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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Idex Corporation
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(Name of Registrant as Specified In Its Charter)
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SEC 1913 (02-02)
[IDEX CORPORATION LOGO]
630 Dundee Road, Suite 400
Northbrook, IL 60062
February 25, 2005
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of shareholders of
IDEX Corporation which will be held on Tuesday, March 22, 2005, at 10:00 a.m.
Central Time, at Bank of America, LaSalle Room, 21st Floor, 231 South LaSalle
Street, Chicago, Illinois.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement. Included with the
Proxy Statement is a copy of the Company's 2004 Annual Report. We encourage you
to read the Annual Report. It includes information on the Company's operations,
markets, products and services, as well as the Company's audited financial
statements.
Whether or not you attend the Annual Meeting, it is important that your
shares be represented and voted. Therefore, we urge you to sign, date, and
promptly return the accompanying proxy card in the enclosed envelope. If you
decide to attend the Annual Meeting, you will of course be able to vote in
person, even if you have previously submitted your proxy card.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company. We look
forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Dennis K. Williams
Dennis K. Williams
Chairman of the Board, President
and Chief Executive Officer
IDEX CORPORATION
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 22, 2005
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TO THE SHAREHOLDERS:
The Annual Meeting of shareholders of IDEX Corporation (the "Company") will
be held on Tuesday, March 22, 2005, at 10:00 a.m. Central Time, at Bank of
America, LaSalle Room, 21st Floor, 231 South LaSalle Street, Chicago, Illinois,
for the following purposes:
1. To elect three directors for a term of three years.
2. To vote on a proposed amendment to the Company's Restated
Certificate of Incorporation to increase the number of authorized
shares of Common Stock from 75,000,000 to 150,000,000 shares.
3. To vote on approval of the Company's Incentive Award Plan.
4. To ratify the appointment of Deloitte & Touche LLP as auditors of
the Company for 2005.
5. To transact such other business as may properly come before the
meeting.
The Board of Directors fixed the close of business on February 17, 2005, as
the record date for the determination of shareholders owning the Company's
Common Stock entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors
/s/ Frank J. Notaro
FRANK J. NOTARO
Vice President-General Counsel
and Secretary
February 25, 2005
Northbrook, Illinois
------------------------------------
PROXY STATEMENT
------------------------------------
The Company has prepared this Proxy Statement in connection with the
solicitation by the Company's Board of Directors of proxies for the Annual
Meeting of shareholders of IDEX Corporation to be held on Tuesday, March 22,
2005, at 10:00 a.m. Central Time, in the LaSalle Room of Bank of America, 231
South LaSalle Street, Chicago, Illinois. The Company commenced distribution of
this Proxy Statement and the materials which accompany it on February 25, 2005.
The Company will bear the costs of preparing and mailing this Proxy
Statement and other costs of the proxy solicitation made by the Company's Board
of Directors. Certain of the Company's officers and employees may solicit the
submission of proxies authorizing the voting of shares in accordance with the
Board of Directors' recommendations, but no additional remuneration will be paid
by the Company for the solicitation of those proxies. Such solicitations may be
made by personal interview, telephone and facsimile transmission. Arrangements
have also been made with brokerage firms and others for the forwarding of proxy
solicitation materials to the beneficial owners of Common Stock of the Company
held of record by such persons, and the Company will reimburse such brokerage
firms and others for reasonable out-of-pocket expenses incurred by them in
connection therewith. The Company has engaged Morrow & Co. to assist in proxy
solicitation and collection, and has agreed to pay such firm $5,500, plus
out-of-pocket costs.
1
VOTING AT THE MEETING
The record of shareholders entitled to notice of and to vote at the Annual
Meeting was taken as of the close of business on February 17, 2005, and each
shareholder will be entitled to vote at the meeting any shares of IDEX Common
Stock held of record at that date. An aggregate of 50,927,355 shares of the
Company's Common Stock was outstanding at the close of business on February 17,
2005. The share numbers in this Proxy Statement reflect the 3-for-2 stock split
of IDEX Common Stock, effected in the form of a 50 percent stock dividend on May
28, 2004. Each share entitles its holder of record to one vote on each matter
upon which votes are taken at the Annual Meeting. No other securities are
entitled to be voted at the Annual Meeting.
A quorum of shareholders is necessary to take action at the Annual Meeting.
A majority of outstanding shares of Common Stock of the Company present in
person or represented by proxy will constitute a quorum. The Company will
appoint election inspectors for the meeting to determine whether or not a quorum
is present, and to tabulate votes cast by proxy or in person at the Annual
Meeting. Under certain circumstances, a broker or other nominee may have
discretionary authority to vote certain 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, and which may occur with respect to voting on the Incentive Award Plan)
as present and entitled to vote for purposes of determining the presence of a
quorum for the transaction of business at the Annual Meeting. The election of
directors requires a plurality vote. The amendment of the Company's Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 75,000,000 to 150,000,000 shares requires a majority vote of
the outstanding shares of Common Stock of the Company. The approval of the
Incentive Award Plan, and the ratification of the appointment of Deloitte &
Touche LLP as auditors of the Company for 2005 each require a majority vote of
the shares of Common Stock of the Company present in person or represented by
proxy at the meeting. Directions to withhold authority will have no effect on
the election of directors, because directors are elected by a plurality of votes
cast. Abstentions will be treated as shares voted against the amendment to
increase the number of authorized shares of Common Stock of the Company, the
approval of the Incentive Award Plan, and the ratification of the appointment of
Deloitte & Touche LLP as auditors of the Company for 2005. Broker non-votes will
be treated as shares voted against the amendment to increase the number of
authorized shares of Common Stock of the Company, and will have no effect on any
other proposal because they are not considered as present and entitled to vote
with respect to that matter.
The Company requests that you mark the accompanying proxy card to indicate
your votes, sign and date it, and return it to the Company in the enclosed
envelope. If your completed proxy card is received prior to or at the meeting,
your shares will be voted in accordance with your voting instructions. If you
sign and return your proxy card but do not give voting instructions, your shares
will be voted FOR the election of the Company's nominees as directors, FOR the
amendment increasing the number of authorized shares of Common Stock of the
Company, FOR the approval of the Incentive Award Plan, FOR the ratification of
the appointment of Deloitte & Touche LLP as auditors of the Company for 2005,
and in the discretion of the proxy holders as to any other business which may
properly come before the meeting. Any proxy solicited hereby may be revoked by
the person or persons giving it at any time before it has been exercised at the
Annual Meeting by giving notice of revocation to the Company in writing at the
meeting. The Company requests that all such written notices of revocation to the
Company be addressed to Frank J. Notaro, Vice President-General Counsel and
Secretary, IDEX Corporation, 630 Dundee Road, Suite 400, Northbrook, IL 60062.
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PROPOSAL 1 -- ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation, as amended, provides
for a three-class Board, with one class being elected each year for a term of
three years. The Board of Directors currently consists of seven members, two of
whom are Class I directors whose terms will expire at this year's Annual
Meeting, two of whom are Class II directors whose terms will expire at the
Annual Meeting to be held in 2006 and, subject to the following sentence, three
of whom are Class III directors whose terms will expire at the Annual Meeting to
be held in 2007. As further described in COMPENSATION OF EXECUTIVE
OFFICERS -- Transition Agreements below, Dennis K. Williams, the Company's
Chairman of the Board, President and Chief Executive Officer and a Class III
director, will resign as President and Chief Executive Officer on March 22,
2005, and will retire as Chairman of the Board on the later of March 31, 2006 or
the date of the Company's 2006 annual meeting, at which time he will cease to be
a director. If the three individuals identified below nominated for election as
Class I directors are elected, the Board of Directors will consist of eight
members.
The Company's Board of Directors has nominated three individuals for
election as Class I directors to serve for a three-year term expiring at the
Annual Meeting to be held in 2008, or upon the election and qualification of
their successors. The nominees of the Board of Directors are Bradley J. Bell,
Gregory B. Kenny and Lawrence D. Kingsley. Messrs. Bell and Kenny are currently
serving as directors of the Company. As further described in COMPENSATION OF
EXECUTIVE OFFICERS -- Transition Agreements below, Mr. Kingsley will be
appointed President and Chief Executive Officer on March 22, 2005. The nominees
and the directors serving in Class II and Class III whose terms expire in future
years and who will continue to serve after the Annual Meeting are listed below
with brief statements setting forth their present principal occupations and
other information, including directorships in other public companies.
If for any reason the nominees for a Class I directorship are unavailable
to serve, proxies solicited hereby may be voted for a substitute. The Board,
however, expects the nominees to be available.
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THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE NOMINEES IN CLASS I IDENTIFIED BELOW.
NOMINEES FOR DIRECTORSHIP
CLASS I: NOMINEES FOR THREE-YEAR TERM
BRADLEY J. BELL Director since 2001
Executive Vice President and Chief Financial Officer Age 52
Nalco Company
Mr. Bell has been a director of the Company since June 11, 2001. He has
been Executive Vice President and Chief Financial Officer of Nalco Company since
November 5, 2003. Mr. Bell was Senior Vice President and Chief Financial Officer
of Rohm and Haas Company from prior to 2000 until May 31, 2003. Mr. Bell is a
director of Nalco Holding Company and Compass Minerals International, Inc. Mr.
Bell is Chairman of the Audit Committee.
GREGORY B. KENNY Director since 2002
President and Chief Executive Officer Age 52
General Cable Corporation
Mr. Kenny has been a director of the Company since February 1, 2002. Mr.
Kenny has been President and Chief Executive Officer of General Cable
Corporation since August 2001. From prior to 2000 until August 2001, Mr. Kenny
served as President and Chief Operating Officer of General Cable Corporation.
Mr. Kenny is a director of General Cable Corporation. Mr. Kenny is Chairman of
the Compensation Committee.
LAWRENCE D. KINGSLEY
Chief Operating Officer Age 42
IDEX Corporation
Mr. Kingsley has been Chief Operating Officer of the Company since August
23, 2004. From March 2004 to August 2004, Mr. Kingsley served as Corporate Vice
President and Group Executive within the Danaher Corporation responsible for the
Sensors and Controls businesses. He served as President, Industrial Controls
Group from April 2002 to July 2004; as President, Motion Group, Special Purpose
Systems from January 2001 to March 2002; and as Vice President and General
Manager, Industrial and Commercial Products Division, Kollmorgen Corporation,
from June 1999 to January 2001. As further described in COMPENSATION OF
EXECUTIVE OFFICERS -- Transition Agreements below, Mr. Kingsley will be
appointed President and Chief Executive Officer on March 22, 2005.
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OTHER INCUMBENT DIRECTORS
CLASS II: THREE-YEAR TERM EXPIRES IN 2006
MICHAEL T. TOKARZ Director since 1987
Member Age 55
The Tokarz Group L.L.C.
Mr. Tokarz has been a director of the Company since its organization in
September 1987. He has been a member of The Tokarz Group L.L.C. since February
1, 2002. From prior to 2000 until January 31, 2002, Mr. Tokarz was a member of
Kohlberg Kravis Roberts & Co., L.L.C. Mr. Tokarz is a director of Conseco, Inc.
and Walter Industries, Inc. Mr. Tokarz is a member of the Compensation Committee
and the Executive Committee of the Board of Directors.
FRANK S. HERMANCE Director since 2004
Chairman and Chief Executive Officer Age 56
AMETEK, INC.
Mr. Hermance has been a director of the Company since January 5, 2004. Mr.
Hermance has been Chairman and Chief Executive Officer of AMETEK, INC. since
January 2001. From September 1999 until January 2001, Mr. Hermance served as
President and Chief Executive Officer of AMETEK, INC. Mr. Hermance is a director
of AMETEK, INC. Mr. Hermance is a member of the Audit Committee of the Board of
Directors.
CLASS III: THREE-YEAR TERM EXPIRES IN 2007
PAUL E. RAETHER Director since 1988
Member Age 58
Kohlberg Kravis Roberts & Co., L.L.C.
Mr. Raether has been a director of the Company since January 22, 1988.
Since prior to 2000, he has been a member of Kohlberg Kravis Roberts & Co.,
L.L.C. Mr. Raether is a director of KSL Recreation Corporation and Shoppers Drug
Mart Corporation. Mr. Raether is a member of the Nominating and Corporate
Governance Committee of the Board of Directors.
NEIL A. SPRINGER Director since 1990
Managing Director Age 66
Springer & Associates, L.L.C.
Mr. Springer has been a director of the Company since February 27, 1990. He
has been Managing Director of Springer & Associates, L.L.C. since prior to 2000.
Mr. Springer is a director of CUNA Mutual Insurance Group, U.S. Freightways
Corporation and Walter Industries, Inc. Mr. Springer is the Chairman of the
Nominating and Corporate Governance Committee, and a member of the Audit
Committee and Executive Committee of the Board of Directors.
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DENNIS K. WILLIAMS Director since 2000
Chairman of the Board, President and Chief Executive Officer Age 59
IDEX Corporation
Mr. Williams was appointed Chairman of the Board, President and Chief
Executive Officer and a director of the Company by the Board of Directors on May
1, 2000. From April 1998 to April 2000, he served as President and Chief
Executive Officer of GE Power Systems Industrial Products. Mr. Williams is a
director of Washington Group International, Inc. Mr. Williams is Chairman of the
Executive Committee of the Board of Directors. As further described in
COMPENSATION OF EXECUTIVE OFFICERS -- Transition Agreements below, Mr. Williams
will resign as President and Chief Executive Officer on March 22, 2005 and will
retire as Chairman of the Board on the later of March 31, 2006 or the date of
the Company's 2006 annual meeting, at which time he will cease to be a director.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has the ultimate authority for the management of the
Company's business. In February 2005, the Board of Directors affirmed the
Company's Corporate Governance Guidelines which, along with the charters of the
Board Committees and the Company's Code of Business Conduct and Ethics, provide
the framework for the governance of the Company. The Company's Corporate
Governance Guidelines address matters such as composition, size and term limits
of the Board, Board membership criteria, the role and responsibilities of the
Board, director compensation, share ownership guidelines, and the frequency of
Board meetings (including meetings to be held without the presence of
management). The Company's Code of Business Conduct and Ethics sets forth the
guiding principles of business ethics and certain legal requirements applicable
to all IDEX employees and directors. Copies of the current Corporate Governance
Guidelines and Code of Business Conduct and Ethics are available on our website
at www.idexcorp.com.
The Board selects the Company's executive officers, delegates
responsibilities for the conduct of the Company's operations to those officers,
and monitors their performance. During 2004, the Board of Directors held ten
meetings. The independent (non-management) directors met in regular executive
sessions without management at each in-person meeting of the Board. Generally,
the Chairman of the Nominating and Corporate Governance Committee presides at
the non-management executive sessions. The Board has made an affirmative
determination that the following members of the Board meet the standards for
"independence" set forth in the New York Stock Exchange corporate governance
listing standards on the basis that they have no material relationship with the
Company (either directly or as a partner, shareholder or officer of an
organization that has a relationship with the Company): Messrs. Bell, Hermance,
Kenny, Raether, Springer and Tokarz. The following member of the Board does not
meet the standards for independence set forth in the NYSE corporate governance
listing standards because he has a material relationship with the Company:
Dennis K. Williams who is our Chairman of the Board, President and Chief
Executive Officer. As further described in COMPENSATION OF EXECUTIVE
OFFICERS -- Transition Agreements below, Mr. Williams will resign as, and Mr.
Kingsley will be appointed to, President and Chief Executive Officer on March
22, 2005. In connection with his appointment to President and Chief Executive
Officer, Mr. Kingsley has been nominated to serve as a Class I director. If Mr.
Kingsley is elected as a director, the Board has determined that he will not
meet the standards for independence set forth in the NYSE corporate governance
listing standards because of his material relationship with the Company.
Important functions of the Board of Directors are performed by committees
comprised of members of the Board. Subject to applicable provisions of the
Company's By-Laws and based on the recommendations of the Nominating and
Corporate Governance Committee, the Board as a whole appoints the members of
each committee each year at its first meeting. The Board may, at any time,
appoint or remove committee members or change the authority or responsibility
delegated to any committee. There are four regularly constituted committees of
the Board of Directors: the Executive Committee, the Audit Committee, the
Compensation Committee and the Nominating and Corporate Governance Committee.
The Executive Committee is empowered to exercise the authority of the Board
of Directors in the management of the Company between meetings of the Board of
Directors, except that the Executive
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Committee may not fill vacancies on the Board, amend the Company's By-Laws or
exercise certain other powers reserved to the Board or delegated to other Board
committees. The members of the Executive Committee are Messrs. Springer, Tokarz
and Williams. As further described in COMPENSATION OF EXECUTIVE
OFFICERS -- Transition Agreements below, Mr. Williams will resign as President
and Chief Executive Officer on March 22, 2005, at which time Mr. Kingsley will
replace Mr. Williams as a member of the Executive Committee. During 2004, the
Executive Committee did not hold any meetings.
The Audit Committee's primary duties and responsibilities are to: monitor
the integrity of the Company's financial reporting process and systems of
internal controls regarding finance, accounting and legal compliance; monitor
the independence and performance of the Company's independent auditor and
monitor the performance of the Company's internal audit function; hire and fire
the Company's auditor and approve any audit and non-audit work performed by the
independent auditor; provide an avenue of communication among the independent
auditor, management and the Board of Directors; and prepare the report that the
rules of the Securities and Exchange Commission require to be included in the
Company's annual proxy statement. The members of the Audit Committee are Messrs.
Bell, Hermance and Springer, each of whom satisfies the "independence"
requirements of the New York Stock Exchange. The Board of Directors has
determined that Mr. Bell is the "audit committee financial expert," as defined
by the rules of the Securities and Exchange Commission. During 2004, the Audit
Committee held twelve meetings. A copy of the current charter of the Audit
Committee is available on our website at www.idexcorp.com.
The Compensation Committee's primary purpose and responsibilities are to:
establish the compensation of the Chief Executive Officer and other senior
officers of the Company; develop and recommend to the Board of Directors total
compensation for the Board; and produce a compensation committee report on
executive compensation as required by the Securities and Exchange Commission to
be included in the Company's annual proxy statement. The members of the
Compensation Committee are Messrs. Kenny and Tokarz, each of whom satisfies the
"independence" requirements of the New York Stock Exchange. During 2004, the
Compensation Committee held six meetings. A copy of the current charter of the
Compensation Committee is available on our website at www.idexcorp.com.
The Nominating and Corporate Governance Committee's primary purpose and
responsibilities are to: develop and recommend to the Board of Directors
corporate governance principles and a code of business conduct and ethics;
develop and recommend criteria for selecting new directors; identify individuals
qualified to become directors consistent with criteria approved by the Board,
and recommend to the Board such individuals as nominees to the Board for its
approval; screen and recommend to the Board individuals qualified to become
Chief Executive Officer and any other senior officer whom the committee may wish
to approve; and oversee evaluations of the Board, individual Board members and
the Board committees. The members of the Nominating and Corporate Governance
Committee are Messrs. Raether and Springer, each of whom satisfies the
"independence" requirements of the New York Stock Exchange. During 2004, the
Nominating and Corporate Governance Committee held two meetings. A copy of the
current charter of the Nominating and Corporate Governance Committee is
available on our website at www.idexcorp.com.
The Nominating and Corporate Governance Committee will consider nominees
for the Board recommended by the Company's shareholders in accordance with the
procedures described under SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR
2006 ANNUAL MEETING. Shareholder nominees that comply with these procedures will
be given the same consideration as nominees for director from other sources.
The Nominating and Corporate Governance Committee will select nominees for
the Board who demonstrate the following qualities:
Experience (in one or more of the following):
- high level leadership experience in business or administrative
activities;
- specialized expertise in the industry;
- financial expertise;
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- breadth of knowledge about issues affecting the Company; and
- ability and willingness to contribute special competencies to Board
activities.
Personal attributes:
- personal integrity;
- loyalty to the Company and concern for its success and welfare and
willingness to apply sound independent business judgment;
- awareness of a director's vital part in the Company's good corporate
citizenship and corporate image;
- time available for meetings and consultation on Company matters; and
- willingness to assume fiduciary responsibilities.
Qualified candidates for membership on the Board shall be considered
without regard to race, color, religion, sex, ancestry, national origin or
disability. Annually, the Nominating and Corporate Governance Committee shall
review the qualifications and backgrounds of the directors, as well as the
overall composition of the Board, and recommend to the full Board the slate of
directors to be recommended for nomination for election at the annual meeting of
shareholders. In the past, the Company has hired Russell Reynolds, a search
firm, to help identify and facilitate the screening and interview process of
director nominees. After conducting an initial evaluation of a candidate, the
Nominating and Corporate Governance Committee will interview that candidate if
it believes the candidate might be suitable to be a director. The Committee may
also ask the candidate to meet with other members of the Board. If the Committee
believes a candidate would be a valuable addition to the Board of Directors, it
will recommend to the full Board that candidate's election.
During 2004, each member of the Board of Directors attended more than 75%
of the aggregate number of meetings of the Board of Directors and of committees
of the Board of which he was a member. The Company encourages the directors to
attend the annual meeting of shareholders. All of the directors attended the
2004 annual meeting of shareholders.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
You can contact the Board or any of the individual directors by writing to
them c/o Frank J. Notaro, Vice President-General Counsel and Secretary, IDEX
Corporation, 630 Dundee Road, Suite 400, Northbrook, Illinois 60062. Inquiries
sent by mail will be reviewed sorted and summarized by the Company's General
Counsel before they will be forwarded to the Board or an individual director.
COMPENSATION OF DIRECTORS
Non-management directors of the Company receive an annual fee of $30,000
for their services. The Audit, Compensation and Nominating and Corporate
Governance Committee chairperson receives an annual retainer (pro-rated for
partial years of service in the position) of $5,000, $4,000 and $4,000,
respectively. Each Board member receives an attendance fee of $1,000 for each
Board meeting attended in-person, and each member of the Audit, Compensation and
Nominating and Corporate Governance Committees receives an attendance fee of
$500 for each committee meeting attended in-person, in each case accrued and
paid in arrears quarterly when payments of the annual base retainer are made.
Under the Second Amended and Restated IDEX Corporation Directors Deferred
Compensation Plan (the "Directors' Deferred Compensation Plan"), directors are
permitted to defer their compensation into an interest-bearing account or into a
deferred compensation units account as of the date that such compensation would
otherwise be payable. The deferred compensation credited to the interest-bearing
account is adjusted on a quarterly basis with hypothetical earnings for the
quarter equal to rates on U.S. government securities with 10-year maturities as
of December 1 of the calendar year preceding the year for which the earnings
were credited, plus 200 basis points. Amounts credited to the interest-bearing
account are compounded monthly. The deferred compensation credited to the
deferred compensation units account is converted into a number of
Common-Stock-equivalent units ("Deferred Compensation Units") by dividing the
deferred compensation by the fair market value of the
8
Company's Common Stock on the deferral date. In addition, the value of the
dividends payable on shares of Common Stock are credited to the deferred
compensation units account and converted into Deferred Compensation Units based
on the number of Deferred Compensation Units on the dividend record date, and
the fair market value of Common Stock on the dividend payment date.
Outside directors receive non-qualified stock options pursuant to the
Amended and Restated IDEX Corporation Stock Option Plan for Outside Directors
(the "Directors' Option Plan"). Outside directors are those individuals who are
not full-time employees of the Company or its subsidiaries. Under the Directors'
Option Plan, non-qualified stock options may be granted to outside directors to
purchase in the aggregate up to 506,250 shares of Common Stock. If any option
expires or is cancelled without having been fully exercised, the shares covered
thereby may be subject to the grant of new options. For so long as the
Directors' Option Plan remains effective, except for each person who immediately
prior to becoming an outside director was a full-time employee of the Company or
any of its subsidiaries, any person who becomes an outside director after April
19, 2000, will receive an option to purchase 6,750 shares of Common Stock. On
the first regularly scheduled meeting of the Board of Directors held each year,
each outside director will receive an option to purchase 4,500 shares of Common
Stock. The exercise price is specified in each option, and is equal to the fair
market value of a share of Common Stock on the date the option is granted, as
determined under the plan. Prior to the amendment of the Directors' Option Plan
in January 2000, the fair market value was based on the average closing price
per share of Common Stock on the New York Stock Exchange during the 30-day
period immediately preceding the date the option was granted. Under the current
terms of the Directors' Option Plan, the fair market value is based on the
closing price per share of the Common Stock on the trading day preceding the
date the option is granted. In the year ended December 31, 2004, Mr. Hermance
received an option to purchase 10,125 shares of Common Stock at an exercise
price of $27.59, and each of Messrs. Bell, Hermance, Kenny, Raether, Springer
and Tokarz received an option to purchase 6,750 shares of Common Stock at an
exercise price of $28.17. On February 2, 2005, each of Messrs. Bell, Hermance,
Kenny, Raether, Springer and Tokarz received an option to purchase 4,500 shares
of Common Stock at an exercise price of $38.55. Upon exercise of any option, the
purchase price of Common Stock may be paid either in cash, in shares of Common
Stock having an aggregate fair market value on the date of exercise equal to the
exercise price, or by delivery of an irrevocable commitment to use the proceeds
from the sale of stock acquired from exercise of the option. If the Incentive
Award Plan is approved by shareholders as set forth in PROPOSAL 3, no further
grants will be made under the Directors' Option Plan, and all future grants to
directors will be made under the terms of the Incentive Award Plan.
9
SECURITY OWNERSHIP
The following table furnishes information as of February 17, 2005, except
as otherwise noted, with respect to the shares of Common Stock beneficially
owned by (i) each director and nominee for director, (ii) each 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 of the Company. Except as indicated by the notes to the following table
and with respect to Deferred Compensation Units issued under the Directors'
Deferred Compensation Plan and the IDEX Corporation 1996 Deferred Compensation
Plan for Officers (the "Officers' Deferred Compensation Plan"), the holders
listed below have sole voting power and investment power over the shares
beneficially held by them. Under the Securities and Exchange Commission rules,
the number of shares shown as beneficially owned includes shares of Common Stock
subject to options that currently are exercisable or will be exercisable within
60 days of February 17, 2005. Shares of Common Stock subject to options that are
currently exercisable within 60 days of February 17, 2005 are considered to be
outstanding for the purpose of determining the percentage of the 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.
SHARES DEFERRED
BENEFICIALLY COMPENSATION PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED UNITS(1) CLASS
------------------------------------ ------------ ------------ ----------
Directors and Nominees
(Other than Executive Officers):
Bradley J. Bell(2).......................... 26,625 *
Frank S. Hermance........................... 0 1,094 *
Gregory B. Kenny(2)......................... 16,875 2,774 *
Paul E. Raether(3).......................... 209,227 20,956 *
Neil A. Springer(2)......................... 67,500 *
Michael T. Tokarz........................... 227,274 12,197 *
Executive Officers:
Dennis K. Williams(4)(5).................... 1,089,000 90,829 2.1
Lawrence D. Kingsley(6)..................... 115,000
Dominic A. Romeo(7)......................... 52,500 *
John L. McMurray(7)......................... 116,572 2,477
David T. Windmuller(7)...................... 96,000 *
Directors, Nominees and All Executive Officers
as a Group.................................. 2,416,299 140,803 4.6
(18 persons)(3)(8)
Other Principal Beneficial Owners:
Ariel Capital Management, Inc.(9)........... 11,273,958 22.2
307 North Michigan Avenue, Suite 500
Chicago, IL 60601
Mario J. Gabelli(10)........................ 2,709,827 5.4
GAMCO Investors, Inc.
Gabelli & Company, Inc.
One Corporate Center
Rye, NY 10580
---------------
(1) Deferred Compensation Units are issued under the Directors' Deferred
Compensation Plan and the Officers' Deferred Compensation Plan and are
payable in IDEX common stock. The value of these Deferred Compensation
Units depends directly on the performance of IDEX Corporation Common Stock.
The Deferred Compensation Units are not included in Shares Beneficially
Owned.
(2) Includes 23,625, 16,875 and 54,000 shares under option which are eligible
for exercise under the Directors' Option Plan for Messrs. Bell, Kenny and
Springer, respectively.
(3) Includes 59,227 shares which are owned by a family trust in which Mr.
Raether's wife is trustee.
10
(4) Includes 789,900 shares which are eligible for exercise under the First
Amended and Restated 1996 Stock Plan for Officers and the 2001 Stock Plan
for Officers.
(5) Mr. Williams was awarded 525,000 shares of restricted stock on April 13,
2000. Under the terms of the award, 105,000 of the shares vested on April
30 in each of years 2001 through 2004, and 105,000 of the shares will vest
on April 30, 2005. In connection with the vesting of shares on April 30,
2001, 2002, 2003 and 2004, Mr. Williams surrendered 34,073, 45,203, 45,203
and 45,203 shares, respectively, to satisfy withholding taxes.
(6) Mr. Kingsley was awarded 115,000 shares of restricted stock on August 23,
2004 as an inducement to his employment as Chief Operating Officer. Such
shares were not granted under any plan approved by shareholders. Under the
terms of the award, 23,000 shares vest on August 23 in each of the years
2005 through 2009. In connection with his promotion to President and Chief
Executive Officer effective March 22, 2005, if the Incentive Award Plan is
approved by shareholders at the Annual Meeting, Mr. Kingsley will receive a
grant of 100,000 shares of restricted stock under the Incentive Award Plan
on such date. Under the terms of the proposed award, 25,000 shares will
vest on March 22 in each of the years 2006 through 2009.
(7) Includes 22,500, 96,000 and 115,500 shares which are eligible for exercise
under the Third Amended and Restated 1996 Stock Option Plan for Non-Officer
Key Employees, the First Amended and Restated 1996 Stock Plan for Officers
and the 2001 Stock Plan for Officers, for Messrs. Romeo, McMurray and
Windmuller, respectively.
(8) Includes 94,500 shares under option which are eligible for exercise under
the Directors' Option Plan, 1,228,500 shares under option which are
eligible for exercise under the First Amended and Restated 1996 Stock Plan
for Officers and the 2001 Stock Plan for Officers, and 15,300 shares under
option which are eligible for exercise under the Third Amended and Restated
1996 Stock Option Plan for Non-Officer Key Employees.
(9) Based on information in Schedule 13G, as of December 31, 2004, filed by
Ariel Capital Management, Inc. with respect to common stock owned by Ariel
Capital Management, Inc. and certain other entities which Ariel Capital
Management, Inc. directly or indirectly controls or for which Ariel Capital
Management, Inc. is an investment advisor on a discretionary basis. The
Company has not attempted to verify any of the foregoing information, which
is based solely upon the information contained in the Schedule 13G.
(10) Based on information in Schedule 13F, as amended on December 31, 2004,
filed by Mario J. Gabelli, GAMCO Investors, Inc. ("GAMCO") and Gabelli
Funds, LLC ("Gabelli Funds"), with respect to common stock owned by GAMCO,
Gabelli Funds and certain other entities which Mr. Gabelli directly or
indirectly controls and for which he acts as chief investment officer. The
Company has not attempted to independently verify any of the foregoing
information, which is based solely upon the information contained in the
Schedule 13F, as amended.
11
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The total compensation paid to the Company's Chief Executive Officer and
the four highest compensated executive officers other than the Chief Executive
Officer for services rendered to the Company in 2004, 2003, and 2002 is
summarized as follows:
LONG-TERM COMPENSATION
ANNUAL COMPENSATION(1) -----------------------------------
--------------------------------- SHARES
OTHER RESTRICTED UNDERLYING LONG-TERM
ANNUAL STOCK OPTIONS INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMP.(2) AWARDS(3) GRANTED PAYOUTS COMPENSATION(4)
--------------------------- ---- -------- ---------- --------- ---------- ---------- --------- ---------------
Dennis K. Williams............. 2004 $750,162 $1,200,000 $263,671 0 132,000 0 $ 4,841
Chairman of the Board,
President 2003 740,000 900,000 230,069 0 150,000 0 6,659
and Chief Executive Officer 2002 710,000 562,300 277,883 0 127,500 0 11,227
Lawrence D. Kingsley........... 2004 147,115 435,000 0 115,000 145,000 0 0
Chief Operating Officer
Dominic A. Romeo............... 2004 296,827 263,800 0 30,000 112,500 0 217,668
Vice President and Chief
Financial Officer
John L. McMurray............... 2004 254,086 230,000 0 0 30,000 0 4,643
Vice President - Group
Executive 2003 239,800 171,600 0 0 31,500 0 4,400
and Operational Excellence 2002 224,500 83,500 0 0 27,000 0 4,100
David T. Windmuller............ 2004 251,570 178,100 0 0 30,000 0 4,643
Vice President - Group
Executive 2003 247,500 222,600 0 0 33,000 0 4,400
2002 238,000 109,300 0 0 27,000 0 4,100
---------------
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) For Mr. Williams, $237,512, $210,911, and $262,966 of the amount shown for
2004, 2003 and 2002, respectively, represents the incremental cost for Mr.
Williams' personal use of the Company's aircraft. As further described in
COMPENSATION OF EXECUTIVE OFFICERS -- Transition Agreements below, Mr.
Williams will resign as President and Chief Executive Officer on March 22,
2005, at which time his personal use of the Company's aircraft as Chairman
of the Board will be limited to an incremental cost to the Company of
$110,000 for the period from May 1, 2005 until the later of March 31, 2006
or the date of the Company's 2006 annual meeting. For all other individuals,
the value of perquisites provided did not exceed the lesser of $50,000 or
10% of base salary plus bonus.
(3) Mr. Williams was awarded 525,000 shares of restricted stock on April 13,
2000. Under the terms of the award, 105,000 of the shares vested on April 30
in each of the years 2001 through 2004, and 105,000 of the shares will vest
on April 30, 2005. At December 31, 2004, the 105,000 shares of non-vested
restricted stock had a value of $4,252,500 based on the closing price of our
common stock at year-end. The shares are eligible for the Company's dividend
on its common stock.
Mr. Kingsley was awarded 115,000 shares of restricted stock on August 23,
2004 as an inducement to accept employment as the Company's Chief Operating
Officer. Such shares were not granted under a plan approved by
shareholders. Under the terms of the award, 23,000 of the shares will vest
on August 23 in each of the years 2005 through 2009. At December 31, 2004,
the 115,000 shares of non-vested restricted stock had a value of $4,657,500
based on the closing price of our common stock at year-end. The shares are
eligible for the Company's dividend on its common stock. In connection with
his promotion to Chief Executive Officer effective March 22, 2005, if the
Incentive Award Plan is approved by shareholders at the Annual meeting, Mr.
Kingsley will receive a grant of 100,000 shares of restricted stock under
the Incentive Award Plan which will vest in 25,000 share increments on
March 22 in each of the years 2006 through 2009. These shares will be
eligible for the Company's dividend on its common stock.
Mr. Romeo was awarded 30,000 shares of restricted stock on January 14, 2004
as an inducement to accept employment as our Vice President and Chief
Financial Officer. Such shares were not granted under a plan approved by
shareholders. Under the terms of the award, 15,000 of the shares will vest
on
12
January 14 in each of the years 2008 and 2009. At December 31, 2004, the
30,000 shares of non-vested restricted stock had a value of $1,215,000
based on the closing price of our common stock at year-end. The shares are
eligible for the Company's dividend on its common stock.
(4) For Mr. Williams in 2004, 2003 and 2002, amount represents $198, $2,259, and
$7,127, respectively, in imputed interest on a $180,000 loan made by the
Company to pay withholding taxes on the 2001 vesting of his restricted stock
award (this loan has been paid in full), and $4,643, $4,400, and $4,100,
respectively, of Company matching contributions to his Savings Plan
individual account. The amount shown for Mr. Romeo includes $150,000 paid to
him as a sign-on inducement bonus, $63,624 paid to him for relocation costs,
and $4,044 of Company matching contributions to his Savings Plan individual
account. For Mr. McMurray and Mr. Windmuller, the amount shown represents
Company matching contributions to Savings Plan individual accounts.
13
OPTION GRANTS IN 2004
The following tables set forth certain information with respect to options
granted in 2004 to the Company's Chief Executive Officer and the four highest
compensated officers other than the Chief Executive Officer:
INDIVIDUAL GRANTS
------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SHARES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR OPTION
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
---- ---------- ------------ -------- ---------- ---------------- ----------
Dennis K. Williams................. 132,000 8% $27.33 03/23/14 $2,268,775 $5,749,522
Lawrence D. Kingsley............... 145,000 9% 30.87 08/23/14 2,815,027 7,133,830
Dominic A. Romeo................... 75,000 5% 27.67 01/12/14 1,305,114 3,307,414
Dominic A. Romeo................... 37,500 2% 27.33 03/23/14 644,538 1,633,387
John L. McMurray................... 30,000 2% 27.33 03/23/14 515,631 1,306,709
David T. Windmuller................ 30,000 2% 27.33 03/23/14 515,631 1,306,709
OPTION EXERCISES AND YEAR-END VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED,
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Dennis K. Williams.................. 0 $ 0 577,500 484,500 $12,463,545 $8,852,970
Lawrence D. Kingsley................ 0 0 0 145,000 0 1,396,350
Dominic A. Romeo.................... 0 0 0 112,500 0 1,456,125
John L. McMurray.................... 24,076 511,779 88,200 86,100 1,820,223 1,483,737
David T. Windmuller................. 57,300 845,014 67,200 88,800 1,327,224 1,541,226
---------------
(1) Calculated using closing stock price on December 31, 2004 of $40.50.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information with respect to the
Company's equity compensation plans as of December 31, 2004:
NUMBER OF SECURITIES WEIGHTED-AVERAGE NUMBER OF SECURITIES
TO BE ISSUED UPON EXERCISE PRICE OF REMAINING AVAILABLE FOR
EXERCISE OF OUTSTANDING FUTURE ISSUANCE UNDER
OUTSTANDING OPTIONS, OPTIONS, WARRANTS EQUITY COMPENSATION
PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS PLANS(1)
------------- -------------------- ----------------- -----------------------
Equity compensation plans approved by
the Company's shareholders............ 5,505,790 $22.76 559,153(2)(3)
Equity compensation plans not approved
by the Company's shareholders......... 62,322 15.79 433,940(4)
--------- ------ -------
Total.............................. 5,568,112 $22.70 993,093(5)
========= ====== =======
---------------
(1) Excludes securities to be issued upon the exercise of outstanding options,
warrants and rights.
(2) Includes 35,307 shares remaining available for future issuance for
settlement of Deferred Compensation Units under the Directors' Deferred
Compensation Plan.
(3) Includes 4,150 shares remaining available for future issuance for settlement
of Deferred Compensation Units under the Officers' Deferred Compensation
Plan which are payable under the First Amended and Restated 1996 Stock Plan
for Officers and the 2001 Stock Plan for Officers.
14
(4) Includes 433,940 shares remaining available for future issuance for
settlement of Deferred Compensation Units under the 1996 Deferred
Compensation Plan for Non-Officer Presidents (the "Presidents' Deferred
Compensation Plan"). Under the Presidents' Deferred Compensation Plan,
presidents who are not officers are permitted to defer a portion of their
compensation into an interest-bearing account or into a deferred
compensation units account as of the date that such compensation would
otherwise be payable. The deferred compensation credited to the
interest-bearing account is adjusted on a quarterly basis with hypothetical
earnings for the quarter equal to rates on U.S. government securities with
10-year maturities as of December 1 of the calendar year preceding the year
for which the earnings were credited, plus 200 basis points. Amounts
credited to the interest-bearing account are compounded monthly. The
deferred compensation credited to the deferred compensation units account is
converted into a number of Deferred Compensation Units by dividing the
deferred compensation by the fair market value of the Company's Common Stock
on the deferral date. In addition, the value of the dividends payable on
shares of Common Stock are credited to the deferred compensation units
account and converted into Deferred Compensation Units based on the number
of Deferred Compensation Units on the dividend record date, and the fair
market value of Common Stock on the dividend payment date. Deferred
compensation is paid on January 1 following the number of years for which
deferral was elected (5 or 10), retirement, death or termination of
employment. Deferred Compensation Units are distributed in the form of our
Common Stock.
(5) Upon approval of the IDEX Corporation Incentive Award Plan, only 469,247 of
these shares will remain available for future issuance as Deferred
Compensation Units under the Directors Deferred Compensation Plan and the
Presidents' Deferred Compensation Plan, and no future grants will be made
under any existing option plans.
PENSION AND RETIREMENT PLANS
Certain employees of the Company, including the executive officers and
certain hourly employees, are covered under the IDEX Corporation Retirement Plan
(the "Retirement Plan"). The Company and the other sponsoring subsidiaries are
required to make an annual contribution to the Retirement Plan in such amounts
as are actuarially required to fund the benefits of the participants. The
Retirement Plan is an ongoing "career average" plan that provides a level of
benefit based on a participant's compensation for a year, historically with
periodic updates to average compensation over a fixed five-year period. Under
the Retirement Plan, participants are entitled to receive an annual benefit on
retirement equal to the sum of the benefit earned through 1995 using the
five-year average compensation of a participant through 1995, plus the benefit
earned under the current formula for each year of employment after 1995. For
each year of participation through 1995, a participant earns a benefit equal to
1.25% of the first $16,800 of such average compensation through 1995, and 1.65%
of such compensation in excess of $16,800. Beginning January 1, 1996, the
benefit earned equals the sum of 1.6% of the first $16,800 of each year's total
compensation, and 2.0% for such compensation in excess of $16,800 for each full
year of service credited after 1995. As required by law, compensation counted
for purposes of determining this benefit is limited. For all participants in the
Retirement Plan, the normal form of retirement benefit is payable in the form of
a life annuity with five years of payments guaranteed. Other optional forms of
payment are available.
As of December 31, 2004, the total accrued monthly benefit under the
Retirement Plan for Messrs. Williams, Kingsley, Romeo, McMurray and Windmuller
was $1,319, $289, $331, $3,727 and $4,880, respectively. Assuming projected
earnings in 2005 of $1,053,123, $612,200, $505,600 and $444,500 for Messrs.
Kingsley, Romeo, McMurray and Windmuller, respectively, and assuming that such
earnings remain level until each person reaches age 65, the projected monthly
benefit for Messrs. Kingsley, Romeo, McMurray and Windmuller under the
Retirement Plan would be $8,268, $7,253, $7,509 and $11,050, respectively, upon
retirement at age 65. Pursuant to Mr. Williams' transition and retirement
agreement, he will retire on the later of March 31, 2006 or the date of the
Company's 2006 annual meeting. Mr. Williams projected benefit at age 65 will be
$2,008. See COMPENSATION OF EXECUTIVE OFFICERS -- Transition Agreements below,
for a description of Mr. Williams' transition and retirement agreement.
15
Pursuant to the Company's Supplemental Executive Retirement Plan (the
"SERP"), employees of the Company are entitled to retirement benefits to
compensate for any reduction in benefits under the Retirement Plan arising from
the maximum benefit limitations under Sections 401 and 415 of the Internal
Revenue Code of 1986, as amended (the "Code"). Based on the above assumptions,
the projected monthly benefit at age 65 for Messrs. Kingsley, Romeo, McMurray
and Windmuller under the SERP would be $28,087, $14,237, $7,862 and $10,806,
respectively. Pursuant to Mr. Williams' transition and retirement agreement, Mr.
Williams will not accrue any additional SERP benefits by reason of the
compensation to be paid him as Chairman of the Board, and the benefit accruals
he earns under the Retirement Plan as a result of such compensation will reduce
his SERP benefit. However, the calculation of his SERP benefit will include
$324,000 of the payments to be made upon his retirement on April 1, 2006. On his
retirement, Mr. Williams will receive his SERP benefit of approximately
$3,993,966 in a lump sum. See COMPENSATION OF EXECUTIVE OFFICERS -- Transition
Agreements below, for a description of Mr. Williams' transition and retirement
agreement.
EXECUTIVE EMPLOYMENT AGREEMENTS
The following describes the employment agreements applicable to Mr.
Williams and Mr. Kingsley as in effect in 2004, through February 25, 2005. As
described in more detail below, Mr. Williams has entered into a transition and
retirement agreement regarding his compensation from February 25, 2005 through
his retirement and payments upon his retirement. See COMPENSATION OF EXECUTIVE
OFFICERS -- Transition Agreements below, for a description of Mr. Williams'
transition and retirement agreement, and changes to Mr. Kingsley's compensation.
The Company had entered into an employment agreement with Mr. Williams
which was effective through February 25, 2005. The employment agreement provided
for an initial term of five years ending April 30, 2005, and successive
twelve-month periods thereafter. Mr. Williams' annual base salary for 2005 was
$810,000, subject to annual review and adjustment. In addition to his annual
base salary, Mr. Williams was eligible to receive an annual cash bonus. Annual
bonuses were paid to Mr. Williams under the Executive Incentive Bonus Plan. If
Mr. Williams' employment was terminated by the Company other than for cause, he
would have received continuing salary payments and fringe benefits for 24 months
plus a bonus payment equal to the sum of 240% of his base salary and a pro-rated
portion of 120% of his base salary (based on the portion of the year he was
employed). If Mr. Williams' employment was terminated because of disability, he
would have received continuing salary payments and fringe benefits for a period
of 18 months plus a bonus payment equal to the sum of 180% of his base salary
and a pro-rated portion of 120% of his base salary (based on the portion of the
year he was employed). If Mr. Williams died before the continuing payments
described above were complete, such payments would have continued to Mr.
Williams' wife if she survived him or, if she did not survive him, to his
estate. Additionally, if Mr. Williams would have died during the term of the
agreement, Mr. Williams' wife or estate would have received continuing salary
payments and fringe benefits for a period of 18 months plus a bonus payment
equal to the sum of 180% of his base salary and a pro-rated portion of 120% of
his base salary (based on the portion of the year he was employed). In
connection with Mr. Williams' employment agreement, the Company awarded Mr.
Williams 525,000 shares of restricted IDEX Common Stock. Under the terms of the
award, 105,000 shares of the restricted stock vested on each of April 30, 2001
through 2004, and an additional 105,000 shares will vest on April 30, 2005 if
Mr. Williams remains as Chairman of the Board of the Company. The remaining
105,000 shares of restricted stock will vest in the event Mr. Williams is
terminated by the Company other than for cause or if Mr. Williams terminates his
employment because the Company has taken certain actions with respect to his
employment. The agreement provided for payment of the 20% golden parachute
excise tax, increased for taxes due on the payment, in the event that the
Internal Revenue Service determines any such taxes to be payable due to a change
in control.
The Company has entered into an employment agreement with Mr. Kingsley. The
employment agreement provides for an initial term of five years and successive
twelve-month periods thereafter. Mr. Kingsley's annual base salary for 2005
under such Agreement is set at $450,000, subject to annual review and
adjustment. In addition to his annual base salary, Mr. Kingsley is eligible to
receive an annual cash bonus. Annual bonuses are paid to Mr. Kingsley under the
Executive Incentive Bonus Plan. If Mr. Kingsley's
16
employment is terminated by the Company other than for cause, he will receive
continuing salary payments and fringe benefits for 18 months plus a bonus
payment equal to the sum of 112.5% of his base salary and a pro-rated portion of
75% of his base salary (based on the portion of the year he was employed). If
Mr. Kingsley's employment is terminated because of disability, he will receive a
bonus payment equal to a pro-rated portion of 75% of his base salary (based on
the portion of the year he was employed). Additionally, if Mr. Kingsley should
die during the term of the agreement, Mr. Kingsley's wife or estate will receive
a bonus payment equal to a pro-rated portion of 75% of his base salary (based on
the portion of the year he was employed). In connection with Mr. Kingsley's
employment agreement, the Company awarded Mr. Kingsley 115,000 shares of
restricted IDEX Common Stock. Under the terms of his award, 23,000 shares of the
restricted stock vest on August 23 in each of years 2005 through 2009 if Mr.
Kingsley remains as Chief Operating Officer of the Company. All shares of the
restricted stock will vest in the event Mr. Kingsley is terminated by the
Company other than for cause or if Mr. Kingsley terminates his employment
because the Company has taken certain actions with respect to his employment.
The Company has entered into an employment agreement with Mr. Romeo. The
agreement does not provide for a fixed term and may be terminated at any time.
Mr. Romeo's annual base salary for 2005 is $334,000, subject to annual review
and adjustment. In addition to his annual base salary, Mr. Romeo is eligible to
receive an annual cash bonus. Annual bonuses are paid to Mr. Romeo under the
Management Incentive Bonus Plan. If Mr. Romeo's employment is terminated by the
Company other than for cause, he will be entitled to receive continuing salary
payments for 18 months. In the event Mr. Romeo is actually or constructively
terminated without cause within two years following a change in control, the
Company will be obligated to pay Mr. Romeo his salary and his current target
Management Incentive Plan Bonus for two years. In connection with Mr. Romeo's
employment agreement, the Company awarded Mr. Romeo 30,000 shares of restricted
IDEX Common Stock. Under the terms of the award, 15,000 of the shares vest on
January 14 in each of years 2008 and 2009. All shares of the restricted stock
will vest in the event Mr. Romeo is terminated by the Company other than for
cause or if Mr. Romeo dies or becomes disabled.
The Company has entered into agreements with each of Messrs. Windmuller and
McMurray providing for three years' compensation and fringe benefits in the
event they are actually or constructively terminated without cause within two
years following a change of control. The Company had entered into a similar
agreement with Mr. Williams which was terminated effective February 25, 2005.
TRANSITION AGREEMENTS
Effective as of the Annual Meeting on March 22, 2005, Mr. Williams will
resign his position as President and Chief Executive Officer, but will remain in
his executive Chairman of the Board position in order to transition leadership
to Mr. Kingsley, who will succeed Mr. Williams as President and Chief Executive
Officer. Under the terms of a transition and retirement agreement effective
February 25, 2005, Mr. Williams will receive for his agreement to transition
leadership to Mr. Kingsley and to extend his noncompete with the Company from
his current two-year period following the termination of his employment to a
five-year period, 22 bi-weekly payments of $109,090.91 beginning May 11, 2005
through the earlier of March 8, 2006, the termination of his employment for
cause, or his resignation. If Mr. Williams does not resign or is not terminated
for cause, such payments will total $2,400,000. These transition payments will
not be considered compensation for benefit accrual purposes under the SERP and
any benefits Mr. Williams accrues under the Retirement Plan as a result of such
transition payments shall reduce Mr. Williams' SERP benefits. During such
period, Mr. Williams will not be eligible for any bonus or other long term
incentive compensation grants, but otherwise will receive all other employee
benefits and perquisites he is currently eligible to receive as Chairman of the
Board, President and Chief Executive Officer, including the personal use of the
Company's aircraft up to an incremental cost to the Company of $110,000 for the
period May 1, 2005 to the later of March 31, 2006 or the date of the Company's
2006 annual meeting.
Mr. Williams will receive a lump sum payment of $1,296,000 and 26 bi-weekly
payments of $31,153.85 upon his retirement or, if such amounts are considered
deferred compensation subject to new Section 409A of the Internal Revenue Code,
six months following his retirement. Such amounts are equivalent to what Mr.
Williams would be entitled to receive upon expiration of the term of his current
employment agreement
17
on April 30, 2005. Of the $1,296,000 lump sum payment, $324,000 is considered
compensation for purposes of calculating Mr. Williams SERP benefit. Upon his
termination or, if necessary to comply with Code Section 409A during 2005, Mr.
Williams will receive a lump sum payment of his SERP benefit of approximately
$3,993,966. Additionally, upon his retirement he is entitled to receive any
compensation or benefits he has accrued and vested in during his employment,
including under the Officers' Deferred Compensation Plan and 2001 Stock Plan for
Officers.
In connection with his promotion to President and Chief Executive Officer
effective as of March 22, 2005, Mr. Kingsley's base salary will increase to
$600,000. If the proposed Incentive Award Plan set forth in PROPOSAL 3 is
approved, then on March 22, 2005, Mr. Kingsley will be awarded 100,000 shares of
restricted stock which will vest in 25,000 share increments on March 22 in each
of the years 2006 through 2009. However, if his employment is terminated by the
Company other than for cause or he dies or becomes disabled, these shares of
restricted stock will automatically vest. Additionally, if his employment is
terminated by the Company other than for cause, the amount of severance based on
bonus payable to Mr. Kingsley under his employment agreement will be based on
100% of his base salary rather than 75% of his base salary as currently provided
in his employment agreement. His employment agreement will be amended to reflect
this change.
COMPENSATION COMMITTEE REPORT
THE COMMITTEE
The Compensation Committee of the Board of Directors of the Company is
composed exclusively of non-employee, independent directors. The Compensation
Committee reviews the compensation program for the Chief Executive Officer and
other members of senior management, including the executive officers listed in
this Proxy Statement in the Summary Compensation Table (the "named executives"),
and determines and administers their compensation. In the case of the Chief
Executive Officer, the compensation determination made by the Compensation
Committee is also subject to ratification by the entire Board. The Compensation
Committee has retained an independent consultant to assist in fulfilling its
responsibilities.
COMPENSATION PHILOSOPHY
The Compensation Committee approves base salary, annual management
incentive compensation, and long-term incentive awards for all corporate
officers and certain other key executives, with the objective of attracting and
retaining individuals of the necessary quality and stature to operate the
business. As part of its responsibility, the Compensation Committee reviews and
approves all elements of compensation for the named executives. The Committee
considers individual contributions, performance against strategic goals and
directions, and industry-wide pay practices in determining the levels of base
compensation for key executives. The Compensation Committee also considers the
total value of the annual compensation for each executive and all executives as
a group.
The Compensation Committee periodically reviews the effectiveness and
competitiveness of the Company's executive compensation structure with the
assistance of its independent consultant. In reviewing the competitiveness of
the Company's executive compensation, the Compensation Committee uses peer group
data, as well as performs a comparative analysis of market surveys and other
compensation data, utilizing a regression analysis based on company revenue
size.
It is the Compensation Committee's practice to target the key elements of
executive compensation to deliver compensation to each executive and all
executives as a group at approximately the 50th percentile of its peer group.
CHIEF EXECUTIVE OFFICER
The Committee sets compensation of the Company's Chief Executive Officer
annually based on Company performance, his performance, and prevailing market
conditions. Dennis K. Williams has a personal stake in the Company through his
ownership of 404,100 shares of Common Stock of the Company (inclusive of 105,000
shares of non-vested restricted stock), and his ownership of 90,829 deferred
compensation units under the Officers' Deferred Compensation Plan. He also has
options to acquire an additional 1,062,000 shares
18
of Common Stock, 164,700 of which will remain unvested at his retirement. See
COMPENSATION OF EXECUTIVE OFFICERS--Transaction Agreements below, for a
description of Mr. Williams' transition and retirement agreement. With this
sizeable ownership position, a very large percentage of Mr. Williams' personal
net worth is tied directly to the Company's performance.
Annual bonuses were paid to Mr. Williams based upon the attainment of
operating income performance goals pursuant to the terms of the Executive
Incentive Bonus Plan. The maximum bonus payable to Mr. Williams under the
Executive Incentive Bonus Plan is 2% of the Company's operating income. Mr.
Williams' actual bonus for 2004 was $1,200,000.
As part of its responsibility to review and approve all elements of the
Chief Executive Officer's compensation, the Compensation Committee negotiated
and approved the terms of the transition and retirement compensation to be paid
to Mr. Williams in exchange for his agreement to transition leadership of the
Company to Mr. Kingsley and to extend his noncompete from a two-year period
following his termination of employment to a five-year period. The Compensation
Committee determined such amounts were necessary and reasonable compensation to
effect an orderly transition of the leadership of the Company. A general
description of the terms of Mr. Williams' transition and retirement compensation
can be found above under COMPENSATION OF EXECUTIVE OFFICERS -- Transition
Agreements.
Our incoming Chief Executive Officer, Mr. Kingsley, also has a substantial
personal stake in the Company through his ownership of 115,000 shares of Common
Stock. He also has options to acquire an additional 145,000 shares of Common
Stock. In addition, to increase Mr. Kingsley's personal stake in the Company,
subject to approval of the proposed Incentive Award Plan by shareholders under
PROPOSAL 3, the Committee has agreed to grant Mr. Kingsley 100,000 shares of
restricted stock of the Company on March 22, 2005. Such restricted stock will
vest over four years in equal installments of 25,000 shares on March 22 in each
of years 2006 through 2009.
In light of his promotion to President and Chief Executive Officer
effective as of March 22, 2005, and his increased management responsibilities,
the Committee has approved an increase in Mr. Kingsley's base salary to $600,000
annually, effective March 22, 2005. Additionally, the Committee has agreed to
amend his employment agreement to provide that, in the event his employment is
terminated by the Company without cause, he will be entitled, in addition to
other severance described in his employment agreement, to severance based on
bonus payable to him based on bonus of 100% of his base salary rather than the
75% currently provided in his employment agreement. See COMPENSATION OF
EXECUTIVE OFFICERS -- Employment Agreements and Transition Agreements above. Mr.
Kingsley will be eligible for an annual bonus in 2005 under the Executive
Incentive Bonus Plan.
OTHER KEY EXECUTIVES
Annual management incentive compensation is paid to corporate officers
other than Mr. Williams and certain other key executives under the Management
Incentive Compensation Plan. The Management Incentive Compensation Plan provides
for payment of annual bonuses based upon performance of the business units of
the Company and individual performance of the employee. Individual target bonus
percentages are based on base salaries and levels of responsibility. Actual
awards are set as a percentage of target based on meeting quantitative and
qualitative performance criteria set each year in connection with the annual
planning process, and adjusted by an individual personal performance multiplier.
These targets are based on objectives of importance to the Company, including
revenue and margin growth, improvement in working capital and new product
introductions. Actual payouts under the plan to corporate officers since the
Company was formed in 1988 have ranged from 41% of target to 170% of target. The
Committee believes that this plan is properly leveraged relative to performance
of the Company and its business units.
Long-term incentive awards are granted to corporate officers and certain
other key employees under the Company's 2001 Stock Plan for Officers and the
Third Amended and Restated 1996 Stock Plan for Non-Officer Key Employees. The
awards take the form of stock options which are tied directly to the market
value of the Company's Common Stock.
The Committee believes that both the annual bonus plan and the long-term
incentive plan align the interests of management with the shareholders and focus
the attention of management on the long-term
19
success of the Company. A significant portion of the executives' compensation is
at risk, based on the financial performance of the Company and the value of the
Company's stock in the marketplace.
The Compensation Committee has reviewed all components of executive
compensation, including salary, bonus, equity and long-term incentive
compensation, accumulated realized and unrealized stock option and restricted
stock gains, the earnings and accumulated payout obligations under the Company's
non-qualified deferred compensation program, the actual projected payout
obligations under the Company's supplemental executive retirement plan and under
several potential severance and change-in-control scenarios.
Section 162(m) of the Code precludes a public corporation from taking a
deduction for compensation in excess of $1 million for its chief executive
officer or any of its four other highest paid executive officers, unless such
compensation is performance-based and certain specific and detailed criteria are
satisfied. The Compensation Committee considers the anticipated tax treatment to
the Company and the executive officers in its review and establishment of
compensation programs and payments. The deductibility of some types of
compensation payments can depend upon the timing of an executive's vesting or
exercise of previously granted rights. Interpretations of and changes in
applicable tax laws and regulations as well as other factors beyond the
Compensation Committee's control also can affect deductibility of compensation.
The Compensation Committee has been advised that, based on current
interpretations, the Executive Incentive Bonus Plan and the 2001 Stock Plan for
Officers satisfy the requirements for performance-based compensation under Code
Section 162(m). The Compensation Committee has also been advised that, if the
Incentive Award Plan is approved by shareholders as set forth in PROPOSAL 3,
certain awards under the Incentive Award Plan will satisfy the requirements for
performance-based compensation under Code Section 162(m).
The Report of the Compensation Committee shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
into any filing under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed soliciting material or filed under such acts.
Gregory B. Kenny, Chairman
Michael T. Tokarz
20
AUDIT COMMITTEE REPORT
For the year ended December 31, 2004, the Audit Committee has reviewed and
discussed the audited financial statements with management and the independent
auditors, Deloitte & Touche LLP. The Committee discussed with the independent
auditors the matters required to be discussed by the Statement of Auditing
Standards No. 61, and reviewed the results of the independent auditors'
examination of the financial statements.
The Committee also reviewed the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1,
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 or
incorporated by reference in the Annual Report on Form 10-K for the year ended
December 31, 2004, for filing with the Commission.
The Board of Directors has determined that the members of the Audit
Committee satisfy the "independence" requirements of the New York Stock
Exchange. The Committee is governed by a charter, which was published in the
Company's 2004 Proxy Statement and is available on the Company's website at
www.idexcorp.com.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 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.
Bradley J. Bell, Chairman
Frank S. Hermance
Neil A. Springer
21
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 Company's 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 our Audit Committee
pursuant to our pre-approval policy discussed below.
2004 2003
---------- ----------
Audit fees(1)............................................... $1,338,000 $1,276,000
Audit-related fees(2)....................................... 806,000 287,000
Tax fees(3)................................................. 1,131,000 529,000
All other fees(4)........................................... 89,000 26,000
---------- ----------
Total....................................................... $3,364,000 $2,118,000
========== ==========
---------------
(1) Audit fees represent the aggregate fees billed for the audit of the
Company's financial statements, review of the financial statements included
in the Company's quarterly reports, and services in connection with
statutory and regulatory filings or engagements for those fiscal years.
(2) 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 Company's financial statements and are not reported under
"Audit fees." These services include planning and compliance with Sarbanes-
Oxley regulations in 2004 and 2003.
(3) Tax fees represent the aggregate fees billed for professional services for
tax compliance, tax advice and tax planning.
(4) 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" sections. The Audit Committee has determined that the provision of
these services is not incompatible with maintaining the principal
accountant's 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 will provide the Audit Committee with an audit
services plan during the first quarter of each fiscal year outlining the scope
of the audit services proposed to be performed for the fiscal year and the fees
therefor, which plan must be formally accepted by the Audit Committee. For
non-audit services, Company management will submit to the Audit Committee for
approval during the first 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, and the
fees therefor. Company management and the accounting firm will each confirm to
the Audit Committee that each non-audit service on any list is permissible under
all applicable legal requirements. The Audit Committee will approve both the
list of permissible non-audit services and the budget for such services. The
Audit Committee delegates to the Chair the authority to amend or modify the list
of approved permissible non-audit services and fees. The Chair will report
action taken to the Audit Committee at a subsequent Audit Committee meeting.
22
COMMON STOCK PERFORMANCE GRAPH
The following table compares total shareholder returns over the last five
years to the Standard & Poor's (the "S&P") 500 Index, the S&P 600 Small Cap
Industrial Machinery Index and the Russell 2000 Index assuming the value of the
investment in IDEX Common Stock and each index was $100 on December 31, 1999.
Total return values for IDEX Common Stock, the S&P 500 Index, S&P 600 Small Cap
Industrial Machinery Index and the Russell 2000 Index were calculated on
cumulative total return values assuming reinvestment of dividends. The
shareholder return shown on the graph below is not necessarily indicative of
future performance.
(PERFORMANCE GRAPH)
-------------------------------------------------------------------------------------
12/99 12/00 12/01 12/02 12/03 12/04
-------------------------------------------------------------------------------------
IDEX CORPORATION $100.00 $111.15 $117.91 $113.70 $147.06 $217.77
S&P 500 INDEX 100.00 90.90 80.09 62.39 80.29 89.03
S&P 600 SMALL CAP
INDUSTRIAL 100.00 96.75 103.59 99.19 135.07 173.42
RUSSELL 2000 INDEX 100.00 96.98 99.39 79.03 116.38 137.71
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers, directors and persons who own more than
10% of the Company's Common Stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Officers, directors and greater than 10% shareholders are required by
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms that they file. Based solely on its review of
the copies of such forms received by it, or written representations from certain
reporting persons, the Company believes that all filing requirements applicable
to its officers, directors and greater than 10% shareholders were met during the
year ended December 31, 2004.
PROPOSAL 2 -- INCREASE IN AUTHORIZED COMMON STOCK
The Restated Certificate of Incorporation of the Company presently
authorizes the issuance of 75,000,000 shares of Common Stock, par value $.01 per
share, and 5,000,000 shares of Preferred Stock, par value $.01 per share. As of
February 17, 2005, 50,927,355 shares of Common Stock were issued and outstanding
and no shares of Preferred Stock were issued and outstanding. In addition, as of
that date the Company had reserved 6,091,958 shares of Common Stock for issuance
under its various stock option plans.
23
On February 2, 2005, the Board of Directors of the Company authorized an
amendment to the first paragraph of Article IV of the Restated Certificate of
Incorporation to increase the total authorized shares of Common Stock from
75,000,000 to 150,000,000 shares, subject to shareholder approval. The text of
the first paragraph of Article IV as so amended is set forth below:
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 155,000,000 shares,
consisting of 5,000,000 shares of preferred stock, par value
$.01 per share (the "Preferred Stock") and 150,000,000 shares of
common stock, par value $.01 per share (the "Common Stock").
The increase in authorized shares of Common Stock is recommended by the
Board of Directors in order to provide the Company with increased flexibility
for the future growth of the Company and for obtaining financing for its
activities. Except with respect to the Company's various stock option plans and
deferred compensation plans, there are at present no plans, arrangements,
negotiations or commitments which will result in the issuance of additional
shares of the Company's Common Stock or Preferred Stock. However, these shares
will be available for issuance from time to time by action of the Board of
Directors to such persons and for such consideration as the Board may determine
to be in the best interests of the Company. Such issuance may not require
further shareholder approval. Holders of Common Stock of the Company have no
preemptive rights.
The issuance of additional shares of Common Stock or Preferred Stock, under
certain circumstances, may have anti-takeover effects and may have the effect of
discouraging unilateral attempts by third parties to obtain control of the
Company. For example, such issuance may create voting impediments to the
approval of mergers or other similar transactions involving the Company, may
dilute the voting power of the person seeking to acquire control or may create
other impediments to the consummation of a business combination. The Board of
Directors has no present intention to issue Common Stock or Preferred Stock for
such purposes.
The affirmative vote of a majority of the outstanding shares of Common
Stock of the Company is required to approve this amendment to the Company's
Restated Certificate of Incorporation.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS AMENDMENT.
PROPOSAL 3 -- APPROVAL OF THE IDEX CORPORATION INCENTIVE AWARD PLAN
The Board is submitting for shareholder approval the IDEX Corporation
Incentive Award Plan (the "Plan"). As of February 17, 2005, we had only 993,093
shares available for grant of options and settlement of Deferred Compensation
Units under our current equity compensation plans. Of this amount, 523,846
shares remain available for grant of options (of which only 4,150 remain
available for grant of options to officers), and 469,247 shares remain available
for settlement of Deferred Compensation Units. We believe that it is important
to be able to continue providing equity compensation to our employees in order
to maintain competitive compensation practices and to align the interests of our
employees with our shareholders. Accordingly, we have adopted and are submitting
the Plan for shareholder approval as a means of providing a wide variety of
equity-based compensation to our employees, consultants and directors. The Plan
is intended to replace our other equity compensation plans under one
shareholder-approved plan. Accordingly, if the Plan is approved by our
shareholders, no future grants will be made under any of our existing option
plans, and all forms of equity compensation for our employees, consultants and
directors will be made under the Plan, other than up to 469,247 shares of our
Common Stock issuable upon settlement of Deferred Compensation Units under the
Directors' Deferred Compensation Plan, which was previously approved by our
shareholders, and the Presidents' Deferred Compensation Plan, which was not
previously approved by our shareholders. The Plan is also intended to replace
our Executive Incentive Bonus Plan, which was previously approved by our
shareholders, which will allow bonuses to be paid to participants in cash as
well as our Common Stock. It is our intent that equity awards made under the
Plan be consistent with industry standards of approximately 2% of outstanding
shares each year. On January 28, 2005, the Compensation Committee approved and
adopted the Plan, subject to approval by the Board of Directors and our
shareholders. On February 2, 2005, the Board of Directors approved and adopted
the Plan, subject to approval by our shareholders.
24
The principal features of the Plan are summarized below, but the summary is
qualified in its entirety by reference to the Plan itself, which is included as
Appendix A.
The Plan provides for the grant of incentive stock options ("ISOs"), as
defined in Section 422 of the Code, nonstatutory stock options, restricted
stock, restricted stock units, stock appreciation rights ("SARs"), deferred
stock, dividend equivalent rights, performance awards and stock payments
(collectively referred to as "Awards") to our employees, consultants and
directors.
Under the Plan, the aggregate number of shares of our common stock that may
be issued under Awards is 2,300,000 shares; provided, however, that no more than
650,000 shares will be issued as restricted stock, restricted stock units,
deferred stock, performance awards, stock payments or stock appreciation rights
where the participant does not pay the intrinsic value for such award.
Additionally, Awards for no more than 500,000 shares may be granted to any one
individual during any calendar year. The maximum dollar value of a
performance-based award other than a performance share or performance stock unit
determined at the date of grant will not exceed 2% of our operating income.
The shares subject to the Plan, the limitations on the number of shares
that may be awarded under the Plan, and shares and option prices subject to
Awards outstanding under the Plan, will be adjusted as the Plan administrator
deems appropriate to reflect stock dividends, stock splits, combinations or
exchanges of shares, merger, consolidation, spin-off, recapitalization, or other
similar transactions.
Notwithstanding any provision in the Plan to the contrary, no option may be
awarded to reduce the per share exercise price of the shares subject to the
option below the exercise price as of the date the option is granted, and no
option may be granted in exchange for, or in connection with, the cancellation
or surrender of an option having a higher per share exercise price.
Shares subject to Awards that have expired, been forfeited or otherwise
terminated without having been exercised may be subject to new Awards. Shares
which are used to pay the exercise price for an option or stock appreciation
right, shares withheld to pay taxes, and shares repurchased by the Company other
than by reason of a forfeiture provision will be cancelled and will not be added
back to the number of shares, available for grant under the Plan. Shares issued
under the Plan may be previously authorized but unissued shares, or reacquired
shares bought on the open market or otherwise.
On February 17, 2005, the closing price of a share of our common stock on
the New York Stock Exchange was $38.75.
ADMINISTRATION
Generally, the Compensation Committee of our Board (the "Committee") will
administer the Plan. The Committee will consist of at least two members of the
Board who are both "non-employee" directors for purposes of Section 16-b of the
Exchange Act and "outside directors" under Section 162(m) of the Code. The
Committee has the authority to:
- select the individuals who will receive Awards;
- determine the type or types of Awards to be granted;
- determine the number of Awards to be granted and the number of shares to
which the Award relates;
- determine the terms and conditions of any Award, including the exercise
price and vesting;
- determine the terms of settlement of any Award;
- prescribe the form of Award agreement;
- establish, adopt or revise rules for administration of the Plan;
25
- interpret the terms of the Plan and any matters arising under the Plan;
and
- make all other decisions and determinations as may be necessary to
administer the Plan.
The Committee may delegate its authority to grant or amend Awards with
respect to participants other than senior executive officers, employees covered
by Section 162(m) of the Code or the officers to whom the authority to grant or
amend Awards has been delegated.
The Committee, with the approval of the Board, may also amend the Plan.
Amendments to the Plan are subject to shareholder approval to the extent
required by law, or New York Stock Exchange rules or regulations. Additionally,
shareholder approval will be specifically required to increase the number of
shares available for issuance under the Plan, allow for the grant of options
with an exercise price that is below fair market value on the date of grant,
extend the term of an option beyond ten years, or otherwise materially increase
the benefits or change eligibility requirements.
ELIGIBILITY
Awards under the Plan may be granted to individuals who are our employees
or employees of our subsidiaries, our directors and our consultants. However,
options which are intended to qualify as ISOs may only be granted to employees.
By agreement, Mr. Williams will not be eligible to receive any grants under
the Plan. See COMPENSATION OF EXECUTIVE OFFICERS -- Transition Agreements above.
AWARDS
The following will briefly describe the principal features of the various
Awards that may be granted under the Plan.
Options. Options provide for the right to purchase our common stock at a
specified price, and usually will become exercisable in the discretion of the
Committee in one or more installments after the grant date, but generally not
earlier than one year from the grant date. The option exercise price may be paid
in cash, by check, shares of our common stock which have been held by the option
holder for at least 6 months, other property with value equal to the exercise
price, through a broker assisted cash-less exercise, a loan, provided such loan
does not otherwise violate Section 13(k) of the Securities Exchange Act, or such
other methods as the Committee may approve from time to time. The Committee may
at anytime substitute SARs for options granted under the Plan.
Options may be granted for any term specified by the Committee, but shall
not exceed ten years. Options may not be granted at an exercise price that is
less than the fair market value of our Common Stock on the date of grant.
Additionally, the Committee may not without stockholder approval reprice any
options, including the cancellation of options in exchange for options with a
lower exercise price.
Options may take two forms, nonstatutory options (NSOs) and ISOs.
26
ISOs will be deigned to comply with the provision of the Code and will be
subject to certain restrictions contained in the Code in order to qualify as
ISOs. Among such restrictions, ISOs must:
- have an exercise price not less than the fair market value of our common
stock on the date of grant, or if granted to certain individuals who own
or are deemed to own at least 10% of the total combined voting power of
all of our classes of stock (10% shareholders), then such exercise price
may not be less than 110% of the fair market value of our common stock on
the date of grant;
- be granted only to our employees and employees of our subsidiary
corporations;
- expire within a specified time following the option holders termination
of employment;
- be exercised within ten years after the date of grant, or with respect to
10% shareholders, no more than five years after the date of grant; and
- not be first exercisable for more than $100,000 worth of value,
determined based on the exercise price.
No ISO may be granted under the Plan after ten years from the date the Plan
is approved by our shareholders.
Restricted Stock. A restricted stock award is the grant of shares of our
common stock at a price determined by the Committee (which price may be zero),
is nontransferable and unless otherwise determined by the Committee at the time
of award, may be forfeited upon termination of employment or service during a
restricted period. The Committee shall also determine in the award agreement
whether the participant will be entitled to vote the shares of restricted stock
and or receive dividends on such shares.
Stock Appreciation Rights. SARs provide for the payment to the holder
based upon increases in the price of our common stock over a set base price.
Payment for SARs may be made in cash, our common stock or any combination of the
two.
Restricted Stock Units. Restricted stock units represent the right to
receive shares of our common stock at a specified date in the future, subject to
forfeiture of such right. If the restricted stock unit has not been forfeited,
then on the date specified in the restricted stock we shall deliver to the
holder of the restricted stock unit, unrestricted shares of our common stock
which will be freely transferable.
Dividend Equivalents. Dividend equivalents represent the value of the
dividends per share we pay, calculated with reference to the number of shares
covered by an Award (other than a dividend equivalent award) held by the
participant.
Performance Share Awards. Performance share awards are denominated in
shares of our common stock and are linked to satisfaction of performance
criteria established by the Committee. If the Committee determines that the
Award is intended to meet the requirements of "qualified performance based
compensation" and therefore be deductible under Section 162(m) of the Code, then
the performance criteria on which the Award will be based shall be with
reference to any one or more of the following: net earnings (either before or
after interest, taxes, depreciation and amortization), economic value-added (as
determined by the Committee), sales or revenue, net income (either before or
after taxes), operating earnings, cash flow (including, but not limited to,
operating cash flow and free cash flow), return on capital, return on assets
(net or gross), return on shareholders' equity, return on sales, gross or net
profit margin, productivity, expense margins, operating efficiency, customer
satisfaction, working capital, earnings per share, price per share and market
share, any of which may be measured either in absolute terms or as compared to
any incremental increase or as compared to results of a peer group (the
"Performance Criteria").
Performance Stock Units. Performance stock units are denominated in units
of value, including dollar value of shares of our common stock and are linked to
satisfaction of performance criteria established by the Committee, including the
Performance Criteria on a specified date or dates over any period or periods.
Stock Payments. Payments to participants of bonuses or other compensation
may be made under the Plan in the form of Common Stock.
27
Deferred Stock. Deferred stock typically is awarded without payment of
consideration and is subject to vesting conditions, including satisfaction of
performance criteria, including the Performance Criteria. Like restricted stock,
deferred stock may not be sold, or otherwise transferred until the vesting
conditions are removed or expire. Unlike restricted stock, deferred stock is not
actually issued until the deferred stock award has vested. Recipients of
deferred stock also will have no voting or dividend rights prior to the time
when the vesting conditions are met and the deferred stock is delivered.
Performance Award. Performance awards are payable in cash and are linked
to satisfaction of performance criteria, including the Performance Criteria;
provided that no Performance Award may pay compensation in excess of 2% of our
operating income. The Committee has the authority to reduce the amount otherwise
payable under a Performance Award upon attainment of the Performance Criteria.
VESTING IN AWARDS OTHER THAN OPTIONS
Awards for which the participant does not pay for the intrinsic value of
the shares of Common Stock either directly or by foregoing a right to receive a
cash or stock payment from the Company, such as Restricted Stock, Restricted
Stock Units, Deferred Stock, Stock Appreciation Rights, Performance Share Awards
and Performance Stock Units, will vest over a period of not less than three
years or, in the case of performance-based vesting for Performance Share Awards
and Performance Stock Units, the performance period will be not less than one
year.
CHANGE OF CONTROL
Generally options and Stock Appreciation Rights granted under the Plan will
become exercisable in full upon the occurrence of a change of control (as
defined in the Plan) and all Restricted Stock, Restricted Stock Units, Deferred
Stock or other Performance Awards shall become payable upon a change of control,
unless the Award is assumed by any successor in such change in control, or the
award agreement otherwise provides. In connection with a change in control, the
Committee may cause the Awards to terminate, but shall give the holder of the
Awards the right to exercise their outstanding Awards or receive their other
rights under the Awards outstanding for some period of time prior to the change
in control, even though the Awards may not be exercisable or otherwise payable.
Additionally, to the extent necessary to comply with Section 409A of the Code,
the Committee may provide that the stock value of an Award determined on the
date of the change of control plus interest thereon shall be payable in lieu of
the Award on the date the Award would have otherwise been payable or vested.
ADJUSTMENTS UPON CERTAIN EVENTS
The number and kind of securities subject to an Award and the exercise
price or base price may be adjusted in the discretion of the Committee to
reflect any stock dividends, stock split, combination or exchange of shares,
merger, consolidation, spin-off, recapitalization or other distribution (other
than normal cash dividends) of our assets to our stockholders, or other similar
changes affecting the shares. In addition, upon such events the Committee may
provide for (i) the termination of any Awards in exchange for cash equal to the
amount the holder would otherwise be entitled if they had exercised the Award,
(ii) the full vesting, exercisability or payment of any Award, (iii) the
assumption of such Award by any successor, (iv) the replacement of such Award
with other rights or property, (v) the adjustment of the number, type of shares
and/or the terms and conditions of the Awards which may be granted in the
future, or (vi) that Awards cannot vest, be exercised or become payable after
such event.
AWARDS NOT TRANSFERABLE
Generally, the Awards may not be pledged, assigned or otherwise transferred
other than by will or by laws of descent and distribution. The Committee may
allow Awards other than ISOs to be transferred for estate or tax planning
purposes to members of the holder's family, charitable institutions or trusts
for the benefit of family members. In addition, the Committee may allow Awards
to be transferred to so-called "blind trusts" by
28
a holder of an Award who is terminating employment in connection with the
holder's service with the government, an educational or other non-profit
institution.
MISCELLANEOUS
As a condition to the issuance or delivery of stock or payment of other
compensation pursuant to the exercise or lapse of restrictions on any Award, the
Company requires participants to discharge all applicable withholding tax
obligations. Shares held by or to be issued to a participant may also be used to
discharge tax withholding obligations, subject to the discretion of the
Committee to disapprove of such use.
The Plan will expire and no further Awards may be granted after the tenth
anniversary of its approval by our shareholders.
The Plan must be approved by the shareholders within twelve months of the
date of its adoption. Awards under the Plan may be granted prior to such
approval, provided that such Awards may not vest or become exercisable prior to
the shareholders' approval of the Plan, and that if such approval is not
received within the twelve-month period, all such Awards shall become null and
void.
PLAN BENEFITS
The number of awards that an employee, director or consultant may receive
under the Plan is at the discretion of the Committee and therefore cannot be
determined in advance and, except as described below, the Committee has not made
any determination to grant any shares to any persons under the Plan as of the
date of this proxy statement.
If the Incentive Award Plan is approved, the Committee has agreed to grant
Mr. Kingsley 100,000 shares of restricted stock, which will vest in 25,000 share
increments over a four-year period on March 22 in each of the years 2006 through
2009. The value of such grant is dependent on the price of the Company's common
stock on March 22, 2005, which cannot be determined at this time.
If Performance Awards had been granted under the Plan for 2004, the maximum
amount that would have been payable in cash would have been $2,998,000 (2% of
our operating income).
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences of the Plan under current federal
income tax law are summarized in the following discussion which deals with the
general tax principles applicable to the Plan, and is intended for general
information only. In addition, the tax consequences described below are subject
to the limitations of Code Section 162(m), as discussed in further detail below.
Alternative minimum tax and other federal taxes and foreign, state and local
income taxes are not discussed, and may vary depending on individual
circumstances and from locality to locality.
Nonqualified Stock Options. For federal income tax purposes, the recipient
of NSOs granted under the Plan will not have taxable income upon the grant of
the option, nor will the Company then be entitled to any deduction. Generally,
upon exercise of NSOs the optionee will realize ordinary income, and the Company
will be entitled to a deduction, in an amount equal to the difference between
the option exercise price and the fair market value of the stock at the date of
exercise.
Incentive Stock Options. An optionee generally will not recognize taxable
income upon either the grant or exercise of an ISO. However, the amount by which
the fair market value of the shares at the time of exercise exceeds the exercise
price will be an "item of tax preference" for the optionee. Generally, upon the
sale or other taxable disposition of the shares of Common Stock acquired upon
exercise of an ISO, the optionee will recognize income taxable as capital gains
in an amount equal to the excess, if any, of the amount realized in such
disposition over the option exercise price, provided that no disposition of the
shares has taken place within either (a) two years from the date of grant of the
ISO or (b) one year from the date of exercise. If the shares of Common Stock are
sold or otherwise disposed of before the end of the one-year and two-year
periods specified above, the difference between the ISO exercise price and the
fair market value of the shares
29
on the date of exercise generally will be taxable as ordinary income; the
balance of the amount realized from such disposition, if any, generally will be
taxed as capital gain. If the shares of Common Stock are disposed of before the
expiration of the one-year and two-year periods and the amount realized is less
than the fair market value of the shares at the date of exercise, the optionee's
ordinary income generally is limited to the excess, if any, of the amount
realized in such disposition over the option exercise price paid. The Company
(or other employer corporation) generally will be entitled to a tax deduction
with respect to an ISO only to the extent the optionee has ordinary income upon
sale or other disposition of the shares of Common Stock.
Restricted Stock. Generally, a Participant will not be taxed upon the
grant or purchase of restricted stock that is subject to a "substantial risk of
forfeiture," within the meaning of Section 83 of the Code, until such time as
the restricted stock is no longer subject to the substantial risk of forfeiture.
At that time, the Participant will be taxed on the difference between the fair
market value of the Common Stock and the amount the Participant paid, if any,
for such restricted stock. However, the recipient of restricted stock under the
Plan may make an election under Section 83(b) of the Code to be taxed with
respect to the restricted stock as of the date of transfer of the restricted
stock rather than the date or dates upon which the restricted stock is no longer
subject to a substantial risk or forfeiture.
Stock Appreciation Rights. Generally, SARs that may be settled only in
stock and which are based only on the appreciation of the value of our Common
Stock over the fair market value on the date of grant will not be taxable to the
participant at grant and the appreciation will be taxable to the participant as
ordinary income at exercise. SARs settled in cash and/or that are granted at a
price which is less than the fair market value of our shares of common stock on
the date of grant will be taxable to the participant as ordinary income when the
participant receives the value of the appreciation, whether at exercise or at a
later specified date. To the extent that a SAR is settled in cash or is granted
at a price which is less than the fair market value of our shares of Common
Stock on the date of grant, such SAR will be considered deferred compensation
and subject to the rules of new Section 409A of the Code, which provide rules
regarding the timing of payment of deferred compensation. A SAR subject to
Section 409A of the Code which fails to comply with the rules of Section 409A,
can result in an additional 20% tax obligation, plus penalties and interest.
Currently how the additional tax and penalties and interest will be applied is
unclear.
Restricted Stock Units. A participant will generally not have ordinary
income upon grant of restricted stock units. When the shares of our Common Stock
are delivered under the terms of the restricted stock unit, the participant will
recognize ordinary income equal to the fair market value of the shares
delivered, less any amount paid by the participant for such shares. Restricted
stock units also can be considered non-qualified deferred compensation under new
Code Section 409A and, if the terms of such grant do not meet the requirements
of Code Section 409A, will result in an additional 20% tax obligation, plus
penalties and interest to such participant. Currently, how the additional tax,
penalties and interest will be applied is unclear.
Dividend Equivalents. A participant will be taxed as ordinary income on
dividend equivalents as they are paid and we generally will be entitled a
corresponding deduction.
Performance Share Awards and Performance Stock Units. A participant will
be taxed as ordinary income on the fair market value of the shares or the cash
paid on performance share awards and performance stock units when delivered or
paid. Performance share awards and performance stock units also can be
considered non-qualified deferred compensation under new Code Section 409A and,
if the terms of such grant do not meet the requirements of Code Section 409A,
will result in an additional 20% tax obligation, plus penalties and interest to
such participant. Currently, how the additional tax, penalties and interest will
be applied is unclear.
Stock Payments. A participant will be taxed as ordinary income on the fair
market value of the stock delivered as payment of bonuses or other compensation
under the Plan.
Deferred Stock. A participant will be taxed as ordinary income on the fair
market value of the shares on the date the shares are delivered under a deferred
stock award. Deferred stock can also be considered non-qualified deferred
compensation under new Code Section 409A, and if the terms of such grant do not
meet the
30
requirements of Code Section 409A, will result in an additional 20% tax
obligation, plus penalties and interest to such participant. Currently, how the
additional tax, penalties and interest will be applied is unclear.
Performance Awards. A participant will be taxed as ordinary income on the
amount of cash paid under the Performance Award and generally we will be
entitled to a corresponding deduction.
SECTION 162(M)
Under Code Section 162(m), in general, income tax deductions of
publicly-traded companies may be limited to the extent total compensation
(including base salary, annual bonus, stock option exercises) for certain
executive officers exceeds $1 million in any one taxable year. However, under
Code Section 162(m), the deduction limit does not apply to certain
"performance-based" compensation established by an independent compensation
committee which conforms to certain restrictive conditions stated under the Code
and related regulations. The Plan has been structured with the intent that
Awards granted under the Plan may meet the requirements for "performance-based"
compensation and Code Section 162(m). To the extent granted at an exercise price
not less than the value of our Common Stock, options and SARs granted under the
Plan are intended to qualify as "performance-based" under Section 162(m) of the
Code. Restricted Stock, Performance Stock Awards, Performance Stock Units,
Restricted Stock Units and Deferred Stock under the Plan may qualify as
"performance-based" under Code Section 162(m) they vest or become payable based
solely upon attainment of preestablished goals based on the Performance
Criteria. Performance Awards may qualify as "performance based" under Code
Section 162(m) to the extent payable based solely on attainment of
preestablished goals based on the Performance Criteria.
REASONS FOR ADOPTION OF THE PLAN
Under our current option plans, only employees and our non-employee
directors are eligible to receive grants of options. As of February 17, 2005, we
have only 523,846 shares which remain eligible for future grant of options under
the terms of our current plans (of which only 4,150 remain available for grant
of options to officers). The Board of Directors has determined that it is
advisable to continue to provide options and to allow for grants of other
stock-based incentive compensation to the Company's employees, directors and
consultants, thereby continuing to align the interests of such individuals with
those of our shareholders, and that Awards under the Plan are an effective means
of providing such compensation. Upon approval of the Plan, no further grants
will be made under the terms of our current option plans, however, up to 469,247
shares will remain issuable for settlement of Deferred Compensation Units under
the Directors' Deferred Compensation Plan and the Presidents' Deferred
Compensation Plan.
Additionally, the Plan allows us to provide compensation which would comply
with the requirements of performance-based compensation under Section 162(m) of
the Code in the form of cash and/or our Common Stock, thereby replacing our
current Executive Incentive Bonus Plan, which only provides for payment in the
form of cash.
REQUIRED VOTE FOR APPROVAL AND RECOMMENDATION OF THE BOARD OF DIRECTORS
Shareholder approval of the Plan is required: (1) under the New York Stock
Exchange corporate governance standards; (2) in order to preserve full
deductibility of performance-based awards under the Plan as performance-based
compensation under Section 162(m) of the Code; and (3) in order for options to
qualify for ISO treatment under the Code. Therefore, the Company is requesting
that shareholders approve the Plan. We are also asking for approval of the
Performance Criteria under the Plan in order to preserve the full deductibility
of performance-based awards under the Plan as performance-based compensation
under Section 162(m) of the Code.
The affirmative vote of a majority of the shares present in person or by
proxy at the Annual Meeting and entitled to vote is required to approve the
Plan.
Abstentions from voting on the Plan shall have the effect of a vote against
the proposal. Broker non-votes will not be considered present for purposes of
calculating a majority and, therefore, will have no effect on the
31
outcome of the vote. Pursuant to New York Stock Exchange Rules, a broker may not
vote on the adoption of or a material amendment to an equity compensation plan
without instruction from the beneficial owner of the shares held by such broker.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
PLAN.
PROPOSAL 4 -- APPROVAL OF AUDITORS
The Audit Committee has appointed Deloitte & Touche LLP as the Company's
independent auditors for 2005. Representatives of Deloitte & Touche LLP will
attend the Annual Meeting of shareholders and will have the opportunity to make
a statement if they desire to do so. They will also be available to respond to
appropriate questions.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR 2005.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR 2006 ANNUAL MEETING
A shareholder desiring to submit a proposal for inclusion in the Company's
Proxy Statement for the 2006 Annual Meeting must deliver the proposal so that it
is received by the Company no later than October 28, 2005. The Company requests
that all such proposals be addressed to Frank J. Notaro, Vice President-General
Counsel and Secretary, IDEX Corporation, 630 Dundee Road, Suite 400, Northbrook,
Illinois 60062, and mailed by certified mail, return receipt requested. In
addition, the Company's By-Laws require that notice of shareholder nominations
for directors and related information be received by the Secretary of the
Company not later than 60 days before the anniversary of the 2005 Annual Meeting
which, for the 2006 Annual Meeting, will be January 21, 2006.
32
OTHER BUSINESS
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 judgment on such matters.
By Order of the Board of Directors,
/s/ Frank J. Notaro
FRANK J. NOTARO
Vice President-General Counsel
and Secretary
February 25, 2005
Northbrook, Illinois
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2004, INCLUDING THE FINANCIAL STATEMENT SCHEDULES, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED BY SHAREHOLDERS WITHOUT
CHARGE BY SENDING A WRITTEN REQUEST THEREFOR TO SUSAN H. FISHER, DIRECTOR -
INVESTOR RELATIONS, IDEX CORPORATION, 630 DUNDEE ROAD, SUITE 400, NORTHBROOK,
ILLINOIS 60062.
33
APPENDIX A
IDEX CORPORATION
INCENTIVE AWARD PLAN
ARTICLE I
Purpose
The purpose of the IDEX Corporation Incentive Award Plan (the "Plan") is to
promote the success and enhance the value of IDEX Corporation, a Delaware
corporation. (the "Company") by linking the personal interests of the members of
the Board, Employees, and Consultants to those of Company stockholders and by
providing such individuals with an incentive for outstanding performance to
generate superior returns to Company stockholders. The Plan is further intended
to provide flexibility to the Company in its ability to motivate, attract, and
retain the services of members of the Board, Employees, and Consultants upon
whose judgment, interest, and special effort the successful conduct of the
Company's operation is largely dependent.
ARTICLE 2
Definitions and Construction
Wherever the following terms are used in the Plan, they shall have the
meanings specified below, unless the context clearly indicates otherwise. The
singular pronoun shall include the plural where the context so indicates.
2.1 "Award" means an Option, a Restricted Stock award, a Stock
Appreciation Right award, a Performance Share award, a Performance Stock Unit
award, Performance award, a Dividend Equivalents award, a Stock Payment award, a
Deferred Stock award, a Restricted Stock Unit award, an Other Stock-Based Award,
or a Performance-Based Award granted to a Participant pursuant to the Plan.
2.2 "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award, including through electronic medium.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Change of Control" means the occurrence of (a) any transaction or
series of transactions which within a 12-month period constitute a change of
management or control where (i) at least 51 percent of the then outstanding
shares of Stock are (for cash, property (including, without limitation, stock in
any corporation), or indebtedness, or any combination thereof) redeemed by the
Company or purchased by any person(s), firm(s) or entity(ies), or exchanged for
shares in any other corporation whether or not affiliated with the Company, or
any combination of such redemption, purchase or exchange, or (ii) at least 51
percent of the Company's assets are purchased by any person(s), firm(s) or
entity(ies) whether or not affiliated with the Company for cash, property
(including, without limitation, stock in any corporation) or indebtedness or any
combination thereof, or (iii) the Company is merged or consolidated with another
corporation regardless of whether the Company is the survivor (except any such
transaction solely for the purpose of changing the Company's domicile or which
does not change the ultimate beneficial ownership of the equity interests in the
Company), or (b) any substantial equivalent of any such redemption, purchase,
exchange, change, transaction or series of transactions, acquisition, merger or
consolidation constituting such a change of management or control. For purposes
hereof, the term "control" shall have the meaning ascribed thereto under the
Exchange Act and the regulations thereunder, and the term "management" shall
mean the chief executive officer of the Company. For purposes of clause (a)(ii)
above or as appropriate for purposes of clause (b) above, the Company shall be
deemed to include on a consolidated basis all subsidiaries and other affiliated
corporations or other entities with the same effect as if they were divisions.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
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2.6 "Committee" means the committee of the Board described in Article 12.
2.7 "Consultant" means any consultant or adviser if:
(a) The consultant or adviser renders bona fide services to the
Company;
(b) The services rendered by the consultant or adviser are not in
connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market
for the Company's securities; and
(c) The consultant or adviser is a natural person who has contracted
directly with the Company to render such services.
2.8 "Covered Employee" means an Employee who is, or could be, a "covered
employee" within the meaning of Section 162(m) of the Code.
2.9 "Deferred Stock" means a right to receive a specified number of shares
of Stock during specified time periods pursuant to Article 8.
2.10 "Disability" means that the Participant qualifies to receive
long-term disability payments under the Company's long-term disability insurance
program, as it may be amended from time to time.
2.11 "Dividend Equivalents" means a right granted to a Participant
pursuant to Article 8 to receive the equivalent value (in cash or Stock) of
dividends paid on Stock.
2.12 "Effective Date" shall have the meaning set forth in Section 13.1.
2.13 "Employee" means any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company or any Subsidiary.
2.14 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.15 "Fair Market Value" means, as of any given date, (i) if Stock is
traded on an exchange, the closing price of a share of Stock as reported in the
Wall Street Journal for the first trading date immediate prior to such date
during which a sale occurred; or (ii) if Stock is not traded on an exchange but
is quoted on NASDAQ or a successor or other quotation system, (x) the last sales
price (if the Stock is then listed as a National Market Issue under the NASD
National Market System) or (y) the mean between the closing representative bid
and asked prices (in all other cases) for the Stock on the date immediately
prior to such date on which sales prices or bid and asked prices, as applicable,
are reported by NASDAQ or such successor quotation system; or (iii) if such
Stock is not publicly traded on an exchange and not quoted on NASDAQ or a
successor quotation system, the mean between the closing bid and asked prices
for the Stock on the day previous to such date, as determined in good faith by
the Committee; or (iv) if the Stock is not publicly traded, the fair market
value established by the Committee acting in good faith.
2.16 "Full Value Award" means any Award other than an Option or other
Award for which the Participant pays the intrinsic value (whether directly or by
forgoing a right to receive a cash payment from the Company).
2.17 "Incentive Stock Option" means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.
2.18 "Independent Director" means a member of the Board who is not an
Employee of the Company.
2.19 "Non-Employee Director" means a member of the Board who qualifies as
a "Non-Employee Director" as defined in Rule 16b-3(b)(3) of the Exchange Act, or
any successor definition adopted by the Board.
2.20 "Non-Qualified Stock Option" means an Option that is not intended to
be an Incentive Stock Option.
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2.21 "Option" means a right granted to a Participant pursuant to Article 5
of the Plan to purchase a specified number of shares of Stock at a specified
price during specified time periods. An Option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
2.22 "Other Stock-Based Award" means an Award granted or denominated in
Stock or units of Stock pursuant to Section 8.7 of the Plan.
2.23 "Participant" means a person who, as a member of the Board,
Consultant or Employee, has been granted an Award pursuant to the Plan.
2.24 "Performance Award" means a right granted to a Participant pursuant
to Article 8, to receive a cash payment contingent upon achieving certain
performance goals established by the Committee.
2.25 "Performance-Based Award" means an Award granted to selected Covered
Employees pursuant to Articles 6 and 8, but which is subject to the terms and
conditions set forth in Article 9.
2.26 "Performance Criteria" means the criteria that the Committee selects
for purposes of establishing the Performance Goal or Performance Goals for a
Participant for a Performance Period. The Performance Criteria that will be used
to establish Performance Goals are limited to the following: net earnings
(either before or after interest, taxes, depreciation and amortization),
economic value-added (as determined by the Committee), sales or revenue, net
income (either before or after taxes), operating earnings, cash flow (including,
but not limited to, operating cash flow and free cash flow), cash flow return on
capital, return on net assets, return on stockholder's equity, return on assets,
return on capital, stockholder returns, return on sales, gross or net profit
margin, productivity, expense, margins, operating efficiency, customer
satisfaction, working capital, earnings per share, price per share of Stock, and
market share, any of which may be measured either in absolute terms or as
compared to any incremental increase or as compared to results of a peer group.
The Committee shall, within the time prescribed by Section 162(m) of the Code,
define in an objective fashion the manner of calculating the Performance
Criteria it selects to use for such Performance Period for such Participant.
2.27 "Performance Goals" means, for a Performance Period, the goals
established in writing by the Committee for the Performance Period based upon
the Performance Criteria. Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit, or an individual. The Committee, in its discretion, may, within the time
prescribed by Section 162(m) of the Code, adjust or modify the calculation of
Performance Goals for such Performance Period in order to prevent the dilution
or enlargement of the rights of Participants (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (ii) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.
2.28 "Performance Period" means the one or more periods of time, which may
be of varying and overlapping durations, as the Committee may select, over which
the attainment of one or more Performance Goals will be measured for the purpose
of determining a Participant's right to, and the payment of, a Performance-Based
Award.
2.29 "Performance Share" means a right granted to a Participant pursuant
to Article 8, to receive Stock, the payment of which is contingent upon
achieving certain performance goals established by the Committee.
2.30 "Performance Stock Unit" means a right granted to a Participant
pursuant to Article 8, to receive Stock, the payment of which is contingent upon
achieving certain performance goals established by the Committee.
2.31 "Plan" means this IDEX Corporation Incentive Award Plan, as it may be
amended from time to time.
A-3
2.32 "Qualified Performance-Based Compensation" means any compensation
that is intended to qualify as "qualified performance-based compensation" as
described in Section 162(m)(4)(C) of the Code.
2.33 "Restricted Stock" means Stock awarded to a Participant pursuant to
Article 6 that is subject to certain restrictions and may be subject to risk of
forfeiture.
2.34 "Restricted Stock Unit" means an Award granted pursuant to Section
8.6.
2.35 "Stock" means the common stock of the Company, par value $0.01 per
share, and such other securities of the Company that may be substituted for
Stock pursuant to Article 11.
2.36 "Stock Appreciation Right" or "SAR" means a right granted pursuant to
Article 7 to receive a payment equal to the excess of the Fair Market Value of a
specified number of shares of Stock on the date the SAR is exercised over the
Fair Market Value on the date the SAR was granted as set forth in the applicable
Award Agreement.
2.37 "Stock payment" means (a) a payment in the form of shares of Stock,
or (b) an option or other right to purchase shares of Stock, as part of any
bonus, deferred compensation or other arrangement, made in lieu of all or any
portion of the compensation, granted pursuant to Article 8.
2.38 "Subsidiary" means any corporation or other entity of which a
majority of the outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.
ARTICLE 3
Shares Subject to the Plan
3.1 Number of Shares.
(a) Subject to Article 11 and Section 3.1(b), the aggregate number of
shares of Stock which may be issued or transferred pursuant to Awards under the
Plan shall be 2,300,000 shares; provided however, no more than 650,000 shares of
Stock may be issued in the form of Full Value Awards. The maximum number of
shares of Stock that may be delivered upon exercise of Incentive Stock Options
shall be 2,300,000.
(b) Notwithstanding Section 3.1(a): (i) the Committee may adopt reasonable
counting procedures to ensure appropriate counting, avoid double counting (as,
for example, in the case of tandem or substitute awards), and make adjustments
if the number of shares of Stock actually delivered differs from the number of
shares previously counted in connection with an Award; (ii) shares of Stock that
are potentially deliverable under any Award that expires or is canceled,
forfeited or otherwise terminated without a delivery of such shares to the
Participant will not be counted as delivered under the Plan; (iii) shares of
Stock that have been issued in connection with any Award (e.g., Restricted
Stock) that is canceled, forfeited, or repurchased for the same price paid by
the Participant so that such shares of Stock are returned to the Company will
again be available for Awards; provided, however, that, no shares shall become
available pursuant to this Section 3.1(b) to the extent that (x) the transaction
resulting in the return of shares occurs more than ten years after the date of
the most recent shareholder approval of the Plan, or (y) such return of shares
would constitute a "material revision" of the Plan subject to stockholder
approval under then applicable rules of the New York Stock Exchange (or any
other applicable exchange or quotation system). In addition, in the case of any
Award granted in substitution for an award of a company or business acquired by
the Company or a subsidiary or affiliate, shares of Stock issued or issuable in
connection with such substitute Award shall not be counted against the number of
shares reserved under the Plan, but shall be available under the Plan by virtue
of the Company's assumption of the plan or arrangement of the acquired company
or business. This Section 3.1 shall apply to the share limit imposed with
respect to Incentive Stock Options only to the extent consistent with applicable
regulations relating to Incentive Stock Options under the Code. Because shares
will count against the number reserved in Section 3.1 upon deliver, the
Committee may, subject to the share counting rules under this Section 3.1,
determine that Awards may be outstanding that relate to a greater number of
shares than the aggregate remaining available under the Plan, so long as Awards
will not result in delivery and vesting of shares in excess of the number then
available under the Plan. The payment of Dividend Equivalents in conjunction
with any outstanding Awards shall not be counted against the shares available
for issuance under the Plan. Shares which are used to pay the exercise price for
an Option or SAR, shares withheld to pay taxes
A-4
and shares repurchased by the Company other than by reason of a forfeiture
provision will be cancelled and will not again be available for issuance under
the Plan.
3.2 Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
3.3 Limitation on Number of Shares Subject to Awards and Limit on
Performance Awards. Notwithstanding any provision in the Plan to the contrary,
and subject to Article 11, the maximum number of shares of Stock with respect to
one or more Awards that may be granted to any one Participant during any
calendar year shall be 500,000. The maximum amount that may be paid in cash as a
Performance Award that is intended to be a Performance Based Award shall not
exceed 2% of the Company's operating income (income from operations before
extraordinary items, interest and taxes).
ARTICLE 4
Eligibility and Participation
4.1 Eligibility.
(a) General. Persons eligible to participate in this Plan include
Employees, Consultants, and all members of the Board, as determined by the
Committee.
(b) Foreign Participants. Notwithstanding any provision of the Plan to
the contrary, in order to comply with the laws in other countries in which the
Company and its Subsidiaries operate or have Employees, Consultants or members
of the Board, the Committee, in its sole discretion, shall have the power and
authority to:
(i) Determine which Subsidiaries shall be covered by the Plan;
(ii) Determine which Employees, Consultants or members of the Board
outside the United States are eligible to participate in the Plan;
(iii) Modify the terms and conditions of any Award granted to
Employees, Consultants or members of the Board outside the United States to
comply with applicable foreign laws;
(iv) Establish subplans and modify exercise procedures and other terms
and procedures, to the extent such actions may be necessary or advisable
(any such subplans and/or modifications shall be attached to this Plan as
appendices); provided, however, that no such subplans and/or modifications
shall increase the share limitations contained in Sections 3.1 and 3.3 of
the Plan; and
(v) Take any action, before or after an Award is made, that it deems
advisable to obtain approval or comply with any necessary local
governmental regulatory exemptions or approvals.
Notwithstanding the foregoing, the Committee may not take any actions hereunder,
and no Awards shall be granted, that would violate the Exchange Act, the Code,
any securities law or governing statue or any other applicable law.
4.2 Participation. Subject to the provisions of the Plan, the Committee
may, from time to time, select from among all eligible individuals, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award. No individual shall have any right to be granted an Award pursuant to
this Plan.
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ARTICLE 5
Stock Options
5.1 General. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock subject to
an Option shall be determined by the Committee and set forth in the Award
Agreement; provided that the exercise price for any Option shall not be
less than 100% of the Fair Market Value on the date of grant.
(b) Time and Conditions of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part;
provided that the term of any Option granted under the Plan shall not
exceed ten years and that no Option may be exercisable earlier than one
year after its date of grant, except as provided in Section 11.2. The
Committee shall also determine the performance or other conditions, if any,
that must be satisfied before all or part of an Option may be exercised.
(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, promissory not bearing interest at no less than
such rate as shall then preclude the imputation of interest under the Code,
shares of Stock held for longer than 6 months having a Fair Market Value on
the date of delivery equal to the aggregate exercise price of the Option or
exercised potion thereof, or other property acceptable to the Committee
(including through the delivery of a notice that the Participant has placed
a market sell order with a broker with respect to shares of Stock then
issuable upon exercise of the Option, and that the broker has been directed
to pay a sufficient portion of the net proceeds of the sale to the company
in satisfaction of the Option exercise price; provided that payment of such
proceeds is then made to the Company upon settlement of such sale), and the
methods by which shares of Stock shall be delivered or deemed to be
delivered to Participants. Notwithstanding any other provision of the Plan
to the contrary, no Participant who is a member of the Board or an
"executive officer" of the Company within the meaning of Section 13(k) of
the Exchange Act shall be permitted to pay the exercise price of an Option
in any method which would violate Section 13(k) of the Exchange Act.
(d) Evidence of Grant. All Options shall be evidenced by an Award
Agreement between the Company and the Participant. The Award Agreement
shall include such additional provisions as may be specified by the
Committee.
5.2 Incentive Stock Options. Incentive Stock Options shall be granted
only to Employees and the terms of any Incentive Stock Options granted pursuant
to the Plan, in addition to the requirements of Section 5.1, mush comply with
the following additional provisions of this Section 5.2:
(a) Expiration of Option. An Incentive Stock Option may not be
exercised to any extent by anyone after the first to occur of the following
events:
(i) Ten years from the date it is granted, unless an earlier time
is set in the Award Agreement;
(ii) Three months after the Participant's termination of employment
as an Employee; and
(iii) One year after the date of the Participant's termination of
employment or service on account of Disability or death. Upon the
Participant's Disability or death, any Incentive Stock Options
exercisable at the Participant's Disability or death may be exercised by
the Participant's legal representative or representatives, by the person
or persons entitled to do so pursuant to the Participant's last will and
testament, or, if the Participant fails to make testamentary disposition
of such Incentive Stock Option or dies intestate, by the person or
persons entitled to receive the Incentive Stock Option pursuant to the
applicable laws of descent and distribution.
(b) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time the Option is granted) of all shares of Stock
with respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000 or such other
limitation as
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imposed by Section 422(d) of the Code, or any successor provision. To the
extent that Incentive Stock Options are first exercisable by a Participant
in excess of such limitation, the excess shall be considered Non-Qualified
Stock Options.
(c) Ten Percent Owners. An Incentive Stock Option shall be granted
to any individual who, at the date of grant, owns stock possessing more
than ten percent of the total combined voting power of all classes of Stock
of the Company only if such Option is granted at a price that is not less
than 110% of Fair Market Value on the date of grant and the Option is
exercisable for no more than five years from the date of grant.
(d) Transfer Restriction. The Participant shall give the Company
prompt notice of any disposition of shares of Stock acquired by exercise of
an Incentive Stock Option within (i) two years from the date of grant of
such Incentive Stock Option or (ii) one year after the transfer of such
shares of Stock to the Participant.
(e) Expiration of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to this Plan after the tenth anniversary
of the Effective Date.
(f) Right to Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.
5.3 Substitution of Stock Appreciation Rights. The Committee may provide
in the Award Agreement evidencing the grant of an Option that the Committee, in
its sole discretion, shall have the right to substitute a Stock Appreciation
Right for such Option at any time prior to or upon exercise of such Option,
provided that such Stock Appreciation Right shall be exercisable for the same
number of shares of Stock as such substituted Option would have been exercisable
for.
ARTICLE 6
Restricted Stock Awards
6.1 Grant of Restricted Stock. The Committee is authorized to make Awards
of Restricted Stock to any Participant selected by the Committee in such amounts
and subject to such terms and conditions as determined by the Committee. All
Awards of Restricted Stock shall be evidenced by an Award Agreement.
6.2 Issuance and Restrictions. Subject to Section 10.6, Restricted Stock
shall be subject to such restrictions on transferability and other restrictions
as the Committee may impose (including, without limitation, limitations on the
right to vote Restricted Stock or the right to receive dividends on the
Restricted Stock). These restrictions may lapse separately or in combination at
such times, pursuant to such circumstances, in such installments, or otherwise,
as the Committee determines at the time of the grant of the Award or thereafter.
6.3 Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited; provided, however, that,
except as otherwise provided by Section 10.6, the Committee may (a) provide in
any Restricted Stock Award Agreement that restrictions or forfeiture conditions
relating to Restricted Stock will be waived in whole or in part in the event of
terminations resulting from specified causes, and (b) in other cases waive in
whole or in part restrictions or forfeiture conditions relating to Restricted
Stock.
6.4 Certificates for Restricted Stock. Restricted Stock granted pursuant
to the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.
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ARTICLE 7
Stock Appreciation Rights
7.1 Grant of Stock Appreciation Rights.
(a) A Stock Appreciation Right may be granted to any Participant selected
by the Committee. A Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall impose and
shall be evidenced by an Award Agreement.
(b) A Stock Appreciation Right shall entitle the Participant (or other
person entitled to exercise the Stock Appreciation Right pursuant to the Plan)
to exercise all or a specified portion of the Stock Appreciation Right (to the
extent then exercisable to its terms) and to receive from the Company an amount
determined by multiplying the difference obtained by subtracting the exercise
price per share of the Stock Appreciation Right from the Fair Market Value of a
share of Stock on the date of exercise of the Stock Appreciation Right by the
number of shares of Stock with respect to which the Stock Appreciation Right
shall have been exercised, subject to any limitations the Committee may impose.
7.2 Payment and Limitations on Exercise.
(a) Payment of the amounts determined under Section 7.1(b) above shall be
in cash, in Stock (based on its Fair Market Value as of the date the Stock
Appreciation Right is exercised) or a combination of both, as determined by the
Committee in the Award Agreement. To the extent payment for a Stock Appreciation
Right is to be made in cash. The Award Agreements shall specify the date of
payment which may be different than the date of exercise of the Stock
Appreciation Right, to the extent necessary to comply with the requirements to
Section 409A of the Code, as applicable. If the date of payment for a Stock
Appreciation Right is later than the date of exercise, the Award Agreement may
specify that the Participant be entitled to earnings on such amount until paid.
(b) To the extent any payment under Section 7.1(b) is effected in Stock it
shall be made subject to satisfaction of all provisions of Article 5 above
pertaining to Options.
ARTICLE 8
Other Types of Awards
8.1 Performance Share Awards. Any Participant selected by the Committee
may be granted one or more Performance Share awards which shall be denominated
in a number of shares of Stock and which may be linked to nay one or more of the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee (subject to Section 10.6). In
making such determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular
Participant.
8.2 Performance Stock Units. Any Participant selected by the Committee
may be granted one or more Performance Stock Unit awards which shall be
denominated in unit equivalent of shares of Stock and/or units of value
including dollar value of shares of Stock and which may be linked to any one or
more of the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, in each case on a specified date or
dates or over any period or periods determined by the Committee (subject to
Section 10.6). In making such determinations, the Committee shall consider
(among such other factors as it deems relevant in light of the specific type of
award) the contributions, responsibilities and other compensation of the
particular Participant.
8.3 Performance Award. Any Participant selected by the Committee may be
granted a Performance Award. The value of such Performance Awards may be linked
to any one or more of the Performance Criteria or other specific performance
criteria determined appropriate by the Committee, in each case on a specific
date or dates or over any Performance Period determined by the Committee. In
making such determinations,
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the Committee shall consider (among such other factors as it deems relevant in
light of the specific type of award) the contributions, responsibilities and
other compensation of the Participant.
8.3 Dividend Equivalents.
(a) Any Participant selected by the Committee may be granted Dividend
Equivalents based on the dividends declared on the shares of Stock that are
subject to any Award, to be credited as of dividend payment dates, during the
period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Stock by such
formula and at such time and subject to such limitations as may be determined by
the Committee.
(b) Dividend Equivalents granted with respect to Options or SARs that are
intended to be Qualified Performance-Based Compensation shall be payable, with
respect to pre-exercise periods, regardless of whether such Option or SAR is
subsequently exercised.
8.5 Stock Payments. Any Participant selected by the Committee may receive
Stock Payments in the manner determined from time to time by the Committee;
provided, that unless otherwise determined by the Committee such Stock Payments
shall be made in lieu of base salary, bonus, or other cash compensation
otherwise payable to such Participant. The number of shares shall be determined
by the Committee and may be based upon the Performance Criteria or other
specific criteria determined appropriate by the Committee, determined on the
date such Stock Payment is made or on any date thereafter.
8.6 Deferred Stock. Any Participant selected by the Committee may be
granted an award of Deferred Stock in the manner determined from time to time by
the Committee. The number of shares of Deferred Stock shall be determined by the
Committee and may be linked to the Performance Criteria or other specific
criteria determined to be appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee (subject to Section 10.6). Stock underlying a Deferred Stock award
will not be issued until the Deferred Stock award has vested, pursuant to a
vesting schedule or criteria set by the Committee. Unless otherwise provided by
the Committee, a Participant awarded Deferred Stock shall have no rights as a
Company stockholder with respect to such Deferred Stock until such time as the
Deferred Stock Award has vested and the Stock underlying the Deferred Stock
Award has been issued.
8.7 Restricted Stock Units. The Committee is authorized to make Awards of
Restricted Stock Units to any Participant selected by the Committee in such
amounts and subject to such terms and conditions as determined by the Committee.
At the time of grant, the Committee shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and nonforfeitable, and may
specify such conditions to vesting as it deems appropriate (subject to Section
10.6). At the time of grant, the Committee shall specify the maturity date
applicable to each grant of Restricted Stock Units which shall be no earlier
than the vesting date or dates of the Award and may be determined at the
election of the grantee. On the maturity date, the Company shall transfer to the
Participant one unrestricted, fully transferable share of Stock for each
Restricted Stock Unit scheduled to be paid out on such date and not previously
forfeited. The Committee shall specify the purchase price, if any, to be paid by
the grantee to the Company for such shares of Stock.
8.8 Term. Except as otherwise provided herein, the term of any Award of
Performance Shares, Performance Stock Units, Dividend Equivalents, Stock
Payments, Deferred Stock, Restricted Stock Units or Other Stock-Based Award
shall be set by the Committee in its discretion.
8.9 Exercise or Purchase Price. The Committee may establish the exercise
or purchase price, if any, of any Award of Performance Shares, Performance Stock
Units, Deferred Stock, Stock Payments, Restricted Stock Units or Other
Stock-Based Award; provided, however, that such price shall not be less than the
par value of a share of Stock, unless otherwise permitted by applicable state
law.
8.10 Exercise Upon Termination of Employment or Service. An Award of
Performance Shares, Performance Stock Units, Dividend Equivalents, Deferred
Stock, Stock Payments, Restricted Stock Units and Other Stock-Based Award shall
only be exercisable or payable while the Participant is an Employee, Consultant
or a member of the Board, as applicable; provided, however, that the Committee
in its sole and
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absolute discretion may provide that an Award of Performance Shares, Performance
Stock Units, Dividend Equivalents, Stock Payments, Deferred Stock, Restricted
Stock Units or Other Stock-Based Award may be exercised or paid subsequent to a
termination of employment or service, as applicable, or following a Change of
Control of the Company, or because of the Participant's retirement, death or
disability, or otherwise.
8.11 Form of Payment. Payments with respect to any Awards granted under
this Article 8 shall be made in cash, in Stock or a combination of both, as
determined by the Committee.
8.12 Award Agreement. All Awards under this Article 8 shall be subject to
such additional terms and conditions as determined by the Committee and shall be
evidenced by an Award Agreement.
ARTICLE 9
Performance-Based Awards
9.1 Purpose. The purpose of this Article 9 is to provide the Committee
the ability to qualify Awards other than Options and SARs and that are granted
pursuant to Articles 6 and 8 as Qualified Performance-Based Compensation. If the
Committee, in its discretion, decides to grant a Performance-Based Award to a
Covered Employee, the provisions of this Article 9 shall control over any
contrary provision contained in Articles 6 or 8; provided, however, that the
Committee may in its discretion grant Awards to Covered Employees or other
Participants that are based on Performance Criteria or Performance Goals but
that do not satisfy the requirements of this Article 9.
9.2 Applicability. This Article 9 shall apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
designation of a Covered Employee as a Participant for a Performance Period
shall not in any manner entitle the Participant to receive an Award for the
period. Moreover, designation of a Covered Employee as a Participant for a
particular Performance Period shall not require designation of such Covered
Employee as a Participant in any subsequent Performance Period and designation
of one Covered Employee as a Participant shall not require designation of any
other Covered Employees as a Participant in such period or in any other period.
9.3 Procedures with Respect to Performance-Based Awards. To the extent
necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any Award
granted under Articles 6 and 8 which may be granted to one or more Covered
Employees, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (a) designate one or more Covered
Employees, (b) select the Performance Criteria applicable to the Performance
Period, (c) establish the Performance Goals, and amounts of such Awards, as
applicable, which may be earned for such Performance Period, and (d) specify the
relationship between Performance Criteria and the Performance Goals and the
amounts of such Awards, as applicable, to be earned by each Covered Employee for
such Performance Period. Following the completion of each Performance Period,
the Committee shall certify in writing whether the applicable Performance Goals
have been achieved for such Performance Period. In determining the amount earned
by a Covered Employee, the Committee shall have the right to reduce or eliminate
(but not to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period.
9.4 Payment of Performance-Based Awards. Unless otherwise provided in
the applicable Award Agreement, a Participant must be employed by the Company or
a Subsidiary on the day a Performance-Based Award for such Performance Period is
paid to the Participant. Furthermore, a Participant shall be eligible to receive
payment pursuant to a Performance-Based Award for a Performance Period only if
the Performance Goals for such period are achieved. In determining the amount
earned under a Performance-Based Award, the Committee may reduce or eliminate
the amount of the Performance-Based Award earned for the Performance Period, if
in its sole and absolute discretion, such reduction or elimination is
appropriate.
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9.5 Additional Limitations. Notwithstanding any other provision of the
Plan, any Award which is granted to a Covered Employee and is intended to
constitute Qualified Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as qualified
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and the Plan shall be deemed amended to the extent necessary to conform to such
requirements.
ARTICLE 10
Provisions Applicable to Awards
10.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan
may, in the discretion of the Committee, be granted either alone, in addition
to, or in tandem with, any other Award granted pursuant to the Plan. Awards
granted in addition to or in tandem with other Awards may be granted either at
the same time as or at a different time from the grant of such other Awards.
10.2 Award Agreement. Awards under the Plan shall be evidenced by Award
Agreements that set forth the terms, conditions and limitations for each Award
which may include the term of an Award, the provisions applicable in the event
the Participant's employment or service terminates, and the Company's authority
to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an
Award.
10.3 Limits on Transfer. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no Award
shall be assigned, transferred, or otherwise disposed of by a Participant other
than by will or the laws of descent and distribution. The Committee by express
provision in the Award or an amendment thereto may permit an Award (other than
an Incentive Stock Option) to be transferred to, exercised by and paid to
certain persons or entities related to the Participant, including but not
limited to members of the Participant's family, charitable institutions, or
trusts or other entities whose beneficiaries or beneficial owners are members of
the Participant's family and/or charitable institutions, or to such other
persons or entities as may be expressly approved by the Committee, pursuant to
such conditions and procedures as the Committee may establish. Any permitted
transfer shall be subject to the condition that the Committee receive evidence
satisfactory to it that the transfer is being made for estate and/or tax
planning purposes (or to a "blind trust" in connection with the Participant's
termination of employment or service with the Company or a Subsidiary to assume
a position with a governmental, charitable, educational or similar non-profit
institution) and on a basis consistent with the Company's lawful issue of
securities.
10.4 Beneficiaries. Notwithstanding Section 10.3, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Award Agreement
applicable to the Participant, except to the extent the Plan and Award Agreement
otherwise provide, and to any additional restrictions deemed necessary or
appropriate by the Committee. If the Participant is married and resides in a
community property state, a designation of a person other than the Participant's
spouse as his or her beneficiary with respect to more than 50% of the
Participant's interest in the Award shall not be effective without the prior
written consent of the Participant's spouse. If no beneficiary has been
designated or survives the Participant, payment shall be made to the person
entitled thereto pursuant to the Participant's will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Participant at any time provided the change or revocation is
filed with the Committee.
10.5 Stock Certificates. Notwithstanding anything herein to the contrary,
the Company shall not be required to issue or deliver any certificates
evidencing shares of Stock pursuant to the exercise of any Award,
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unless and until the Board has determined, with advice of counsel, that the
issuance and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authorities and, if applicable, the
requirements of any exchange on which the shares of Stock are listed or traded.
All Stock certificates delivered pursuant to the Plan are subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or
advisable to comply with federal, state, or foreign jurisdiction, securities or
other laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on which the Stock is listed, quoted, or
traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock. In addition to the terms and conditions
provided herein, the Board may require that a Participant make such reasonable
covenants, agreements, and representations as the Board, in its discretion,
deems advisable in order to comply with any such laws, regulations, or
requirements. The Committee shall have the right to require any Participant to
comply with any timing or other restrictions with respect to the settlement or
exercise of any Award, including a window-period limitation, as may be imposed
in the discretion of the Committee.
10.6 Full Value Award Vesting Limitations. Notwithstanding any other
provision of this Plan to the contrary, Full Value Awards made to Employees or
Consultants shall become vested over a period of not less than three years, (or,
in the case of vesting based upon the attainment of Performance Goals or other
performance-based, objectives, over a period of not less than one year)
following the date the Award is made; provided, however, that, notwithstanding
the foregoing, Full Value Awards that result in the issuance of an aggregate of
up to 5% of the shares of Stock available pursuant to Section 3.1 (a) may be
granted to any one or more Participants without respect to such minimum vesting
provisions.
10.7 Paperless Exercise. In the event that the Company establishes, for
itself or using the services of a third party, an automated system for the
exercise of Awards, such as a system using an internet website or interactive
voice response, then the paperless exercise of Awards by a Participant may be
permitted through the use of such an automated system.
ARTICLE 11
Changes in the Capital Structure
11.1 Adjustments. In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of
Company assets to stockholders, or any other change affecting the shares of
Stock or the share price of the Stock, the Committee shall make such
proportionate adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change with respect to (a) the aggregate number and
type of shares that may be issued under the Plan (including, but not limited to,
adjustments of the limitations in Sections 3.1 and 3.3); (b) the terms and
conditions of any outstanding Awards (including, without limitation, any
applicable performance targets or criteria with respect thereto); and (c) the
grant or exercise price per share for any outstanding Awards under the Plan. Any
adjustment affecting an Award intended as Qualified Performance-Based
Compensation shall be made consistent with the requirements of Section 162(m) of
the Code.
11.2 Acceleration upon a Change of Control. Except as may otherwise be
provided in any Award Agreement or any other written agreement entered into by
and between the Company and a Participant, if a Change of Control occurs and a
Participant's Options, Restricted Stock or Stock Appreciation Rights settled in
stock are not converted, assumed, or replaced by a successor, such Awards shall
become fully exercisable and all forfeiture restrictions on such Awards shall
lapse; and provided such Change of Control is a change in the ownership or
effective control of the Company or in the ownership of or a substantial portion
of the assets of the Company within the meaning of Section 409A of the Code,
then all Restricted Stock Units, Deferred Stock and Performance Stock shall
become deliverable upon the Change of Control. Upon, or in anticipation of, a
Change of Control, the Committee may in its sole discretion provide for (i) any
and all Awards outstanding hereunder to terminate at a specific time in the
future and shall give each Participant the right to exercise such Awards during
a period of time as the Committee shall determine, (ii) either the purchase of
any Award for an amount of cash equal to the amount that could have been
attained upon the exercise of such Award or realization of the Participant's
rights had such Award been currently exercisable or payable or fully
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vested (and, for the avoidance of doubt, if as of such date the Committee
determines in good faith that no amount would have been attained upon the
exercise of such Award or realization of the Participant's rights, then such
Award may be terminated by the Company without payment), (iii) the replacement
of such Award with other rights or property selected by the Committee in its
sole discretion the assumption of or substitution of such Award by the successor
or surviving corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of Shares and prices, or (iv) provide for
payment of Awards in cash based on the value of Stock on the date of the Change
of Control plus reasonable interest on the Award through the date such Award
would otherwise be vested or have been paid in accordance with its original
terms, if necessary to comply with Section 409A of the Code.
11.3 Outstanding Awards -- Certain Mergers. Subject to any required
action by the stockholders of the Company, in the event that the Company shall
be the surviving corporation in any merger or consolidation (except a merger or
consolidation as a result of which the holders of shares of Stock receive
securities of another corporation), each Award outstanding on the date of such
merger or consolidation shall pertain to and apply to the securities that a
holder of the number of shares of Stock subject to such Award would have
received in such merger or consolidation.
11.4 Outstanding Awards -- Other Changes. In the event of any other
change in the capitalization of the Company or corporate change other than those
specifically referred to in this Article 11, the Committee may, in its absolute
discretion, make such adjustments in the number and class of shares subject to
Awards outstanding on the date on which such change occurs and in the per share
grant or exercise price of each Award as the Committee may consider appropriate
to prevent dilution or enlargement of rights.
11.5 No Other Rights. Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan or pursuant to action of the Committee
under the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Stock subject to an Award or the grant or exercise price of any Award.
ARTICLE 12
Administration
12.1 Committee. The Plan shall be administered by the Compensation
Committee of the Board; provided however that the Compensation Committee may
delegate to a committee of one or more members of the Board the authority to
grant or amend Awards to Participants other than (a) senior executives of the
Company who are subject to Section 16 of the Exchange Act or (b) Covered
Employees. The Committee shall consist of at least two individuals, each of whom
qualifies as (x) a Non-Employee Director, and (y) an "outside director" pursuant
to Code Section 162(m) and the regulations issued thereunder. Reference to the
Committee shall refer to the Board if the Compensation Committee ceases to exist
and the Board does not appoint a successor Committee.
12.2 Action by the Committee. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present, and acts approved in writing by a majority
of the Committee in lieu of a meeting, shall be deemed the acts of the
Committee. Each member of the Committee is entitled to, in good faith, rely or
act upon any report or other information furnished to that member by any officer
or other employee of the Company or any Subsidiary, the Company's independent
certified public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.
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12.3 Authority of Committee. Subject to any specific designation in the
Plan, the Committee has the exclusive power, authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted pursuant
to the Plan, including, but not limited to, the exercise price, grant
price, or purchase price, any restrictions or limitations on the Award, any
schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof, any
provisions related to non-competition and recapture of gain on an Award,
based in each case on such considerations as the Committee in its sole
discretion determines; provided, however, that the Committee shall not have
the authority to accelerate the vesting or waive the forfeiture of any
Performance-Based Awards;
(e) Determine whether, to what extent, and pursuant to what
circumstances an Award may be settled in, or the exercise price of an Award
may be paid in, cash, Stock, other Awards, or other property, or an Award
may be canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(g) Decide all other matters that must be determined in connection
with an Award;
(h) Establish, adopt, or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant to, the
Plan or any Award Agreement; and
(j) Make all other decisions and determinations that may be required
pursuant to the Plan or as the Committee deems necessary or advisable to
administer the Plan.
12.4 Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan and final, binding, and
conclusive on all parties.
ARTICLE 13
Effective and Expiration Date
13.1 Effective Date. The Plan is effective as of the date the Plan is
approved by the Company's stockholders (the "Effective Date"). The Plan will be
deemed to be approved by the stockholders if it receives the affirmative vote of
the holders of a majority of the shares of stock of the Company present or
represented and entitled to vote at a meeting duly held in accordance with the
applicable provisions of the Company's Bylaws.
13.2 Expiration Date. The Plan will expire on, and no Award may be
granted pursuant to the Plan after, the tenth anniversary of the Effective Date.
Any Awards that are outstanding on the tenth anniversary of the Effective Date
shall remain in force according to the terms of the Plan and the applicable
Award Agreement.
ARTICLE 14
Amendment, Modification, and Termination
14.1 Amendment, Modification, and Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that (a) to
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the extent necessary and desirable to comply with any applicable law,
regulation, or stock exchange rule, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required, and (b) stockholder approval is required for any amendment to the Plan
that (i) increases the number of shares available under the Plan (other than any
adjustment as provided by Article 11, (ii) permits the Committee to grant
Options with an exercise price that is below Fair Market Value on the date of
grant, (iii) permits the Committee to extend the exercise period for an Option
beyond ten years from the date of grant, or (iv) results in a material increase
in benefits or a change in eligibility requirements. Notwithstanding any
provision in this Plan to the contrary, absent approval of the stockholders of
the Company, no Option may be amended to reduce the per share exercise price of
the shares subject to such Option below the per share exercise price as of the
date the Option is granted and, except as permitted by Article 11, no Option may
be granted in exchange for, or in connection with, the cancellation or surrender
of an Option having a higher per share exercise price.
14.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted pursuant to the Plan without the prior written consent of the
Participant.
ARTICLE 15
General Provisions
15.1 No Rights to Awards. No Participant, employee, or other person shall
have any claim to be granted any Award pursuant to the Plan, and neither the
Company nor the Committee is obligated to treat Participants, employees, and
other persons uniformly.
15.2 No Stockholders Rights. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
15.3 Withholding. The Company or any Subsidiary shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local and foreign taxes
(including the Participant's employment tax obligations) required by law to be
withheld with respect to any taxable event concerning a Participant arising as a
result of this Plan. The Committee may in its discretion and in satisfaction of
the foregoing requirement allow a Participant to elect to have the Company
withhold shares of Stock otherwise issuable under an Award (or allow the return
of shares of Stock) having a Fair Market Value equal to the sums required to be
withheld. Notwithstanding any other provision of the Plan, the number of shares
of Stock which may be withheld with respect to the issuance, vesting, exercise
or payment of any Award (or which may be repurchased from the Participant of
such Award within six months after such shares of Stock were acquired by the
Participant from the Company) in order to satisfy the Participant's federal,
state, local and foreign income and payroll tax liabilities with respect to the
issuance, vesting, exercise or payment of the Award shall be limited to the
number of shares which have a Fair Market Value on the date of withholding or
repurchase equal to the aggregate amount of such liabilities based on the
minimum statutory withholding rates for federal, state, local and foreign income
tax and payroll tax purposes that are applicable to such supplemental taxable
income.
15.4 No right to Employment or Services. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment or services at any
time, nor confer upon any Participant any right to continue in the employ or
service of the Company or any Subsidiary.
15.5 Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company or any Subsidiary.
15.6 Indemnification. To the extent allowable pursuant to applicable law,
each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost,
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liability, or expense that may be imposed upon or reasonably incurred by such
member in connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or she may be
involved by reason or any action or failure to act pursuant to the Plan and
against and from any all amounts paid by him or her in satisfaction or judgment
in such action, suit, or proceeding against him or her; provided he or she gives
the Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled pursuant to the
Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
15.7 Relationship to other Benefits. No payment pursuant to the Plan
shall be taken into account in determining any benefits pursuant to any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary except to the extent otherwise expressly
provided in writing in such other plan or an agreement thereunder.
15.8 Expenses. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
15.9 Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only and, in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
15.10 Fractional Shares. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up or down as appropriate.
15.11 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan, the Plan, and any Award granted or awarded to any
Participant who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.
15.12 Government and Other Regulations. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register pursuant
to the Securities Act of 1933, as amended, any of the shares of Stock paid
pursuant to the Plan. If the shares paid pursuant to the Plan may in certain
circumstances be exempt from registration pursuant to the Securities Act of
1933, as amended, the Company may restrict the transfer of such shares in such
manner as it deems advisable to ensure the availability of any such exemption.
15.13 Governing Law. The Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Delaware.
* * * * *
I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of IDEX Corporation on February 2, 2005.
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* * * * *
I hereby certify that the foregoing Plan was approved by the stockholders
of IDEX Corporation on , 2005.
Executed on this day of , 2005.
--------------------------------------
Corporate Secretary
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PROXY
DETACH HERE
--------------------------------------------------------------------------------
IDEX CORPORATION
630 DUNDEE ROAD
NORTHBROOK, ILLINOIS 60062
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints NEIL A. SPRINGER, DENNIS K. WILLIAMS and
FRANK J. NOTARO, and each of them, as Proxies with full power of substitution,
and hereby authorize(s) them to represent and to vote, as designated below, all
the shares of common stock of IDEX Corporation held of record by the undersigned
on February 17, 2005, at the Annual Meeting of shareholders to be held on March
22, 2005, or at any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
DETACH HERE
--------------------------------------------------------------------------------
(Continued from the other side)
(1) Election of Directors -- Class I. Nominees: (1) Bradley J. Bell
(2) Gregory B. Kenny (3) Lawrence D. Kingsley
[ ] FOR [ ] WITHHOLD
(2) Approval of Amendment to Company's Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 75,000,000 to
150,000,000 shares
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Approval of the Company's Incentive Award Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Approval of Deloitte & Touche LLP as auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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, 3 AND 4.
DATED: , 2005
-------------------------
--------------------------------------
SIGNATURE
--------------------------------------
SIGNATURE IF HELD JOINTLY
PLEASE SIGN EXACTLY AS NAME APPEARS ABOVE. WHEN
SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNED AS ATTORNEY, AS 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.