies in the Russell Midcap Index, Mr. Silvernail had 83,625 shares vest, Mr. Grogan had 3,350 shares vest, Mr. Ashleman had 17,238 shares vest, Ms. Cade had 7,963 shares vest and Mr. Bucklew had 8,150 shares vest. |
Nonqualified Deferred Compensation at 2018 Fiscal Year End
The Supplemental Executive Retirement and Deferred Compensation Plan (SERP) is an unfunded, nonqualified plan designed to provide supplemental executive retirement benefits. The following table provides information related to the benefits payable to each NEO under the defined contribution portion of the SERP, which is the Companys only defined contribution nonqualified deferred compensation plan:
Name | Executive Contributions in Last Fiscal Year ($) (1) |
Registrant Contributions in Last Fiscal Year ($) (2) |
Aggregate Earnings in Last Fiscal Year ($) |
Aggregate Withdrawals / Distributions ($) |
Aggregate Balance at Last Fiscal Year End ($) (3) |
|||||||||||||||
Andrew K. Silvernail |
- | 269,935 | -154,486 | 10,438 | 1,791,816 | |||||||||||||||
William K. Grogan |
- | 81,600 | -12,527 | 3,050 | 147,527 | |||||||||||||||
Eric D. Ashleman |
- | 114,316 | -20,471 | 4,297 | 592,457 | |||||||||||||||
Denise R. Cade |
- | 81,430 | -13,664 | 6,845 | 174,156 | |||||||||||||||
Jeffrey D. Bucklew |
- | 67,118 | 8,493 | 2,502 | 305,405 |
(1) | None of the NEOs contributed to the SERP in 2018. |
(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 $1,138,462; Mr. Grogan $40,475; Mr. Ashleman $260,184; Ms. Cade $96,802; and Mr. Bucklew $50,027. |
47
48
49
50
51
Change in Control and Termination Payments and Benefits for Andrew K. Silvernail
Incremental Benefits Due to Termination Event |
Involuntary Not for Cause Termination ($) |
Disability or Death ($) |
Change in Control ($) |
Involuntary Not for Cause Termination or Voluntary Good Reason
|
||||||||||||
Cash Severance (incl. Incentives) |
4,000,000 | - | - | 6,000,000 | ||||||||||||
Unvested Restricted Stock |
- | - | - | - | ||||||||||||
Unvested Options |
6,781,743 | 6,781,743 | - | 6,781,743 | ||||||||||||
Unvested Performance Shares (1) |
10,134,925 | 10,134,925 | - | 10,061,356 | ||||||||||||
SERP |
1,791,816 | 1,791,816 | 1,791,816 | 1,791,816 | ||||||||||||
Health and Welfare Benefits |
43,645 | - | - | 65,467 | ||||||||||||
Total |
22,752,129 | 18,708,484 | 1,791,816 | 24,700,382 |
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 ($) |
Involuntary Not for Cause Termination or Voluntary Good Reason
|
||||||||||||
Cash Severance (incl. Incentives) |
822,500 | - | - | 1,645,000 | ||||||||||||
Unvested Restricted Stock |
- | 692,536 | - | 692,536 | ||||||||||||
Unvested Options |
- | 1,073,774 | - | 1,073,774 | ||||||||||||
Unvested Performance Shares (1) |
- | 1,655,006 | - | 1,640,978 | ||||||||||||
SERP |
147,527 | 147,527 | 147,527 | 147,527 | ||||||||||||
Total |
970,027 | 3,568,843 | 147,527 | 5,199,815 |
52
Change in Control and Termination Payments and Benefits for Eric D. Ashleman
Incremental Benefits Due to Termination Event |
Involuntary Not for Cause Termination ($) |
Disability or Death ($) |
Change in Control ($) |
Involuntary Not for Cause Termination or Voluntary Good Reason
|
||||||||||||
Cash Severance (incl. Incentives) |
1,053,000 | - | - | 2,106,000 | ||||||||||||
Unvested Restricted Stock |
- | - | - | - | ||||||||||||
Unvested Options |
- | 1,954,108 | - | 1,954,108 | ||||||||||||
Unvested Performance Shares (1) |
- | 2,802,963 | - | 2,783,051 | ||||||||||||
SERP |
592,457 | 592,457 | 592,457 | 592,457 | ||||||||||||
Total |
1,645,457 | 5,349,528 | 592,457 | 7,435,616 |
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 ($) |
Involuntary Not for Cause Termination or Voluntary Good Reason
|
||||||||||||
Cash Severance (incl. Incentives) |
782,000 | - | - | 1,564,000 | ||||||||||||
Unvested Restricted Stock |
- | - | - | - | ||||||||||||
Unvested Options |
- | 793,147 | - | 793,147 | ||||||||||||
Unvested Performance Shares (1) |
- | 1,633,375 | - | 1,620,836 | ||||||||||||
SERP |
174,156 | 174,156 | 174,156 | 174,156 | ||||||||||||
Total |
956,156 | 2,600,678 | 174,156 | 4,152,139 |
Change in Control and Termination Payments and Benefits for Jeffrey D. Bucklew
Incremental Benefits Due to Termination Event |
Involuntary Not for Cause Termination ($) |
Disability or Death ($) |
Change in Control ($) |
Involuntary Not for Cause Termination or Voluntary Good Reason
|
||||||||||||
Cash Severance (incl. Incentives) |
680,000 | - | - | 1,360,000 | ||||||||||||
Unvested Restricted Stock |
- | - | - | - | ||||||||||||
Unvested Options |
- | 748,237 | - | 748,237 | ||||||||||||
Unvested Performance Shares (1) |
- | 1,330,715 | - | 1,321,175 | ||||||||||||
SERP |
305,405 | 305,405 | 305,405 | 305,405 | ||||||||||||
Total |
985,405 | 2,384,357 | 305,405 | 3,734,817 |
(1) | In the event of a termination for disability or death, 2018 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, 2018 PSU grants have been valued based on performance as of December 31, 2018. |
53
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 2018 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 fiscal year 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 2018 calculation. Under the Item 402(u)(4)(ii) (de minimis) exemption, the Company may exclude non-United States employees up to a 5% threshold when identifying the median employee. As noted in last years 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 2018 Summary Compensation Table. The annual total compensation of the CEO is $10,125,650. The median of the annual total compensation of all employees, except the CEO, is $63,175. The pay ratio is 160:1.
54
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 2020 Annual Meeting of Stockholders.
55
For the year ended December 31, 2018, 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, 2018, 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.
Ernest J. Mrozek, Chair
Mark A. Beck
Mark A. Buthman
William M. Cook
56
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.
2018 | 2017 | |||||||
Audit fees(1) |
$ | 4,129,916(2) | $3,345,479 | |||||
Audit-related fees(3) |
- | - | ||||||
Tax fees(4) |
1,207,429 | 1,031,571 | ||||||
All other fees(5) |
- | - | ||||||
Total |
$ | 5,337,345 | $4,337,047 |
(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.
57
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 2019. 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.
58
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Companys officers, directors and persons who own more than 10% of Common Stock to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of the forms it received, or written representations from reporting persons, the Company believes that all filing requirements applicable to its officers, directors and greater than 10% stockholders were met during the year ended December 31, 2018.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR 2020 ANNUAL MEETING OF STOCKHOLDERS
A stockholder desiring to submit a proposal for inclusion in the Companys proxy statement for the 2020 Annual Meeting of Stockholders must deliver the proposal so that it is received by the Company no later than November 23, 2019. 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 2020 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 2020 Annual Meeting of Stockholders, any such notice must be received by the Corporate Secretary, at the address above, on any date beginning on January 11, 2020 and ending on February 10, 2020.
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 22, 2019
Lake Forest, Illinois
A copy of the Companys Annual Report on Form 10-K for the year ended December 31, 2018, 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.
59
|
1925 W. FIELD CT, SUITE 200 LAKE FOREST, IL 60045 |
|
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:
E62503-P19153 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. IF ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING, THE PERSONS NAMED IN THIS PROXY WILL VOTE IN THEIR DISCRETION. |
||||||||||||||||||||||||||
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. |
|||||||||||||||||||||||
1. To elect three directors each for a term of three years |
||||||||||||||||||||||||||
Nominees: |
☐ | ☐ | ☐ |
|
||||||||||||||||||||||
01) ERNEST J. MROZEK |
||||||||||||||||||||||||||
02) LIVINGSTON L. SATTERTHWAITE |
||||||||||||||||||||||||||
03) DAVID C. PARRY |
For | Against | Abstain | ||||||||||||
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 2019. |
☐ | ☐ | ☐ | |||||||||||
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. |
☐ | ☐ | ||||||||||
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 10, 2019
The Annual Meeting of Stockholders of IDEX Corporation (the "Company") will be held on Friday, May 10, 2019, 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 15, 2019, 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 2019 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.
E62504-P19153
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, Andrew K. Silvernail 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 15, 2019, at the Annual Meeting of Stockholders to be held on May 10, 2019, 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 |
||||||||||||||||