DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.
)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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[X] |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-2. |
Dover Corporation
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement, if
other than Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12. |
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(1) |
Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): |
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(4) |
Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
Notice Of Annual Meeting Of Shareholders
March 24,
2009
Dear
Fellow Shareholder:
You are cordially invited to attend our Annual Meeting of
Shareholders at Embassy Suites Palm Desert,
74-700
Highway 111, Palm Desert, California 92260, on May 7, 2009,
at 1:00 p.m. local time, to be held for the following
purposes:
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1.
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To elect twelve directors;
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2.
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To approve amendments to the 2005 Equity and Cash Incentive Plan;
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3.
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To approve amendments to the Executive Officer Annual Incentive
Plan;
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4.
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To act upon a shareholder proposal regarding a climate change
report; and
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5.
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To ratify the appointment of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for 2009.
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All holders of record at the close of business on March 10,
2009 are entitled to vote at the meeting or any adjournments
thereof. We urge you to vote your shares as soon as
possible.
By authority of the board of directors,
Joseph
W. Schmidt
Secretary
PROXY
STATEMENT
TABLE
OF CONTENTS
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APPENDIX A 2005 EQUITY AND CASH INCENTIVE PLAN
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APPENDIX B EXECUTIVE OFFICER ANNUAL INCENTIVE
PLAN
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www.dovercorporation.com
280 Park Avenue
New York, New York 10017
PROXY STATEMENT
We are providing this proxy statement to our shareholders in
connection with the solicitation of proxies by the board of
directors for use at our 2009 Annual Meeting of Shareholders
(the Meeting).
Record
Date
As of the close of business on March 10, 2009, the record
date for determining shareholders eligible to vote at the
Meeting, we had outstanding 186,013,418 shares of common
stock. Each share of common stock is entitled to one vote on
each matter.
Electronic
Delivery of Proxy Materials
We have made available to you over the Internet or delivered
paper copies of our proxy statement, a proxy card and our Annual
Report (of which our 2008 Annual Report on
Form 10-K
is a part) in connection with the Meeting. This year, we are
pleased to be using the SECs rules that allow companies to
furnish their proxy materials over the Internet. As a result, we
are mailing to many of our shareholders a notice about the
Internet availability of the proxy materials instead of a paper
copy of the proxy materials. All shareholders receiving the
notice will have the ability to access the proxy materials over
the Internet and to request a paper copy by mail by following
the instructions in the notice. In addition, the notice contains
instructions for electing to receive proxy materials over the
Internet or by mail in future years.
Proxy
Voting; Items of Business
The shares covered by your proxy will be voted in accordance
with your voting instructions. If you vote by proxy card and
sign the card without giving specific instructions, the shares
covered by your proxy will be voted as follows:
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for the election of the twelve nominees for director;
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for approval of amendments to the 2005 Equity and Cash Incentive
Plan (the 2005 plan);
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for approval of amendments to the Executive Officer Annual
Incentive Plan (the annual bonus plan);
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against the shareholder proposal for a climate change
report; and
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for ratification of the appointment of PricewaterhouseCoopers
LLP (PwC) as our independent registered public
accounting firm for 2009.
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Quorum;
Abstentions and Broker Non-Votes; Vote Required
For purposes of the Meeting, there will be a quorum if the
holders of a majority of the outstanding shares of our common
stock are present in person or by proxy. Abstentions and broker
non-votes will be included in determining whether a quorum
exists. A majority of the votes cast at
the Meeting is required to elect directors. This means that the
number of votes cast FOR a director must exceed the
number of votes cast AGAINST that director in order
for that director to be elected. Abstentions and broker
non-votes will not count as a vote cast with respect to that
director and will have no effect on the outcome of the vote.
Proposals 2, 3, 4 and 5 will require the affirmative vote
of a majority of shares present in person or by proxy and
entitled to vote at the Meeting. For Proposals 2, 3, 4 and
5, abstentions and broker non-votes will have the same effect as
a vote against the proposal. Our organizational documents do not
provide for cumulative voting.
Voting
Procedures; Revoking Your Proxy
You may vote over the Internet, by telephone, or by mail by
following the instructions provided in the notice or the printed
copy of the proxy materials. If you hold your shares in
street name through a broker or other nominee, you
must follow the instructions provided by your broker or nominee
to vote your shares. If you are a shareholder of record, whether
you give your proxy over the Internet, by telephone or by mail,
you may revoke it at any time before it is exercised. You may
enter a new vote by using the Internet or the telephone or by
mailing a new proxy card bearing a later date so it is received
prior to the Meeting.
Shareholders
Sharing the Same Address
SEC rules permit us to deliver only one copy of the proxy
statement or the notice of internet availability of the proxy
statement to multiple shareholders of record who share the same
address and have the same last name, unless we have received
contrary instructions from one or more of the shareholders. This
delivery method, called householding, reduces our
printing and mailing costs. Shareholders who participate in
householding will continue to receive or have internet access to
separate proxy cards.
If you are a shareholder of record and wish to receive a
separate copy of the proxy statement, now or in the future, at
the same address, or you are currently receiving multiple copies
of the proxy statement at the same address and wish to receive a
single copy, please write to or call the Corporate Secretary,
Dover Corporation, 280 Park Avenue, 34W, New York, NY 10017,
telephone:
(212) 922-1640.
Beneficial owners sharing an address who are currently receiving
multiple copies of the proxy materials or notice of internet
availability of the proxy materials and wish to receive a single
copy in the future, or who currently receive a single copy and
wish to receive separate copies in the future, should contact
their bank, broker or other holder of record to request that
only a single copy or separate copies, as the case may be, be
delivered to all shareholders at the shared address in the
future.
Proxy
Solicitation Costs
We will pay the reasonable and actual costs of printing, mailing
and soliciting proxies, but we will not pay a fee to any of our
officers or employees or to officers or employees of any of our
subsidiaries as compensation for soliciting proxies. We have
retained Morrow & Co. to solicit brokerage houses and
other custodians, nominees or fiduciaries, and to send proxies
and proxy materials to the beneficial owners of such shares, for
a fee of $9,000 plus expenses.
2
ITEMS TO
BE VOTED UPON
Proposal 1
Election of Directors
There are twelve nominees for election to our board at this
meeting. If any nominee for election becomes unavailable to
serve as a director before the meeting, an event which we do not
anticipate, the persons named as proxies will vote for a
substitute nominee or nominees as may be designated by our board
of directors. Directors will be elected by a majority of the
votes cast for and against them. All of the nominees for
director for election at the Meeting currently serve on our
board and are being proposed by our board. Each director elected
at the Meeting will serve until the election and qualification
of his or her successor.
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David H. Benson
Senior Advisor, Fleming Family & Partners (since September 2001; investment management company); Director of Murray International Investment Trust, F. F. and P. Alternative Strategies Income Fund and F.F. and P. Managed Portfolio Funds (investment management companies); formerly Vice Chairman of The Kleinwort Benson Group plc (financial services company), Chairman of The COIF Charities Fund (investment and cash management for charities), Director of BG Group plc (gas exploration and production) and The Rouse Company (real estate development). Age 71
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Director since 1995
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Robert W. Cremin
Chairman (since 2001), President (since 1997) and Chief Executive Officer (since 1999), Esterline Technologies Corporation (manufacturer of aerospace and defense products); Director of British-American Business Council of the Pacific Northwest; British Honorary Consul in Seattle. Age 68
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Director since 2005
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Thomas J. Derosa
Private Investor; formerly Vice Chairman and Chief Financial Officer (until November 2004), The Rouse Company (real estate development) and Global Co-Head, Health Care Investment Banking Group, Deutsche Bank AG (from 1999 to 2002); Director of Health Care REIT, Inc. (REIT with investments in health care facilities) (since 2004); Director of Value Retail PLC (luxury outlet shopping development) (since July 2005). Age 51
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Director since 2007
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Jean-Pierre M. Ergas
Chairman of the Board (since January 2000), Chief Executive Officer (from 2000 to 2007) and Director (since 1995), BWAY Corporation (steel and plastic container manufacturer); Director of Plastic Omnium (manufacturer of automotive components and plastic products). Age 69
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Director since 1994
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Peter T. Francis
President and Chief Executive Officer (since 1994) and Chairman of the Board of Directors (from 1993 to 2008), J. M. Huber Corporation (privately held diversified company focused on engineered materials, natural resources and technology-based services). Age 56
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Director since 2007
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Kristiane C. Graham
Private Investor. Age 51
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Director since 1999
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James L. Koley
Chairman (since May 2008) and Lead Director (since March 2008) of the Board of Directors of Dover. Director (until April 2006) and Chairman (until February 2002) of Arts-Way Manufacturing Co., Inc. (agricultural manufacturer). Age 78
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Director since 1989
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Robert A. Livingston
President and Chief Executive Officer of Dover (since December 1, 2008); President and Chief Operating Officer of Dover (from July 2008 to December 2008); Vice President of Dover, President and Chief Executive Officer of Dover Engineered Systems (from August 2007 to July 2008); President and Chief Executive Officer of Dover Electronics, Inc. (from October 2004 to July 2007); President of Vectron International (from January 2004 to October 2004). Age 56
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Director since 2008
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Richard K. Lochridge
President, Lochridge & Company, Inc. (management consulting firm); Director of The Lowes Company, Inc. (home improvement retailer) and PETsMART (pet supplies retailer). Age 65
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Director since 1999
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Bernard G. Rethore
Chairman of the Board Emeritus, Flowserve Corporation (fluid transfer and control equipment and services); previously Chairman (from July 1997 to April 2000), Chief Executive Officer (from July 1997 to December 1999) and President (from October 1998 to July 1999), Flowserve Corporation; Director of Mueller Water Products, Inc. (fire hydrants, valves and ductile iron pipes), Belden, Inc. (signal transmission solutions) and Walter Industries, Inc. (energy and natural resources). Age 67
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Director since 2001
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Michael B. Stubbs
Private Investor; Director of Moore-Handley, Inc. (wholesale hardware distributor). Age 60
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Director since 1999
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Mary A. Winston
Senior Vice President and Chief Financial Officer, Giant Eagle Inc. (grocery and fuel retailer) (since September 2008); formerly, President, Winsco Financial LLC (financial and strategic consulting firm) (from July 2007 to September 2008); Executive Vice President and Chief Financial Officer, Scholastic Corporation (childrens publishing and media company) (from February 2004 to January 2007); Director of Plexus Corporation (electronics manufacturing services company). Age 47
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Director since 2005
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THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH
OF THE NOMINEES.
Board
of Directors and Committees
Our board of directors met eight times during 2008. Our board
has three standing committees the audit committee,
the compensation committee and the governance and nominating
committee. Each of these committees has a written charter which
is available on our website at www.dovercorporation.com. In
2008, each director attended at least 75% of the meetings of our
board of directors and the standing committees of which he or
she was a member.
Audit
Committee
The audit committee is currently composed of four directors. All
of its members satisfy all the criteria for being
independent members of our board and the audit
committee established by the SEC and the New York Stock Exchange
Listing Standards (NYSE Listing Standards) and also
our standards for classification as an independent director (the
Dover Independence Standards) which are available on
our website at www.dovercorporation.com. In addition, our board
of directors has determined that all members of the audit
committee qualify as audit committee financial
experts as defined in SEC rules. The primary functions of
the audit committee consist of:
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selecting and engaging our independent registered public
accounting firm (independent auditors); overseeing
the work of our independent auditors and our director of
internal audit;
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approving in advance all services to be provided by, and all
fees to be paid to, our independent auditors, who report
directly to the committee;
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reviewing with management and the independent auditors the audit
plan and results of the auditing engagement; and
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reviewing with management and our independent auditors the
quality and adequacy of our internal accounting controls.
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The audit committees responsibilities, authority and
resources are described in greater detail in its written
charter. In 2008, the audit committee held eight meetings. The
members of the audit committee are Mary A. Winston (Chair),
Thomas J. Derosa, Bernard G. Rethore and Michael B. Stubbs. See
Items to be Voted Upon
Proposal 5 Ratification of Appointment of
Independent Registered Public Accounting Firm Audit
Committee Report elsewhere in this proxy statement.
Compensation
Committee
The compensation committee is composed of five directors. All of
its members satisfy all the criteria for being
independent members of our board established by the
SEC and the NYSE
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Listing Standards, as well as the Dover Independence Standards.
The compensation committee, together with our other independent
directors, approves compensation for our chief executive
officer. The compensation committee also:
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approves compensation for executive officers who report directly
to the CEO (together with the CEO, senior executive
officers);
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grants awards and approves payouts under our 2005 plan and our
annual bonus plan;
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approves changes to the compensation plans; and
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supervises the administration of the compensation plans.
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As noted above, the compensation committee annually reviews the
performance of our chief executive officer and recommends his
compensation for review and revision or approval by our
independent directors acting as a group. The compensation of the
executive officers who report directly to the chief executive
officer is recommended by the chief executive officer to the
committee, which reviews and revises or approves the
recommendations as the committee deems appropriate. In making
its executive compensation decisions, the committee utilizes
tally sheets prepared by its benefits consultant, detailing all
compensation payable to each senior executive officer, including
potential post-termination benefits.
The compensation committee has the authority and discretion to
retain external compensation consultants as it deems
appropriate. The compensation committee has retained Mercer (US)
Inc. (Mercer) to serve as its compensation
consultant to provide information and analyses regarding
executive compensation. The Mercer consultant who performs these
services reports directly to the committee chair and follows
Mercer guidelines to assure objectivity. The compensation
committee generally does not ask its consultants to develop
recommendations for the compensation of individual executive
officers. Rather, the compensation committee looks to its
consultant to periodically review and advise regarding the
adequacy and appropriateness of our overall executive
compensation plans, programs and practices and, from time to
time, to answer specific questions raised by the committee or
management. Compensation decisions are made by, and are the
responsibility of, the compensation committee and our board, and
may reflect factors and considerations other than the
information and recommendations provided by the committees
consultants. The compensation committees compensation
consultant performs substantially no other services for us.
The compensation committees responsibilities, authority
and resources are described in greater detail in its written
charter. In 2008, the compensation committee held six meetings.
The members of the compensation committee are Richard K.
Lochridge (Chair), Robert W. Cremin, Jean-Pierre M. Ergas, Peter
T. Francis and Kristiane C. Graham. See Executive
Compensation Compensation Committee Report
elsewhere in this proxy statement.
Governance
and Nominating Committee
The governance and nominating committee is composed of four
directors. All of its members satisfy all the criteria for being
independent members of the board established by the
SEC and the NYSE Listing Standards, as well as the Dover
Independence Standards. The governance and nominating committee
develops and recommends corporate governance principles to our
board. In addition, the governance and nominating committee
identifies and recommends to our board candidates for election
as directors and any changes it believes desirable in the size
and composition of our board. For a discussion of the
committees procedures for selecting nominees to our board,
see Items to be Voted Upon
Proposal 1 Election of Directors
Qualifications and Nominations of Directors elsewhere in
this proxy statement. It also makes recommendations to our board
concerning the structure and membership of our boards
committees. The governance and nominating committees
responsibilities, authority and resources are described in
greater detail in its written charter. The governance and
nominating committee held four meetings in 2008. The
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members of the governance and nominating committee are Robert W.
Cremin (Chair), David H. Benson, Kristiane C. Graham and James
L. Koley.
Corporate
Governance
We are committed to conducting our business in accordance with
the highest level of ethical and corporate governance standards.
Our board periodically reviews Dovers corporate governance
practices and takes other actions to address changes in
regulatory requirements, developments in governance best
practices and matters raised by shareholders. The following
describes some of the actions taken to help ensure that our
conduct earns the respect and trust of shareholders, customers,
business partners, employees and the communities in which we
live and work.
Governance
Guidelines and Codes
Our board of directors has adopted written corporate governance
guidelines that set forth the responsibilities of our board and
the qualifications and independence of its members and the
members of its standing committees. In addition, our board has
adopted a code of business conduct and ethics setting forth
standards applicable to all of our companies and their
employees, a code of ethics for our chief executive officer and
senior financial officers, and charters for each of its standing
committees. All of these documents (referred to collectively as
governance materials) are available on our website at
www.dovercorporation.com and in print to any shareholder who
requests them. Requests should be directed to the Corporate
Secretary at Dover Corporation, 280 Park Avenue, New York, NY
10017. Each of our segments and operating companies has a
written code of conduct that meets or exceeds the standards of
our code of business conduct and ethics.
Advance
Notice Provisions for Shareholder Proposals and Nominations of
Directors
Our bylaws require advance notice of shareholder proposals and
nominations of directors. In 2008, our board reduced the period
in advance of a shareholder meeting by which the shareholder
must notify us of proposals or nominations the shareholder
intends to present at the meeting. Our shareholders must now
notify us of such proposals or board nominations not earlier
than 120 days and not later than 90 days (reduced from
150 days and 120 days) prior to the date of the first
anniversary of the prior years meeting. If a shareholder
wants to have a proposal included in our proxy statement for a
meeting, the shareholder must comply with the requirements,
including deadlines, of the SECs proxy rules.
Majority
Standard for Election of Directors
In 2007, our board amended our by-laws and corporate governance
guidelines to change the voting standard in director elections
from a plurality to a majority of the votes cast. Under the
majority standard, a director must receive more votes in favor
of his or her election than votes against his or her election.
Abstentions and broker non-votes do not count as votes cast with
respect to a directors election. In contested director
elections (where there are more nominees than available seats on
the board), the plurality standard will continue to apply.
For an incumbent director to be nominated for re-election, he or
she must submit an irrevocable, contingent resignation letter.
The resignation will be contingent on the nominee not receiving
a majority of the votes cast in an uncontested election and on
the boards acceptance of the resignation. If an incumbent
director fails to receive a majority of the votes cast in an
uncontested election, the governance and nominating committee
will make a recommendation to our board concerning the
resignation. Our board will act on the resignation within ninety
days following certification of the election results, taking
into account the committees recommendation. It will
publicly announce its decision and, if the resignation is
rejected, the rationale for its decision.
8
Director
Attendance at Shareholders Meetings
In 2008, our board of directors implemented a policy that
directors are expected to attend the annual shareholders
meeting. All but one of the directors attended the Annual
Meeting of Shareholders held on May 1, 2008.
Director
Stock Ownership
Our board has adopted a policy that directors are expected to
hold at any time an amount of shares at least equal to the
aggregate number of shares they received as the stock portion of
their annual retainer during the past five years, net of an
assumed 30% tax rate.
Director
Independence
Our board has determined that at least two-thirds of its members
and all of the members of its audit, compensation and governance
and nominating committees shall be independent from management
and shall meet all of the applicable criteria for independence
established by the NYSE, the SEC and Dover. Our board makes an
annual determination of the independence of each nominee for
director prior to his or her nomination for (re)election. No
director may be deemed independent unless the board determines
that he or she has no material relationship with Dover, directly
or as an officer, shareholder or partner of an organization that
has a material relationship with Dover.
Our board has determined that each of the current members of the
board, except for Robert A. Livingston, who is the current
management representative on our board, has no material
relationship with Dover and meets the independence requirements
in the NYSE Listing Standards and the independence requirements
of the SEC. In addition, all members of our board, except for
Mr. Livingston, meet the Dover Independence Standards,
which are available on our website.
Directors
Meetings; Self-evaluations
Our directors meet at regularly scheduled executive sessions
without management representatives. Mr. Koley, as Chairman
of the Board of Directors, has presided and will preside at
these sessions. Our board and its committees conduct annual
self-evaluations of their performance. Many independent
directors periodically attend meetings of our segment boards and
company presidents. At least one independent director serves as
an advisory (non-voting) director of each of the four segments,
and at least one independent director usually attends the
segments regular board and company presidents
meetings.
Audit
Committee Procedures; Disclosure Controls and Procedures
Committee
The audit committee meets eight times each year. It holds
regular quarterly meetings at which it meets with each of our
independent registered public accounting firm, PwC, the director
of internal audit, management and the general counsel separately
to assess certain matters, including the status of the
independent audit process and managements assessment of
the effectiveness of internal controls over financial reporting.
In addition, the audit committee as a whole reviews and meets to
discuss the contents of each
Form 10-Q
and
Form 10-K
(including the financial statements) prior to its filing with
the SEC. Management has a disclosure controls and procedures
committee, which includes among its members our chief financial
officer, our controller, our director of internal audit and our
general counsel, as well as the chief financial officers of our
segments. This management committee meets at least quarterly to
review the companys earnings release and its quarterly or
annual report, as the case may be, for the prior quarter and our
disclosure controls and procedures. The chair of the audit
committee or her designee and representatives of PwC participate
in these meetings.
9
Complaints
Hotline; Communication with Directors
In accordance with the Sarbanes-Oxley Act of 2002 (the
Sarbox Act), the audit committee has established
procedures for (i) the receipt, retention and treatment of
complaints regarding accounting, internal accounting controls,
or auditing matters (accounting matters), and
(ii) the confidential, anonymous submission by employees of
concerns regarding questionable accounting matters. Such
complaints or concerns may be submitted to us care of the
corporate secretary, or through the communications coordinator,
an external service provider, by mail, fax, telephone or via the
internet as published on our website. The communications
coordinator forwards such communications to the chair of the
audit committee and, in most circumstances, to Dovers
general counsel, in each case without disclosing the identity of
the sender if anonymity is requested. Shareholders and other
interested persons may also communicate with our board and the
non-management directors in any of these same manners. Such
communications are forwarded to the chair of the governance and
nominating committee and our general counsel.
Procedures
for Approval of Related Person Transactions
We generally do not engage in transactions in which our senior
executive officers or directors, any of their immediate family
members or any of our 5% shareholders have a material interest.
Should a proposed transaction or series of similar transactions
involve any such persons and an amount that exceeds $120,000, it
would be subject to review and approval by the governance and
nominating committee in accordance with a written policy and the
following procedures adopted by our board:
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Management is responsible for determining whether a proposed
transaction requires review under the policy and, if so, will
present such transaction to the governance and nominating
committee;
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The governance and nominating committee will review the relevant
facts and circumstances of the transaction, including the amount
involved; the related person involved and his or her
relationship to Dover and interest and role in the transaction;
the benefits to Dover of the transaction; whether Dover has
available to it alternative means or transactions to reap such
benefits; the terms of the transaction, whether they are fair to
Dover and whether they are comparable to the terms that would
exist in a similar transaction with an unaffiliated third party;
and any other factors that the committee deems relevant;
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If it is impractical or undesirable to defer consummation of a
related person transaction until the committee meets to review
and approve the transaction, the chair of the committee will
decide whether to approve the transaction and will report the
transaction to the committee at its next meeting;
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No director may participate in the review of any transaction in
which he or she is a related person; and
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If a proposed transaction involves our chief executive officer
or enough members of the committee such that the committee
cannot have a quorum to approve or reject the transaction, the
disinterested members of the committee will review the
transaction and make a recommendation to the board and the board
will approve or reject the transaction.
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The written policy and procedures adopted by the board for
related person transactions is available with the governance
materials on our website. There were no related party
transactions in or since 2008.
10
Qualifications
and Nominations of Directors
The governance and nominating committee considers and recommends
to the board of directors nominees for election to, or for
filling any vacancy on, our board in accordance with our by-laws
and the committees charter. The committee annually reviews
the requisite skills and characteristics of board members as
well as the size, composition, functioning and needs of our
board as a whole. To be considered for board membership, a
nominee for director must be an individual who has the highest
personal and professional integrity, who has demonstrated
exceptional ability and judgment, and who will be most
effective, in conjunction with the other nominees to our board,
in collectively serving the long-term interests of our
shareholders. The committee also considers members
qualifications as independent (the board requires that at least
two-thirds of its members be independent), the financial
literacy of members of the audit committee, the qualification of
audit committee members as audit committee financial
experts, and the diversity, skills, background and
experiences of board members in the context of the needs of the
board.
The governance and nominating committee may also consider such
other factors as it may deem to be in the best interests of
Dover and its shareholders. Our board believes it appropriate
and important that at least one key member of the companys
management participate as a member of our board. In appropriate
circumstances, this number may be increased to two.
Whenever the committee concludes, based on the reviews or
considerations described above or due to a vacancy, that a new
nominee to our board is required or advisable, it will consider
recommendations from directors, management, shareholders and, if
it deems appropriate, consultants retained for that purpose. In
such circumstances, it will evaluate individuals recommended by
shareholders in the same manner as nominees recommended from
other sources. Shareholders who wish to recommend an individual
for nomination should send that persons name and
supporting information to the committee, care of the corporate
secretary or through our communications coordinator.
Shareholders who wish to directly nominate an individual for
election as a director, without going through the governance and
nominating committee or using our proxy material, must comply
with the procedures in our by-laws.
Directors
Compensation
Under our 1996 Non-Employee Directors Stock Compensation
Plan (the directors plan), non-employee
directors receive annual compensation in an amount our board
sets from time to time. The directors annual compensation
is payable partly in cash and partly in common stock in an
allocation our board may adjust from time to time. If any
director serves for less than a full calendar year, the
compensation to be paid to that director for the year will be
pro-rated as deemed appropriate by the compensation committee.
Non-employee director compensation for 2008 consisted of the
following components:
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Annual retainer of $140,000 under the directors plan, payable
40% in cash ($56,000) and 60% in common stock
(2,934 shares, determined by dividing the dollar amount of
the directors annual compensation to be paid in shares by
our closing price on the NYSE on the date of grant);
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An additional $50,000 (paid by the issuance of 1,746 shares
of common stock) to Messrs. Ergas, Francis, Koley and
Lochridge for services on a temporary board committee formed to
study the composition and role of the board, strategic planning
and management succession;
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Audit committee chair annual cash retainer of $15,000;
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Compensation committee chair and nominating and governance
committee chair annual cash retainers of $7,500;
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11
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Board chairman annual cash retainer of $80,000 which was paid to
Mr. Reece who was Chairman through May 1, 2008
(pro-rated for partial year service), which annual cash retainer
was increased to $110,000 in May 2008; and
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Advisory director segment board annual cash retainer of $15,000
(directors serving on two or more segment boards receive an
additional annual cash retainer of $10,000).
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The table below sets forth the compensation paid to our
directors (other than Messrs. Hoffman and Livingston) for
services in 2008.
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Fees
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Earned or
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Paid in
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Stock
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All Other
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Cash
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Awards
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Compensation
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Name
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($)(1)
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($)(2)
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($)(3)
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Total($)
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David H. Benson
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56,000
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84,000
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15,000
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155,000
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Robert W. Cremin
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61,000
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84,000
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0
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145,000
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Thomas J. Derosa
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56,000
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84,000
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0
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140,000
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Jean-Pierre M. Ergas
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56,000
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134,000
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15,000
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205,000
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Peter T. Francis
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56,000
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134,000
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0
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190,000
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Kristiane C. Graham
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56,000
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84,000
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15,000
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155,000
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James L. Koley
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131,833
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134,000
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5,000
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270,833
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Richard K. Lochridge
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63,500
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134,000
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0
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197,500
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Thomas L. Reece (4)
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29,334
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44,000
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0
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73,334
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Bernard G. Rethore
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56,000
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84,000
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15,000
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155,000
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Michael B. Stubbs
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61,000
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84,000
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15,000
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160,000
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Mary A. Winston
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66,000
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84,000
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19,375
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169,375
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(1)
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Amounts include the standard
annual cash retainer, the chairmans additional cash
retainer and the annual cash retainer for committee
chairmanships, in each case pro-rated for any partial year
service. Messrs. Ronald L. Hoffman and Robert A. Livingston
do not appear on this table because they were formerly or are
currently management directors and do not receive any additional
compensation for their service as a director. For discussion of
Mr. Hoffmans and Mr. Livingstons
compensation for 2008, see Executive
Compensation Compensation Discussion and
Analysis Compensation of the Chief Executive
Officer and Executive Compensation Summary
Compensation Table elsewhere in this proxy statement.
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(2)
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Amounts represent the face value
(which is the aggregate grant date fair value calculated in
accordance with Statement of Financial Accounting Standard
No. 123(R)) of the stock awards granted on
November 17, 2008 to independent directors for the year
2008 under the directors plan and, for Messrs. Ergas,
Francis, Koley and Lochridge, amounts include $50,000 paid by
issuance of additional shares of common stock on
November 17, 2008 for services on a temporary board
committee formed to study the composition and role of the board,
strategic planning and management succession.
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(3)
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Amounts represent the annual
retainer for service as a segment advisory director, pro-rated
for partial year service in the case of Mr. Koley. For
Ms. Winston, amount includes $4,375 paid in 2008 for
partial-year segment advisory director service in 2007.
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(4)
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Mr. Reece retired from the
board as of May 1, 2008, the date of the 2008 Annual
Meeting of Shareholders. His compensation reflects pro-ration
for partial year service.
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12
Security
Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information regarding the
beneficial ownership, as of March 10, 2009 (except as
otherwise stated), of our common stock by:
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each director and each of our executive officers named in
Executive Compensation Summary Compensation
Table (NEOs);
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all of the directors and executive officers as a group,
including the NEOs; and
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each person known to us to own beneficially more than 5% of our
outstanding common stock.
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The beneficial ownership set forth in the table is determined in
accordance with the rules of the SEC. The percentage of
beneficial ownership is based on 186,013,418 shares of
common stock outstanding on March 10, 2009. In computing
the number of shares beneficially owned by any shareholder and
the percentage ownership of such shareholder, shares of common
stock subject to options or stock settled stock appreciation
rights (SSARs) held by that person that are
currently exercisable or exercisable within 60 days of the
record date are deemed to have been exercised and to be
outstanding. Such shares, however, are not deemed to have been
issued and to be outstanding for purposes of computing the
percentage ownership of any other person. Shares held in the
Dover Corporation Retirement Savings Plan (the 401(k)
plan) are reported as of March 10, 2009.
Unless otherwise indicated in the footnotes below, the persons
and entities named in the table have sole voting and investment
power as to all shares beneficially owned. Unless otherwise
indicated, the business address for all directors and executive
officers is
c/o Dover
Corporation, 280 Park Avenue, New York, NY 10017.
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Name of Beneficial
Owner
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Number of Shares
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Percentage
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David H. Benson
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25,299
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(1)
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*
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Robert W. Cremin
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8,960
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*
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Thomas J. Derosa
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2,578
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*
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Jean-Pierre M. Ergas
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34,596
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*
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Peter T. Francis
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27,329
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*
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Kristiane C. Graham
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884,723
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(2)
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*
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Ronald L. Hoffman
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614,831
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(3)
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*
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James L. Koley
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27,796
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(4)
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*
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Robert G. Kuhbach
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312,361
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(5)
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*
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Robert A. Livingston
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248,239
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(6)
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*
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Richard K. Lochridge
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13,352
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(7)
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*
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Bernard G. Rethore
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12,109
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(8)
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*
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David J. Ropp
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221,305
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(9)
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*
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William W. Spurgeon, Jr.
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132,026
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(10)
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*
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Michael B. Stubbs
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597,469
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(11)
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*
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David R. Van Loan
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153,042
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(12)
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*
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Mary A. Winston
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5,947
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*
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Directors and executive officers as a group (24 persons)
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3,245,070
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(13)
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1.7
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Barclays Global Investors, N.A.
400 Howard Street
San Francisco, CA 94105
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14,404,958
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(14)
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7.7
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13
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(1)
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Includes 1,000 shares held by
Mr. Bensons spouse as to which Mr. Benson
disclaims any beneficial ownership.
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(2)
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Includes 267,722 shares
pledged to a bank as collateral for a line of credit,
409,830 shares held by foundations of which Ms. Graham
is a director and in which she disclaims any beneficial
ownership, 67,708 shares held in various trusts of which
she is a co-trustee sharing voting and investment powers and in
which she disclaims any beneficial ownership and
2,460 shares held by her minor children.
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(3)
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Includes 31,586 shares held
by a revocable trust of which Mr. Hoffman is the sole
trustee, 580,738 shares in respect of options and SSARS
held by Mr. Hoffman that are exercisable within
60 days of the record date but which have an exercise or
base price higher than our closing price on the NYSE on
March 10, 2009 and 2,507 shares owned by
Mr. Hoffman in our 401(k) plan.
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(4)
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Includes 5,900 shares that
are subject to a margin account.
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(5)
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Includes 24,580 shares held
by Mr. Kuhbachs spouse, 226,425 shares in
respect of options and SSARs held by Mr. Kuhbach that are
exercisable within 60 days of the record date but which
have an exercise or base price higher than our closing price on
the NYSE on March 10, 2009 and 7,900 shares owned by
Mr. Kuhbach in our 401(k) plan.
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(6)
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Includes 193,281 shares in
respect of options and SSARs held by Mr. Livingston that
are exercisable within 60 days of the record date but which
have an exercise or base price higher than our closing price on
the NYSE on March 10, 2009 and 12,501 shares held in
our 401(k) plan.
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(7)
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Represents shares held by a trust
of which Mr. Lochridge is the trustee.
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(8)
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Represents shares held by a trust
of which Mr. Rethore is the trustee.
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(9)
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Includes 11,013 shares that
are subject to a margin account, 208,014 shares in respect
of options and SSARs held by Mr. Ropp that are exercisable
within 60 days of the record date but which have an
exercise or base price higher than our closing price on the NYSE
on March 10, 2009 and 2,278 shares held in our 401(k)
plan.
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(10)
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Includes 4,229 shares held by
his spouse, 121,490 shares in respect of options and SSARs
held by Mr. Spurgeon that are exercisable within
60 days of the record date but which have an exercise or
base price higher than our closing price on the NYSE on
March 10, 2009 and 6,307 shares held in our 401(k)
plan.
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(11)
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Includes 500 shares held by
his spouse as to which Mr. Stubbs disclaims beneficial
ownership, 54,972 shares held by a trust of which
Mr. Stubbs is a co-trustee and various members of his
immediate family are beneficiaries and 539,097 shares held
in grantor-retained annuity trusts. Excludes
1,755,878 shares held by trusts of which Mr. Stubbs is
a beneficiary.
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(12)
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Includes 139,796 shares in
respect of options and SSARs held by Mr. Van Loan that are
exercisable within 60 days of the record date but which
have an exercise or base price higher than our closing price on
the NYSE on March 10, 2009 and 370 shares held in our
401(k) plan.
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(13)
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Includes 44,008 shares that
are owned by officers in our 401(k) plan and
1,855,152 shares in respect of options and SSARs held by
executive officers that are exercisable within 60 days of
the record date but which have an exercise or base price higher
than our closing price on the NYSE on March 10, 2009.
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(14)
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Based on information contained in
a Schedule 13G filed with the SEC on February 5, 2009
by Barclays Global Investors, NA (BGI), Barclays
Global Fund Advisors (BGF), Barclays Global
Investors, Ltd. (BGIL), Barclays Global Investors
Japan Limited (BGIJ), Barclays Global Investors
Canada Limited (BGIC), Barclays Global Investors
Australia Limited (BGIA) and Barclays Global
Investors (Deutschland) AG. BGI reported sole voting and/or
dispositive power with respect to 10,040,909 shares. BGF
reported sole voting and/or dispositive power with respect to
2,118,694 shares. BGIL, BGIJ, BGIC and BGIA reported sole
voting and/or dispositive power with respect to 1,154,692,
793,623, 274,739 and 22,301 shares respectively.
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14
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that our
directors and certain of our officers file reports of ownership
and changes of ownership of our common stock with the SEC and
the NYSE. Based solely on copies of such reports provided to us,
we believe that all directors and officers filed on a timely
basis all such reports required of them with respect to stock
ownership and changes in ownership during 2008 except that
Mr. Ralph Coppola was late in reporting an open market sale
of shares and Ms. Kristiane C. Graham was late in reporting
sales by one trust of which she is a beneficiary.
Proposal 2
Proposal to Approve Amendments to the 2005 Equity and Cash
Incentive Plan
Our board of directors has unanimously approved, subject to
shareholder approval, amendments to our 2005 plan. If approved
by our shareholders, the amendments to the plan would:
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add performance shares as a type of equity award that may be
granted under the plan conditional upon the satisfaction of
three-year performance targets; and
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add additional performance criteria for the payout of cash
performance awards, performance share awards and other awards
under the plan.
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If the shareholders do not approve the amendments to the plan,
the current terms of the 2005 plan will remain in effect.
The full text of the 2005 plan, as amended by this proposal, is
attached to this proxy statement as Appendix A. The
material features of the 2005 plan are summarized below, but
this summary is qualified in its entirety by reference to the
full text of the 2005 plan.
Purpose
of the Plan and the Proposed Amendments
The purpose of the 2005 plan is to promote our long-term success
by providing long-term incentives that will assist in retaining
and motivating our officers and other key employees of Dover and
our subsidiaries who are in a position to affect materially our
profitability and growth and on whom major responsibility rests
for our present and future success.
The compensation committee intends grants and awards under the
2005 plan to incentivize behavior that will produce the greatest
increase in value for shareholders over a performance period of
three or more years. The proposed amendments are intended to
enhance the compensation committees flexibility to select
the best award structure to improve shareholder return and to
increase the extent to which our executive compensation is
performance-based. The amendments will also allow the
compensation committee to structure awards based on our
performance relative to that of our peers. The structure of the
compensation committees proposed awards for 2009 and the
performance targets relating to those awards are discussed in
Executive Compensation Compensation Discussion
and Analysis.
Duration
and Modification
The 2005 plan has a predetermined term of 10 years and will
terminate on January 31, 2015. The compensation committee
may make grants and awards at any time or from time to time
before January 31, 2015, provided that no incentive stock
options (ISOs) may be granted after
February 11, 2014.
Our board may amend or terminate the 2005 plan as it deems
advisable, except that approval of our shareholders is required
for any amendment that would increase the maximum number of
shares covered by the plan or change the class of employees
eligible to receive awards; reduce the exercise price of any
option or base price of any SSAR below its fair market value at
the time of grant; extend to more than 10 years the maximum
period from the date of option or SSAR grant to the
15
date of exercise; or make any other amendment or modification to
the 2005 plan which requires shareholder approval pursuant to
any applicable law or regulation or rule of the New York Stock
Exchange.
Administration
The compensation committee, which currently consists of five
independent members of the board who are also outside
directors within the meaning of Section 162(m) of the
Internal Revenue Code, administers the plan.
Eligibility
Officers and other key employees of Dover and our subsidiaries,
as selected by the compensation committee, are eligible to
participate in the 2005 plan.
Description
of Awards
Types of
Awards
The 2005 plan provides for stock options and SSAR grants,
restricted stock awards, cash performance awards and, subject to
shareholder approval, performance share awards. A maximum of
20,000,000 shares of common stock may be issued under the
2005 plan, of which 12,832,804 currently remain available for
grants, and of which only 10% (i.e. 2,000,000 shares) may
be granted as restricted shares or performance shares. The
maximum aggregate number of shares issuable under the plan is
subject to adjustments resulting from stock dividends, stock
splits, recapitalizations, reorganizations and other similar
changes. The total original number of shares granted under any
award under the 2005 plan that is exercised, vests or held until
payment continues to count against the aggregate maximum number
of shares available under the 2005 plan, even if such an award
is settled in whole or in part in any way other than by the
delivery of our common stock to a participant (including any
netting or withholding of any shares to satisfy tax withholding
obligations).
Stock Options and Stock-Settled Stock Appreciation
Rights. The compensation committee may grant
SSARs and options under the 2005 plan. Grants of options under
the plan may be ISOs or non-qualified stock options and permit
the participant to acquire shares of common stock at an exercise
price fixed on the date of grant during the life of the award.
SSARs granted under the plan are freestanding,
meaning they are granted separately from options and the
exercise of SSARs is not linked in any way to the exercise of
options. A SSAR allows the plan participant to receive the
increase, if any, in the fair market value of the number of
shares of common stock underlying the award during the life of
the award over a base price set on the date of grant. The amount
payable upon the exercise of the SSAR will be paid to the plan
participant in shares of common stock.
The compensation committee determines the exercise price for
options and the base price of SSARs, which may not be less than
the closing price of our common stock on the NYSE on the date of
grant. The compensation committee may not grant a single
recipient options and SSARs covering more than
600,000 shares in any year.
The compensation committee determines any conditions to the
exercisability of options and SSARs, including requirements of a
period of continuous service by the participant (time vesting)
or performance or other criteria. Options and SSARs may not
generally be exercised prior to the third anniversary of the
date of grant. The committee also determines the term of each
award, provided that the maximum term of any option or SSAR is
ten years from the date of grant. All options and SSARs granted
under the 2005 plan have a
10-year term
and are not exercisable for the first three years of that term.
A plan participant may pay the exercise price of an option in
cash or by transfer of shares of our common stock owned by the
participant or by a combination of these methods.
16
Stock options and SSARs are not transferable except by bequest
or by inheritance, except that non-qualified options may be
transferred to members of the holders immediate family (or
a trust for the benefit of one or more of such family members),
but any such transferred options cannot be further transferred
by the transferee during the transferees lifetime.
Restricted Stock. The compensation committee
may make restricted stock awards to employees under the 2005
plan. The compensation committee may not grant a single
recipient more than 600,000 shares of restricted stock in
any year.
The compensation committee determines the vesting period, of not
less than one year or more than five years, with respect to a
restricted stock award and whether other restrictions, including
the satisfaction of any performance targets, are applicable to
the restricted stock award. The compensation committee also
determines whether a holder of restricted stock is entitled to
exercise voting rights with respect to such restricted stock
during the restriction period and whether dividends payable with
respect to restricted stock will be reinvested in additional
shares of restricted stock for the account of the holder or
distributed in cash to the holder of such stock.
Shares of restricted stock are not transferable, and may not be
sold, assigned, transferred, pledged or otherwise encumbered,
except as otherwise provided in the applicable award agreement.
Cash Performance Awards. Under the 2005 plan,
the compensation committee may grant a participant the
opportunity to earn a cash performance award conditional upon
the satisfaction, over a performance period of not less than
three years, of certain pre-established objective performance
targets based on specified performance criteria.
The compensation committee establishes a percentage of the value
created at the relevant business unit (or our company as a
whole) during the performance period that the maximum total
payout for that business unit (or our company as a whole) may
not exceed. The compensation committee determines such
percentages and dollar amounts annually when the performance
targets are established for the performance period beginning
with that year. A cash performance payout for a performance
period to a single recipient may not exceed $5 million for
the relevant period.
Performance Share Awards. Subject to
shareholder approval of this Proposal 2, the compensation
committee may grant performance share awards to employees that
will become payable in shares of our common stock upon the
achievement of objective pre-established performance targets
based on specified performance criteria over a performance
period of not less than three years. Awards may set a specific
number of performance shares that may be earned, or a range of
performance shares that may be earned depending on the degree of
achievement of the pre-established performance targets. Shares
of common stock in payment of performance shares will be issued
only if the compensation committee has certified after the end
of the performance period that the required performance targets
have been met and the amount of the award. The maximum number of
shares of our common stock that may be paid to a single
participant in respect of performance shares for any performance
period may not exceed 600,000.
Performance
Criteria
Performance share awards will be, and other awards may be, made
subject to performance criteria. The compensation committee
establishes performance targets based on the plans
performance criteria that include objective formulas or
standards for determining the amount of the performance award
that may be payable to a participant when the targets are
satisfied. The performance targets do not need to be the same
for all participants.
The 2005 plan, prior to the amendments, included the performance
criteria of earnings per share, operating earnings, return on
equity and return on investment, which criteria applied only to
CP awards. The amendments add additional performance criteria
and provide a uniform set of performance criteria from which the
compensation committee may select for any performance-based
awards under the plan. The performance criteria under the plan,
as amended by this proposal,
17
consist of the following: earnings before interest, taxes,
depreciation and amortization (EBITDA); cash flow;
earnings per share; operating earnings; return on equity; return
on investment; total shareholder return (TSR) or
internal total shareholder return (iTSR); sales or
revenues; expense targets; targets with respect to the value of
our common stock; margins; pre-tax or after-tax net income;
market penetration; geographic goals; business expansion goals;
or goals based on operational efficiency. Performance targets
will be set each year by the compensation committee for that
years awards (payable three years later) based on one or
more of the performance criteria for our company as a whole, or
for a subsidiary, division or business unit.
The compensation committee has the discretion to decrease the
amount payable under any award upon attainment of the
performance target, provided that a decrease for one participant
does not result in an increase in the amount payable to a
covered employee under Section 162(m) of the
Internal Revenue Code. The compensation committee may not
increase the amount payable to a participant in the case of a
payment intended to constitute qualified performance-based
compensation within the meaning of Section 162(m). To the
extent permitted by Section 162(m), the compensation
committee may take into account the effect of any unusual,
non-recurring circumstance.
The compensation committee has the discretion to approve
proportional or adjusted awards to address situations where
participants are hired, transfer or are promoted within our
organization during a performance period, but only to the extent
that such discretion would not cause an award intended to meet
the requirements of Section 162(m) to fail to so qualify.
The compensation committee may elect to make a discretionary
payment to a permanently disabled participant or to the
participants estate in the case of death or upon a change
in control without regard to actual attainment of the
performance targets and whether or not payment of such award
would be deductible under Section 162(m) of the Internal
Revenue Code.
Effect
of Termination, Death, Disability or Change in Control on
Awards
For a discussion of the treatment of awards granted under the
2005 plan upon a participants termination of employment,
death or disability or upon a change in control of our company,
see Executive Compensation Potential Payments
upon Termination or Change in Control elsewhere in this
proxy statement.
Federal
Income Tax Consequences of the 2005 Plan
The following is a summary of the principal U.S. federal
income tax consequences to participants and us with respect to
awards under the 2005 plan. It is for general informational
purposes only and does not describe all federal income tax
consequences under the 2005 plan, nor does it discuss state,
local, or foreign tax consequences. In addition, the information
is based upon current federal income tax rules and therefore is
subject to change when those rules change.
Tax
Consequences to the Participants
Nonqualified Stock Options and Incentive Stock
Options. The grant of a stock option will not
result in any income tax consequences for a
U.S. participant at the time of grant. The participant will
have no taxable income for regular income tax purposes upon
exercising an ISO, although the participant may incur
alternative minimum tax liability in the year of exercise. Upon
exercising a non-qualified stock option, the participant will
recognize ordinary income in the amount by which the fair market
value of our common stock on the date of exercise exceeds the
option exercise price. The treatment to a participant of a
disposition of shares acquired through the exercise of an option
is dependent upon the length of time the shares have been held
and on whether such shares were acquired by exercising an ISO or
a non-qualified stock option. In the event a participants
employment terminates other than by reason of death, any ISOs
held by the participant may be
18
taxed as non-qualified stock options upon exercise if exercised
more than three months (one year in the case of disability)
following such termination of employment.
Stock Appreciation Rights and Performance Share
Awards. The grant of an SSAR or a performance
share award will not result in income tax consequences for the
participant at the time of grant. The value of shares received
in payment of SSARs or performance share awards is taxable to
the participant as ordinary income at the time such shares are
transferred to the participant.
Restricted Stock. The award of shares of
restricted stock generally will not result in income tax
consequences to the participant at the time of the award so long
as such shares are not transferable and are subject to a
substantial risk of forfeiture. Dividends paid with respect to
restricted stock prior to the lapse of forfeiture restrictions
applicable to such stock will be taxable as compensation to the
participant if such dividends are payable in cash to the
participant or the participant otherwise has the right to
receive such dividends. Generally, a participant will recognize
ordinary income at the first time restricted stock becomes
transferable or is no longer subject to a substantial risk of
forfeiture, in an amount equal to the fair market value of our
common stock on the date the forfeiture restrictions lapse. A
participant, however, may elect within 30 days of the date
that restricted stock is granted to recognize ordinary income
upon the date the restricted stock was awarded (instead of on
the date the forfeiture restrictions lapse) based on the fair
market value of our common stock on the date of grant. In
addition, dividends paid with respect to restricted stock as to
which such an election has been made will be treated as dividend
income, rather than compensation income, the participant will
not recognize additional taxable income when the forfeiture
restrictions applicable to his or her restricted stock award
lapse, and the dividends paid during the restriction period will
not be deductible by us.
Cash Performance Awards. A grant to a
participant under the cash incentive portion of the 2005 plan,
consisting of contingent future rights to cash after the
completion of the performance period, will not result in taxable
income to the participant at the time of the initial grant. At
the time we pay a cash award, the amount of the cash will
constitute compensation taxable to the individual as ordinary
income.
Tax
Consequences to Dover
To the extent that a recipient of an award under the 2005 plan
recognizes ordinary income as described above, we generally will
be entitled to a corresponding federal income tax deduction
provided that, among other things, the income meets the test of
reasonableness, is an ordinary and necessary business expense,
is not an excess parachute payment within the
meaning of Section 280G of the Internal Revenue Code, is
not disallowed by the $1 million deduction limitation on
certain executive compensation under Section 162(m) of the
Internal Revenue Code, and we have met certain income tax
withholding and reporting requirements with respect to such
award. Generally, amounts taxable to a participant as ordinary
income will subject the participant and us to social security
and Medicare tax in the year taxable, subject to statutory
limitations.
Plan
Benefits
Because the compensation committee may grant awards under the
2005 plan through January 31, 2015, it is not possible to
determine at this time all the awards which may be granted under
the 2005 plan. The following table sets forth the aggregate
dollar value of cash performance award potentials and the
numbers of options and SSARs granted under the 2005 plan from
2005
19
through December 31, 2008 for each of the NEOs, the NEOs
and our other current executive officers as a group and our
non-executive officer employees as a group:
|
|
|
|
|
|
|
|
|
|
|
Dollar Value of Cash
|
|
|
|
|
Performance Award Potentials
|
|
Number of Options/SSARS
|
Name and Position
|
|
($)
|
|
(#)
|
|
Robert A. Livingston
|
|
|
2,012,850
|
|
|
|
183,028
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
Ronald L. Hoffman
|
|
|
2,019,600
|
|
|
|
721,536
|
|
Former President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
Robert G. Kuhbach
|
|
|
524,400
|
|
|
|
187,441
|
|
Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
David J. Ropp
|
|
|
2,349,000
|
|
|
|
214,113
|
|
Vice President of Dover, President and Chief Executive Officer
of Dover Industrial Products Inc.
|
|
|
|
|
|
|
|
|
William W. Spurgeon, Jr.
|
|
|
1,915,650
|
|
|
|
174,748
|
|
Vice President of Dover, President and Chief Executive Officer
of Dover Fluid Management, Inc.
|
|
|
|
|
|
|
|
|
David Van Loan
|
|
|
1,915,425
|
|
|
|
165,139
|
|
Vice President of Dover, President and Chief Executive Officer
of Dover Electronics Technologies, Inc.
|
|
|
|
|
|
|
|
|
Executive Officers as a Group
|
|
|
13,894,712
|
|
|
|
1,982,133
|
|
Non-Executive Officer Employees as a Group
|
|
|
91,014,039
|
|
|
|
6,209,118
|
|
Equity
Compensation Plans
The table below provides information about our equity
compensation plans at December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
Remaining Available for
|
|
|
Number of Securities to
|
|
|
|
Future Issuance Under
|
|
|
be Issued Upon Exercise
|
|
Weighted-Average Exercise Price
|
|
Equity Compensation Plans
|
|
|
of Outstanding Options,
|
|
of Outstanding Options,
|
|
(Excluding Securities
|
|
|
Warrants and Rights
|
|
Warrants and Rights
|
|
Reflected in Column (a))
|
Plan Category
|
|
(#)(a)
|
|
($)(b)
|
|
(#)(c)
|
|
Equity compensation plans approved by shareholders
|
|
|
11,183,421
|
|
|
|
40.60
|
|
|
|
12,832,804
|
|
Equity compensation plans not approved by shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
11,183,421
|
|
|
|
40.60
|
|
|
|
12,832,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
We have three compensation plans under which our equity
securities have been authorized for issuance and have been
issued to employees and to non-employee directors. These are the
1995 Incentive Stock Option Plan and 1995 Cash Performance
Program (the 1995 plan), the 2005 plan and the 1996
Non-Employee Directors Stock Compensation Plan (the
directors plan). The table above does not
reflect shares eligible for issuance under the directors
plan, which does not specify a maximum number of shares issuable
under it. For a discussion of the directors plan, see
Items to be Voted Upon
Proposal 1 Election of Directors
Directors Compensation elsewhere in this proxy
statement.
Information on the 2005 plan appears on the preceding pages. The
1995 plan was adopted in 1995 (replacing its predecessor plan
which expired in January 1995) and provided for stock
options, restricted stock awards and cash performance awards.
The 1995 plan expired in January 2005, but column (a) of
the table above includes options that remain outstanding
under it.
Options granted under the 1995 plan were all designated as
non-qualified stock options. The exercise price of options
granted under the 1995 plan is the fair market value on the date
of grant as determined in good faith by the compensation
committee. Options granted under the 1995 plan may not be sold,
transferred, hypothecated, pledged or otherwise disposed of by
any of the holders except by will or by the laws of descent and
distribution, except that a holder may transfer options to
members of the holders immediate family, or to one or more
trusts for the benefit of such family members, provided that the
holder does not receive any consideration for the transfer.
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF THE AMENDMENTS TO THE 2005 EQUITY AND CASH INCENTIVE
PLAN.
|
|
Proposal 3
|
Proposal
to Approve Amendments to the Executive Officer
Annual Incentive Plan
|
Our executive compensation program includes annual cash bonuses
to executive officers based upon satisfaction of performance
targets under our Executive Officer Annual Incentive Plan
(annual bonus plan). Our board of directors has
approved, subject to shareholder approval, additional
performance criteria under the plan. The performance criteria
that the compensation committee can choose from under the plan
currently are net income, earnings per share, operating earnings
and return on investment or equity. This Proposal 3 would
add additional performance criteria, including earnings before
interest, taxes, depreciation and amortization; cash flow; TSR
and iTSR; sales and revenues, expenses targets, margins and
other operational criteria. As with the proposed amendments to
the 2005 plan, the proposed amendments to the annual bonus plan
are intended to give the compensation committee greater
flexibility in selecting the best performance targets to drive
creation of shareholder value.
Section 162(m) of the Internal Revenue Code limits our
ability to take an income tax deduction for annual compensation
paid to each of our chief executive officer and certain other
highly-compensated officers in any year in excess of
$1 million unless the material terms under which the
compensation is paid, including the performance goals, are
disclosed to and approved by shareholders and, before payment of
such compensation, a committee of independent directors
certifies that pre-established objective performance goals and
other material terms were satisfied. In order for compensation
to be exempt from the $1 million annual deductibility limit
under Section 162(m), our shareholders must re-approve the
plans performance criteria at least every five years, and
approve any changes to such performance criteria. Our
shareholders most recently re-approved the performance criteria
at last years annual shareholders meeting. The board
of directors is seeking shareholder approval to amend the plan
to provide for additional performance criteria as summarized
above.
If our shareholders do not approve the amendments to the plan,
the current terms of the annual bonus plan will remain in
effect. The full text of the annual bonus plan, as amended by
this
21
proposal, is attached to this proxy statement as
Appendix B. The material features of the annual bonus plan,
as amended by this proposal, are summarized below.
Purpose
of the Plan
Dover established the annual bonus plan to make annual bonus
amounts paid to certain senior executive officers fully
deductible by Dover for federal income tax purposes as qualified
performance-based compensation under Section 162(m). The
plan provides for the payment of annual bonuses to senior
executive officers who are in a position to make material
contributions to our success and who are selected each year by
the compensation committee. These annual bonuses are intended to
motivate participants and reward the achievement of annual
performance targets established each year by the committee, as
described in Executive Compensation
Compensation Discussion and Analysis elsewhere in this
proxy statement.
Duration
and Modification
The annual bonus plan does not have a predetermined term. Our
board may at any time suspend or terminate the plan, or make
modifications to it for future performance periods as it may
deem advisable. However, the board may not make any amendments
which are expected to materially increase amounts payable under
the plan unless appropriate measures have been taken to cause
the increased benefits to meet the requirements for qualified
performance-based compensation under Section 162(m). In
addition, the board may not add additional performance criteria
without shareholder approval.
Administration
The compensation committee, which currently consists of five
members of the board who are outside directors
within the meaning of Section 162(m), administers the plan.
These five directors are also independent under the standards of
the SEC, the NYSE Listing Standards and the Dover Independence
Standards.
Eligibility
The compensation committee in its sole discretion determines the
executive officers eligible to participate in the annual bonus
plan each year. For this purpose, executive officer means our
chief executive officer, our chief operating officer, if any,
each other executive who reports directly to either our chief
executive officer or our chief operating officer, if any, any
other of our executives or executives of our affiliates selected
by the compensation committee, or any person who is an executive
officer of ours under applicable SEC definitions. For 2008, each
of the NEOs participated in the annual bonus plan.
Plan
Features
Performance
Period and Performance Goals
An executive officer designated to participate in the annual
bonus plan may earn an annual cash bonus conditioned upon the
attainment of pre-established performance targets measured over
each calendar year. The performance target must be established
in writing by the compensation committee within the first
90 days of each year on the basis of one or more of the
performance criteria specified under the plan. The performance
criteria under the plan, as amended by this proposal, consist of
the following, as applied to Dover as a whole, or to a
subsidiary, a division or a business unit: EBITDA; cash flow;
earnings per share; operating earnings; return on equity; return
on investment; TSR or iTSR; net earnings; sales or revenues;
expense targets; targets with respect to the value of our common
stock; margins; pre-tax or after-tax net income; market
penetration; geographic goals; business expansion goals; or
goals based on operational efficiency.
22
Certain
Adjustments
The compensation committee has the discretion to reduce or
eliminate any amounts otherwise payable under the plan. However,
the committee may not authorize payments under the plan in
excess of the amounts determined in accordance with the
plans provisions.
Payment
of Incentive Compensation
The compensation committee makes the determination of whether
any amount is payable under the plan. The compensation committee
will certify, in writing and before any amount under the plan is
paid, the amount that is payable with respect to each
participant for performance during the prior calendar year. All
payments are made in cash within two and one half months after
the close of the year. The maximum annual cash bonus payable
under the plan to any covered individual with respect to any
performance period may not in any circumstances exceed
$5 million.
Future
Plan Benefits
Because amounts payable under the annual bonus plan are based on
performance goals each year determined at the discretion of the
compensation committee, it cannot be determined at this time
what benefits or amounts, if any, will be received by or
allocated to any person or group of persons under the plan. For
a discussion of the performance targets and payouts for 2008 for
the NEOs, see Executive Compensation
Compensation Discussion and Analysis elsewhere in this
proxy statement.
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF THE AMENDMENTS TO THE EXECUTIVE OFFICER ANNUAL
INCENTIVE PLAN.
Proposal 4
Shareholder Proposal for Climate Change Report
Dover has been notified by Calvert Asset Management Company,
Inc., 4550 Montgomery Avenue, Bethesda, Maryland 20814, that on
behalf of various of its funds it intends to present the
following proposal for consideration at the Annual Meeting. The
Board of Directors unanimously recommends a vote against this
proposal for the reasons stated after the proposal.
Report
On Climate Change Resolution
Whereas in 2007, the Intergovernmental Panel on Climate
Changes Fourth Assessment Report stated it is very
likely that anthropogenic greenhouse gas emissions have
heavily contributed to global warming. Furthermore, there
is substantial economic potential for the mitigation of global
greenhouse gas emissions over the coming decades, that could
offset the projected growth of global emissions or reduce
emissions below current levels.
Whereas, the 2006 Stern Review on the Economics of Climate
Change, led by the former chief economist at the World Bank,
... estimates that if we dont act, the overall costs
and risks of climate change will be equivalent to losing at
least 5% of global GDP each year, now and forever. Yet,
investment of 1% global GDP each year is enough for appropriate
mitigation.
Whereas, increasingly investors believe that there is an
intersection between climate change and corporate financial
performance. According to a February, 2007 report by Lehman
Brothers, The Business of Climate Change, companies
which are aware of the impact their business practices have on
the overall environment, including climate change, and
proactively take actions to mitigate any unfavorable impact, may
create a significant competitive advantage compared with
companies which, through a lack of awareness, become blindsided
by regulations.
23
Whereas, information from corporations on their greenhouse gas
emissions and climate change policy is essential to investors as
they assess the strengths of corporate securities in the context
of climate change and the need for greenhouse gas emissions
reductions.
Whereas, the Carbon Disclosure Project (CDP) representing 385
institutional investors with trillions of dollars in assets
under management requested corporations to disclose their
greenhouse gas emissions in 2007 and 2008.
Whereas, in 2007 and 2008, Dover Corporation did not respond to
the CDP and disclose investment-relevant information concerning
its greenhouse gas emissions and climate change.
Whereas, more than 250 S&P 500 companies responded to
the CDP, including other manufacturers such as 3M, Ingersoll
Rand, and Eaton.
Whereas, leading companies such as Johnson Controls, DuPont, and
UPS have recognized the advantages a forward-looking approach to
climate change may provide and have disclosed strategies such as
carbon sequestration, alternative fuel use, efficient product
distribution, and process efficiency improvements, to save
energy and reduce emissions.
Whereas, companies such as General Electric and Baxter
International have described the opportunity of addressing
climate change in a responsible manner, as resulting in new
product development, external recognition, rewards and energy
savings.
Resolved:
Shareholders request that within 6 months of the 2009
annual meeting, the Board of Directors provide a report to
shareholders, prepared at reasonable cost and omitting
proprietary information, describing how Dover is assessing the
impact of climate change on the corporation, and the
corporations plans to disclose this assessment to
shareholders.
Board
Recommendation
The Board
of Directors recommends a vote AGAINST the proposal
for the following reasons:
The impact of climate change on Dovers businesses and
Dovers impact on the environment are matters taken
seriously within Dover. In 2007 and 2008, Dover reported in its
proxy statements on numerous sustainability initiatives
undertaken by its operating companies that protect the long term
well-being of the environment while assisting its customers in
similar efforts and creating competitive advantages which
resulted in economic value for Dovers shareholders.
Additional reporting on such initiatives appears on Dovers
website at www.dovercorporation.com.
Dovers commitment to the environment is reflected in the
selected initiatives described below and on its website. While
this is an area of focus for Dover and its companies, the board
believes that a company-wide collection of detailed statistical
information at each of the Dover companies hundreds of
sites, as contemplated by the proponents and the Carbon
Disclosure Project they cite, cannot be prepared at reasonable
cost and is not an effective use of shareholder resources for
the reasons described below. We believe our shareholders share
this view. More than 68% of our shareholders who voted at last
years annual meeting did not support this proposal.
Dover operates through more than 35 operating companies which,
together with their divisions, constitute approximately 100
separate businesses located in more than 35 countries around the
world. These businesses produce many highly diverse products and
have different manufacturing processes. Each of these businesses
requires and adheres to different operating practices and
policies appropriate for its business, and each faces different
climate change risks and opportunities. For example, an
evaluation of climate change risks and opportunities for a
company that makes miniature microphones for hearing aids would
be very different from one for a company that makes
24
refrigeration equipment or tank trailers. An analysis of any of
these businesses taken individually would not provide meaningful
information about Dover as a whole. Similarly, aggregating these
analyses to generate a company-wide assessment would produce
information so general that it would not be illuminating about
Dover or any individual business. As applied to Dover, the
proposal would in essence require a full study and separate
report for each of Dovers companies. The board believes
this is unnecessary in light of Dovers existing disclosure
obligations and that the substantial sums and management time
that would have to be expended on these reports would be more
productively used on initiatives that could have a direct impact
on climate change, produce an economic advantage or help abate
the potential risks of climate change to Dover companies.
Dover companies are aware of and have increasingly focused on
the risks and opportunities climate change could present for
their businesses. They incorporate these considerations into
their planning and practices because it makes good business
sense to do so. The following account illustrates how some Dover
companies already are investing shareholder assets toward these
objectives and incorporating climate change concerns into their
operations.
HillPHOENIX, an industry leader in developing energy efficient
approaches to supermarket refrigeration, was the first United
States manufacturer to develop supermarket cases that use a
primary refrigerant that does not produce greenhouse gases. This
technology, called Second
Nature®,
has enabled HillPHOENIX customers to dramatically reduce their
output of fluorocarbons and other greenhouse gases. HillPHOENIX
was also one of the first in its industry to redesign
low-temperature cases to improve significantly their energy
efficiency. In 2007, HillPHOENIX was one of the founding members
of the U.S. Environmental Protection Agencys
GreenChill Advanced Refrigeration Partnership, an initiative
that promotes refrigeration technologies that reduce emissions
of ozone-depleting substances and greenhouse gases and seeks to
obtain the commitment of retail food establishments and
refrigeration equipment manufacturers to go beyond meeting
regulatory requirements in reducing those emissions. HillPHOENIX
has in the past several years significantly reduced its own
greenhouse gas and volatile organic compound emissions, reduced
metal consumption and landfill waste, decreased energy
consumption and increased recycling of scrap metal and cardboard.
Marathon Equipment Company, a leading manufacturer of
on-site
waste compaction and recycling systems, which play important
roles in sustainability, developed the
GreenBuilttm
line of compactors, which feature solar panels that produce up
to 100% of the compactors power requirements,
biodegradable oils and hydraulic fluids, and power units that
use 50% less power than other units of comparable speed and
performance. Marathon was proud to announce earlier this year
that Arizona State University, home to the nations first
School of Sustainability, chose
GreenBuilttm
compactors for its campus needs. Marathon has also achieved
meaningful reductions in its own electricity usage and volatile
organic compound emissions.
OPW Fueling Components, the global leader in commercial and
retail fueling equipment, manufactures nozzles that collect
vapors emitted during the refueling of automobiles and return
them to gasoline storage tanks. The vapors that accumulate in
the tanks are separated into liquid gasoline and clean air using
a membrane technology OPW developed called
Vaporsavertm.
This allows liquid gasoline to be recovered in the tanks and
only fresh air to be released into the atmosphere. Absent this
process, the gasoline vapors that accumulate in the tanks would
eventually seep out of the tanks, releasing hydrocarbons into
the environment.
K & L Microwave, which designs and manufactures a full
line of RF and microwave filters, duplexers and subassemblies,
was recognized by the Environmental Protection Agency as the
first company in Maryland to enroll in the voluntary national
partnership for environmental priorities and praised for its
successful recycling program and use of energy efficient
equipment. K&L has been an ISO 14001 registered company
since 2003 and is widely respected for its commitment to finding
new and innovative ways to reduce pollution and for taking steps
to go above and beyond environmental compliance. K&L is
actively engaged in a metals recycling program, has reduced its
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plating operations waste water discharge to zero and has
installed energy efficient equipment to reduce its consumption
of electric power.
These are just a few of the many examples within Dover where its
operating companies are addressing climate change concerns as an
integral part of their business operations. While Dover
companies are committed to these initiatives, the board believes
that the significant resources that would be required to conduct
a special review and prepare an extensive technical report
addressing the impact of climate change on each of Dovers
many businesses would not be an effective or prudent use of
shareholder assets.
THE BOARD
UNANIMOUSLY RECOMMENDS A VOTE AGAINST ADOPTION OF
THIS SHAREHOLDER PROPOSAL.
Proposal 5
Ratification of Appointment of Independent Registered Public
Accounting Firm
The audit committee has appointed the independent registered
public accounting firm of PwC to audit the annual accounts of
Dover and its subsidiaries for 2009. PwC also audited the
financial statements for 2008, 2007 and 2006. Representatives of
PwC are not expected to be present at the Meeting.
Although shareholder ratification of PwCs appointment is
not required by Dovers bylaws or otherwise, our board of
directors is submitting the ratification of PwCs
appointment for the year 2009 to Dovers shareholders. If
the shareholders do not ratify the appointment of PwC, the audit
committee will reconsider whether or not to retain PwC as
Dovers independent registered public accounting firm for
the year 2009 but will not be obligated to terminate the
appointment. Even if the shareholders ratify the appointment of
PwC, the audit committee in its discretion may direct the
appointment of a different independent registered public
accounting firm at any time during the year if the audit
committee determines that such a change would be in Dovers
interests.
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR
2009.
Audit
Committee Report
The audit committee of Dovers board of directors consists
of four directors, all of whom are independent in accordance
with the NYSE Listing Standards, the rules of the SEC applicable
to audit committee members and the Dover Independence Standards.
The board of directors has adopted a written charter for the
audit committee, a copy of which may be found at Dovers
website. In accordance with the requirements of the Sarbox Act,
the related SEC rules and the NYSE Listing Standards, the audit
committee engaged the independent registered public accounting
firm PwC to audit the annual accounts of Dover and its
subsidiaries for 2008.
The audit committee is responsible for the duties set forth in
its charter but is not responsible for preparing the financial
statements, implementing or assessing internal controls or
auditing the financial statements. Dovers management is
responsible for preparing the financial statements, maintaining
effective internal control over financial reporting and
assessing the effectiveness of internal control over financial
reporting. Dovers independent auditors are responsible for
auditing the financial statements and expressing an opinion on
the effectiveness of internal control over financial reporting.
The review of the financial statements by the audit committee is
not the equivalent of an audit.
Pursuant to its oversight responsibilities, the audit committee
discussed with PwC the overall scope and plans for the audit of
Dovers 2008 financial statements. The audit committee met
with
26
PwC, with and without Dover management present, to discuss the
results of PwCs examination, their assessment of
Dovers internal controls and the overall quality of
Dovers financial reporting.
The audit committee reviewed and discussed, with both the
management of Dover and PwC, Dovers 2008 audited financial
statements, including a discussion of critical accounting
policies, the quality, not just the acceptability, of the
accounting principles followed, the reasonableness of
significant judgments reflected in such financial statements and
the clarity of disclosures in the financial statements.
The audit committee also (1) discussed with PwC the matters
required to be discussed by Statement on Auditing Standards
No. 61, as amended, as adopted by the Public Company
Accounting Oversight Board in Rule 3200T, and
(2) reviewed the written disclosures and the letter from
PwC required by the applicable requirements of the Public
Company Accounting Oversight Board regarding the independent
accountants communications with the audit committee
concerning independence, and discussed with PwC its
independence, including any relationships or permitted
non-auditing services described below under Items to be
Voted Upon Proposal 5 Ratification
of Appointment of Independent Registered Public Accounting
Firm Relationship with Independent Registered Public
Accounting Firm, that might impact PwCs objectivity
and independence.
The audit committee reviewed and had input on each of the four
quarterly earnings releases related to 2008 financial
information. The chair of the audit committee also participated
on behalf of the committee in five meetings of Dovers
disclosure controls and procedures committee, one before each of
the four quarterly earnings releases and one before the filing
of Dovers Annual Report on
Form 10-K
for 2008. In addition, the audit committee held eight meetings
in which it reviewed 2008 financial information. Four of these
meetings were held in connection with the Dover boards
regular quarterly meetings. The other four were held to review
Dovers Quarterly Report on
Form 10-Q
for each of the first three quarters and Dovers Annual
Report on
Form 10-K
for the full year just prior to their filing with the SEC.
Based upon the review and discussions referred to above, the
audit committee recommended that the audited financial
statements for the year ended December 31, 2008 be included
in Dovers Annual Report on
Form 10-K.
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Audit Committee:
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Mary A. Winston (Chair)
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Thomas J. Derosa
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Bernard G. Rethore
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Michael B. Stubbs
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Relationship
with Independent Registered Public Accounting Firm
As discussed above, the independent registered public accounting
firm of PwC is the independent registered public accounting firm
selected by the audit committee to audit our annual accounts and
those of our subsidiaries for 2009.
Fees Paid
to Independent Registered Public Accounting Firm
Audit Fees. Audit fees include fees for audit
or review services in accordance with generally accepted
auditing standards and fees for services that generally only
independent auditors provide, such as statutory audits and
review of documents filed with the SEC. Audit fees also include
fees paid in connection with services required for compliance
with Section 404 of the Sarbox Act. The aggregate fees,
rounded to the nearest thousand dollars, paid to, or accrued
for, PwC for consolidated auditing services to us and our
subsidiaries for the years ended December 31, 2008 and
December 31, 2007 were $9,275,000 and $9,408,000,
respectively.
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Audit-Related Fees. For the years ended
December 31, 2008, and December 31, 2007, no fees were
paid to or accrued for PwC for audit-related services to us or
our subsidiaries.
Tax Fees. Tax fees include fees for services
that are performed by professional tax staff other than in
connection with the audit. These services include tax compliance
services. The aggregate fees, rounded to the nearest thousand
dollars, paid to, or accrued for, PwC for tax services to us and
our subsidiaries for the years ended December 31, 2008 and
December 31, 2007 were $931,000 and $921,000, respectively.
All Other Fees. All other fees include, for
the year ended December 31, 2008, fees for services in
connection with a fraud prevention compliance program and a
foreign license project. All other aggregate fees, rounded to
the nearest thousand dollars, paid to, or accrued for, PwC to us
and our subsidiaries for the years ended December 31, 2008
and December 31, 2007 were $269,000 and $0, respectively.
Pre-Approval
of Services Provided by Independent Registered Public Accounting
Firm
Consistent with its charter and applicable SEC rules, our audit
committee pre-approves all audit and permissible non-audit
services provided by PwC to us and our subsidiaries. With
respect to certain services which PwC has traditionally
provided, the audit committee has adopted specific pre-approval
policies and procedures. In developing these policies and
procedures, the audit committee considered the need to ensure
the independence of PwC while recognizing that, in certain
situations, PwC may possess the expertise and be in the best
position to advise us and our subsidiaries on issues and matters
other than accounting and auditing.
The policies and procedures adopted by the audit committee allow
the pre-approval by the audit committee of permissible
audit-related services, non-audit-related services and tax
services. Under the policies and procedures, pre-approval is
generally provided for up to one year and any general
pre-approval is detailed as to the particular services or
category of services and is subject to a specific budget for
each of them. The policies and procedures require that any other
services be expressly and separately approved by the audit
committee prior to such services being performed by the
independent auditors. In addition, pre-approved services which
it is known will exceed the budgeted amount included in a
general pre-approval require separate, specific pre-approval.
For each proposed service, the independent auditors and
management are required to provide detailed information to the
audit committee at the time of approval. The audit committee
considers whether each pre-approved service is consistent with
the SECs rules and regulations on auditor independence.
All audit-related and non-audit-related services of PwC during
2008 listed above under Items to be Voted Upon
Proposal 5 Relationship with Independent
Registered Public Accounting Firm Fees Paid to
Independent Registered Public Accounting Firm were
pre-approved specifically or pursuant to the procedures outlined
above.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Executive
Summary
This Compensation Discussion and Analysis reviews the
compensation objectives, policies and decisions of our
Compensation Committee (the committee) with respect
to our NEOs.
Under the oversight of the committee, we maintain an executive
compensation program for our executives, including our NEOs,
that is heavily focused on performance. The design and operation
of the program reflect the following objectives:
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Recruiting and retaining highly qualified executive officers;
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Implementing measurable performance targets; and
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Aligning our executives interests with our
shareholders interests.
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We seek to achieve these objectives through the following
compensation principles:
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Paying annual compensation that is competitive with that offered
for similar positions by other public manufacturing companies of
similar size;
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Linking long-term compensation to objective performance and
TSR; and
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Aligning an executives compensation to the performance of
the business over which the executive has the most control.
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Our NEOs for 2008 consist of executives at our corporate and
segment levels. Mr. Hoffman, our chief executive officer
through November 30, 2008, and Mr. Kuhbach, our chief
financial officer, held positions at the corporate level, and
their 2008 compensation was aligned with our overall
performance, as reported to shareholders. Mr. Livingston,
our current CEO, became our president and chief operating
officer in July 2008 and our chief executive officer effective
December 1, 2008. However, at the beginning of 2008, when
the committee established 2008 performance-based compensation
targets, Mr. Livingston was the president and chief
executive officer of Dover Engineered Systems, one of our
business segments, and, accordingly, his compensation for 2008
was aligned with the performance of Dover Engineered Systems,
rather than our company as a whole. Our remaining NEOs for 2008
were at the segment level and their 2008 compensation was
aligned with the performance of their respective business
segments.
We provide the following compensation and benefits components to
our executive officers, including our NEOs.
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Component
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Objective
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Key Features
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Salary
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To provide a fixed level of annual cash compensation.
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Targeted on average at the market 62nd percentile. Individual
salaries are set as appropriate based on executives
responsibilities, performance, skills, and experience as
compared with the relevant market.
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Annual cash bonus
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To encourage and reward executive officers contribution
over the year in producing strong financial and operating
results.
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Awards are based on assessment of earnings performance for each
executives relevant business entity and other factors in
the individuals annual performance.
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Long-term cash performance award
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To encourage and reward executive officers contribution in
producing strong financial and operating results over a
three-year period.
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Awards are formulaically determined based on the financial performance of each executives relevant business unit.
Starting in 2009, pending shareholder approval, the plans formula will be changed to better reflect each units shareholder return performance (see below).
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Component
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Objective
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Key Features
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Equity awards
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To encourage executive officers to focus on long-term
performance, retain talented executives and align their
interests with those of our shareholders.
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SSARs have value only to the extent our stock price appreciates over the grant price.
Starting in 2009, pending shareholder approval, a portion of our executive officers equity awards will be performance shares, in lieu of SSARs. The performance shares will vest based on our three-year TSR compared to that of our peer group (see below).
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Retirement plans, including broad-based plans, Supplemental
Executive Retirement Plan and Deferred Compensation Plan
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To provide competitive retirement benefits in a tax-efficient
manner, retain talented executives and encourage them to focus
on long-term performance.
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Consist of both qualified retirement plans generally available
to most employees as well as plans limited to executive
participation to deliver more competitive benefits.
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In 2008, our compensation committee retained Mercer to review
our long-term incentive compensation program, the 2005 plan, to
provide competitive data and provide recommendations related to
potential changes in our program. As a result of that process,
which was undertaken as part of an overall company strategy
review, we have adopted, subject to shareholder approval, a new
framework for our long-term incentive compensation. The
amendments to the 2005 plan in Proposal 2 are designed to
provide our compensation committee with greater flexibility in
selecting incentive compensation components to best enhance
creation of shareholder value. Beginning with awards for 2009,
subject to shareholder approval, the compensation committee
intends to focus on TSR and iTSR for two components of our
performance-based long-term incentive compensation.
We have traditionally offered our executive officers incentive
compensation under the 2005 plan in two forms. The first form is
cash performance awards, which are paid, if earned, three years
after award, depending on the financial performance of the
executive officers applicable business unit over the
three-year period. The second form is equity awards consisting
of SSARs, which are not exercisable until three years after
grant, and are thereafter exercisable for seven years, for a
total term of 10 years.
Under the 2005 plan as proposed to be revised, we will continue
to provide three-year cash performance awards. However, the
payout of such awards will be based on satisfaction of iTSR
targets. iTSR measures the internal performance of a company or
business unit, defined as the change in the entity value (based
on a multiple of EBITDA) plus free cash flow, over the
performance period. We will also continue to award long-term
incentive compensation in the form of SSARs. However, subject to
shareholder approval, for our executive officers, we will
provide a portion of the equity incentive opportunity in the
form of performance shares in lieu of SSARs. Like cash
performance awards, the payment of the performance shares will
depend on the satisfaction of performance targets over a
three-year period. In the case of performance shares, the
performance criteria will be our corporate TSR over the
performance period relative to our peer group of companies
discussed below. TSR is the change in stock price plus dividends
paid over the performance period. Performance share award
payments will be in the form of our common stock. The
compensation committee plans to grant only one performance share
for each four SSARs that it
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otherwise would grant. If we fail to meet threshold performance
after three years, no payout of performance shares will be made,
and the payout level could be up to 200% of the granted number
of performance shares if the actual three year TSR meets or
exceeds the 75th percentile of our peer group.
The following table summarizes the components of our long-term
incentive compensation plan and the related performance criteria.
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Current Performance
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Proposed Performance Criteria
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LTIP Component
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Criteria
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(Starting in 2009)
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SSARs
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Market price of our common stock
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No change
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Cash Performance Awards
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ROI and Earnings Growth
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iTSR
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Performance Shares
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N/A
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TSR relative to peers
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To reinforce a stock ownership culture among our executive
officers, the compensation committee is also implementing
minimum share ownership guidelines in 2009. Under the
guidelines, each executive officer at the corporate, segment or
platform subsidiary level will be required to own shares having
a fair market value equal to a multiple of his or her salary
within a specified number of years, subject to limited
exceptions. Under the guidelines, the executive officers will be
required to hold the net after-tax shares acquired through our
2005 plan until they have satisfied the applicable guidelines.
The revised framework for awards under the 2005 plan is designed
to meet the following objectives:
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Objective
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Framework Design
Component
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Align executive compensation with value creation as measured
internally by iTSR and externally by our TSR
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Cash Performance Plan (CPP) payouts are driven by iTSR components (EBITDA, free cash flow).
Performance Share Award payouts are driven by our TSR relative to a 38-company peer group (performance shares introduced for corporate, segment and platform executives, including the NEOs, and carved out of a portion of the SSAR grant).
SSARS are retained (but at a reduced level for corporate, segment and platform executives).
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Raise the bar on expected financial and market performance
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Target performance share grant is earned only if we meet median peer group 3-year TSR.
Performance share awards result in no payout if our TSR over a three-year period is below the 35th percentile of our 38-company peer group.
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Reward executives for businesses over which they have the most
influence
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CPP payouts are based on iTSR for each participants
business entity.
Performance shares are introduced only for those executives with
the most direct impact on our TSR.
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Reinforce a share ownership culture
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Minimum share ownership guidelines are introduced for executives at the corporate, segment and platform levels.
Equity compensation components of long-term incentive awards maintained for all plan participants.
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In addition, we have also adopted, subject to shareholder
approval, amendments to the performance criteria for our annual
bonus plan, making the performance criteria for that plan
consistent with the performance criteria for the 2005 plan, as
amended. These amendments will
31
provide the committee greater flexibility in designing incentive
compensation targets to drive our annual financial and operating
objectives.
Determining
Executive Compensation
Pay
Mix
We have designed our executive compensation programs for our
NEOs and other senior executive officers to emphasize
performance-based compensation. Fixed compensation elements,
although essential to a competitive compensation program, are
not the focus point of our executive compensation programs.
Under both our current,
pre-amendment
program and our proposed modified program, the majority of our
NEOs compensation is at risk (i.e., performance-based).
Annual
Review
Compensation for executive officers is reviewed annually in
January. We generally employ a one-over-one
compensation review system in which an employees
compensation is proposed by the employees supervisor and
approved or revised by the person to whom the supervisor
reports. The compensation of the executive officers who report
directly to our chief executive officer is recommended by our
chief executive officer and revised or approved by the
compensation committee. The compensation of our chief executive
officer is recommended by the compensation committee and
approved or revised by all of our independent directors acting
as a group (which includes all of the members of the
compensation committee).
In establishing compensation for our senior executive officers
(consisting of our chief executive officer and the executive
officers who report directly to our chief executive officer,
including all NEOs), the compensation committee considers the
total compensation earned or potentially available for each such
person. As part of this process, the compensation committee
reviews tally sheets for our NEOs and other senior
executive officers. The tally sheets are intended to ensure that
the compensation committee has all compensation data regarding
such officers in front of it as it makes compensation decisions.
Accordingly, the tally sheets include all elements of
remuneration, including salary, annual bonus, cash performance
awards and payouts, equity incentive awards, aggregate value of
outstanding equity incentive awards, retirement and termination
benefits, hypothetical payments following termination upon
change in control, health and welfare benefits and any
perquisites.
Competitor
Data
We believe that a competitive pay package is an important tool
in our efforts to attract and retain qualified executives with
manufacturing industry experience. To ensure that the
compensation we offer remains competitive, we compare it to that
offered by other manufacturers with whom we compete for a
limited pool of executive talent.
Given the wide diversity of the businesses we own and the many
different end-markets they serve, we believe it is useful to
assess our executives compensation using data from a broad
range of manufacturing companies. To accomplish this, we
generally compare our executive compensation to that offered by
the manufacturing companies in the Total Compensation Management
database, a proprietary database designed by Hewitt Associates
(the TCM database). The TCM database currently
includes almost 200 public manufacturing companies, including
Dover.
We have utilized the TCM database because it includes a broad
range of manufacturing companies and because we and the other
companies in the database are comparable in other ways,
including the following:
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substantial U.S. operations (only U.S. compensation
data is included in the database);
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geographically diverse;
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comparable revenues (over half of the TCM manufacturing
companies have revenues between $1 billion and
$10 billion); and
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operations in many of the same manufacturing sectors.
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In assessing the appropriateness of compensation for a
particular executive, we use the TCM manufacturing companies
data adjusted for revenues similar to those of the
executives unit. For example, in considering the
compensation of a segment head, we use the adjusted data for
divisions of TCM manufacturing companies. We then generally use
the 62nd percentile of pay for a comparable position at the
companies in that subset as a reference point in determining
compensation for the position.
In 2008, in connection with the review of our 2005 plan, we
identified a group of 38 companies as our new peer group.
We used this group of companies for purposes of comparing the
performance of our stock in our performance graph included in
our annual report to shareholders and, subject to shareholder
approval of our proposed 2005 plan amendments, will use it for
determining our relative TSR for purposes of payout of
performance shares. In addition, beginning with compensation for
2009, we will use compensation data from this peer group, in
addition to the TCM database, in considering compensation for
our NEOs.
Our peer group consists of the companies listed below. This
group of companies was selected because they collectively
represent our mix of businesses in the following sectors:
industrial machinery, construction and farm machinery,
electrical and electronic equipment, oil and gas equipment,
aerospace and defense, building products and consumer goods. In
addition, the median revenue of the group roughly matches that
of Dover.
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Actuant Corp.
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FMC Technologies
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Parker-Hannifin
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AGCO
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Honeywell
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Pentair
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Agilent Technologies
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Hubbell
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Precision Castparts
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Ametek
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Idex
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Rockwell Automation
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Cameron International
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Illinois Tool Works
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Roper Industries
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Carlisle Cos
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Ingersoll-Rand
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SPX
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Cooper Industries
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ITT Industries
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Terex
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Crane
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Leggett & Platt
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Timken
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Danaher
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Manitowoc
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Tyco
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Deere & Company
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Masco
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United Technologies
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Eaton
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Oshkosh
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Weatherford
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Emerson Electronic
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Paccar
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3M Company
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Flowserve
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Pall
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Compensation
Components
Our NEOs remuneration consists of an annual salary, an
annual incentive bonus opportunity and long-term cash and equity
based awards, as well as retirement and other customary benefits
such as participation in a health and welfare program. We do not
provide post-retirement health care benefits to our executive
officers.
1. Salary
We set salaries of our executive officers at levels that are
intended to motivate and reward annual achievements and
continued service to us. As discussed above, we generally use
the 62nd percentile of the TCM database as a reference
point in determining compensation. We also take into account the
officers assigned responsibilities, individual
performance, business unit performance and the individuals
skills, experience and background as well as overall economic
conditions. Salaries are reviewed annually and adjusted as
appropriate to realign them with market levels after taking into
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account the factors indicated above. Beginning with salaries for
2009, we will also consider compensation data from our peer
group in making salary decisions for our NEOs.
Mr. Livingstons salary was increased during 2008 to
reflect his promotion to our president and chief operating
officer and then chief executive officer. All other salary
increases for 2008 reflect increases to remain competitive with
general market levels. For 2009, given the significant adverse
economic conditions, management recommended that there be no
increases in the salaries of our NEOs, which the compensation
committee endorsed. Effective March 1, 2009,
Mr. Livingston took a reduction in his salary for the
remainder of the year of 15%, and his direct reports took a 10%
reduction.
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2.
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Performance-Based
Compensation
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We offer incentive compensation on an annual and longer-term
basis. There are four forms of awards:
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Type of Award
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Performance Period
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Performance Metrics
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Annual bonus
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1 year
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Earnings
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Cash performance program
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3 years
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ROI and earnings growth (under current program); iTSR (under
proposed program)
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Performance shares (under proposed program)
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3 years
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TSR relative to peer group (under proposed program)
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SSARs
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3 year vesting; 10 year term
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Stock price appreciation
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Our executives who participate in the annual bonus plan
(including, for 2008, all of the NEOs) are awarded annual
bonuses to reward their achievement of preset annual financial
performance goals that vary depending upon the executive
officers business unit. The annual bonus plan is designed
to satisfy the requirements of Section 162(m) of the
Internal Revenue Code so that we may deduct for federal income
tax purposes the full amount of the annual bonus awards to
participants.
At the beginning of each year, the compensation committee
determines which executive officers will participate in the
annual bonus plan that year. At that time, the compensation
committee also selects the performance criteria by which each
participant will be measured for that year, the numerical
performance target for each such criterion, and a target dollar
bonus amount for each participant. The compensation committee
sets the numerical performance targets at levels it believes
provide a reasonable bonus opportunity, with an incentive for
substantial upside for achievement of greater than 100% of the
target. It is generally anticipated that performance will fall
between 75% and 100% of the target. The compensation committee
has decided that no credit will be given for performance less
than 50% of a performance target, and that no additional credit
will be given for performance above 150% of a performance target.
After the end of the year, the percentage of achievement of the
performance target is determined and the potential bonus for
each participant is calculated. The compensation committee then
considers all other factors in the annual performance of each
participant. These factors include the participants
individual contributions with respect to strategic objectives,
such as acquisitions and divestitures, global expansion
initiatives, overall leadership and effectiveness, efficiency
and productivity efforts, attracting, retaining and developing
the skills and talents of high-caliber employees, developing
succession plans for themselves and their direct reports and
fostering a culture of compliance with laws and our ethical
standards. Considering these factors, the compensation committee
has discretion to set the amount of a participants annual
bonus, provided that under the annual bonus plan the
compensation committee may not award an amount greater than that
calculated in accordance with the annual bonus plan. The bonuses
paid under the annual bonus plan are almost always less than the
maximum possible bonus calculated in accordance with the plan.
34
For 2008, the performance criteria for participants were based
on our earnings per share for corporate executives and operating
earnings for segment executives. These criteria were considered
to be most likely to have a direct, positive impact on
shareholder returns.
The table below provides the specific performance targets, level
of achievement, and annual bonus payment for each named
executive officer for 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Bonus
|
|
|
|
Actual
|
|
|
|
|
|
|
Opportunity ($ and
|
|
Performance
|
|
Performance
|
|
Maximum Payable
|
|
Actual Bonus ($ and
|
Named Executive
|
|
as a Percent of
|
|
Target
|
|
(as a Percent of
|
|
Based on Unit
|
|
a Percent of
|
Officer
|
|
Salary)
|
|
of Officers Unit
|
|
Target)
|
|
Performance ($)
|
|
Maximum Payable)
|
|
Robert Livingston(1)
|
|
|
1,775,000(250
|
%)
|
|
$319 million operating earnings
|
|
|
87.5
|
%
|
|
|
1,378,000
|
|
|
|
1,000,000 (73
|
%)
|
Ronald Hoffman(2)
|
|
|
3,675,000(300
|
%)
|
|
$4.02 EPS
|
|
|
77.6
|
%
|
|
|
2,852,000
|
|
|
|
2,930,000 (103
|
%)
|
Robert Kuhbach
|
|
|
1,830,000(300
|
%)
|
|
$4.02 EPS
|
|
|
77.6
|
%
|
|
|
1,420,000
|
|
|
|
605,000 (43
|
%)
|
David Ropp
|
|
|
1,975,000(250
|
%)
|
|
$342 million operating earnings
|
|
|
87.7
|
%
|
|
|
1,533,000
|
|
|
|
835,000 (55
|
%)
|
William Spurgeon
|
|
|
1,625,000(250
|
%)
|
|
$352 million operating earnings
|
|
|
81.0
|
%
|
|
|
1,261,000
|
|
|
|
650,000 (52
|
%)
|
David Van Loan
|
|
|
1,813,000(250
|
%)
|
|
$237 million operating earnings
|
|
|
81.9
|
%
|
|
|
1,407,000
|
|
|
|
725,000 (52
|
%)
|
|
|
|
(1)
|
|
At the beginning of 2008 when the
performance targets were established, Mr. Livingston, our
current chief executive officer, was president and chief
executive officer of Dover Engineered Systems, one of our
segments. Accordingly, Mr. Livingstons performance
targets for 2008 and payout were based on Dover Engineered
Systems performance.
|
|
(2)
|
|
In the case of Mr. Hoffman,
at the time of his retirement as our chief executive officer
effective November 30, 2008, the compensation committee
awarded him a discretionary bonus that somewhat exceeded the
maximum payout of his 2008 annual bonus opportunity under the
annual bonus plan. See Executive Compensation
Compensation Discussion and Analysis Compensation of
the Chief Executive Officer elsewhere in this proxy
statement.
|
|
|
b.
|
Long-Term
Incentive Plan Compensation
|
We offer executive officers incentive compensation over periods
of time longer than one year under our 2005 plan. The
compensation committee believes that compensation earned over a
longer period helps retain highly qualified executive officers
and motivate them toward longer term goals that will benefit
shareholders. Only executives who are in a position to affect
materially our profitability and growth are eligible for awards
under the 2005 plan.
Awards under the 2005 plan are generally made only once each
year, at the scheduled February compensation committee meeting
shortly after announcement of earnings for the prior year.
Except in very limited circumstances, the compensation committee
does not grant awards under the 2005 plan at any other time
during a given year. In such rare instances, the grants would be
made by the compensation committee at a regularly scheduled
quarterly meeting. All option/SSAR grants, whenever made, have
an exercise or base price equal to our stocks closing
price on the NYSE on the date of grant. Mid-year hires who will
participate in the long-term incentive plan usually receive
their first grant the following February.
2005 plan awards are a combination of an equity grant and a
cash performance award, both of which are performance-based. The
award for an individual is calculated by multiplying the
individuals salary by a multiple appropriate for his or
her level. These multiples were established by the compensation
committee on the advice of a compensation consultant. The same
multiple applies to all executive officers at the same level or
in the same category of employees. The compensation committee
reviews these multiples from time to time. It may, and
infrequently does, change multiples, usually with advice from a
compensation consultant. After an individuals salary is
multiplied by the appropriate multiple, the resulting dollar
value is allocated between SSARs and a cash performance award,
based on the executives responsibility across our
organization. Increasingly higher percentages are allocated to
reward potential through equity awards for persons
35
who are in positions to most materially affect our overall
profitability and growth. The table below shows how each
NEOs long-term incentive compensation opportunities were
determined and allocated for 2008.
Long-term
Incentive Compensation Opportunities for 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-
|
|
Total Long-
|
|
CPP Target
|
|
SSAR Grant Value(2)(3)
|
|
|
Salary at
|
|
Term
|
|
Term
|
|
|
|
Percent of
|
|
|
|
Percent of
|
|
|
Time of
|
|
Incentive
|
|
Incentive
|
|
|
|
Total
|
|
|
|
Total
|
Named Executive
Officer
|
|
Grant ($)
|
|
Multiple
|
|
Grant ($)
|
|
$
|
|
Grant (%)
|
|
$
|
|
Grant (%)
|
|
Robert Livingston(1)
|
|
|
710,000
|
|
|
|
1.65
|
|
|
|
1,171,682
|
|
|
|
575,100
|
|
|
|
49
|
|
|
|
596,582
|
|
|
|
51
|
|
Ronald Hoffman
|
|
|
1,225,000
|
|
|
|
2.19
|
|
|
|
2,679,320
|
|
|
|
529,200
|
|
|
|
20
|
|
|
|
2,150,120
|
|
|
|
80
|
|
Robert Kuhbach
|
|
|
610,000
|
|
|
|
1.15
|
|
|
|
704,156
|
|
|
|
139,080
|
|
|
|
20
|
|
|
|
565,076
|
|
|
|
80
|
|
David Ropp
|
|
|
790,000
|
|
|
|
1.65
|
|
|
|
1,303,706
|
|
|
|
639,900
|
|
|
|
49
|
|
|
|
663,806
|
|
|
|
51
|
|
William Spurgeon
|
|
|
650,000
|
|
|
|
1.65
|
|
|
|
1,072,663
|
|
|
|
526,500
|
|
|
|
49
|
|
|
|
546,163
|
|
|
|
51
|
|
David Van Loan
|
|
|
725,000
|
|
|
|
1.65
|
|
|
|
1,196,436
|
|
|
|
587,250
|
|
|
|
49
|
|
|
|
609,186
|
|
|
|
51
|
|
|
|
|
(1)
|
|
Mr. Livingston was president
and chief executive officer of Dover Engineered Systems when he
received his long-term incentive compensation award for 2008.
|
|
(2)
|
|
For 2009, 25% of the SSAR value
has been granted in performance shares, pending shareholder
approval.
|
|
(3)
|
|
Based on Black-Scholes option
valuation methodology.
|
Cash Performance Awards. The portion of
the total award to be applied to the cash performance award
becomes the target amount of that award. Cash performance awards
are made annually for the three-year performance period
commencing with the year of the award. Any payout of cash
performance awards will occur three years later, conditional
upon the level of achievement of pre-set financial performance
targets by the participants business unit over the
three-year period. For example, payouts of cash performance
awards made in February 2009 are scheduled for payment in
February 2012, depending on the level of achievement of the
performance criteria for the three years 2009, 2010 and 2011,
compared to the actual performance in the base year 2008. The
actual cash payout, if any, is equal to the cash performance
award target amount multiplied by a percentage which is derived
from a performance matrix or table.
Cash Performance Awards for 2008 under Current
Program. For awards made in 2008 and prior
years, including awards which were paid out in February 2009,
the performance matrix used a combination of the following
performance criteria, using in each case the average of each
factor over the three-year performance period compared to the
base year:
|
|
|
|
|
real (inflation adjusted) growth in earnings (earnings per share
for our chief executive officer and chief financial officer at
the corporate level and operating earnings for our segment
heads); and
|
|
|
|
after-tax return on equity (at the corporate level) or return on
investment (at the segment level).
|
As noted above, at the time the cash performance award for 2008
was granted, Mr. Livingston was the president and chief
executive officer of one of our segments. Accordingly, the
performance criteria applicable to his 2008 award were average
three-year real growth in operating earnings and after-tax
return on investment for that segment.
The matrix matches every percent of average after-tax return on
equity (or investment, as the case may be) equal to or more than
10% with every percent of three-year average inflation-adjusted
36
growth in earnings above zero. The following is an excerpt from
the matrix included here to illustrate selected combinations of
these measures and the percent payouts they produce:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average After-Tax Return on
Equity / Investment
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
20
|
|
|
|
|
30
|
|
|
|
|
40
|
|
|
Three-Year Average Growth in Earnings (adjusted for
inflation)
|
|
|
5
|
|
|
|
|
56
|
|
%
|
|
|
144
|
|
%
|
|
|
199
|
|
%
|
|
|
204
|
|
%
|
|
|
10
|
|
|
|
|
95
|
|
%
|
|
|
240
|
|
%
|
|
|
329
|
|
%
|
|
|
337
|
|
%
|
|
|
15
|
|
|
|
|
125
|
|
%
|
|
|
336
|
|
%
|
|
|
449
|
|
%
|
|
|
459
|
|
%
|
|
|
20
|
|
|
|
|
168
|
|
%
|
|
|
432
|
|
%
|
|
|
568
|
|
%
|
|
|
596
|
|
%
|
In determining an executives payout, the average return on
equity (investment) actually achieved over a three-year period
is matched on the matrix with the average growth in earnings
achieved over that three-year period to arrive at a multiplier,
which is then multiplied by the individuals cash
performance award target (fixed three years earlier as described
above) to determine the payment. The matrix, using the
applicable parameters, is applied to plan participants across
all business units within Dover, providing a transparent,
objective and egalitarian performance award system.
The matrix theoretically can be extended out to a very wide
range. However, there are realistic and reasonable limits on any
payouts. First, as a practical matter, very high average returns
on investment or equity and very high earnings growth rates are
difficult to attain on average over a three-year period. More
importantly, the 2005 plan as in effect through 2008 has
maximums built in which place the real limits on payouts. The
maximum multiplier in the matrix is 1562%. The payouts to all
individuals in a unit may not exceed 30% of the average annual
earnings growth of the unit over the three-year period. In
addition, the payment to any individual may not exceed
$2,000,000, no matter how well the unit or we performed over
that time. There is no payout if the three-year average growth
in earnings is below zero or if the three-year average return on
equity or return on investment is less than ten percent.
Because the plan is performance-based, the payouts rise and fall
with the performance of a participants unit. Each of the
six NEOs had an opportunity for a payout in each of the past
five years or a total of 30 opportunities. Of those 30
opportunities, in 6 cases the payout was zero, in 2 cases the
payout was $2,000,000 (the maximum under the plan), and the
average payout was $707,106.
Cash Performance Awards for 2009 under Proposed
Program. Subject to shareholder approval,
beginning with awards for the three-year performance period
2009-2011,
the cash performance program will use iTSR over the performance
period as the performance criteria.
Payouts of cash performance awards will be made on a sliding
scale using the following formula. This formula will take the
place of the matrix discussed above.
|
|
|
|
|
% iTSR
|
|
Payout Multiple
|
|
< 6%
|
|
|
0
|
%
|
6%
|
|
|
25
|
%
|
9%
|
|
|
100
|
%
|
17%
|
|
|
300
|
%
|
50%
|
|
|
750
|
%
|
Total payouts for all participants for a business unit may not
exceed 1.75% of the value created over the three-year
performance period. In addition, the payout to any individual
may not exceed $5,000,000. No payouts may be made unless iTSR
equals or exceeds 6%.
Assuming shareholder approval of the change in performance
criteria for the cash performance program, participants in the
2005 plan will receive any cash performance payouts for the
37
performance period 2009 through 2011 measured under this
proposed iTSR formula. Any payout of cash performance awards to
our NEOs and other participants subject to Section 162(m)
for the performance periods of 2007 through 2009 and 2008
through 2010 will continue to be based on the terms as described
above with respect to the 2008 awards.
In the event that our shareholders do not approve the use of
iTSR as a performance criterion, cash performance award payouts
for all performance periods will continue to be based on the
matrix described above under Executive
Compensation Compensation Discussion and
Analysis Compensation Components
Performance-Based Compensation Cash Performance
Awards for 2008 under Current Program.
Equity Awards. Once the dollar value to
be applied to the equity grant is determined, that value is
converted into a number of equity awards. For 2008, all equity
awards were made in the form of SSARs, the number of which was
determined by dividing the dollar value to be applied to the
equity grant by the Black-Scholes value of our stock on the date
of grant. As noted above, subject to shareholder approval, we
have added performance shares as a new type of equity award
under the plan. Assuming shareholder approval of the use of
performance shares, beginning with the awards granted in
February 2009, we will use a combination of SSARs and
performance shares to reflect the equity portion of 2005 plan
awards for corporate, segment and platform executive officers.
Executive officers at those levels, including all of our NEOs,
will receive 25% of the equity portion of the award in the form
of performance shares. For purposes of determining the value of
the awards granted, the committee used the assumption that each
performance share was the equivalent of four SSARs.
We have made alternative awards, contingent on whether our
shareholders approve the proposed amendments to the 2005 plan.
In the event that the shareholders approve the amendments, we
have awarded our executive officers at the corporate, segment
and platform levels the equity portion of their 2005 plan award
in SSARs and performance shares. In the event that our
shareholders do not approve the amendments to the 2005 plan,
such executive officers will receive all of the equity portion
of their 2005 plan award in the form of SSARs.
SSARs. All SSARs have been granted with
ten-year terms and are not exercisable until three years after
their grant. The exercise or base price of all SSARs is the
closing price of our stock on the date of grant.
Performance Shares. Beginning in
2009, subject to shareholder approval, equity awards under the
2005 plan will include performance shares. Performance shares
represent potential payments of common stock based on our
relative TSR versus that of our peer group over the performance
period.
Actual payments may range from 0% to 200% of target grant, as
follows:
|
|
|
|
|
|
|
Dover 3-year TSR
|
|
|
|
Payout Percentage
|
Performance v. Peer Group
|
|
Payout Level
|
|
of Target Grant
|
|
³
75th Percentile
|
|
Maximum
|
|
|
200
|
%
|
50th Percentile
|
|
Target
|
|
|
100
|
%
|
35th Percentile
|
|
Threshold
|
|
|
50
|
%
|
<
35th Percentile
|
|
Below Threshold
|
|
|
0
|
%
|
Other Equity Awards. The 2005 plan also
provides for stock option grants and a limited number of
restricted stock awards. However, we generally do not award
restricted stock except in connection with special or unusual
circumstances. No restricted stock awards have been made in
recent years and none of our executive officers holds restricted
stock. Since the 2005 plan was amended to make SSARs available,
no options have been granted, and it is presently expected that
none will be granted.
38
3. Retirement
Programs and Other Benefits
Broadly Available Plans. Our executive
officers are able to participate in retirement and benefit plans
generally available to our employees on the same terms as other
employees. The levels of participation may depend on factors
such as age, length of service with our companies and salary
level. These plans serve a different purpose than traditional
compensation, such as providing protection against financial
loss arising from illness, disability or death, and building
retirement security.
We and most of our companies offer a 401(k) plan to
substantially all
U.S.-based
employees and provide a company matching contribution
denominated as a percentage of the amount of salary deferred
into the plan by a participant during the course of the year.
Some of our
U.S.-based
employees, including most of our executive officers, also
participate in a tax-qualified defined benefit pension plan. All
our
U.S.-based
employees are offered a health and welfare plan (including
health, term life and disability insurance).
Limited Availability Plans. We offer
two non-qualified deferred compensation plans with participation
generally limited to executive officers. These are the
Supplemental Executive Retirement Plan (SERP) and
the deferred compensation plan. The purpose of these plans is to
permit executive officers to earn and put aside, on a
tax-deferred basis, greater amounts than are permitted under our
qualified plans. Both the 401(k) plan and the tax-qualified
pension plan have significant contribution limitations
established by law that significantly restrict the ability of
highly compensated employees to save for retirement within those
plans. The compensation committee believes that the ability to
save for retirement on a tax-deferred basis is a significant
factor in our efforts to hire and retain talented executives.
The SERP in particular is intended to encourage executive
officers to remain with us and enhance our long-term strength,
growth and profitability. The opportunity to earn increased
retirement benefits alleviates participants concerns about
funding their retirement and enables enhanced focus on our
business. The compensation committee was advised by a benefits
consultant in adopting and setting the terms of the SERP. In
certain instances, in order to facilitate the hiring of
experienced, mid-career executives, participants are credited
with a portion of years of service prior to their actual years
of service with Dover for purposes of determining their benefits
under the plan. Until March 1, 2009, in order to facilitate
the hiring of experienced, mid-career executives, such persons
could qualify for credit for service prior to joining Dover. The
compensation committee recognizes the value of SERP
participation to the executive officers and considers that value
in setting the levels of their other compensation. For more
information about this plan, see Executive
Compensation Pension Benefits Through 2008
elsewhere in this proxy statement.
The deferred compensation plan allows participants to elect to
defer their receipt of up to 50% of salary and 100% of bonus and
any payout of a cash performance award. This affords tax
planning benefits to participants. We do not consider the
deferred compensation plan to play a major role in our
compensation program, as it merely permits executive officers to
defer receipt of part of their compensation to later periods,
usually post-retirement. We do not match any amounts deferred or
guarantee any particular return on such amounts. See
Executive Compensation Nonqualified Deferred
Compensation in 2008 elsewhere in this proxy statement for
a detailed description of this plan. We offer this plan to
assist in attracting and retaining executives in a competitive
environment at little expense to us.
Change in Control
Arrangements. Although we do not have
executive employment contracts, we do have double-trigger
change-in-control
agreements with each of the NEOs and certain other executive
officers designed to encourage each such officer to continue to
carry out his or her duties with our companies in the event of a
change in control. The agreements, all of which are identical,
provide that if both (1) there is a change in control of
Dover and (2) within eighteen months following the change
in control the officers employment is terminated either by
Dover for other than cause, disability
or death, or by such officer for good reason (all as
defined in the
39
agreements), then such officer will receive a lump sum payment
equal to three times the salary in effect prior to that time
plus the average annual bonus earned by the officer during the
three prior years.
Under the terms of various of our benefit plans, a change in
control will cause acceleration of the availability and payout
of benefits, including that all outstanding cash performance
awards and performance share awards will immediately vest and be
paid and all outstanding stock options and SSARs will
immediately vest and become exercisable. The treatment of our
NEOs under these plans is the same as the treatment of all other
participants in the plans, subject to potential delays in
payments to our 50 most highly compensated officers required
under Section 409A of the Internal Revenue Code.
Compensation
of the Chief Executive Officer
The compensation of our chief executive officer is determined in
the same manner and pursuant to the provisions of the same plans
as the other executive officers. There are no special
agreements, plans or other arrangements with the chief executive
officer. The overall compensation of the chief executive officer
is higher than that of the other executive officers due to his
greater breadth of responsibilities and his ultimate
responsibility, subject to board oversight, for the strategic
business plan and the performance of the company. Due to the
provisions of some plans, the chief executive officers
higher salary and bonus can cause other elements of compensation
to be higher, such as the number of SSARs or performance shares
granted and change in retirement benefits. The compensation
committee and the independent directors take this into
consideration in setting the chief executive officers
salary and bonus.
Mr. Hoffman retired as our chief executive officer
effective November 30, 2008. In connection with
Mr. Hoffmans retirement, after considering, among
other factors, Mr. Hoffmans service to our company,
including his leadership in refocusing the alignment of our
companies, re-evaluating our capital allocation priorities and
embedding operational excellence through the PerformanceCOUNTS
program, the compensation committee awarded him a bonus for 2008
of $2,930,000, which was paid in December 2008. The committee
also determined that previously awarded options and SSARs would
continue to vest and be exercisable by Mr. Hoffman until
the earlier of an awards normal expiration date and
November 30, 2013, that Mr. Hoffman will be entitled
to receive any payments under his three outstanding cash
performance plan awards if and when they become due based on
actual performance (payment dates being February 2009, 2010 and
2011), and that Mr. Hoffman will be permitted to
participate in our health and welfare program, at his expense,
under COBRA until he reaches age 65.
When Mr. Livingston, our chief executive officer, was
promoted on July 1, 2008 from the head of one of our
segments to be our president and chief operating officer, his
salary was increased from $710,000 to $810,000. When he was
promoted to be our chief executive officer on December 1,
2008, his salary was increased to $900,000. There were no other
changes in his compensation at those times. Effective
March 1, 2009, Mr. Livingston took a reduction in his
salary for the remainder of the year of 15%.
Other
Compensation Policies
Employment contracts and severance agreements
Our executive officers do not have employment contracts and we
do not have a formal severance policy. Accordingly, other than
benefits to be provided in accordance with the terms of
compensation plans in connection with previously granted equity
and cash performance awards, accrued retirement benefits and
double-trigger change in control agreements described above, an
executive officers severance or other benefits upon
termination of employment are at the discretion of the
compensation committee.
40
Perquisites
In keeping with our decentralized management style, we have no
formal executive perquisite program. Management and the
compensation committee believe that providing significant
perquisites to executive officers would not be consistent with
our overall compensation philosophy. Perquisites are determined
on a
case-by-case
basis at the applicable segment or corporate headquarters level
for the NEOs and have generally consisted of items such as club
memberships, annual physicals and automobile usage.
Shareholding Guidelines
We believe that our executives will most effectively pursue the
long-term interests of our shareholders if they are shareholders
themselves. We have not historically had formal share ownership
requirements for our executive officers, although senior
executive officers were generally expected to hold the net
shares they acquired upon exercise of options or SSARs for the
duration of employment. As noted above, the compensation
committee is adopting formal share ownership guidelines for our
executives to reinforce our culture of share ownership, define
minimum levels of share ownership and provide our executives
with greater flexibility in their personal financial planning
once the ownership guidelines are met. These guidelines will be
implemented in 2009.
Under these guidelines, our chief executive officer must hold
shares of common stock equal in value to five times his annual
salary. Other senior executive officers (including other NEOs
and those executives who report directly to the chief executive
officer) are required to own shares equal in value to three
times their annual salary, with our remaining executives having
a minimum share ownership set at two times their annual salary.
The compensation committee may grant exceptions from the
guidelines for significant personal events, such as the purchase
of a house. In addition, the compensation committee may reduce
or waive the requirements for persons as they approach
retirement age.
Each person will have five years from the implementation date or
the date of hire or promotion to a covered position to meet the
applicable guidelines. Anyone who fails to meet or to make
satisfactory progress toward the share ownership guidelines
within that time period may receive a portion of his or her
annual bonus or any cash performance program payments in stock,
until such time as he or she satisfies the guidelines.
Tax Deductibility; Section 162(m)
We take into consideration applicable tax, securities laws and
accounting regulations in structuring and modifying our
compensation arrangements and employee benefit plans and, as we
deem appropriate, making individual compensation decisions.
As discussed above in Items to be Voted Upon
Proposal 3 Proposal to Approve Amendments to
the Executive Officer Annual Incentive Plan,
Section 162(m) of the Internal Revenue Code limits our
ability to deduct, in calculating our income tax, compensation
in excess of $1 million to specified executive officers
unless the compensation is paid under a shareholder-approved
plan and meets the requirements for performance-based
compensation. Our annual bonus plan, cash performance awards and
performance share awards covered under our 2005 plan are
designed to satisfy the requirements of Section 162(m).
Most of our NEOs compensation other than salary qualifies
as performance-based and is therefore deductible under
Section 162(m). All salaries up to $1 million are also
deductible. We consider tax deductibility to be an important,
but not the sole or primary, consideration in setting executive
compensation. Accordingly, the compensation committee has the
authority to approve, and in specific situations has approved,
the payment of compensation that may not be deductible when it
believes such payments are in the best interest of our
shareholders. In February 2008 when the independent directors
set Mr. Hoffmans 2008 salary at $1,225,000, they
anticipated that the amount above $1,000,000 would not be
deductible, but they believed that this amount was justifiable
given Mr. Hoffmans service to us.
41
Compensation
Committee Report
We reviewed and discussed with management the Compensation
Discussion and Analysis for the year ended December 31,
2008.
Based on the review and discussions referred to above, we
recommended to the board of directors that this Compensation
Discussion and Analysis be included in this proxy statement and
in Dovers Annual Report on
Form 10-K
for the year ended December 31, 2008.
|
|
|
Compensation Committee:
|
|
Richard K. Lochridge (Chair)
Robert W. Cremin
Jean-Pierre M. Ergas
Peter T. Francis
Kristiane C. Graham
|
42
Summary
Compensation Table
The Summary Compensation Table and notes below show all
remuneration for 2008 provided to:
|
|
|
|
|
our current chief executive officer,
|
|
|
|
our former chief executive officer;
|
|
|
|
our chief financial officer; and
|
|
|
|
our three other most highly compensated executive officers.
|
The determination of the most highly compensated executive
officers is based on total compensation paid or accrued for
2008, excluding changes in the actuarial value of defined
benefit plans and earnings on nonqualified deferred compensation
balances.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
Name and
|
|
|
|
|
|
Bonus
|
|
Awards
|
|
Compensation
|
|
Earnings (4)
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
Salary ($)
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
($)(5)
|
|
($)
|
|
Robert A. Livingston
|
|
|
2008
|
|
|
|
767,500
|
|
|
|
1,000,000
|
|
|
|
668,334
|
|
|
|
763,020
|
|
|
|
998,938
|
|
|
|
20,225
|
|
|
|
4,218,017
|
|
President and Chief Executive Officer(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald L. Hoffman
|
|
|
2008
|
|
|
|
1,119,792
|
|
|
|
2,930,000
|
|
|
|
2,582,069
|
|
|
|
632,952
|
|
|
|
4,844,741
|
|
|
|
5,520
|
|
|
|
12,115,074
|
|
Former President and
|
|
|
2007
|
|
|
|
1,200,000
|
|
|
|
1,600,000
|
|
|
|
2,680,398
|
|
|
|
1,124,334
|
|
|
|
2,215,397
|
|
|
|
10,800
|
|
|
|
8,830,929
|
|
Chief Executive
|
|
|
2006
|
|
|
|
1,000,000
|
|
|
|
2,300,000
|
|
|
|
2,292,385
|
|
|
|
1,013,727
|
|
|
|
1,866,242
|
|
|
|
9,544
|
|
|
|
8,481,898
|
|
Officer(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert G. Kuhbach
|
|
|
2008
|
|
|
|
610,000
|
|
|
|
605,000
|
|
|
|
968,855
|
|
|
|
163,729
|
|
|
|
434,029
|
|
|
|
5,520
|
|
|
|
2,787,133
|
|
Vice President and Chief
|
|
|
2007
|
|
|
|
585,000
|
|
|
|
580,000
|
|
|
|
767,745
|
|
|
|
292,042
|
|
|
|
643,532
|
|
|
|
10,800
|
|
|
|
2,879,119
|
|
Financial Officer
|
|
|
2006
|
|
|
|
565,000
|
|
|
|
550,000
|
|
|
|
694,715
|
|
|
|
424,356
|
|
|
|
571,806
|
|
|
|
9,557
|
|
|
|
2,815,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David J. Ropp
|
|
|
2008
|
|
|
|
790,000
|
|
|
|
835,000
|
|
|
|
691,676
|
|
|
|
1,534,870
|
|
|
|
505,461
|
|
|
|
37,637
|
|
|
|
4,394,644
|
|
Vice President of Dover,
|
|
|
2007
|
|
|
|
750,000
|
|
|
|
835,000
|
|
|
|
1,469,898
|
|
|
|
1,596,849
|
|
|
|
1,135,256
|
|
|
|
10,800
|
|
|
|
5,797,803
|
|
President and Chief
|
|
|
2006
|
|
|
|
700,000
|
|
|
|
750,000
|
|
|
|
935,655
|
|
|
|
2,000,000
|
|
|
|
1,204,136
|
|
|
|
9,525
|
|
|
|
5,599,316
|
|
Executive Officer of Dover Industrial Products Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William W. Spurgeon, Jr.
|
|
|
2008
|
|
|
|
650,000
|
|
|
|
650,000
|
|
|
|
626,391
|
|
|
|
2,000,000
|
|
|
|
324,416
|
|
|
|
11,040
|
|
|
|
4,261,847
|
|
Vice President of Dover, President and Chief
Executive Officer of Dover Fluid Management, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Van Loan
|
|
|
2008
|
|
|
|
725,000
|
|
|
|
725,000
|
|
|
|
693,232
|
|
|
|
1,763,595
|
|
|
|
661,203
|
|
|
|
31,825
|
|
|
|
4,599,855
|
|
Vice President of Dover, President and Chief Executive Officer
of Dover Electronic Technologies, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Bonus amounts generally represent
payments under our annual bonus plan for the year indicated,
which payments are made in the first quarter of the following
year. The annual bonus plan constitutes a non-equity incentive
plan under Statement of Financial Accounting Standards No.
123(R). Although they are based on satisfaction of
pre-established performance targets, these amounts are reported
in the bonus column rather than the non-equity incentive plan
compensation column to make clear that they are annual bonus
payments for the year indicated and to distinguish them from the
payouts under the cash performance awards under the 2005 plan
for the three-year performance period ended December 31 of that
year.
|
43
|
|
|
(2)
|
|
The amounts represent the
compensation cost of outstanding option and SSAR awards granted
during the year indicated and prior years, calculated and
expensed in accordance with Statement of Financial Accounting
Standards No. 123(R) for the fiscal year indicated, and do
not correspond to the actual value that might be recognized by
the named executives. For a discussion of the assumptions
relating to calculation of the cost of equity awards, see
Note 10 to the Notes to the Financial Statements contained
in our Annual Report on
Form 10-K
for the year ended December 31, 2008.
|
|
(3)
|
|
Amounts represent the payouts
earned under cash performance awards under our 2005 plan for the
three-year performance period ended on December 31 of the year
indicated. The actual payouts were made during the first quarter
of the following year. See the column under Note (1) for
additional amounts paid as non-equity incentive plan
compensation.
|
|
(4)
|
|
Amounts represent changes in
present value of accumulated benefits under the pension plan
and/or SERP during 2008.
|
|
(5)
|
|
For Messrs. Livingston,
Hoffman, Kuhbach and Spurgeon, the amounts represent 401(k)
matching/profit sharing contributions. For Mr. Ropp, the
amount represents, for 2008, travel expenses, $5520 in 401(k)
matching/profit sharing contributions, $23,541 in reimbursement
of relocation expenses and $8,363 in automobile allowance, and,
for other years, 401(k) matching/profit sharing contributions.
For Mr. Van Loan, the amount represents $17,425 in 401(k)
matching/profit sharing contributions and $14,400 in automobile
allowance.
|
|
(6)
|
|
Mr. Livingston became
Dovers president and chief operating officer on
July 1, 2008 and became chief executive officer on
December 1, 2008. Prior thereto, he was a vice president of
Dover and the president and chief executive officer of Dover
Engineered Systems, Inc. Mr. Livingston was not a named
executive officer for the years 2007 and 2006.
Mr. Livingstons salary for 2008 reflects the changes
in his position during 2008. His annual salary was set at
$900,000 as of December 1, 2008 and remains at that level
into 2009. Effective March 1, 2009, Mr. Livingston
reduced his salary by 15% for the remainder of the year.
|
|
(7)
|
|
Mr. Hoffman retired as
Dovers chief executive officer effective November 30,
2008. Mr. Hoffmans salary for 2008 was pro-rated to
reflect his services for 11 months of the year.
|
44
Grants of
Plan-Based Awards in 2008
(all
awards have a grant date of February 14, 2008)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts Under
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
Equity
|
|
Exercise
|
|
Grant
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
Incentive Plan
|
|
Price of
|
|
Date
|
|
|
|
|
Threshold
|
|
|
|
|
|
Awards
|
|
Option
|
|
Fair
|
|
|
|
|
(1)
|
|
Target
|
|
Maximum
|
|
Target
|
|
Awards
|
|
Value
|
Name
|
|
Type
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
($/Sh)
|
|
($)
|
|
Mr. Livingston
|
|
SSAR(2)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
54,383
|
|
|
|
42.30
|
|
|
|
596,582
|
|
|
|
CPP(3)
|
|
|
0
|
|
|
|
575,100
|
|
|
|
2,000,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
Bonus Plan(4)
|
|
|
0
|
|
|
|
1,775,000
|
|
|
|
2,662,500
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Mr. Hoffman
|
|
SSAR(2)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
196,000
|
|
|
|
42.30
|
|
|
|
2,150,120
|
|
|
|
CPP(3)
|
|
|
0
|
|
|
|
529,200
|
|
|
|
2,000,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
Bonus plan(4)
|
|
|
0
|
|
|
|
3,675,000
|
|
|
|
5,512,500
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Mr. Kuhbach
|
|
SSAR(2)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
51,511
|
|
|
|
42.30
|
|
|
|
565,076
|
|
|
|
CPP(3)
|
|
|
0
|
|
|
|
139,080
|
|
|
|
2,000,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
Bonus plan(4)
|
|
|
0
|
|
|
|
1,830,000
|
|
|
|
2,745,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Mr. Ropp
|
|
SSAR(2)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
60,511
|
|
|
|
42.30
|
|
|
|
663,806
|
|
|
|
CPP(3)
|
|
|
0
|
|
|
|
639,900
|
|
|
|
2,000,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
Bonus plan(4)
|
|
|
0
|
|
|
|
1,975,000
|
|
|
|
2,962,500
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Mr. Spurgeon
|
|
SSAR(2)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
49,787
|
|
|
|
42.30
|
|
|
|
546,163
|
|
|
|
CPP(3)
|
|
|
0
|
|
|
|
526,500
|
|
|
|
2,000,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
Bonus plan(4)
|
|
|
0
|
|
|
|
1,625,000
|
|
|
|
2,437,500
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Mr. Van Loan
|
|
SSAR(2)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
55,532
|
|
|
|
42.30
|
|
|
|
609,186
|
|
|
|
CPP(3)
|
|
|
0
|
|
|
|
587,250
|
|
|
|
2,000,000
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
Bonus plan(4)
|
|
|
0
|
|
|
|
1,813,000
|
|
|
|
2,718,750
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
(1)
|
|
Represents the minimum amount
payable for a certain level of performance.
|
|
(2)
|
|
Represents an award of an SSAR
under the 2005 plan. The SSARs will not be exercisable until
February 14, 2011. The grant date fair value is calculated
in accordance with Statement of Financial Accounting Standards
No. 123(R), using a Black-Scholes value of $10.97 per SSAR.
|
|
(3)
|
|
Represents a cash performance
award under the 2005 plan made on February 14, 2008 for the
three-year performance period of 2008 through 2010 compared to
the base year 2007. The actual cash payout, if any, at the end
of the three-year performance period will be equal to the award
amount multiplied by a percentage which is derived from a
performance matrix. The target amount shown assumes the award
amount is multiplied by 100%. See Executive
Compensation Compensation Discussion and
Analysis Compensation Components
Performance-Based Compensation elsewhere in this proxy
statement.
|
|
(4)
|
|
The amounts shown in this row
reflect the potential payouts in February 2009 for 2008 under
the annual bonus plan. The threshold, target and maximum amounts
assume, respectively, less than 50%, 100% and 150% satisfaction
of the participants performance goal for 2008. The bonus
amount actually paid in February 2009 is disclosed in the
Summary Compensation Table in the column Bonus for
2008 for the executive officer. No future payout will be made
under this award. For a discussion of the annual bonus plan and
the 2008 payouts, see Executive
Compensation Compensation Discussion and
Analysis Compensation Components
Performance-Based Compensation elsewhere in this proxy
statement.
|
45
Outstanding
Equity Awards at Fiscal Year-End 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities Underlying
|
|
|
Securities Underlying
|
|
|
|
|
|
|
|
|
|
Unexercised Options
|
|
|
Unexercised Options
|
|
|
Option Exercise
|
|
|
Option
|
|
Name
|
|
(#) Exercisable
|
|
|
(#) Unexercisable
|
|
|
Price ($)
|
|
|
Expiration Date
|
|
|
Mr. Livingston
|
|
|
|
|
|
|
54,383
|
(1)
|
|
|
42.30
|
|
|
|
2/14/2018
|
|
|
|
|
|
|
|
|
41,621
|
(2)
|
|
|
50.60
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
|
|
42,261
|
(3)
|
|
|
46.00
|
|
|
|
2/2/2016
|
|
|
|
|
44,763
|
(4)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/10/2015
|
|
|
|
|
15,728
|
(5)
|
|
|
|
|
|
|
41.25
|
|
|
|
2/12/2014
|
|
|
|
|
33,713
|
(6)
|
|
|
|
|
|
|
24.50
|
|
|
|
2/13/2013
|
|
|
|
|
25,343
|
(7)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/14/2012
|
|
|
|
|
22,024
|
(8)
|
|
|
|
|
|
|
41.00
|
|
|
|
2/8/2011
|
|
|
|
|
9,449
|
(9)
|
|
|
|
|
|
|
39.00
|
|
|
|
2/10/2010
|
|
|
|
|
9,510
|
(10)
|
|
|
|
|
|
|
31.00
|
|
|
|
2/4/2009
|
|
Mr. Hoffman
|
|
|
|
|
|
|
196,000
|
(1)
|
|
|
42.30
|
|
|
|
2/14/2018
|
|
|
|
|
|
|
|
|
160,506
|
(2)
|
|
|
50.60
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
|
|
169,609
|
(3)
|
|
|
46.00
|
|
|
|
2/2/2016
|
|
|
|
|
195,421
|
(4)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/10/2015
|
|
|
|
|
106,533
|
(5)
|
|
|
|
|
|
|
41.25
|
|
|
|
2/12/2014
|
|
|
|
|
56,041
|
(6)
|
|
|
|
|
|
|
24.50
|
|
|
|
2/13/2013
|
|
|
|
|
40,500
|
(7)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/14/2012
|
|
|
|
|
12,634
|
(8)
|
|
|
|
|
|
|
41.00
|
|
|
|
2/8/2011
|
|
Mr. Kuhbach
|
|
|
|
|
|
|
51,511
|
(1)
|
|
|
42.30
|
|
|
|
2/14/2018
|
|
|
|
|
|
|
|
|
41,297
|
(2)
|
|
|
50.60
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
|
|
43,873
|
(3)
|
|
|
46.00
|
|
|
|
2/2/2016
|
|
|
|
|
50,760
|
(4)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/10/2015
|
|
|
|
|
44,596
|
(5)
|
|
|
|
|
|
|
41.25
|
|
|
|
2/12/2014
|
|
|
|
|
36,582
|
(7)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/14/2012
|
|
|
|
|
34,046
|
(8)
|
|
|
|
|
|
|
41.00
|
|
|
|
2/8/2011
|
|
|
|
|
16,568
|
(9)
|
|
|
|
|
|
|
39.00
|
|
|
|
2/10/2010
|
|
|
|
|
54,549
|
(10)
|
|
|
|
|
|
|
31.00
|
|
|
|
2/4/2009
|
|
Mr. Ropp
|
|
|
|
|
|
|
60,511
|
(1)
|
|
|
42.30
|
|
|
|
2/14/2018
|
|
|
|
|
|
|
|
|
48,024
|
(2)
|
|
|
50.60
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
|
|
49,304
|
(3)
|
|
|
46.00
|
|
|
|
2/2/2016
|
|
|
|
|
56,274
|
(4)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/10/2015
|
|
|
|
|
47,127
|
(5)
|
|
|
|
|
|
|
41.25
|
|
|
|
2/12/2014
|
|
|
|
|
28,122
|
(6)
|
|
|
|
|
|
|
24.50
|
|
|
|
2/13/2013
|
|
|
|
|
11,670
|
(7)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/14/2012
|
|
|
|
|
10,416
|
(8)
|
|
|
|
|
|
|
41.00
|
|
|
|
2/8/2011
|
|
|
|
|
5,101
|
(9)
|
|
|
|
|
|
|
39.00
|
|
|
|
2/10/2010
|
|
Mr. Spurgeon
|
|
|
|
|
|
|
49,787
|
(1)
|
|
|
42.30
|
|
|
|
2/14/2018
|
|
|
|
|
|
|
|
|
38,419
|
(2)
|
|
|
50.60
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
|
|
40,500
|
(3)
|
|
|
46.00
|
|
|
|
2/2/2016
|
|
|
|
|
46,042
|
(4)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/10/2015
|
|
|
|
|
9,291
|
(5)
|
|
|
|
|
|
|
41.25
|
|
|
|
2/12/2014
|
|
|
|
|
13,557
|
(6)
|
|
|
|
|
|
|
24.50
|
|
|
|
2/13/2013
|
|
|
|
|
7,598
|
(7)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/14/2012
|
|
|
|
|
3,294
|
(8)
|
|
|
|
|
|
|
41.00
|
|
|
|
2/8/2011
|
|
|
|
|
1,208
|
(9)
|
|
|
|
|
|
|
39.00
|
|
|
|
2/10/2010
|
|
|
|
|
1,441
|
(10)
|
|
|
|
|
|
|
31.00
|
|
|
|
2/4/2009
|
|
Mr. Van Loan
|
|
|
|
|
|
|
55,532
|
(1)
|
|
|
42.30
|
|
|
|
2/14/2018
|
|
|
|
|
|
|
|
|
44,822
|
(2)
|
|
|
50.60
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
|
|
44,374
|
(3)
|
|
|
46.00
|
|
|
|
2/2/2016
|
|
|
|
|
20,411
|
(4)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/10/2015
|
|
|
|
|
14,335
|
(5)
|
|
|
|
|
|
|
41.25
|
|
|
|
2/12/2014
|
|
|
|
|
24,135
|
(6)
|
|
|
|
|
|
|
24.50
|
|
|
|
2/13/2013
|
|
|
|
|
15,561
|
(7)
|
|
|
|
|
|
|
38.00
|
|
|
|
2/14/2012
|
|
|
|
|
14,422
|
(8)
|
|
|
|
|
|
|
41.00
|
|
|
|
2/8/2011
|
|
|
|
|
6,558
|
(9)
|
|
|
|
|
|
|
39.00
|
|
|
|
2/10/2010
|
|
|
|
|
7,727
|
(10)
|
|
|
|
|
|
|
31.00
|
|
|
|
2/4/2009
|
|
46
|
|
|
(1)
|
|
SSARs granted on February 14,
2008 are not exercisable until February 14, 2011.
|
|
(2)
|
|
SSARs granted on February 8,
2007 that are not exercisable until February 8, 2010.
|
|
(3)
|
|
SSARs granted on February 2,
2006 that did not become exercisable until February 2, 2009.
|
|
(4)
|
|
Stock options granted on
February 10, 2005 that became exercisable on
February 10, 2008.
|
|
(5)
|
|
Stock options granted on
February 12, 2004 that became exercisable on
February 12, 2007.
|
|
(6)
|
|
Stock options granted on
February 13, 2003 that became exercisable on
February 13, 2006.
|
|
(7)
|
|
Stock options granted on
February 14, 2002 that became exercisable on
February 14, 2005.
|
|
(8)
|
|
Stock options granted on
February 8, 2001 that became exercisable on
February 8, 2004.
|
|
(9)
|
|
Stock options granted on
February 10, 2000 that became exercisable on
February 10, 2003.
|
|
(10)
|
|
Stock options granted on
February 4, 1999 that became exercisable on
February 4, 2002.
|
Option
Exercises and Stock Vested in 2008
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Number of
|
|
|
|
|
Shares Acquired
|
|
Value Realized
|
|
|
on Exercise
|
|
on Exercise
|
Name
|
|
(#)
|
|
($)(1)
|
|
Mr. Livingston
|
|
|
0
|
|
|
|
0
|
|
Mr. Hoffman
|
|
|
10,000
|
|
|
|
165,900
|
(2)
|
Mr. Kuhbach
|
|
|
81,170
|
|
|
|
1,907,279
|
(3)
|
Mr. Ropp
|
|
|
3,525
|
|
|
|
81,710
|
(4)
|
Mr. Spurgeon
|
|
|
911
|
|
|
|
5,521
|
(5)
|
Mr. Van Loan
|
|
|
0
|
|
|
|
0
|
|
|
|
|
(1)
|
|
The value realized on
exercise provided in the table represents the difference
between the closing price on the exercise date and the exercise
price multiplied by the number of shares underlying the option
exercised.
|
|
(2)
|
|
Represents the exercise on
February 6, 2008 of a stock option granted on
February 13, 2003 for 10,000 shares at an exercise
price of $24.50 per share. The closing price of Dovers
common stock on the NYSE on February 6, 2008 was $41.09.
|
|
(3)
|
|
Represents the exercise on
(i) February 1, 2008 of a stock option granted on
February 5, 1998 for 15,562 shares at an exercise
price of $35.00 per share and (ii) May 8, 2008 of a
stock option granted on February 13, 2003 for
65,608 shares at an exercise price of $24.50 per share. The
closing prices of Dovers common stock on the NYSE on
February 1, 2008 and May 8, 2008 were $42.55 and
$51.78, respectively.
|
|
(4)
|
|
Represents the exercise on
May 15, 2008 of a stock option granted on February 4,
1999 for 3,525 shares at an exercise price of $31.00 per
share. The closing price of Dovers common stock on the
NYSE on May 15, 2008 was $54.18.
|
|
(5)
|
|
Represents the exercise on
January 30, 2008 of a stock option granted on
February 5, 1998 for 911 shares at an exercise price
of $35.00 per share. The closing price of Dovers common
stock on the NYSE on January 30, 2008 was $41.06.
|
47
Pension
Benefits Through 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of
|
|
|
|
|
|
|
Number of Years
|
|
Normal
|
|
Accumulated
|
|
Payments during
|
|
|
|
|
Credited Service
|
|
Retirement Age
|
|
Benefit
|
|
last fiscal year
|
Name
|
|
Plan name
|
|
(#)(1)
|
|
(#)
|
|
($)(2)
|
|
(3)
|
|
Mr. Livingston
|
|
Pension Plan
|
|
9.0
|
|
65
|
|
|
33,524
|
|
|
|
Not offered
|
|
|
|
SERP
|
|
25.4(actual)
|
|
62 with 10 years
service
|
|
|
3,418,897
|
|
|
|
Not offered
|
|
Mr. Hoffman
|
|
Pension Plan
|
|
9.0
|
|
65
|
|
|
0
|
|
|
|
223,500
|
|
|
|
SERP
|
|
17.5 (actual +
prior service
credit)
|
|
62 with 10 years
service
|
|
|
10,979,642
|
|
|
|
1,568,928
|
|
Mr. Kuhbach
|
|
Pension Plan
|
|
16.0
|
|
65
|
|
|
379,887
|
|
|
|
Not offered
|
|
|
|
SERP
|
|
21.1 (actual +
prior service
credit)
|
|
62 with 10 years
service
|
|
|
4,190,987
|
|
|
|
Not offered
|
|
Mr. Ropp
|
|
Pension Pan
|
|
11.0
|
|
65
|
|
|
286,955
|
|
|
|
Not offered
|
|
|
|
SERP
|
|
17.7 (actual +
prior service
credit)
|
|
62 with 10 years
service
|
|
|
4,907,184
|
|
|
|
Not offered
|
|
Mr. Spurgeon
|
|
Pension Plan
|
|
16.0
|
|
65
|
|
|
190,464
|
|
|
|
Not offered
|
|
|
|
SERP
|
|
16.0(actual)
|
|
62 with 10 years
service
|
|
|
1,358,436
|
|
|
|
Not offered
|
|
Mr. Van Loan
|
|
Pension Plan
|
|
0.0
|
|
65
|
|
|
0
|
|
|
|
Not offered
|
|
|
|
SERP
|
|
17.9 (actual +
prior service
credit)
|
|
62 with 10 years
service
|
|
|
3,664,282
|
|
|
|
Not offered
|
|
|
|
|
(1)
|
|
Messrs. Livingston, Hoffman,
Kuhbach, Ropp, Spurgeon and Van Loan are eligible for prior
service credit under the SERP of 0.0, 5.8, 5.1, 6.8, 0.0 and
5.7 years, respectively. The increases in present value of
benefits due to their prior service credit are: Livingston: $0;
Hoffman: $4,200,000; Kuhbach: $1,165,976; Ropp: $2,037,312;
Spurgeon: $0; and Van Loan: $1,198,697.
|
|
(2)
|
|
This amount was earned by the
named executive officer over his years of service. The present
value of benefits was calculated assuming that the executive
will receive a single lump sum payment upon retirement at the
later of his current age or age 65 (for the pension plan)
or age 62 (for the SERP).
|
|
(3)
|
|
Our pension plan and SERP do not
allow distributions to participants while employed at Dover.
Mr. Hoffman retired in December and began to receive
distributions under the plans.
|
The amounts shown in the Pension Benefits table above are
actuarial present values of the benefits accumulated through
December 31, 2008. An actuarial present value is calculated
by estimating expected future payments starting at an assumed
retirement age, weighting the estimated payments by the
estimated probability of surviving to each post-retirement age,
and discounting the weighted payments at an assumed discount
rate to reflect the time value of money. The actuarial present
value represents an estimate of the amount which, if invested
today at the discount rate, would be sufficient on an average
basis to provide estimated future payments based on the current
accumulated benefit. The assumed retirement ages for each named
executive are age 62 for SERP and age 65 for the
Pension Plan, which are the earliest ages at which the executive
could retire without any benefit reduction due to age. Actual
benefit present values will vary from these estimates depending
on many factors, including an executives actual retirement
age.
48
Pension
Plan
We maintain a traditional defined benefit plan for our employees
and those of our participating subsidiaries who are US citizens
and tax residents and have completed one year of employment. A
number of our companies do not participate in the pension plan.
Benefits for the NEOs under the pension plan are based generally
upon the participants years of credited service and his or
her final average compensation (the average of the highest 60
consecutive months of compensation during the participants
last 120 months of employment, multiplied by 12).
Specifically, the pension plan provides a benefit equal to A
minus B below with the result multiplied by years of credited
service (up to a maximum of 35 years).
A. 1.5% of final average compensation, minus
B. 0.5% of Social Security Covered Compensation multiplied
by 158%
Compensation is limited to the applicable annual statutory limit
($230,000 for 2008) and includes only base pay, 50% of
annual bonus, commissions, overtime, holiday and vacation pay
and certain pre-tax amounts contributed by employees to other
benefit plans.
Pension plan participants generally vest in their benefits after
five years of employment or, if earlier, upon reaching
age 65, which is the normal retirement age under the plan.
Participants who continue to be employed with a company
participating in the pension plan after age 65 continue to
accrue benefits under the pension plan. Participants may elect
to have their benefits paid in a variety of forms, including
several annuity forms or a lump sum payment.
All NEOs who participate in the pension plan have become vested
in their pension plan benefits and are eligible to begin
receiving reduced benefits if their employment terminates before
normal retirement age. Mr. Hoffman has retired and begun
receiving benefits.
SERP
We maintain a SERP which is unfunded and non-qualified for tax
purposes. To be eligible for SERP benefits, an employee must
have been granted an equity or cash incentive award in each of
five years (not necessarily consecutive) under either the 2005
plan or its predecessor plan and have been designated as an
actual SERP participant by our chief executive officer.
Benefits under the SERP are determined by multiplying the
participants years of actual service plus, in limited
cases, prior service credit (to a combined maximum of
30 years) by 2% of the participants final average
compensation. Final average compensation for SERP purposes is
the same as that under the pension plan, except that the
statutory compensation limitation applicable to the pension plan
does not apply to the SERP. Benefits payable under the SERP are
reduced by the amount of company provided benefits under any
other qualified or non-qualified Dover retirement plans, as well
as the company-paid portion of social security benefits.
Normal retirement age for purposes of the SERP is 65. A
participant who has at least 10 years of service may retire
at age 62 and elect to have benefit payments begin
immediately thereafter without an early retirement benefit
reduction. If, however, a participant who has not attained
age 62 and completed 10 years of service terminates
employment and elects to have benefits payments begin prior to
age 65, his or her SERP benefits will be reduced by an
early retirement reduction factor, based on the
participants age and service at termination of employment.
All NEOs will be eligible to receive unreduced early retirement
benefits if they retire or terminate employment after attaining
age 62.
SERP participants who were at least age 40 on their first
birthday following their date of hire (or the acquisition of
their employer) by one of our companies and received an equity
or cash incentive award under the 2005 plan or its predecessor
plan within 24 months thereafter are eligible for prior
service credit in accordance with the provisions of the plan.
For persons hired after December 31, 2004, receipt of prior
service credit requires approval of our chief executive officer.
49
Persons who become eligible for a SERP benefit after
March 1, 2009 will not receive prior service credit.
SERP benefits are automatically paid in a lump sum or annuity
form following termination of employment, depending on the value
of such benefits, subject to any delay required by
Section 409A of the Code.
SERP participants who, as of December 31, 2004, were
age 55 and had 10 years of service have additional
options with respect to the distribution of the portion of their
SERP benefit accrued through December 31, 2004 based on the
provisions of the SERP in effect at that time, including the
ability to roll over such benefits to the deferred compensation
plan. This applies to Messrs. Hoffman, Kuhbach, Ropp and
Van Loan. Messrs. Hoffman, Kuhbach and Van Loan have
elected to receive their December 31, 2004 SERP benefit as
a lump sum. Mr. Ropp will have his December 31, 2004
SERP benefit paid in the same form and with the same timing as
his benefit under the pension plan.
Nonqualified
Deferred Compensation in 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate
|
|
|
|
|
contributions in
|
|
contributions in
|
|
earnings
|
|
withdrawals/
|
|
balance at
|
|
|
|
|
last FY
|
|
last FY
|
|
in last FY
|
|
distributions
|
|
last FYE
|
Name
|
|
Plan Name
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Mr. Livingston(2)
|
|
Deferred
Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Deferred Income Plan(3)
|
|
|
0
|
|
|
|
|
|
|
|
30,080
|
|
|
|
0
|
|
|
|
270,722
|
|
Mr. Hoffman
|
|
Deferred
Compensation Plan
|
|
|
117,292
|
|
|
|
|
|
|
|
(221,838
|
)
|
|
|
0
|
|
|
|
581,967
|
|
Mr. Kuhbach
|
|
Deferred
Compensation Plan
|
|
|
0
|
|
|
|
|
|
|
|
(611,982
|
)
|
|
|
0
|
|
|
|
894,806
|
|
Mr. Ropp
|
|
Deferred
Compensation Plan
|
|
|
565,203
|
|
|
|
|
|
|
|
(521,486
|
)
|
|
|
0
|
|
|
|
1,318,455
|
|
Mr. Spurgeon
|
|
Deferred
Compensation Plan
|
|
|
226,268
|
|
|
|
|
|
|
|
(74,301
|
)
|
|
|
109,041
|
|
|
|
217,127
|
|
Mr. Van Loan(2)
|
|
Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Amounts shown as executive
contributions in 2008 are included in the Summary Compensation
Table in the salary, bonus or non-equity incentive plan
compensation columns, as appropriate, for the respective
officers.
|
|
(2)
|
|
Messrs. Livingston and Van
Loan have elected not to participate in the deferred
compensation plan.
|
|
(3)
|
|
In
1984-1985,
we offered our executive officers an executive deferred income
plan (the EDIP). Mr. Livingston participated in
the EDIP, pursuant to which he elected to defer certain income
during the period
1985-1988.
We will repay this deferred income to him (or his estate)
beginning when Mr. Livingston has reached age 65 and
retired from our company, and continuing thereafter for a period
of 15 years. The amount Mr. Livingston deferred,
$20,000, will be repaid together with interest compounding at
the rate of 12.5%, if Mr. Livingston terminates his
employment for any reason at age 65 or later. If
Mr. Livingston terminates his employment with us prior to
age 65 for any reason other than death or disability, the
interest rate will be 12.5% only through the date of termination
and will be 10% thereafter. These rates were competitive market
interest rates at the time the program was introduced. As part
of the EDIP, we purchased whole life insurance policies payable
to us to fund the anticipated cost of this program. This plan
has been closed since 1988.
|
50
We maintain an unfunded nonqualified plan that permits a select
group of our and our subsidiaries highly compensated
employees to defer receipt of up to 50% of salary and 100% of
bonus or cash performance program payouts which the participant
may become entitled to receive.
Key management and highly compensated employees on a US payroll
are eligible to participate if they are selected by the deferred
compensation plans administrative committee and meet the
following requirements:
|
|
|
|
|
are expected to have a combination of annual salary and bonus in
excess of the compensation limits applicable to tax-qualified
pension plans for the year ($230,000 for 2008); and
|
|
|
|
are currently participating in or, if newly hired or promoted,
are expected to be granted in the next calendar year an equity
or cash incentive award under the 2005 plan.
|
All of the NEOs are eligible to participate in this plan.
Participants may irrevocably elect to defer salary and bonus or
cash performance payments subject to the plan limits. Although
we may make discretionary contributions to the plan, we have
never done so and do not currently expect to do so.
Amounts deferred under the plan are credited with hypothetical
investment earnings based on the participants investment
elections made from among publicly available investment options
designated under the plan. Participants are 100% vested in all
amounts deferred, as adjusted for any earnings and losses on
such deferred amounts. Our contributions, if any, will vest as
determined by the plans administrator.
We have established a non-qualified grantor trust, with a bank
as the trustee thereof, to hold certain amounts deferred under
the deferred compensation plan. These amounts are considered our
general assets and will be available to our creditors if we
become insolvent.
Participants may elect the timing and form of benefit payments,
provided that small account balances will be distributed in a
lump sum, subject to any delay required by Section 409A of
the Code. Generally, a participant will receive disbursements of
deferred amounts only on account of retirement at age 65
(or age 55 with 10 years of service), disability or
other termination of service, or at a scheduled in-service
withdrawal date chosen by the participant. Upon retirement or
disability or
scheduled-in-service
withdrawals, distributions of a participants account may
be made in annual installments over a specified number of years
or in a single lump sum, subject to any delay required by
Section 409A of the Code. Distributions also may be made if
a participant incurs an unforeseen emergency, as defined in the
plan. Some additional payment options are available with respect
to amounts deferred under the plan as of December 31, 2004,
as adjusted for investment gains and losses.
Potential
Payments Upon Termination or Change in Control
The discussion and tables below describe the payments to which
each of the NEOs would be entitled in the event of termination
of such executives employment or a change in control.
As discussed elsewhere in this proxy statement, Dover companies
do not enter into employment contracts with their executives.
Accordingly, the NEOs are entitled contractually to benefits
upon termination of their employment only as provided for in
previously granted options, SSARs, performance shares and cash
incentive awards under the 2005 plan (including its predecessor
plan), other benefits plans and in double-trigger change in
control agreements. The compensation committee may, in its
discretion, make severance payments on a
case-by-case
basis.
In compliance with Internal Revenue Code Section 409A, an
executive who is a specified employee (one of the 50
most highly compensated employees of the company) at the time of
termination of employment may not receive a payment of any
non-qualified deferred compensation
51
that is subject to Internal Revenue Code Section 409A until
six months after his or her termination of employment
(including, but not limited to, certain benefit payments on
voluntary or involuntary termination, SERP benefits other than
grandfathered SERP benefits, and 409A deferred compensation plan
benefits).
Payments
Made Upon Termination (Without a Change in
Control)
Payments
Made Upon Voluntary or Involuntary (Not for Cause)
Termination
A named executive officer whose employment terminates as a
result of voluntary departure or involuntary termination other
than for cause:
|
|
|
|
|
will be entitled to payment of cash performance awards and
performance share awards for which the performance period had
been completed but payout had not yet occurred, subject to the
satisfaction of performance targets and certification by the
compensation committee that the performance targets have been
met;
|
|
|
|
will be entitled to exercise vested stock options or SSARs until
the end of three months following the date of termination or any
earlier expiration of the award;
|
|
|
|
will receive a single lump sum payment of amounts accrued and
vested in the deferred compensation plan and SERP (other than
grandfathered SERP benefits for which different distribution
options may be available; however a single lump sum payment was
assumed in determining the present values shown above); and
|
|
|
|
will forfeit cash performance awards and performance share
awards for which the performance period has not been completed
as well as unexercisable stock options and SSARs and unvested
restricted stock awards.
|
Payments
Made Upon Termination for Cause
A named executive officer whose employment is terminated by us
for cause will forfeit all outstanding cash and equity awards,
whether or not vested or exercisable. The executive will receive
a payment of amounts deferred and accrued in the deferred
compensation plan and all amounts vested in the SERP as
described in the applicable plan description above.
Payments
Made Upon Normal Retirement
A named executive officer who retires at the normal retirement
age under the applicable plan:
|
|
|
|
|
will be entitled to receive on the normal payout date the payout
of any previously-granted cash performance award or performance
share award that would have been earned had he continued to be a
Dover employee through the payout date, subject to the
satisfaction of performance targets and certification by the
Committee that the performance targets have been met;
|
|
|
|
will continue to vest in options and SSARs held as of the
retirement date and may exercise them after vesting until the
earlier of their expiration date or the end of the
60-month
period following retirement; and
|
|
|
|
will be entitled to receive payment of amounts deferred and
accrued in the deferred compensation plan and amounts vested in
the SERP in accordance with the terms of those plans and the
officers elections thereunder.
|
Under the 2005 plan, normal retirement is defined as retirement
at age 62. For the definitions of normal retirement under
each of the deferred compensation plan, SERP and pension plan,
see the applicable plan description above.
52
Payments
Made Upon Early Retirement
Early retirement is defined in each of the deferred compensation
plan, the SERP and the pension plan as described in the
applicable plan description above. With respect to awards under
the 2005 plan, early retirement is defined as termination for
any reason other than normal retirement, death, disability or
cause, under one of the following circumstances:
|
|
|
|
|
the executive has at least 10 years of service with a Dover
company and the sum of his or her age and years of service on
the date of termination equals at least 65 (the Rule of
65) and the executive terminates employment on at least
6 months notice;
|
|
|
|
the executive has at least 15 years of service with a Dover
company and the sum of his or her age and years of service on
the date of termination equals at least 70 (the Rule of
70) and the executive terminates employment on at least
6 months notice; or
|
|
|
|
the executives employment terminates because the company
or line of business in which he or she is employed is sold and
the executive remains employed in good standing through the
closing date of the sale (sale of a company).
|
A named executive officer who takes early retirement (as defined
in the applicable plan):
|
|
|
|
|
will be entitled to receive payment of amounts deferred and
accrued in the deferred compensation plan and amounts vested in
the SERP in accordance with the terms of the plans and the
officers elections thereunder;
|
|
|
|
will be entitled to have his options and SSARs continue to vest
and be exercisable for a period of 24 months,
36 months or 12 months following the date of early
retirement under the Rule of 65, the Rule of 70 or sale of a
company, respectively; (however, note that (1) an executive
who is eligible to retire under the Rule of 65 or the Rule of 70
and who retires upon the sale of a company will be entitled to
have his options and SSARs continue to vest and be exercisable
in accordance with the Rule of 65 or Rule of 70 treatment, as
the case may be, and (2) options and SSARs can never be
exercised after the expiration of their
10-year
term); and
|
|
|
|
at the discretion of the compensation committee, may receive all
or a portion of the remaining payouts of cash performance awards
or performance share awards outstanding on the date of early
retirement under the Rule of 65 or the Rule of 70, subject to
satisfaction of performance targets and certification by the
committee that such performance targets have been met. Any such
payouts will be made on the regular payout dates for the awards.
All outstanding cash performance awards and performance shares
are canceled under early retirement upon the sale of a company.
|
Any person who takes early retirement under the 2005 plan
(unless he or she waives the early retirement benefits) is
deemed to have expressly agreed that he or she will not compete
with us on the following terms. The participant will not compete
with us or any of our companies at which he or she was employed
within the three years immediately prior to his or her
termination, in the geographic areas in which we or that company
actively carried on business at the end of the
participants employment, for the period during which early
retirement affords him or her enhanced benefits.
If the participant fails to comply with the non-compete
provision, he or she forfeits the early retirement enhanced
benefits referred to above and must return to Dover the economic
value previously realized by reason of such benefits.
53
Payments
Made Upon Disability or Death
A named executive officer who dies or becomes permanently
disabled (or, if he has died, his beneficiary or estate):
|
|
|
|
|
will be entitled to receive on the normal payout date a portion
of each cash performance payout or performance share payout that
he would have earned had he continued to be a Dover employee
through the payout or distribution date prorated on the basis of
the performance period during which he served; unless the
compensation committee determines otherwise, such payment shall
be subject to satisfaction of applicable performance targets and
certification by the compensation committee of the attainment of
such performance targets;
|
|
|
|
will become immediately vested in any unvested options or SSARs
and all options and SSARs may be exercised until the earlier of
their expiration date or the end of the
60-month
period following the executives death or
disability; and
|
|
|
|
will be entitled to receive payment of all amounts deferred and
accrued in the deferred compensation plan and all amounts vested
in the pension plan and the SERP in accordance with the terms of
those plans and his elections thereunder.
|
The table below shows the aggregate amount of potential payments
and other benefits that each continuing named executive officer
(or his beneficiary or estate) would have been entitled to
receive if his employment had terminated (other than as a result
of a change in control) on December 31, 2008. The amounts
shown assume that termination was effective as of
December 31, 2008, include amounts earned through such time
and are estimates of the amounts which could have been paid out
to the executives upon their termination at that time. The
actual amounts to be paid out can only be determined at the time
of each executives separation from our company. Annual
bonuses are discretionary and are therefore omitted from the
tables. Mr. Hoffman retired as of November 30, 2008
and, accordingly, is not included in the table. As of
December 31, 2008, only Mr. Ropp was eligible for
normal retirement (as defined in the applicable plans), only
Mr. Van Loan was eligible for early retirement under the
Rule of 65 and only Messrs. Kuhbach and Livingston were
eligible for early retirement under the Rule of 70. In the event
of early retirement upon sale of company, Mr. Ropp would be
entitled to treatment under Normal Retirement and
Mr. Van Loan would be entitled to treatment under
Early Retirement under the Rule of 65.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Early
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
Early
|
|
(separation
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Retirement
|
|
from
|
|
|
|
|
|
|
or Involuntary
|
|
|
|
|
|
under
|
|
service)
|
|
|
|
|
|
|
Not for Cause
|
|
For Cause
|
|
Normal
|
|
Rule of 65 or
|
|
Upon Sale
|
|
|
|
|
|
|
Termination
|
|
Termination
|
|
Retirement
|
|
Rule of 70
|
|
of Company
|
|
Death
|
|
Disability
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Mr. Livingston
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash performance award
|
|
|
763,020
|
(1)
|
|
|
0
|
|
|
|
n/a
|
|
|
|
1,864,620
|
(2)
|
|
|
n/a
|
|
|
|
1,305,720
|
(3)
|
|
|
1,305,720
|
(3)
|
Stock options/SSARs
|
|
|
302,123
|
(4)
|
|
|
0
|
|
|
|
n/a
|
|
|
|
302,123
|
(5)
|
|
|
n/a
|
|
|
|
302,123
|
(6)
|
|
|
302,123
|
(6)
|
Retirement plan payments(7)
|
|
|
3,867,649
|
|
|
|
3,867,649
|
|
|
|
n/a
|
|
|
|
3,867,649
|
|
|
|
n/a
|
|
|
|
3,867,649
|
|
|
|
3,867,649
|
|
Deferred comp plan(8)
|
|
|
481,429
|
|
|
|
481,429
|
|
|
|
n/a
|
|
|
|
481,429
|
|
|
|
n/a
|
|
|
|
681,145
|
|
|
|
681,145
|
|
Health and welfare benefits(9)
|
|
|
0
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
1,000,000
|
|
|
|
0
|
|
Total:
|
|
|
5,414,221
|
|
|
|
4,349,078
|
|
|
|
n/a
|
|
|
|
6,515,821
|
|
|
|
n/a
|
|
|
|
7,156,637
|
|
|
|
6,156,637
|
|
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Early
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
Early
|
|
(separation
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Retirement
|
|
from
|
|
|
|
|
|
|
or Involuntary
|
|
|
|
|
|
under
|
|
service)
|
|
|
|
|
|
|
Not for Cause
|
|
For Cause
|
|
Normal
|
|
Rule of 65 or
|
|
Upon Sale
|
|
|
|
|
|
|
Termination
|
|
Termination
|
|
Retirement
|
|
Rule of 70
|
|
of Company
|
|
Death
|
|
Disability
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Mr. Kuhbach
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash performance award
|
|
|
163,729
|
(1)
|
|
|
0
|
|
|
|
n/a
|
|
|
|
436,189
|
(2)
|
|
|
n/a
|
|
|
|
299,009
|
(3)
|
|
|
299,009
|
(3)
|
Stock options/SSARs
|
|
|
104,734
|
(4)
|
|
|
0
|
|
|
|
n/a
|
|
|
|
104,734
|
(5)
|
|
|
n/a
|
|
|
|
104,734
|
(6)
|
|
|
104,734
|
(6)
|
Retirement plan payments(7)
|
|
|
4,613,717
|
|
|
|
4,613,717
|
|
|
|
n/a
|
|
|
|
4,613,717
|
|
|
|
n/a
|
|
|
|
4,613,717
|
|
|
|
4,613,717
|
|
Deferred comp plan(10)
|
|
|
894,806
|
|
|
|
894,806
|
|
|
|
n/a
|
|
|
|
894,806
|
|
|
|
n/a
|
|
|
|
894,806
|
|
|
|
894,806
|
|
Health and welfare benefits(9)
|
|
|
0
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
1,000,000
|
|
|
|
0
|
|
Total:
|
|
|
5,776,986
|
|
|
|
5,508,523
|
|
|
|
n/a
|
|
|
|
6,049,446
|
|
|
|
n/a
|
|
|
|
6,912,266
|
|
|
|
5,912,266
|
|
Mr. Ropp (11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash performance award
|
|
|
1,534,870
|
(1)
|
|
|
0
|
|
|
|
2,782,270
|
(2)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
2,153,170
|
(3)
|
|
|
2,153,170
|
(3)
|
Stock options/SSARs
|
|
|
236,787
|
(4)
|
|
|
0
|
|
|
|
236,787
|
(12)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
236,787
|
(6)
|
|
|
236,787
|
(6)
|
Retirement plan payments(7)
|
|
|
5,187,988
|
|
|
|
5,187,988
|
|
|
|
5,187,988
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
5,187,988
|
|
|
|
5,187,988
|
|
Deferred comp plan(10)
|
|
|
1,318,455
|
|
|
|
1,318,455
|
|
|
|
1,318,455
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
1,318,455
|
|
|
|
1,318,455
|
|
Health and welfare benefits(9)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
1,000,000
|
|
|
|
0
|
|
Total:
|
|
|
8,278,100
|
|
|
|
6,506,443
|
|
|
|
9,525,500
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
9,896,400
|
|
|
|
8,896,400
|
|
Mr. Spurgeon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash performance award
|
|
|
2,000,000
|
(1)
|
|
|
0
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
2,000,000
|
(1)
|
|
|
2,499,500
|
(3)
|
|
|
2,499,500
|
(3)
|
Stock options/SSARs
|
|
|
116,917
|
(4)
|
|
|
0
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
116,917
|
(13)
|
|
|
116,917
|
(6)
|
|
|
116,917
|
(6)
|
Retirement plan payments(7)
|
|
|
1,849,564
|
|
|
|
1,849,564
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
1,849,564
|
|
|
|
1,849,564
|
|
|
|
1,849,564
|
|
Deferred comp plan(10)
|
|
|
217,127
|
|
|
|
217,127
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
217,127
|
|
|
|
217,127
|
|
|
|
217,127
|
|
Health and welfare benefits(9)
|
|
|
0
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
0
|
|
|
|
1,000,000
|
|
|
|
0
|
|
Total:
|
|
|
4,183,608
|
|
|
|
2,066,691
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
4,183,608
|
|
|
|
5,683,108
|
|
|
|
4,683,108
|
|
Mr. Van Loan (14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash performance award
|
|
|
1,763,595
|
(1)
|
|
|
0
|
|
|
|
n/a
|
|
|
|
2,330,595
|
(15)
|
|
|
n/a
|
|
|
|
2,337,345
|
(3)
|
|
|
2,337,345
|
(3)
|
Stock options/SSARs
|
|
|
218,053
|
(4)
|
|
|
0
|
|
|
|
n/a
|
|
|
|
218,053
|
(16)
|
|
|
n/a
|
|
|
|
218,053
|
(6)
|
|
|
218,053
|
(6)
|
Retirement plan payments(7)
|
|
|
3,881,936
|
|
|
|
3,881,936
|
|
|
|
n/a
|
|
|
|
3,881,936
|
|
|
|
n/a
|
|
|
|
3,881,936
|
|
|
|
3,881,936
|
|
Deferred comp plan(10)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Health and welfare benefits(9)
|
|
|
0
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
0
|
|
|
|
n/a
|
|
|
|
1,000,000
|
|
|
|
0
|
|
Total:
|
|
|
5,863,584
|
|
|
|
3,881,936
|
|
|
|
n/a
|
|
|
|
6,430,584
|
|
|
|
n/a
|
|
|
|
7,437,334
|
|
|
|
6,437,334
|
|
|
|
|
(1)
|
|
This amount was earned as of
December 31, 2008 for the completed three-year performance
period
2006-2008.
Except for a termination for cause, none of the
termination events in this table would have any effect on the
payout of this amount. This amount was paid to the executive
officer in February 2009 (see Summary Compensation Table).
|
|
(2)
|
|
This amount includes the payout
described in Note (1) for the performance period
2006-2008,
plus an assumed payout in February 2010 at the 100% level of the
cash performance award made in February 2007 for the three-year
performance period
2007-2009
and an assumed payout in February 2011 at the 100% level of the
cash performance award made in February 2008 for the three-year
performance period
2008-2010.
This calculation assumes that the compensation committee
approves for Mr. Livingston, and
|
55
|
|
|
|
|
the chief executive officer
approves for Messrs. Kuhbach, Ropp and Van Loan, payouts
for the
2007-2009
and
2008-2010
performance periods.
|
|
(3)
|
|
This amount includes the payout
described in Note (1) for the performance period
2006-2008,
plus prorated payouts at the 100% level of the other two cash
performance awards outstanding at the time of the
executives death or disability, paid on the regular payout
dates following the executives death or disability.
|
|
(4)
|
|
This amount reflects the value of
outstanding vested options and SSARs as of December 31,
2008, which is the difference between the closing price of
$32.92 per share of our common stock on December 31, 2008,
and the exercise price of each option and SSAR award multiplied
by the number of shares covered by such award. All such vested
options and SSARs would continue to be exercisable for up to
three months following the executives voluntary or
involuntary (not for cause) termination.
|
|
(5)
|
|
This amount reflects the value of
vested options and SSARs as of December 31, 2008, as
described in Note (4), plus the value of unvested options and
SSARs that would vest within 36 months following the
executives retirement, valued in the same manner.
|
|
(6)
|
|
This amount reflects the value of
all vested and unvested options and SSARs. All unvested options
and SSARs immediately vest and become exercisable upon the
executives death or disability.
|
|
(7)
|
|
These amounts reflect benefits
accrued under the SERP and pension plan as of December 31,
2008; no increase in such benefits would result from the
termination event.
|
|
(8)
|
|
This amounts reflects compensation
deferred by Mr. Livingston under the EDIP and interest
accrued thereon. Under the EDIP, Mr. Livingston may only
begin receiving payments at age 65 and payments will be
made over a
15-year
period. If he terminated employment with us as of
December 31, 2008 for any reason other than death or
disability, the amount Mr. Livingston deferred would be
repaid together with interest compounding at the rate of 12.5%
through the date of termination and at the rate of 10%
thereafter. If he terminated employment with us as of
December 31, 2008 due to death or disability, the amount
deferred would be repaid together with interest compounding at
the rate of 12.5%.
|
|
(9)
|
|
In the event of accidental death,
life insurance proceeds of $1,000,000 would be payable. Our
disability plan provides a benefit of $15,000 per month, but
this is offset by retirement benefits provided by us. In the
event of disability of these NEOs, it is assumed that they would
elect retirement benefits that completely offset this disability
benefit.
|
|
(10)
|
|
These amounts reflect compensation
deferred by the executive and earnings accrued thereon under the
deferred compensation plan as of December 31, 2008; no
increase in such benefits would result from the termination
event. Mr. Van Loan has elected not to participate in the
plan.
|
|
(11)
|
|
Since Mr. Ropp is eligible
for normal retirement, the table assumes that he would take
normal retirement in lieu of early retirement.
|
|
(12)
|
|
This amount reflects the value of
vested options and SSARs as of December 31, 2008, as
described in Note (4) plus the value of unvested options
and SSARs that would vest within 60 months following the
executives retirement, valued in the same manner.
|
|
(13)
|
|
This amount reflects the value of
vested options and SSARs as of December 31, 2008, as
described in Note (4) plus the value of unvested options
and SSARs that would vest within 12 months following the
executives early retirement, valued in the same manner.
|
|
(14)
|
|
Since Mr. Van Loan is
eligible for early retirement under the Rule of 65, the table
assumes that he would take early retirement under the Rule of 65
in the event of the sale of his company.
|
|
(15)
|
|
This amount includes the payout
described in Note (1) for the performance period 2006-2008,
plus an assumed payout in February 2010 at the 100% level
of the cash performance award made in February 2007 for the
three-year performance period 2007-2009.
|
|
(16)
|
|
This amount reflects the value of
vested options and SSARs as of December 31, 2008, as
described in Note (4) plus the value of unvested options
and SSARs that would vest within 24 months following the
executives early retirement, valued in the same manner.
|
56
Potential
Payments in Connection with a Change in Control (Without
Termination)
As discussed below, the payment of severance benefits following
a change in control is subject to a double-trigger
that is, such benefits are payable only upon certain specified
termination events following a change in control. However,
rights of an executive under the 2005 plan, the deferred
compensation plan, the pension plan, the SERP and other
incentive and benefit plans are governed by the terms of those
plans and typically are affected by the change in control event
itself, even if the executive continues to be employed by us (or
a successor company) following the change in control.
Under the 2005 plan, upon a change in control, all outstanding
options and SSARs will immediately become exercisable in
accordance with the terms of the appropriate stock option or
SSAR agreement. All outstanding cash performance awards and
performance share awards immediately vest and become immediately
due and payable. The performance periods of all cash performance
awards and performance share awards outstanding terminate on the
last day of the month prior to the month in which the change in
control occurs. The participant is entitled to a payment, the
amount of which is determined in accordance with the plan and
the relevant cash performance award or performance share award
agreement, which is then pro rated based on the portion of the
performance period that the participant completed prior to the
change in control.
Each person granted an award under the 2005 plan is deemed to
agree, and each person who accepts a change in control agreement
agrees, that upon a tender or exchange offer, proxy solicitation
or other action seeking to effect a change in control of Dover,
he or she will not voluntarily terminate employment with us (or
any of our companies) and, unless terminated by us, will
continue to render services to us until the person seeking to
effect a change in control of our company has abandoned,
terminated or succeeded in such persons efforts to effect
the change in control.
Under the SERP, upon a change in control, each participant will
become entitled to receive the actuarial value of the
participants benefit accrued through the date of the
change in control. Under the deferred compensation plan, at
least 30 days before the date the change in control is
expected to occur, we are required to contribute to the grantor
trust holding certain amounts deferred under the plan an amount
equal to (a) two times the annual average total deferrals
made to the plan during the prior three years, plus
(b) 125% of the amount by which the value of all
participants accounts in the plan as of 30 days prior
to the expected date of the change in control exceeds the
liquidated value of the assets then held in the trust. Amounts
deferred under the plan will continue to accrue any earnings and
will be payable in accordance with the elections made by the
executive officer.
The following table shows the aggregate potential equity values
and potential payments under plans to which each of the
continuing NEOs would have been entitled upon a change in
control on December 31, 2008. The deferred compensation
plan amounts reflect a 5% forfeiture for accelerated payout as
required by law.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options/
|
|
Cash Performance
|
|
SERP and Pension
|
|
Deferred
|
|
|
SSARs
|
|
Awards
|
|
Plan
|
|
Compensation Plan
|
Named Executive
Officer
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Mr. Livingston
|
|
|
302,123
|
|
|
|
1,275,120
|
|
|
|
3,867,649
|
|
|
|
481,429
|
(1)
|
Mr. Kuhbach
|
|
|
104,734
|
|
|
|
291,441
|
|
|
|
4,613,717
|
|
|
|
850,066
|
|
Mr. Ropp
|
|
|
236,787
|
|
|
|
2,118,520
|
|
|
|
5,187,988
|
|
|
|
1,252,532
|
|
Mr. Spurgeon
|
|
|
116,917
|
|
|
|
2,471,375
|
|
|
|
1,849,564
|
|
|
|
206,270
|
|
Mr. Van Loan
|
|
|
218,053
|
|
|
|
2,305,283
|
|
|
|
3,881,936
|
|
|
|
n/a
|
|
|
|
|
(1)
|
|
This is the present value of
payments under the EDIP which begin at age 65, and continue
monthly for 15 years guaranteed. This amount will not be
received as a lump sum.
|
57
Potential
Payments Upon Termination Following a Change in
Control
We have double-trigger change in control agreements with each of
our NEOs and certain other executive officers which are designed
to encourage each officer to continue to carry out his or her
duties with us in the event of a change in control. Each of
these agreements requires a double-trigger, meaning
that a change in control alone does not give the named executive
officer any right to terminate his employment and receive
severance benefits. However, a change in control can result in
severance payments if it is followed by the executive officer
resigning for good reason or by us terminating the executive
officer other than for cause.
Under the change in control agreements, if we terminate an
executive for any reason other than cause, death or
disability or the executive resigns for good
reason (as such terms are defined in the agreement) within
18 months after a change in control, the executive is
entitled to severance benefits, payable in a lump sum in cash
(the lump sum amount), equal to the sum of:
|
|
|
|
|
three times the executives salary immediately prior to the
date of termination or, if higher, immediately prior to the
first occurrence or circumstance constituting good
reason; and
|
|
|
|
three times the average annual bonus earned by the executive for
the three fiscal years ending immediately prior to the fiscal
year in which the termination date occurred, or if higher,
immediately prior to the fiscal year in which the change in
control occurred.
|
In addition, the executive is entitled to the life, accident and
health insurance plans that we provided prior to the change in
control (or equivalent benefits), at no direct cost to the
executive, for a period of three years from the date of
termination, and indemnification of the executive for any costs
incurred in any litigation or arbitration by any person in
connection with the enforcement or interpretation of the change
in control agreement, plus pre-judgment interest on any judgment
with respect thereto.
For purposes of these agreements, a change in
control occurs when:
|
|
|
|
|
a person becomes the beneficial owner of 20% or more of our
outstanding common stock or the combined voting power of
outstanding securities, excluding any shares of stock acquired
from us or our affiliates;
|
|
|
|
existing members of the board of directors or persons whose
appointment or election by the board or nomination for election
by the shareholders was approved or recommended by a vote of at
least two-thirds of the incumbent directors whose appointment,
election or nomination was previously so approved or
recommended, cease to constitute a majority of the board of
directors;
|
|
|
|
there is a merger or other business combination of us or our
affiliates, except where our outstanding voting stock
constitutes at least 50% of the combined voting power of the
surviving entity, or the merger was effected to implement a
recapitalization where no person becomes a beneficial owner of
20% or more of our common stock or the combined voting power of
outstanding shares; or
|
|
|
|
our shareholders approve a plan of complete liquidation,
dissolution or sale of substantially all of its assets, other
than when the sale of assets is to an entity in which 50% or
more of the voting power is owned by our former shareholders.
|
Upon a change in control, an executive who is party to a change
in control agreement may be subject to a 20% excise tax under
Section 280G of the Internal Revenue Code to the extent
that the executive receives an excess parachute
payment. Section 280G imposes a 20% excise tax on,
and limits the tax deductibility of, certain compensatory
payments made by us to or for the benefit of certain executives
who are disqualified individuals within the meaning
of Section 280G, if such payments are contingent upon a
change in the ownership or effective control of a corporation or
in the ownership of a substantial portion of the assets, and the
payments equal or exceed a safe harbor
58
amount of 2.99 times the individuals base amount. If
payments deemed to be contingent on the change in control equal
or exceed the safe harbor, payments which exceed one times the
individuals base amount are treated as excess
parachute payments and are subject to the 20% excise tax
and are not deductible by us. Under the change in control
agreements, we have agreed to reimburse the executive for all
excise taxes that are imposed on the executive under
Section 280G with respect to the cash lump sum amount
described above (depending on certain factors involved in the
calculation of such taxes) and any income or excise taxes that
are payable by the executive as a result of our reimbursement of
such Section 280G excise taxes.
The following table shows the potential payments and other
benefits that each of the continuing NEOs would have been
entitled to receive under the change in control agreements upon
involuntary or good reason termination following a change in
control on December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump Sum
|
|
Health and Welfare
|
|
280G Tax
|
|
|
Named Executive
Officer
|
|
Amount ($)
|
|
Benefits ($)
|
|
gross-up ($)
|
|
Total ($)(1)
|
|
Mr. Livingston
|
|
|
4,850,000
|
|
|
|
43,907
|
|
|
|
1,603,475
|
|
|
|
6,497,382
|
|
Mr. Kuhbach
|
|
|
3,485,000
|
|
|
|
65,812
|
|
|
|
1,001,119
|
|
|
|
4,551,931
|
|
Mr. Ropp
|
|
|
4,955,000
|
|
|
|
49,678
|
|
|
|
1,566,047
|
|
|
|
6,570,725
|
|
Mr. Spurgeon
|
|
|
3,475,000
|
|
|
|
51,373
|
|
|
|
1,112,057
|
|
|
|
4,638,430
|
|
Mr. Van Loan
|
|
|
4,175,000
|
|
|
|
32,094
|
|
|
|
1,386,907
|
|
|
|
5,594,001
|
|
|
|
|
(1)
|
|
For additional potential amounts
payable upon a change in control under Dovers employee
benefit plans, whether or not there is a termination of
employment, see the table on page 57.
|
SHAREHOLDER
PROPOSALS FOR 2010 ANNUAL MEETING
In order for shareholder proposals to be included in our proxy
statement for the 2010 Annual Meeting, we must receive them at
our principal executive offices, 280 Park Avenue, New York, NY
10017, by November 24, 2009. All other shareholder
proposals, including nominations for directors, in order to be
voted on at the 2010 Annual Meeting, must be received by us not
earlier than January 7, 2010, and not later than
February 5, 2010 being, respectively, 120 days and
90 days prior to the date of the first anniversary of the
2009 Annual Meeting of Shareholders.
Dated: March 24, 2009
By authority of the board of
directors,
JOSEPH W. SCHMIDT
Secretary
59
Appendix
A
DOVER
CORPORATION
2005 EQUITY AND CASH INCENTIVE PLAN
(Amended and Restated as of January 1, 2009)
A. PURPOSE
AND SCOPE OF THE PLAN
1. Purpose. The 2005 Equity and Cash
Incentive Plan (the Plan) is intended to
promote the long-term success of Dover Corporation by providing
salaried officers and other key employees of Dover Corporation
and its subsidiaries, on whom major responsibility for the
present and future success of Dover Corporation rests, with
long-range and medium-range inducement to remain with the
organization and to encourage them to increase their efforts to
make Dover Corporation successful. The term
Corporation shall mean Dover Corporation and
any present or future corporation which is or would be a
subsidiary corporation of Dover Corporation as
defined in Section 424 of the Internal Revenue Code of
1986, as amended (the Code), unless the
context requires otherwise.
2. Successor Plan. The Plan is the
successor to the 1995 Incentive Stock Option Plan and 1995 Cash
Performance Program (the Predecessor Plan).
No further grants of options, restricted stock or cash
performance awards may be made under the Predecessor Plan after
the Predecessor Plan expires on January 30, 2005. Options,
restricted stock, and performance awards under the Predecessor
Plan shall be administered pursuant to the provisions of the
Predecessor Plan.
3. Administration. The Plan shall be
administered and interpreted by the Compensation Committee or
such other Committee of the Board of Directors as the Board may
designate if there is no Compensation Committee (the
Committee), consisting of not less than three
(3) persons appointed by the Board of Directors of Dover
Corporation from among its members. A person may serve as a
Committee member provided he or she shall comply in all respects
with any qualifications required by law, including specifically
being a non-employee director for purposes of the
rules promulgated under the Securities Exchange Act of 1934, as
amended (the Exchange Act), and an
outside director for purposes of Section 162(m)
of the Code and satisfying any other independence requirement
under applicable law and regulations. The Committee will have
sole and complete authority to administer all aspects of the
Plan, including but not limited to: (a) determining the
individuals eligible to receive stock options, SSARs (as defined
in Paragraph 6), restricted stock, cash performance awards,
and/or
performance share awards under the Plan; (b) granting
options, SSARs, restricted stock, cash performance awards, and
performance share awards; (c) determining the number of
shares to be subject to options and SSARs, and the amount of
restricted stock, cash performance awards, and performance share
awards to be granted to any such eligible individuals at any
time or from time to time; (d) determining the terms and
conditions under which option and SSAR grants, restricted stock
awards, cash performance awards, and performance share awards
will be made; and (e) determining whether objectives,
conditions and performance targets for cash performance awards,
performance share awards and, if applicable, other awards have
been met. The Committee may, subject to the provisions of the
Plan, from time to time establish such rules and regulations as
it deems appropriate for the proper administration of the Plan.
The Committees decisions shall be final, conclusive, and
binding with respect to the interpretation and administration of
the Plan and any grants or awards made thereunder. The Committee
shall have the discretion to make awards under the Plan that are
intended to meet the requirements of Section 162(m) of the
Code as well as awards that are not intended to meet the
requirements of Section 162(m) of the Code.
4. Eligibility. Option and SSAR grants,
restricted stock awards, cash performance awards, and
performance share awards may be made to any employee of the
Corporation who is a salaried officer or other key employee,
including salaried officers who are also members of the Board of
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Directors (hereinafter sometimes referred to as
participants). The Committee shall select the
participants eligible for, and determine the terms of, the
grants and awards to each.
5. Shares Available for Grant. An
aggregate maximum of 20,000,000 shares of common stock of
Dover Corporation (the Common Stock) will be
reserved for issuance upon exercise of options to purchase
Common Stock granted under the Plan, the exercise of SSARs
granted under the Plan, and for awards of restricted stock, and
performance share awards. This maximum number is subject to
appropriate adjustment resulting from future stock splits, stock
dividends, recapitalizations, reorganizations, and other similar
changes to be computed in the same manner as that provided for
in Paragraph 14 below. If any option or SSAR granted under
the Plan expires, terminates, or is cancelled without having
been exercised in full, or if any award of restricted stock or
award of performance shares is forfeited or canceled for any
reason, the number of shares underlying such unexercised option
or SSAR and the number of forfeited or cancelled shares under
such award will again be available under the Plan. However, the
total original number of shares subject to any option, SSAR,
award of restricted stock, or award of performance shares
granted under the Plan that is exercised, vests or held until
payout shall continue to be counted against the aggregate
maximum number of shares reserved for issuance under the Plan,
even if such grant is settled in whole or in part other than by
the delivery of Common Stock to a participant (including any
netting or withholding of any shares to satisfy tax withholding
obligations).
B. STOCK
OPTION AND SSAR GRANTS
6. Stock Options and SSARs. Options to
purchase shares of Common Stock may be granted under the terms
of the Plan and shall be designated as either
non-qualified stock options or incentive
stock options (ISOs) within the meaning of
Section 422 of the Code. Stock appreciation rights that are
settled upon exercise by the issuance of shares of Common Stock
(SSARs) may be granted under the terms of the
Plan. SSARs shall be granted separately from options and the
exercise of an SSAR shall not be linked in any way to the
exercise of an option and shall not affect any option award then
outstanding. Stock option grants and SSARs shall contain such
terms and conditions as the Committee may from time to time
determine, subject to the following limitations:
(a) Exercise Price. The price at which
shares of Common Stock may be purchased upon exercise of an
option shall be fixed by the Committee and may be equal to or
more than (but not less than) the fair market value (as defined
below) of a share of the Common Stock as of the date the option
is granted.
(b) Base Price. The base price of an SSAR
shall be fixed by the Committee and may be equal to or more than
(but not less than) the fair market value of a share of the
Common Stock as of the date the SSAR is granted.
(c) Fair Market Value. For purposes of
the Plan, the fair market value of a share of Common Stock on
the date the option or SSAR is granted shall be determined in
good faith by the Committee on the basis of such considerations
as the Committee deems appropriate from time to time, including,
but not limited to, such factors as the closing price for a
share of Common Stock on such day (or, if such day is not a
trading day, on the next trading day) on the principal United
States exchange on which the Common Stock then regularly trades
(the Exchange), the average of the closing
bid and asked prices for a share of Common Stock on the Exchange
on the date the option or SSAR is granted by the Committee or
the average of the high and low sales price of a share of Common
Stock on the Exchange on the date the option or SSAR is granted
by the Committee (fair market value). The
Committee shall be authorized, in its discretion, to round up
the fair market value of a share of Common Stock to the nearest
whole number or quarterly fraction thereof.
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(d) Term. The term of each option or SSAR
will be for such period as the Committee shall determine as set
forth in the stock option or SSAR agreement, but in no event
shall the term of an option or SSAR be greater than
10 years from the date of grant.
(e) Rights of Holder. A recipient of
stock options or SSARs shall have no rights as a shareholder
with respect to any shares issuable or transferable upon
exercise thereof until the date of issuance of such shares.
Except as specifically set forth in Paragraph 14 below, no
adjustment shall be made for dividends or other distributions of
cash or other property on or with respect to shares of stock
covered by options or SSARs paid or payable to holders of record
prior to such issuance.
(f) Limits on Individuals. The maximum
number of shares of Common Stock covered by all options and
SSARs granted to a single participant in any year may not exceed
600,000. The aggregate fair market value (determined on the date
of grant) of Common Stock with respect to which a participant is
granted ISOs (including ISOs granted under the Predecessor Plan)
which first become exercisable during any given calendar year
shall not exceed $100,000.
7. Exercise. An option or SSAR granted
under the Plan shall be exercisable during the term of the
option or SSAR subject to such terms and conditions as the
Committee shall determine and are specified in the stock option
or SSAR agreement, not inconsistent with the terms of the Plan;
provided, however, that except as set forth in
Paragraphs 11, 14 and 41, no option or SSAR may be
exercised prior to the third (3rd) anniversary of the date of
its grant and any partial exercise of an option or SSAR shall be
with respect to not fewer than 500 shares. In addition, the
Committee may condition the exercise of an option or SSAR upon
the attainment by the Corporation or any subsidiary or division
or by the participant of any performance targets set by the
Committee. The shares to be issued upon exercise of an option or
SSAR will be either treasury or authorized and unissued stock,
in the sole discretion of the Corporation.
(a) Option. To exercise an option, the
option holder must give written notice to the Corporation of the
number of shares to be purchased accompanied by payment of the
full purchase price of such shares as set forth in
Paragraph 8. The date when the Corporation has actually
received both such notice and payment shall be deemed the date
of exercise of the option with respect to the shares being
purchased and the shares shall be issued as soon as practicable
thereafter.
(b) SSAR. To exercise an SSAR, the SSAR
holder must give written notice to the Corporation of the number
of SSARs being exercised as provided in the SSAR agreement. No
payment shall be required to exercise an SSAR. The date of
actual receipt by the Corporation of such notice shall be deemed
to be the date of exercise of the SSAR and the shares issued in
settlement of such exercise therefor shall be issued as soon as
practicable thereafter. Upon the exercise of an SSAR, the SSAR
holder shall be entitled to receive from the Corporation for the
SSARs being exercised that number of whole shares of Common
Stock having a fair market value on the date of exercise of the
SSAR equal in value to the excess of (A) the fair market
value of a share of Common Stock on the exercise date multiplied
by the number of SSARs being exercised over (B) the sum of
(i) the aggregate base prices of the SSARs being exercised
multiplied by the number of SSARs being exercised, plus
(ii) unless the holder elects to pay such tax in cash, any
amount of tax that must be withheld in connection with such
exercise. For this purpose, the fair market value of a share of
Common Stock on the date of exercise of a SSAR shall be the
average of the high and low sales price of a share of Common
Stock on the Exchange on the date a SSAR is exercised or if no
sales have occurred on that date, such value will be the closing
price per share on the next trading date following the exercise
of the SSAR. Fractional shares of Common Stock shall be
disregarded upon exercise of an SSAR unless otherwise determined
by the Committee.
8. Payment of Exercise Price. Payment of
the option exercise price must be made in full at the time of
exercise (a) by check made payable to the Corporation,
(b) by transfer to the
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Corporation of shares of Common Stock owned by the participant,
or (c) with a combination of the foregoing. If payment is
made by the transfer of shares, the shares of Common Stock to be
transferred to the Corporation must have been owned by the
option holder for such minimum period as may be required to
prevent the Corporation from incurring an adverse accounting
charge, the value per share of the shares so transferred to the
Corporation to be credited toward the purchase price will be the
average between the high and the low sales price per share of
Common Stock on the Exchange on the date the option is exercised
or, if no sales have occurred on that date, such value will be
the closing price per share on the Exchange on the next trading
day following the exercise of the option. The shares transferred
to the Corporation will be added to the Corporations
treasury shares or canceled and become authorized and unissued
shares. Notwithstanding the foregoing, such shares will continue
to be counted against the maximum number of shares for which
options and SSARs may be granted to a participant pursuant to
Section 6(f).
9. Transfers. The options and SSARs
granted under the Plan may not be sold, transferred,
hypothecated, pledged, or otherwise disposed of by any of the
holders except by will or by the laws of descent and
distribution, or as otherwise provided herein. The option or
SSARs of any person to acquire stock and all rights thereunder
shall terminate immediately if the holder attempts to or does
sell, assign, transfer, pledge, hypothecate or otherwise dispose
of the option or SSAR or any rights thereunder to any other
person except as permitted herein. Notwithstanding the
foregoing, a participant may transfer any non-qualified stock
option (but not ISOs or SSARs) granted under this Plan to
members of the holders immediate family (defined as a
spouse, children
and/or
grandchildren), or to one or more trusts for the benefit of such
family members if the instrument evidencing such option
expressly so provides and the option holder does not receive any
consideration for the transfer; provided that any such
transferred option shall continue to be subject to the same
terms and conditions that were applicable to such option
immediately prior to its transfer (except that such transferred
option shall not be further transferred by the transferee during
the transferees lifetime).
10. Registration. The Corporation will
stamp stock certificates delivered to the shareholder with an
appropriate legend if the shares are not registered under the
Securities Act of 1933, as amended (the Securities
Act), or are otherwise not free to be transferred by
the holder and will issue appropriate stop-order instructions to
the transfer agent for the Common Stock, if and to the extent
such stamping or instructions may then be required by the
Securities Act or by any rule or regulation of the Securities
and Exchange Commission issued pursuant to the Securities Act.
11. Effect of Death, or Disability or
Retirement. If an option or SSAR holder dies or
becomes disabled while employed by the Corporation, all options
or SSARs held by such holder shall become immediately
exercisable and the holder or such holders estate or the
legatees or distributees of such holders estate or of the
options or SSARs, as the case may be, shall have the right, on
or before the earlier of the respective expiration date of an
option or SSAR or sixty (60) months following the date of
such death or disability, to exercise any or all options or
SSARs held by such holder as of such date of death or
disability. If an option or SSAR holder retires at or after
age 62, the holder shall have the right, on or before the
earlier of the expiration date of the option or SSAR or sixty
(60) months following the date of such retirement, to
purchase shares under any options or SSARs which at retirement
are, or within sixty (60) months following retirement
become, exercisable.
If the employment of a holder of an option or SSAR terminates
for any reason other than (i) the reasons specified above
or (ii) termination for cause (as defined
below), and one of the following sets of circumstances is
applicable: (a) the holder has at least 10 years of
service with the Corporation (including service with any
subsidiary corporation of the Corporation while it is owned by
the Corporation), the sum of the holders years of service
plus his or her age on the date of such termination equals at
least 65 and the holder satisfies the notice requirements set
forth below (Early Retirement I),
(b) the holder has at least 15 years of service with
the Corporation (including service with any subsidiary
corporation of the Corporation while is it owned by the
A-4
Corporation), the sum of the holders years of service plus
his or her age on the date of such termination equals at least
70 and the holder satisfies the notice requirements set forth
below (Early Retirement II), or (c) such
holders employment with the Corporation terminates due to
the sale of stock or assets of the subsidiary corporation (or
line of business) by which the holder is employed and the holder
is so employed in good standing by the subsidiary or line of
business through the date of such sale (Early
Retirement III) each of Early
Retirement I, II and III from time to time being
referred to herein as Early Retirement), the holder
shall have the right (subject to the provisions of
Paragraph 42 below), (x) in the event of Early
Retirement I, on or before the earlier of the expiration
date of the option or SSAR or twenty-four (24) months
following the date of such Early Retirement, to exercise, and
acquire shares under, any options or SSARs which at such
termination are, or within twenty-four (24) months
following such termination become, exercisable, (y) in the
event of Early Retirement II, on or before the earlier of the
expiration date of the option or SSAR or thirty-six
(36) months following the date of such Early Retirement, to
exercise, and acquire shares under, any options or SSARs which
at such termination are, or within thirty-six (36) months
following such termination become, exercisable, or (z) in
the event of Early Retirement III, on or before the earlier of
the expiration date of the option or SSAR or twelve
(12) months following the date of such Early Retirement, to
exercise, and acquire shares under, any options or SSARs which
at such termination are, or within twelve (12) months
following such termination become, exercisable. Notwithstanding
the above, if a holder taking Early Retirement III would
also qualify for Early Retirement I or II excluding the
notice requirement, the holder shall be entitled to the benefits
of Early Retirement I or II, as appropriate.
In order to be eligible for Early Retirement I or II, the holder
must give six (6) months advance notice of retirement and
must continue to be employed by the Corporation (or any
subsidiary corporation provided such subsidiary corporation
continues to be owned by the Corporation throughout the notice
period) and perform his or her duties throughout such notice
period. Failure to satisfy the notice requirement will render
the holder ineligible for Early Retirement I or II
notwithstanding the satisfaction by the holder of all other
applicable requirements. Dovers Chief Executive Officer
shall have the authority to reduce or waive the required notice
period.
12. Voluntary or Involuntary
Termination. If any option or SSAR holders
employment with the Corporation is voluntarily or involuntarily
terminated for any reason, other than for reasons or in
circumstances specified above or for cause (as
defined below), the holder shall have the right at any time on
or before the earlier of the expiration date of the option or
SSAR or three (3) months following the effective date of
such termination of employment, to exercise, and acquire shares
under, any options or SSARs which at such termination are
exercisable.
13. Termination for Cause. If an option
or SSAR holders employment with the Corporation is
terminated for cause (defined as (a) a felony conviction of
the holder; (b) the commission by the holder of an act of
fraud or embezzlement against the Corporation; or (c) the
holders willful misconduct or gross negligence materially
detrimental to the Corporation), the option or SSAR shall be
canceled and the holder shall have no further rights to exercise
any such option or SSAR and all of such holders rights
thereunder shall terminate as of the effective date of
termination of employment.
14. Effect of Stock Dividends, Merger, Recapitalization
or Reorganization or Similar Events. If any
Common Stock dividend is paid by the Corporation, if any
non-cash distribution is made by the Corporation as respects its
Common Stock, if the shares of Common Stock are split or
reclassified, if the Corporation should be reorganized or
consolidated or merged with or into another corporation, or if
all or substantially all the assets of the Corporation are
transferred to any other corporation in a reorganization, each
option or SSAR holder shall be entitled, upon exercise of such
holders option or SSAR, to receive for the same aggregate
exercise price in the case of an option, or upon exercise of the
SSAR, the same number and kind of shares of stock (to the
nearest whole number) as he or she would have been entitled to
receive upon the happening of such stock dividend, distribution,
stock split, reclassification, reorganization, consolidation,
merger or transfer,
A-5
if he or she had been, immediately prior to such event, the
holder of such shares. Outstanding options and SSARs shall be
appropriately amended as to exercise price or base price and
other terms in a manner consistent with the aforementioned
adjustment to the shares of Common Stock subject to the Plan.
The adjustments to be made pursuant to this Paragraph 14
shall meet the requirements of Section 409A of the Code and
the regulations thereunder. The Board of Directors shall have
the power, in the event of any disposition of substantially all
of the assets of the Corporation, its dissolution, any merger or
consolidation, or the merger or consolidation of any other
corporation into the Corporation, to amend all outstanding
options and SSARs to permit their exercise prior to the
effectiveness of any such transaction and to terminate such
options or SSARs as of such effectiveness. If the Board of
Directors shall exercise such power, all options and SSARs
outstanding shall be deemed to have been amended to permit the
exercise thereof in whole or in part by the holder at any time
or from time to time as determined by the Board of Directors
prior to the effectiveness of such transaction and such options
and SSARs shall be deemed to terminate upon such effectiveness.
15. Change in Control. Options and SSARs
and grantees of options and SSARs shall be subject to the terms
of Paragraph 41 below related to a change in control of the
Corporation.
C. RESTRICTED
STOCK AWARDS
16. Grant. Subject to the provisions and
as part of the Plan, the Committee shall have the discretion and
authority to award to persons eligible to participate in the
Plan shares of Common Stock which are subject to specified
forfeiture restrictions during a specified restriction period
and subject to the other applicable terms of the Plan
(restricted stock). Subject to the provisions
of the Plan, awards of restricted stock shall contain such terms
and conditions as the Committee may determine at the time of
award; provided, however, in no event shall the
aggregate number of shares of restricted stock awarded under the
Plan plus the aggregate number of performance shares awarded
under the Plan exceed ten percent (10%) of the total number of
shares reserved for issuance under the Plan in accordance with
Paragraph 5 hereof. The maximum number of shares of Common
Stock that may be paid to a single participant in any year as
restricted stock may not exceed 600,000. The Committee may
condition the vesting of restricted stock awards upon the
attainment of performance targets established by the Committee
as provided in
paragraphs 33-36
below.
17. Term of Restriction Period. The
Committee may adopt such vesting schedules, not less than one
(1) year and not longer than five (5) years from the
date of the award, as it may deem appropriate with respect to
awards of restricted stock and may condition the lapse of the
restrictions applicable to an award upon the attainment by the
Corporation or any subsidiary or division or by the participant
of any performance targets set by the Committee as provided in
paragraphs 33-36
below.
18. Issuance of Shares. Certificates
issued for restricted stock shall be registered in the name of
the participant and deposited by the participant with the
Secretary of the Corporation, together with a stock power
endorsed in blank. Upon lapse of the applicable restriction
period
and/or
attainment of any applicable performance targets
and/or
satisfaction of any other restrictions, the Corporation shall
deliver such shares of stock to the participant. In the event
that the shares of restricted stock are forfeited, such shares
automatically shall be transferred back to the Corporation. The
Corporation will stamp any stock certificates delivered to the
participant with an appropriate legend if the shares are not
registered under the Securities Act, or are otherwise not free
to be transferred by the participant and will issue appropriate
stop-order instructions to the transfer agent for the Common
Stock, if and to the extent such stamping or instructions may
then be required by the Securities Act or by any rule or
regulation of the Securities and Exchange Commission issued
pursuant to the Securities Act.
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19. Dividends and Voting Rights. In the
discretion of the Committee, dividends which become payable with
respect to restricted stock during the restriction period may be
reinvested in additional shares of restricted stock for the
account of the award recipient, or accumulated for later
distribution to vested participants (in each case, such amounts
shall be payable upon fixed dates or events in accordance with
the requirements of Section 409A of the Code), or
distributed to the award recipient as paid. An employee who
receives an award of restricted stock may also, in the
discretion of the Committee, be entitled, during the restriction
period, to exercise voting rights with respect to such
restricted stock.
20. Nontransferability. Shares of
restricted stock may not be sold, assigned, transferred, pledged
or otherwise encumbered and shall not be subject to execution,
attachment, garnishment or other similar legal process, except
as otherwise provided in the applicable award agreement. Upon
any attempt to sell, transfer, assign, pledge, or otherwise
encumber or dispose of the restricted stock contrary to the
provisions of the award agreement or the Plan, the restricted
stock shall immediately be forfeited to the Corporation.
21. Termination of Employment. In the
case of a participants disability, death, termination of
employment by the Corporation other than for cause (as defined
in Paragraph 13 above) or special circumstances, as
determined by the Committee, any purely temporal restrictions
remaining with respect to shares of restricted stock as of the
date of such disability, death or termination of employment
shall lapse and, if any performance targets are applicable, the
shares of restricted stock shall continue to vest as if the
participants employment had not terminated until the
prescribed time for determining attainment of performance
targets has passed and the appropriate determination of
attainment of performance targets has been made. If the
participants employment with the Corporation is terminated
as a result of (a) the retirement of the participant at or
after age 62, or (b) an Early Retirement, subject to
the provisions of Paragraph 42 below in the case of Early
Retirement, then, in either such case, the shares of restricted
stock shall continue to vest as if the participants
employment had not terminated until such time as the remaining
temporal restrictions lapse and, if any performance targets are
applicable, the prescribed time for determining attainment of
performance targets has passed and the appropriate determination
of attainment of performance targets has been made. If a
participants employment with the Corporation is
voluntarily or involuntarily terminated for any other reason
during the restriction period, the shares of restricted stock
shall be forfeited. Except as provided in paragraph 35,
payment of restricted stock that is subject to performance
targets shall be subject to satisfaction of applicable
performance targets and certification by the Committee of the
attainment of such targets and the amount of the payment.
22. Effect of Stock Dividends, Merger, Recapitalization
or Reorganization or Similar Events. In the event
of a stock dividend, merger, recapitalization, reorganization,
or other transaction described in Paragraph 14 above, the
terms and conditions of the restricted stock awards shall be
adjusted in a manner consistent with adjustments made to options
granted under the Plan.
23. Change in Control. Awards of
restricted stock and participants who are awarded restricted
stock shall be subject to the terms of Paragraph 41 below.
24. Cancellation. The Committee may at
any time, with due consideration to the effect on the holder of
Section 409A of the Code, require the cancellation of any
award of restricted stock in consideration of a cash payment or
alternative award under the Plan equal to the fair market value
of the cancelled award of restricted stock.
D. CASH
PERFORMANCE AWARDS
25. Awards and Period of Contingency.
The Committee may, concurrently with, or independently of, the
granting of an option, SSAR or other award under the Plan, in
its sole discretion, grant to a participant the opportunity to
earn a cash performance payment, conditional upon the
satisfaction of objective pre-established performance targets
with respect to performance criteria as set forth in
paragraphs 33-36
below. The performance period shall be not less than three
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(3) fiscal years of the Corporation, including the year in
which the award is made. The Corporation shall make a payment in
respect of any award only if the Committee shall have certified
that the applicable performance targets have been satisfied for
a performance period. The aggregate maximum cash payout for any
business unit within the Corporation or the Corporation as a
whole shall not exceed a fixed percentage of the value created
at the relevant business unit during the performance period,
determined using such criteria as may be specified by the
Committee, such percentages and dollar amounts to be determined
by the Committee annually when performance targets and
performance criteria are established. In no event shall a
participant receive a payment in respect of a performance period
that exceeds $5,000,000. Cash performance awards shall be paid
within two and one-half months following the year in which the
relevant performance period ends.
26. Effect of Death, Disability, or Early
Retirement. If a participant in the Plan holding
a cash performance award dies or becomes disabled while employed
by the Corporation, then, the participant (or the
participants estate or the legatees or distributees of the
participants estate, as the case may be) shall be entitled
to receive on the payment date the cash payment which the
participant would have earned had the participant then been an
employee of the Corporation, multiplied by a fraction, the
numerator of which is the number of months the participant was
employed by the Corporation during the performance measurement
period and the denominator of which is the number of months of
the performance measurement period (treating fractional months
as whole months in each case). Except as provided in
paragraph 35, such payment shall be subject to satisfaction
of the applicable performance targets and certification by the
Committee of the attainment of such performance targets.
If the participant in the Plan is the subject of Early
Retirement I or Early Retirement II (as defined in
Paragraph 11) and on the date of such Early Retirement
the participant holds one or more outstanding cash performance
awards, the Committee, or if the Committee delegates to the
Corporations Chief Executive Officer such authority, the
Corporations Chief Executive Officer, shall determine in
its sole discretion whether the participant is eligible to
receive any payment and, if so, the amount thereof, in which
event such payment shall be made on the date or dates following
the date of the participants Early Retirement on which the
Corporation pays cash performance awards for the performance
measurement period relating to any such outstanding cash
performance award held by such participant. Any such payment to
a participant shall be subject to the satisfaction of the
applicable performance targets, certification by the Committee
of the satisfaction of such performance targets and
determination of the amount of the payment by the Committee, and
the provisions of Paragraph 42 below, and may not exceed
the amount that the participant would have been entitled to
receive had the participant been an employee of the Corporation
on such payment date. Except as provided in this
Paragraph 26, if the participant is the subject of Early
Retirement I or II, all cash performance awards held by such
participant shall be canceled and all of the participants
awards thereunder shall terminate as of the effective date of
such Early Retirement. If the participant in the Plan is the
subject of Early Retirement III, all cash performance awards
held by such participant shall be cancelled and all of the
participants rights thereunder shall terminate as of the
effective date of such Early Retirement.
27. Effect of Normal Retirement. If,
before the date of payment, the participant retires on or after
age 62, the participant shall be entitled to receive on the
payment date the same amount of cash which the participant would
have earned had such participant been an employee of the
Corporation as of such date, subject to the satisfaction of the
applicable performance targets and certification by the
Committee of the attainment of such performance targets and the
amount of the payment.
28. Effect of Other Terminations of
Employment.
(a) General Termination. If a
participants employment with the Corporation is terminated
for any other reason, whether voluntary, involuntary, or for
cause (as defined as Paragraph 13 above), other than those
described in Paragraphs 26 or 27 above or in
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Paragraph 28(b) below, then his or her outstanding cash
performance awards shall be canceled and all of the
participants rights under any such award shall terminate
as of the effective date of the termination of such employment.
(b) Pre-Payment Termination. If, after
the end of a performance measurement period and before the date
of payment of any final award, a participants employment
is terminated, whether voluntarily or involuntarily for any
reason other than for cause (as defined in Paragraph 13
above), the participant shall be entitled to receive on the
payment date the cash payment which the participant would have
earned had the participant continued to be an employee of the
Corporation as of the payment date, subject to the satisfaction
of the applicable performance targets and certification by the
Committee of the attainment of such performance targets and the
amount of the payment.
(c) Change in Control. The treatment of
any performance targets and each participant who is granted a
cash performance award shall be subject to the terms of
Paragraph 41 below.
E. PERFORMANCE
SHARE AWARDS
29. Awards and Period of Contingency. The
Committee may, concurrently with, or independently of, any other
award under the Plan, in its sole discretion, grant to a
participant the opportunity to receive shares of Common Stock
(with or without payment or other consideration therefor),
conditional upon the satisfaction of pre-established performance
targets with respect to specified performance criteria as set
forth in
paragraphs 33-36
below (performance shares) during a
performance period of not less than three (3) fiscal years
of the Corporation, including the year in which the conditional
award is made. Any such grant may set a specific number of
performance shares that may be earned, or a range of performance
shares that may be earned, depending on the degree of
achievement of performance targets pre-established by the
Committee. In no event shall the aggregate number of performance
shares awarded under the Plan plus the aggregate number of
shares of restricted stock awarded under the Plan exceed ten
percent (10%) of the total number of shares reserved for
issuance under the Plan in accordance with Paragraph 5
hereof. The maximum number of shares of Common Stock that may be
paid to a single participant as payment for a performance share
award for any performance period shall not exceed
600,000 shares. Performance share awards shall be paid
within two and one-half months following the year in which the
relevant performance period ends. The Corporation shall issue
Common Stock in payment of performance share awards only if the
Committee shall have certified that the applicable performance
targets have been satisfied. Unless the participant shall have
elected and made arrangements to pay such tax in cash, the
Corporation shall be permitted to withhold from the payment of
performance shares such number of shares (or any cash), to the
extent permitted by law, as the Corporation shall determine to
be necessary to pay any amount of federal, state, local and
foreign tax that must be withheld in connection with such
payment. No fractional shares of Common Stock shall be issued in
payment of a performance share award. Prior to the issuance of
shares of Common Stock, a participant shall not be the legal or
beneficial owner of shares subject to a performance share award
and shall not have any voting rights or rights to distributions
with respect to such shares, provided that the Committee
may specify that the participant is entitled to receive
distributions that have a record date on or after the date of
certification by the Committee but before the shares are issued.
Grants with respect to performance shares under the Plan may not
be sold, transferred, hypothecated, pledged, or otherwise
disposed of by any holder except by will or by the laws of
descent and distribution, or as otherwise provided herein. All
rights with respect to such grants shall terminate immediately
if the holder attempts to or does sell, assign, transfer,
pledge, hypothecate or otherwise dispose of any such rights to
any other person except as permitted herein. In the event of a
stock dividend, merger, recapitalization, reorganization, or
other transaction described in Paragraph 14 above, the
terms and conditions of performance share awards shall be
adjusted in a manner consistent with adjustments made to options
granted under the Plan.
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30. Effect of Death, Disability, or Early
Retirement. If a participant in the Plan holding
a performance share award dies or becomes disabled while
employed by the Corporation, then the participant (or the
participants estate or the legatees or distributes of the
participants estate, as the case may be) shall be entitled
to receive on the payment date that number of shares of Common
Stock which the participant would have earned had the
participant then been an employee of the Corporation, multiplied
by a fraction, the numerator of which is the number of months
the participant was employed by the Corporation during the
performance measurement period and the denominator of which is
the number of months of the performance measurement period
(treating fractional months as whole months in each case).
Except as provided in paragraph 35, such payment shall be
subject to satisfaction of the applicable performance targets
and certification by the Committee of the attainment of such
performance targets and the amount of payment.
If the participant in the Plan is the subject of Early
Retirement I or Early Retirement II (as defined in
Paragraph 11) and on the date of such Early Retirement
the participant holds one or more outstanding performance share
awards, the Committee, or if the Committee delegates to the
Corporations Chief Executive Officer such authority, the
Corporations Chief Executive Officer, shall determine in
its sole discretion whether the participant shall receive any
payment and, if so, the amount thereof, in which event such
payment shall be made on the date or dates following the date of
the participants Early Retirement on which the Corporation
pays performance share awards for the performance measurement
period relating to any such outstanding performance share award
held by such participant. Any such payment to the participant
shall be subject to the satisfaction of the applicable
performance targets, and certification by the Committee of such
satisfaction and determination by the Committee of the amount of
payment, shall be subject to the provisions of Paragraph 42
below, and may not exceed the number of shares that the
participant would have been entitled to receive had the
participant been an employee of the Corporation on such payment
date. Except as provided in this Paragraph 30, if the
participant is the subject of Early Retirement I or II, all
performance share awards held by such participant shall be
canceled, and all of the participants awards thereunder
shall terminate as of the effective date of such Early
Retirement. If the participant in the Plan is the subject of
Early Retirement III, all performance share awards held by such
participant shall be cancelled and all of the participants
rights thereunder shall terminate as of the effective date of
such Early Retirement.
31. Effect of Normal Retirement. If,
before the date of payment of a performance share award, the
participant retires on or after age 62, the participant
shall be entitled to receive on the payment date the same number
of shares which the participant would have earned had such
participant then been an employee of the Corporation as of such
date, subject to the satisfaction of the applicable performance
targets and certification by the Committee of the attainment of
such performance targets and the amount of the payment.
32. Effect of Other Terminations of Employment.
(a) General Termination. If a
participants employment with the Corporation is terminated
for any reason, whether voluntary, involuntary, or for cause (as
defined as Paragraph 13 above), other than those described
in Paragraphs 30 or 31 above or in Paragraph 32(b)
below, then his or her outstanding performance share awards
shall be canceled and all of the participants rights under
any such award shall terminate as of the effective date of the
termination of such employment.
(b) Pre-Payment Termination. If, after
the end of a performance measurement period and before the date
of payment of any final award, a participants employment
is terminated, whether voluntarily or involuntarily for any
reason other than for cause (as defined in Paragraph 13
above), the participant shall be entitled to receive on the
payment date the payment which the participant would have earned
had the participant continued to be an employee of the
Corporation as of the payment date, subject to the satisfaction
of the
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applicable performance targets and certification by the
Committee of the attainment of such performance targets and the
amount of the payment.
(c) Change in Control. The treatment of
any performance targets and each participant who is granted a
performance share award shall be subject to the terms of
Paragraph 41 below. In the event of a change in control,
the Committee shall have the discretion to pay a performance
share award by delivery to a participant of shares of Common
Stock or cash equal to the fair market value on the last
business day immediately prior to the change in control of the
number of shares of Common Stock to which the participant is
entitled, or any combination thereof.
F. PERFORMANCE
CRITERIA
33. Establishment of Performance
Targets. The Committee may, in its sole
discretion, grant an award under the Plan conditional upon the
satisfaction of objective pre-established performance targets
based on specified performance criteria during a performance
period. The performance period for cash performance awards and
performance shares shall be not less than three (3) full
fiscal years of the Corporation, including the year in which an
award is made and may be shorter in the case of other awards but
not less than one full fiscal year. Any performance targets
established by the Committee shall include one or more objective
formulas or standards for determining the amount of the
performance award payable to a participant if the targets are
satisfied in whole or in part. The performance targets may be
fixed by the Committee for the Corporation as a whole or for a
subsidiary, division, or business unit, depending on the
Committees judgment as to what is appropriate, and shall
be set by the Committee not later than the earlier of the
90th day after the commencement of the period of services
to which the performance payment relates or by the time 25% of
such period of services has elapsed, in either case, provided
that the outcome of the targets is substantially uncertain at
the time the targets are established. The performance targets
with respect to a performance period need not be the same for
all participants.
34. Performance Criteria. Performance
targets shall be based on at least one or more of the following
performance criteria which the Committee deems appropriate, as
they apply to the Corporation as a whole or to a subsidiary, a
division, or business unit: (a) earnings before interest,
taxes, depreciation and amortization, (b) cash flow,
(c) earnings per share, (d) operating earnings,
(e) return on equity, (f) return on investment,
(g) total shareholder return or internal total shareholder
return, (h) net earnings, (i) sales or revenue,
(j) expense targets, (k) targets with respect to the
value of common stock, (l) margins, (m) pre-tax or
after-tax net income, (n) market penetration,
(o) geographic goals, (p) business expansion goals, or
(q) goals based on operational efficiency.
35. Approval and Certification. Promptly
after the close of a performance period, the Committee shall
certify in writing if the performance targets have been met and
determine the amount of awards payable to participants. The
Committee shall have the discretion to approve proportional or
adjusted awards under the Plan to address situations where
participants join the Corporation, or transfer or are promoted
within the Corporation, during a performance period, but only to
the extent that such discretion would not cause an award
intended to qualify as qualified performance based
compensation to fail to so qualify. The Committee may, in
its sole discretion, elect to make a payment to a disabled
participant or to the participants estate (or to legatees
or distributees, as the case may be, of the participants
estate) in the case of death or upon a change in control as
provided in Paragraph 41 below, without regard to actual
attainment of the performance targets (or the Committees
certification thereof), but only to the extent that such
discretion would not cause an award intended to qualify as
qualified performance based compensation to fail to
so qualify.
36. Committee Discretion.
(a) The Committee shall have the discretion to decrease the
amount payable under any award made under the Plan upon
attainment of a performance target. The Committee shall also
have the
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discretion to decrease or increase the amount payable upon
attainment of the performance target to take into account the
effect on an award of any unusual, non-recurring circumstance,
extraordinary items or change in accounting methods, but only to
the extent that such discretion would not cause an award
intended to qualify as qualified performance based
compensation to fail to so qualify.
(b) Except as provided in paragraph 36(a),
(i) the Committee shall make a payment in respect of an
award intended to qualify as qualified performance-based
compensation under Section 162(m) only if the
Committee shall have certified in writing that the applicable
performance targets have been satisfied, and (ii) the
Committee shall not increase the amount payable to a covered
employee under any award intended to meet the requirements of
Section 162(m) of the Code. The exercise of discretion by
the Committee to decrease any award payable to a participant
shall not result in an increase in the amount payable to a
covered employee under any award intended to meet the
requirements of Section 162(m) of the Code.
G. GENERAL
PROVISIONS
37. Legal Compliance. It is the intent of
the Corporation that the Plan comply in all respects with
applicable provisions of the Exchange Act, including
Section 16 and
Rule 16b-3,
so that any grant or award of options, SSARs, restricted stock
or performance shares to, or other transaction by, a participant
who is subject to the reporting requirements of
Section 16(a) of the Exchange Act shall not result in
short-swing profits liability under Section 16(b) (except
for any transaction exempted under alternative Exchange Act
rules or intended by such participant to be a non-exempt
transaction). If it is the intent of the Corporation that any
compensation income realized in connection with any grant or
award under the Plan constitute qualified
performance-based compensation within the meaning of
Section 162(m) of the Code and the Treasury regulations
issued thereunder, the Corporation does not intend to be subject
to the limitations of Section 162(m) of the Code.
Accordingly, if any provision of the Plan or any agreement
relating to any grant or award under the Plan does not comply
with the requirements of
Rule 16b-3
as then applicable to any such transaction so that such a
participant would be subject to Section 16(b) liability
(except for any transaction exempted under alternative Exchange
Act rules or intended by such participant to be a non-exempt
transaction), or if any provision of the Plan or any agreement
relating to any grant or award under the Plan would limit, under
Section 162(m) of the Code, the amount of compensation
income that the Corporation would otherwise be entitled to
deduct, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements, or to
eliminate such deductibility limitation, and the participant
shall be deemed to have consented to such construction or
amendment.
38. Withholding Taxes. The Corporation
shall make arrangements for the collection of any Federal,
State, or local taxes of any kind required to be withheld with
respect to any transactions effected under the Plan. The
obligations of the Corporation under the Plan shall be
conditional on satisfaction of such obligations and the
Corporation, to the extent permitted by law, shall have the
right to deduct from any payment of any kind otherwise due to or
with respect to a participant, the minimum amount of such taxes
as may be determined by the Corporation to be required to be
withheld by law. The Corporation may, in its discretion, elect
to withhold shares from delivery to a participant upon exercise
or payment of an award, or require that all or a portion of such
shares be sold, to satisfy the Corporations withholding
obligations under the Plan. A participant shall be solely
responsible for any tax or other amounts payable with respect to
amounts included in participants income under
Section 409A of the Code in respect of awards received
under the Plan, including penalties or interest.
39. Effect of Recapitalization or
Reorganization. The obligations of the
Corporation with respect to any grant or award under the Plan
shall be binding upon the Corporation, its successors or
assigns, including any successor or resulting company either in
liquidation or merger of the Corporation into another company
owning all the outstanding voting stock of the Corporation or in
any other transaction whether by merger, consolidation or
otherwise under which such succeeding or
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resulting company acquires all or substantially all the assets
of the Corporation and assumes all or substantially all its
obligations, unless options or SSARs are terminated in
accordance with Paragraph 14.
40. Employment Rights and
Obligations. Neither the making of any grant or
award under the Plan, nor the provisions related to a change in
control of the Corporation (as defined below) or a Person (as
defined below) seeking to effect a change in control of the
Corporation, shall alter or otherwise affect the rights of the
Corporation to change any and all the terms and conditions of
employment of any participant including, but not limited to, the
right to terminate such participants employment.
41. Change in Control. Each participant,
upon acceptance of a grant or award under the Plan, and as a
condition to such grant or award, shall be deemed to have agreed
that, in the event any Person begins a tender or exchange offer,
circulates a proxy to shareholders, or takes other steps seeking
to effect a change in control of the Corporation (as defined
below), such participant will not voluntarily terminate his or
her employment with the Corporation or with a direct or indirect
subsidiary of the Corporation, as the case may be, and, unless
terminated by the Corporation or such subsidiary, will continue
to render services to the Corporation or such subsidiary until
such Person has abandoned, terminated or succeeded in such
efforts to effect a change in control.
(a) In the event of a change in control,
(i) all options and SSARs to purchase or acquire shares of
common stock of the Corporation shall immediately vest and
become exercisable in accordance with the terms of the
appropriate stock option or SSAR agreement;
(ii) all outstanding restrictions, including any
performance targets, with respect to any restricted stock shall
immediately expire and be deemed to have been satisfied;
(iii) with respect to cash performance award and
performance share awards:
(A) all cash performance awards and performance share
awards outstanding shall immediately vest and become immediately
due and payable;
(B) the performance measurement period of all cash
performance awards and performance share awards outstanding
shall terminate on the last day of the month prior to the month
in which the change in control occurs;
(C) the participant shall be entitled to a cash or stock
payment the amount of which shall be determined in accordance
with the terms and conditions of the Plan and the appropriate
cash performance award agreement and performance share award
agreement, which amount shall be multiplied by a fraction, the
numerator of which is the number of months in the performance
measurement period which has passed prior to the change in
control (as determined in accordance with clause (iii)(B) above)
and the denominator of which is the total number of months in
the original performance measurement period; and
(D) the Continuing Directors (as defined in
Article Fourteenth of the Corporations Certificate of
Incorporation) shall promptly determine whether the participant
is entitled to any performance award or performance share award,
and any performance award payable shall be paid to the
participant promptly but in no event more than five
(5) days after a change in control;
(iv) the Continuing Directors shall have the sole and
complete authority and discretion to decide any questions
concerning the application, interpretation or scope of any of
the terms and conditions of any grant, award or participation
under the Plan, and their decisions shall be binding and
conclusive upon all interested parties; and
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(v) other than as set forth above, the terms and conditions
of all grants and awards shall remain unchanged.
(b) A change in control shall be deemed
to have taken place upon the occurrence of any of the following
events (capitalized terms are defined below):
(i) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Corporation (not including
in the securities beneficially owned by such Person any
securities acquired directly from the Corporation or its
Affiliates) representing 20% or more of either the then
outstanding shares of common stock of the Corporation or the
combined voting power of the Corporations then outstanding
securities, excluding any Person who becomes such a Beneficial
Owner in connection with a transaction described in
clause (A) of paragraph (iii) below; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on January 1, 2006, constituted the Board
and any new director (other than a director whose initial
assumption of office is in connection with an actual or
threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
the Corporation) whose appointment or election by the Board or
nomination for election by the Corporations shareholders
was approved or recommended by a vote of at least two-thirds
(2/3) of the directors in office at the time of such approval or
recommendation who either were directors on January 1, 2006
or whose appointment, election or nomination for election was
previously so approved or recommended; or
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect subsidiary of the
Corporation with any other corporation, other than (A) any
such merger or consolidation after the consummation of which the
voting securities of the Corporation outstanding immediately
prior to such merger or consolidation continue to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof)
at least 50% of the combined voting power of the voting
securities of the Corporation or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation, or (B) any such merger or consolidation
effected to implement a recapitalization of the Corporation (or
similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the
Corporation (not including in the securities Beneficially Owned
by such Person any securities acquired directly from the
Corporation or its Affiliates) representing 20% or more of
either the then outstanding shares of common stock of the
Corporation or the combined voting power of the
Corporations then outstanding securities; or
(iv) the shareholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or there
is consummated an agreement for the sale or disposition by the
Corporation of all or substantially all of the
Corporations assets, other than a sale or disposition by
the Corporation of all or substantially all of the
Corporations assets to an entity, at least 50% of the
combined voting power of the voting securities of which are
owned by shareholders of the Corporation in substantially the
same proportions as their ownership of the Corporation
immediately prior to such transaction or series of transactions.
(v) Notwithstanding the foregoing, with respect to a cash
performance award, performance share award, or any other award
that is determined to be deferred compensation subject to the
requirements of Section 409A of the Code, the Corporation
will not be deemed to have undergone a change in control for the
purposes of this Plan and with respect to any and all clauses of
this Paragraph 41, unless the Corporation is deemed to have
undergone a change in the ownership or effective control of the
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Corporation or in the ownership of a substantial portion of the
assets of the Corporation (as such terms are defined in
Section 409A of the Code and the Treasury regulations
issued thereunder).
(c) For purposes of this Paragraph 41, the following
terms shall have the meanings indicated:
(i) Affiliate shall have the meaning set
forth in
Rule 12b-2
under Section 12 of the Exchange Act.
(ii) Beneficial Owner shall have the
meaning set forth in
Rule 13d-3
under the Exchange Act, except that a Person shall not be deemed
to be the Beneficial Owner of any securities which are properly
filed on a
Form 13-F.
(iii) Exchange Act shall mean the
Securities Exchange Act of 1934, as amended from time to time.
(iv) Person shall have the meaning given
in Section 3(a)(9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Corporation or any of its
Affiliates, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation or
any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities or
(iv) a corporation owned, directly or indirectly, by the
shareholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation.
42. Non-compete.
(a) Any Early Retirement taken by any participant and the
benefits thereof, as contemplated in Paragraphs 11, 21, 26
and 30, unless such benefits are waived in writing by the
participant, shall be subject to the provisions of this
Paragraph 42. Any participant who is the beneficiary of any
such Early Retirement shall be deemed to have expressly agreed
not to compete with the Corporation or any subsidiary of the
Corporation at which such participant was employed at any time
in the three (3) years immediately prior to termination of
employment, as the case may be, in the geographic area in which
the Corporation or such subsidiary actively carried on business
at the end of the participants employment there, for the
period with respect to which such Early Retirement affords the
participant enhanced benefits, which period shall be,
(a) with respect to stock options or SSARs, the additional
period allowed the participant for the vesting and exercise of
options or SSARs outstanding at termination of employment,
(b) with respect to restricted stock, the period remaining
after the participants termination of employment until the
end of the original restriction period for such restricted
stock, and (c) with respect to cash performance awards and
performance shares granted under the Plan, the period until the
payment date following the end of the last applicable
performance period.
(b) In the event that a participant shall fail to comply
with the provisions of this Paragraph 42, the Early
Retirement shall be automatically rescinded and the participant
shall forfeit the enhanced benefits referred to above and shall
return to the Corporation the economic value theretofore
realized by reason of such benefits as determined by the
Committee. If the provisions of this Paragraph 42 or the
corresponding provisions of a stock option, SSAR, restricted
stock award, cash performance award agreement, or performance
share award shall be unenforceable as to any participant, the
Committee may rescind the benefits of any such Early Retirement
with respect to such participant.
(c) If any provision of this Paragraph 42, or the
corresponding provisions of a stock option, SSAR, restricted
stock award, cash performance award agreement, or performance
share award is determined by a court to be unenforceable because
of its scope in terms of geographic area or duration in time or
otherwise, the Corporation and the participant agree that the
court making such determination is specifically authorized to
reduce the duration
and/or
geographical area
and/or other
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scope of such provision and, in its reduced form, such provision
shall then be enforceable; and in every case the remainder of
this Paragraph 42, or the corresponding provisions of a
stock option, SSAR, restricted stock award, cash performance
award agreement, or performance share award shall not be
affected thereby and shall remain valid and enforceable, as if
such affected provision were not contained herein or therein.
43. Interpretation. The Committee shall
have the sole and complete authority and discretion to decide
any questions concerning the application, interpretation or
scope of any of the terms and conditions of the Plan, stock
option, SSAR, restricted stock award, cash performance award
agreement, or performance share award entered into pursuant to
the Plan, and its decisions shall be binding and conclusive upon
all interested parties. Reference to any statute or regulation
in the Plan shall mean such statute or regulation in effect from
time to time and shall include any successor statute or
regulation. For purposes of the Plan, the term
disability or disabled shall have the
meaning contained in Section 409A(a)(2) of the Code and the
regulations promulgated thereunder. The Corporation reserves the
right to make incentive or equity awards to Participants under
other plans maintained by the Company or otherwise as determined
by the Company in its sole discretion, which other plans or
arrangements need not be intended to meet the requirements of
Section 162(m) of the Code.
44. Amendment. Except as expressly
provided in the next sentence, the Board of Directors may amend
the Plan in any manner it deems necessary or appropriate
(including any of the terms, conditions or definitions contained
herein), or terminate the Plan at any time prior to
January 31, 2015; provided, however, that any
such termination will not affect the validity of any grants or
awards previously made under the Plan, as the case may be.
Without the approval of the Corporations shareholders, the
Board of Directors cannot: (a) increase the maximum number
of shares covered by the Plan or change the class of employees
eligible to receive any grants or awards; (b) reduce the
exercise price of any option or base price of a SSAR below the
fair market value of the Common Stock on the date of the option
or SSAR grant; (c) extend beyond 120 months from the
date of the grant the period within which an option or SSAR may
be exercised; or (d) make any other amendment to the Plan
that would constitute a modification, revision or amendment
requiring shareholder approval pursuant to any applicable law or
regulation or rule of the Exchange.
45. Effective Date and Termination Date of
Plan. The Plan became effective on
February 1, 2005, and will terminate on January 31,
2015, provided that no ISOs shall be granted under the
Plan after February 11, 2014. No non-qualified stock
options, SSARs, restricted stock, cash performance awards, or
performance share awards shall be granted after January 31,
2015. The amendments to the Plan adopted November 3, 2005
and February 2, 2006 became effective January 1, 2006.
The Plan was further amended effective January 1, 2009 to
comply with the provisions of Sections 409A and 162(m) of
the Code and applicable guidance issued by the Treasury
Department and the Internal Revenue Service. The Plan is further
amended effective January 1, 2009, subject to approval by
the shareholders at the May 7, 2009 shareholders
meeting.
46. Foreign Jurisdictions. The Committee
may adopt, amend, and terminate such arrangements, not
inconsistent with the intent of the Plan, as it may deem
necessary or desirable to make available tax or other benefits
of the laws of foreign jurisdictions to participants who are
subject to such laws.
47. Governing Law. The Plan and all
grants, options, SSARs, awards and payments made hereunder shall
be governed by and interpreted in accordance with the laws of
the State of New York.
48. Special Rules for Specified
Employees. Notwithstanding any provision of the
Plan to the contrary, upon the participants termination of
employment for any reason other than death, if the Corporation
determines that the participant is a specified
employee (as determined by the Board or by such committee
or other body as the Board shall delegate) and that an award
constitutes
A-16
nonqualified deferred compensation within the
meaning of Section 409A, any payment of such award due
within the six-month period after the participants
termination of employment shall be made at the beginning of the
seventh month following the date of termination of employment.
The provisions of this Paragraph 48 shall only apply if
required to comply with Section 409A of the Code. For the
period from January 1, 2005 to December 31, 2008, the
Plan was administered in good faith compliance with
Section 409A of the Code and applicable guidelines issued
by the Treasury Department and the Internal Revenue Service.
A-17
Appendix B
DOVER
CORPORATION
EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN
(Amended and Restated as of January 1, 2009)
1. Purpose. The purposes of the Dover Corporation
Executive Officer Annual Incentive Plan (the
Plan) are to provide annual incentive
compensation to designated executive officers of Dover
Corporation (the Company) based on the
achievement of established performance targets, to encourage
such executive officers to remain in the employ of the Company,
to assist the Company in attracting and motivating new executive
officers and to qualify the incentive payments awarded under the
Plan (the Awards) as qualified
performance-based compensation so that payments
under the Plan shall be deductible in accordance with
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code).
2. Eligibility. The Compensation Committee of the
Board of Directors of the Company (the
Committee) shall each year determine the
Executive Officers of the Company eligible to participate in the
Plan (the Participants). For purposes hereof,
Executive Officers shall mean the Chief
Executive Officer and the Chief Operating Officer of the
Company, each executive of the Company or an Affiliate who
reports directly to the Chief Executive Officer or the Chief
Operating Officer of the Company, and any other executive of the
Company or an Affiliate as may be selected by the Committee or
who is an executive officer of the Company within
the meaning of
Rule 3b-7
under the Securities Exchange Act of 1934. As used herein,
Affiliate shall mean each corporation that is
a member of the Companys affiliated group, within the
meaning of Section 1504 of the Code (without regard to
Section 1504(b) of the Code) other than any subsidiary of
the Company that is itself a publicly held corporation as such
term is defined in Section 162(m) of the Code and the
Treasury regulations issued thereunder and any subsidiaries of
such publicly held corporation subsidiary.
3. Performance Periods. Each performance period for
purposes of the Plan shall have a duration of one calendar year,
commencing January 1 and ending the next December 31
(Performance Period).
4. Administration. The Committee shall have the full
power and authority to administer and interpret the Plan and to
establish rules for its administration including, without
limitation, correcting any defect, supplying any omission or
reconciling any inconsistency in this Plan in the manner and to
the extent it shall deem necessary to carry this Plan into
effect. Unless otherwise specified by the Committee at the time
of grant, all Awards are intended to qualify as
performance-based compensation within the meaning of
Section 162(m) of the Code (Qualified Performance
Awards). The Committee retains the discretion to grant
Awards that are not intended to qualify as Qualified Performance
Awards, to determine the terms and conditions of such Awards and
adjust or prorate such Awards. All decisions of the Committee on
any question concerning the selection of Participants and the
interpretation and administration of the Plan shall be final,
conclusive, and binding upon all parties.
5. Performance Targets. On or before the
90th day of each Performance Period (provided that the
outcome is substantially uncertain at the time the Committee
establishes the targets), the Committee shall establish in
writing one or more performance targets (Performance
Targets) for the Performance Period. The Performance
Targets shall in all instances be determined on the basis of the
one or more of the following performance criteria as they apply
to the Company as a whole or to a subsidiary, a division, or
business unit: (a) earnings before interest, taxes,
depreciation and amortization, (b) cash flow,
(c) earnings per share, (d) operating earnings,
(e) return on equity, (f) return on investment,
(g) total shareholder return or internal total shareholder
return, (h) net earnings, (i) sales or revenue,
(j) expense targets, (k) targets with respect to the
value of common
B-1
stock, (l) margins, (m) pre-tax or after-tax net
income, (n) market penetration, (o) geographic goals,
(p) business expansion goals, or (q) goals based on
operational efficiency.
6. Incentive Payout Calculation. As soon as
practicable after the end of each Performance Period, the
Committee shall make a determination in writing with regard to
the attainment of the Companys Performance Targets
specified pursuant to Section 5 for such Performance Period
and shall calculate the possible payout of incentive awards for
each Participant.
7. Reduction Of Calculated Payouts. The Committee
shall have the power and authority to reduce or eliminate for
any reason the payout calculated pursuant to Section 6 that
would otherwise be payable to a Participant based on the
established target Award and payout schedule, provided,
however, that the exercise of discretion to reduce or
eliminate the payout to one Participant may not result in an
increase in the amount payable to another Participant.
8. Payouts. Qualified Performance Awards shall not
be paid before the Committee certifies in writing that the
Performance Targets specified pursuant to Section 5 have
been satisfied. No portion of a Qualified Performance Award may
be paid if the Performance Targets have not been satisfied.
Notwithstanding the forgoing, the Committee may, in its sole and
absolute discretion, permit the payment of Qualified Performance
Awards with respect to a Performance Period in the case of death
or disability of the Participant or a change in ownership or
control of the Company (within the meaning of Section 280G
of the Code) during such Performance Period without regard to
actual achievement of the Performance Targets and whether or not
payment of such Awards would be deductible under
Section 162(m) of the Code but only if such payment would
not cause Awards made under the Plan to fail to be qualified
performance-based compensation under Section 162(m) of the
Code and Treasury regulations issued thereunder. The Committee
may, in its sole and absolute discretion, permit the payment of
Awards which are not Qualified Performance Awards without regard
to actual achievement of the Performance Targets. In no event
shall the payout under the Plan to any Participant for any
Performance Period exceed $5 million. Payment of the Award
determined in accordance with the Plan for each Performance
Period shall be made to a Participant in cash within two and
one-half
(21/2)
months following the Performance Period.
9. Miscellaneous Provisions.
(a) The Board of Directors of the Company shall have the
right to suspend or terminate the Plan at any time and may amend
or modify the Plan with respect to future Performance Periods
prior to the beginning of any Performance Period,
provided that no such amendment or modification which is
expected to materially increase benefits payable to Participants
under the Plan who are covered employees within the
meaning of Section 162(m) of the Code (Covered
Employees) shall be made unless such measures as the
Committee deems necessary for the increased benefit to be
deductible as qualified performance-based compensation pursuant
to Section 162(m) of the Code have been taken.
(b) Nothing contained in the Plan or any agreement related
hereto shall affect or be construed as affecting the terms of
the employment of any Participant except as specifically
provided herein or therein. Nothing contained in the Plan or any
agreement related hereto shall impose or be construed as
imposing any obligation on (i) the Company or any Affiliate
to continue the employment of any Participant or (ii) any
Participant to remain in the employ of the Company or any
Affiliate. The Company reserves the right to make bonus or other
incentive awards to Participants under other plans maintained by
the Company or otherwise as determined by the Company in its
sole discretion, which other plans or arrangements need not be
intended to meet the requirements of Section 162(m) of the
Code.
(c) No person shall have any claim to be granted an Award
under the Plan and there is no obligation of uniformity of
treatment of eligible employees under the Plan. Awards under the
Plan may not be assigned or alienated.
B-2
(d) The Company or Affiliate, as applicable, shall have the
right to deduct from any Award to be paid under the Plan any
federal, state or local taxes required by law to be withheld
with respect to such payment.
(e) If any provision of the Plan or an Award would cause
the Awards granted to a Covered Employee not to be qualified
performance-based compensation under
Section 162(m) of the Code, that provision, insofar as it
pertains to such Covered Employee, shall be severed from, and
shall be deemed not to be a part of, the Plan or an Award, but
the other provisions hereof shall remain in full force and
effect.
(f) It is intended that the Awards granted under the Plan
shall be exempt from, or in compliance with, Section 409A
of the Code. In the event any of the Awards issued under the
Plan are subject to Section 409A of the Code, it is
intended that no payment or entitlement pursuant to this Plan
will give rise to any adverse tax consequences to a Participant
under Section 409A of the Code. The Plan shall be
interpreted to that end and, consistent with that objective and
notwithstanding any provision herein to the contrary, the
Company may unilaterally take any action it deems necessary or
desirable to amend any provision herein to avoid the application
of, or excise tax under, Section 409A of the Code provided
that such action is consistent with the requirements of
Section 162(m) of the Code. Neither the Company nor its
current or former employees, officers, directors,
representatives or agents shall have any liability to any
current or former Participant with respect to any accelerated
taxation, additional taxes, penalties, or interest for which any
current or former Participant may become liable in the event
that any amounts payable under the Plan are determined to
violate Section 409A.
(g) Notwithstanding anything herein to the contrary, to the
extent required by Section 409A of the Code and Treasury
regulations, upon a termination of employment (other than as a
result of death) of a person determined by the Board of
Directors of the Company (or a committee of the Board of
Directors as such body shall delegate) to be a specified
employee (within the meaning of Section 409A of the
Code), distributions determined, in whole or in part, to
constitute nonqualified deferred compensation within
the meaning of Section 409A of the Code shall be delayed
until six months after such termination of employment if such
termination constitutes a separation from service
(within the meaning of Section 409A(a)(2)(A)(i) of the Code
and the Treasury regulations issued thereunder) and such
distribution shall be made at the beginning of the seventh month
following the date of the specified employees termination
of employment.
10. Adoption. The Plan initially became effective as
of January 1, 1998 subject to approval by the shareholders
of the Company which was obtained on April 28, 1998. The
Plan was subsequently re-approved by the Company shareholders on
April 2, 2003 and May 1, 2008, and was amended and
restated in its entirety effective January 1, 2009 to
comply with the provisions of Sections 409A and 162(m) of
the Code and applicable guidance issued by the Treasury
Department and the Internal Revenue Service. For the period from
January 1, 2005 to December 31, 2008, the Plan was
administered in good faith compliance with Section 409A of
the Code and applicable guidance issued by the Treasury
Department and the Internal Revenue Service. The Plan is hereby
further amended and restated in its entirety effective
January 1, 2009, subject to approval by the shareholders at
the May 7, 2009 shareholders meeting.
B-3
DOVER CORPORATION 280 PARK AVENUE, 34W NEW YORK, NY 10017 VOTE BY INTERNET www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when
you access the web site and follow the instructions to obtain your records and to create an
electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like
to reduce the costs incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or
the Internet. To sign up for electronic delivery, please follow the instructions above to vote
using the Internet and, when prompted, indicate that you agree to receive or access proxy materials
electronically in future years. VOTE BY PHONE 1-800-690-6903 Use any touch-tone telephone to
transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date.
Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark,
sign and date your proxy card and return it in the postage-paid envelope we have provided or return
it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. ACCESS YOUR ACCOUNT
ONLINE You may access your Dover Corporation Shareholder account online via Investor ServiceDirect®
at http:/ /www.bnymellon.com/shareowner/isd. For technical assistance, please call Dovers transfer
agent, BNY Mellon Shareowner Services, at 1-877-978-7778 between 9am 7pm Monday Friday Eastern
Time. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: DOVEC1KEEP THIS PORTION FOR
YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.DETACH AND RETURN THIS PORTION
ONLY DOVER CORPORATION The Board of Directors recommends a vote FOR each director under Item 1.
1.Election of DirectorsFor Against Abstain Nominees: 1a. D. H. Benson0 0 0 1b. R. W. Cremin0 0 0
The Board of Directors recommends a vote FOR Items 2 and 3. For Against Abstain 2.To approve
amendments to the 2005 Equity and Cash 1c. T. J. Derosa0 0 0Incentive Plan.0 0 0 3.To approve
amendments to the Executive Officer Annual 1d. J-P. M. Ergas0 0 00 0 0 Incentive Plan. 1e. P. T.
Francis0 0 0 The Board of Directors recommends a vote AGAINST Item 4. For Against Abstain 4.To act
upon a shareholder proposal regarding a climate 1f. K. C. Graham0 0 0change report.0 0 0 1g. J. L.
Koley0 0 0 The Board of Directors recommends a vote FOR Item 5.For Against Abstain 5.To ratify the
appointment of PricewaterhouseCoopers LLP 1h. R. A. Livingston0 0 0as the independent registered
public accounting firm of 0 0 0 Dover Corporation for 2009. 1i. R. K. Lochridge0 0 0 1j. B. G.
Rethore0 0 0 1k. M. B. Stubbs0 0 0 1l. M. A. Winston0 0 0 Please sign exactly as your name or names
appear above. For joint accounts, each owner should sign. When signing as executor, administrator,
attorney, trustee or guardian, etc., please give your full title. Signature [PLEASE SIGN WITHIN
BOX]DateSignature (Joint Owners)Date |
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING, BOTH ARE AVAILABLE 24 HOURS A
DAY, 7 DAYS A WEEK. Internet and telephone voting are available through 11:59 PM Eastern Time the
day before the annual meeting date. Your Internet or telephone vote authorizes the named proxies to
vote these shares in the same manner as if you marked, signed and returned your proxy card.
INTERNETTELEPHONE http://www.proxyvote.com/dovOR1-800-690-6903 Use the Internet to vote your
proxy.Use any touch-tone telephone to Have your proxy card in hand whenvote your proxy. Have your
proxy you access the website.card in hand when you call. If you vote your proxy by Internet or
telephone, you do NOT need to mail back your proxy card. To vote by mail, mark, sign and date your
proxy card and return it in the enclosed postage-paid envelope. Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement, Annual
Report and Form 10-K are available at www.proxyvote.com. FOLD AND DETACH HERE DOVEC2
PROXYPROXYPROXY DOVER CORPORATION PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, MAY 7,
2009. The undersigned hereby appoints Robert A. Livingston, Robert G. Kuhbach, Joseph W. Schmidt
and Ivonne M. Cabrera, and each of them, as the undersigneds proxy or proxies, each with full
power of substitution, to vote all shares of Common Stock of Dover Corporation which the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held in Palm Desert,
California, on May 7, 2009 at 1:00 P.M., local time, and any adjournments thereof, as fully as the
undersigned could if personally present, upon the proposals set forth on the reverse side hereof,
revoking any proxy or proxies heretofore given. For participants in the Companys Retirement
Savings Plan, this proxy will govern the voting of stock held for the account of the undersigned in
the Plan. IMPORTANTYou have the option of voting these shares by returning the enclosed proxy
card, voting via Internet or by using a toll-free telephone number above and on the reverse side.
On the reverse side of this proxy card are instructions on how to vote via the Internet or by
telephone. If you vote by either of these methods, your vote will be recorded as if you mailed in
your proxy card. If you vote by returning this proxy card, you must sign and date this proxy on the
reverse side. THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE REVERSE
SIDE, BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ON THE
REVERSE SIDE, FOR PROPOSALS 2 AND 3, AGAINST PROPOSAL 4, AND FOR PROPOSAL 5. (CONTINUED, AND TO BE
MARKED, DATED AND SIGNED ON THE REVERSE SIDE.) |