The Board has nominated four individuals for election as ClassI directors to serve for a three-yearterm expiring at the Annual Meeting to be held in 2023, or upon the election and qualification of their successors. The nominees of the Board are Andrew K. Silvernail, Katrina L. Helmkamp, Mark A. Beck and Carl R. Christenson, each of whom iscurrently serving as a director of the Company.
The nominees and the directors serving in ClassII and ClassIII whose terms expire in futureyears and who will continue to serve after the Annual Meeting are listed below with brief statements setting forth their present principal occupations and other information, including any directorships in other public companies, and their particularexperiences, qualifications, attributes and skills that led to the conclusion they should serve as directors. If for any reason any of the nominees are unavailable to serve, proxies solicited hereby may be voted for a substitute. The Board, however,expects the nominees to be available.
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Our Board of Directorsrecommends that you vote FOR the election of each of the 2020 ClassI director nominees |
2020 DIRECTOR NOMINEES
Mr.Silvernail was appointed Chairman of the Board effective January1, 2012. Mr.Silvernail has served asChief Executive Officer and a director of the Company since August 10, 2011. From August 10, 2011 to February21, 2020, Mr.Silvernail also served as President of the Company. Prior to that, Mr.Silvernail served since January 2011 asVice President Group Executive of the Companys Health& Science Technologies, Global Dispensing and Fire& Safety/Diversified Products business segments. From February 2010 to December 2010, Mr.Silvernail was VicePresident Group Executive of the Companys Health& Sciences Technologies and Global Dispensing business segments. Mr.Silvernail joined IDEX in January 2009 as Vice President Group Executive of Health& ScienceTechnologies.
Andrew K. Silvernail Age: 48 Director since August 2011 Chairman, President and Chief Executive Officer
Mr.Silvernails relevant experience with engineering and technology industries in general, together with his extensive management experience, ledto the conclusion that he should serve on the Board of Directors.
Mr.Silvernail received a bachelor of science degree in government from DartmouthCollege and a master of business administration degree from Harvard University.
Mr.Silvernail is a director of Stryker Corporation.
Ms.Helmkamp has served as Chief Executive Officer of Cartus Corporation, the relocation services subsidiary of RealogyHoldings Corp., the largest full-service residential real estate services company in the United States, since June 2018. Previously, Ms.Helmkamp served as Chief Executive Officer of Lenox Corporation from November 2016 to June 2018. Prior toLenox Corporation, Ms.Helmkamp served as Chief Executive Officer of SVP Worldwide from 2010 through 2014, and as Senior Vice President, North America Product for Whirlpool Corporation from 2008 to 2010.
Katrina L. Helmkamp Age: 53 Director since November 2015 Independent Committees: Compensation Nominating and Corporate Governance
Ms.Helmkamps operating leadership skills and her experience across multiple markets and technologies led to the conclusion that she should serveon the Board of Directors. During her time at SVP Worldwide and Whirlpool Corporation, Ms.Helmkamp was responsible for managing the operations and profitability of global businesses that derived a substantial portion of their revenues fromoutside of the United States.
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In addition, Ms.Helmkamp successfully oversaw numerous new product development and technologyinitiatives, including the launch of new products and service categories with improved margins and quality. Ms.Helmkamp also has significant mergers and acquisitions experience, both in identifying and evaluating potential targets, as well asleading post-acquisition integration activities.
Ms.Helmkamp received a bachelor of science degree in industrial engineering and a master ofbusiness administration degree from Northwestern University.
Mr.Beck is the co-founder and Chief Executive Officer of B-Square Precision, LLC, a private company engaged in the acquisition and management of companies that manufacture high-precision tools, dies, molds and components. Previously, Mr.Beck served as President andChief Executive Officer of JELD-WEN Holding, Inc. (JELD-WEN), one of the worlds largest door and window manufacturers, from November 2015 to February 2018, and wasa director of JELD-WEN from May 2016 to February 2018. Prior to JELD-WEN, Mr.Beck served as an Executive Vice President at Danaher Corporation, leadingDanahers water quality and dental programs, beginning in April 2014. Previously, he spent 18 years with Corning Incorporated in a series of management positions with increasing responsibility, culminating in his appointment as Executive VicePresident overseeing Cornings environmental technologies and life science units in July 2012. He also served on the board of directors of Dow-Corning Corporation from 2010 to 2014.
Mark A. Beck Age: 53 Director since January 2018 Independent Committees: Audit
Mr.Becks experience as a chief executive officer of a public company with significant international operations and his track record of innovationand successfully integrating acquired businesses led to the conclusion that he should serve on the Board of Directors.
Mr.Beck received a bachelorof arts degree in business management from Pacific University and a master of business administration degree from Harvard University.
Mr.Beck is adirector of Owens& Minor, Inc.
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Mr.Christenson has served since April 2014 as Chief Executive Officer and Chairman of the Board of Directors of AltraIndustrial Motion Corp. (Altra), a leading global designer, producer and marketer of a wide range of electromechanical power transmission motion control products. From January 2009 to April 2014, Mr.Christenson served as President and ChiefExecutive Officer of Altra. Prior to that, Mr.Christenson served as President and Chief Operating Officer of Altra from January 2005 to December 2008. From 2001 to 2005, Mr.Christenson was President of Kaydon Bearings, a manufacturer ofcustom-engineered bearings and a division of Kaydon Corporation. Prior to joining Kaydon, Mr.Christenson held several management positions at TB Woods Incorporated and several positions at the Torrington Company, a division of IngersollRand.
Carl R. Christenson Age: 60 Director since June 2019 Independent Committees: Compensation
Mr.Christensons extensive experience leading industrial businesses and executing strategic acquisitions, including in his current role as chiefexecutive officer of a public company with global operations, led to the conclusion that he should serve on the Board of Directors.
Mr.Christensonreceived bachelor of science and master of science degrees in Mechanical Engineering from the University of Massachusetts and a master of business administration degree from Rensselaer Polytechnic Institute.
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OTHER INCUMBENT DIRECTORS
ClassII: Three-Year Term Expires in 2021
Mr.Cook is our Lead Director. He served as Chairman of the Board of Donaldson Company, Inc. from prior to 2009 toApril 2016. Mr.Cook retired as the President and Chief Executive Officer of Donaldson in April 2015, having served since prior to 2009.
Mr.Cooks strong business and organizational leadership skills and his relevant experience in technology industries led to the conclusion that heshould serve on the Board of Directors. Throughout his 35-year career at Donaldson, a technology-driven global company that manufactures filtration systems designed to remove contaminants from air and liquids,Mr.Cook served in several senior executive positions, and was elected as a director in 2004.
William M. Cook Age: 65 Director since April 2008Independent Committees: Audit
Mr.Cook received a bachelor of science degree in business administration and a master of businessadministration degree from Virginia Polytechnic Institute and State University.
Mr.Cook is a director of Neenah, Inc. and Axalta Coating Systems,Ltd.
Ms.Warner has served as President and Chief Executive Officer and as a director of Renewable Energy Group, Inc., anadvanced biofuel producer, since January 2019. Previously, Ms.Warner served as Executive Vice President, Operations for Andeavor (formerly known as Tesoro Corporation) from August 2016 until October 2018, when Andeavor was acquired by MarathonPetroleum Corp. Prior to that, Ms.Warner served as Andeavors Executive Vice President, Strategy and Business Development, since October 2014. From 2012 to 2014, Ms.Warner was Chairman and Chief Executive Officer of Sapphire Energy,Inc. From 2009 to 2011, Ms.Warner was Chairman and President of Sapphire Energy. Prior to 2009, Ms.Warner was Group Vice President, Global Refining, at BP plc.
Cynthia J. Warner Age: 60 Director since February 2013 Independent Committees: Compensation Nominating and Corporate Governance (Chair)
Ms.Warners operating leadership skills, international experience and extensive experience in the energy, refining and transportation industriesled to the conclusion that she should serve on the Board of Directors. During her 25 years at BP and Amoco, Inc. (prior to its acquisition by BP), Ms.Warner gained significant knowledge of the global energy industry and served in numerousleadership roles, including overseeing BPs Global Refining business and its health, safety, security and environmental efforts, with a consistent record of success in coordinating the operations of thousands of employees across BPsglobal facilities.
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In her role as Chief Executive Officer of Sapphire Energy, an alternative energy venture, Ms.Warnerhad oversight responsibility for the raising of substantial investment capital and the successful completion of a new demonstration facility for the company.
Ms.Warner received a bachelor of engineering degree in chemical engineering from Vanderbilt University and a master of business administration degreefrom Illinois Institute of Technology.
Ms.Warner is a director of Sempra Energy.
Mr.Buthman retired from Kimberly-Clark Corporation, a leading global manufacturer of consumer packaged goods andpersonal care products, in 2015, where he was Executive Vice President and Chief Financial Officer from January 2003 to April 2015. During his 33-year career at Kimberly-Clark, Mr.Buthman held a widerange of leadership roles, led or participated in more than 50 acquisition transactions totaling more than $10billion in value and was part of an executive team that created more than $20billion in shareholder value during his tenure asChiefFinancial Officer.
Mark A. Buthman Age: 58 Director since April 2016 Independent Committees: Audit (Chair)
Mr.Buthmans experience as a Chief Financial Officer of a Fortune 150 company with significant international operations and as a public companydirector led to the conclusion that he should serve on the Board of Directors. Mr.Buthman is a disciplined financial leader with a track record of allocating capital in shareholder-friendly ways and his insight is extremely valuable to ourBoard of Directors and management.
Mr.Buthman received a bachelor of business administration degree in finance from the University of Iowa.
Mr.Buthman is a director of West Pharmaceutical Services, Inc.
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ClassIII: Three-Year Term Expires in 2022
Mr.Mrozek served as Vice Chairman and Chief Financial Officer of The ServiceMaster Company, a residential andcommercial service company, until his retirement in March 2008.
Mr.Mrozeks strategic and operating leadership skills, his extensiveexperience and expertise in the business services industry and his financial reporting expertise led to the conclusion that he should serve on the Board of Directors. Through over 20 years of executive experience in various senior positions ingeneral management, operations and finance at ServiceMaster, including more than eight years as President and Chief Operating Officer of ServiceMaster or one of its largest segments, Mr.Mrozek developed extensive knowledge of the businessservices industry and gained valuable financial expertise and experience in mergers and acquisitions.
Ernest J. Mrozek Age: 65 Director since July 2010Independent Committees: Audit
Prior to joining ServiceMaster in 1987, Mr.Mrozek spent 12 years in public accounting with ArthurAndersen& Co. Mr.Mrozek has also acquired substantial experience in corporate governance as a director on the boards of several public and private companies.
Mr.Mrozek received a bachelor of science degree in accountancy with honors from the University of Illinois and is a certified public accountant, oninactive status.
Mr.Mrozek is a director of Advanced Disposal Services, Inc.
Mr.Satterthwaite has served since October 2019 as President and Chief Operating Officer of Cummins, Inc., a globalpower leader that designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products. From April 2015 through October 2019, Mr.Satterthwaite served as President of Cummins DistributionBusiness, a unit of Cummins. Prior to that, Mr.Satterthwaite served as President of Cummins Power Generation from June 2008 to April 2015.
Livingston L. Satterthwaite Age: 58 Director since April 2011 Independent Committees: Compensation (Chair) Nominating and Corporate Governance
Mr.Satterthwaites business leadership and sales skills, international experience and extensive experience in industrial manufacturing led to theconclusion that he should serve on the Board of Directors. Since joining Cummins in 1988, Mr.Satterthwaite has held various positions at Cummins Power Generation and other divisions of Cummins, including 14 years in managerial and salespositions in the United Kingdom and Singapore.
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Prior to joining Cummins, Mr.Satterthwaite spent four years at Schlumberger Limited, an oil fieldservices provider, as a general field engineer.
Mr.Satterthwaite received a bachelor of science degree in civil engineering from Cornell Universityand a master of business administration degree from Stanford University.
Mr.Parry served as Vice Chairman of Illinois Tool Works Inc. (ITW) from 2010 until his retirement in April 2017. Fromprior to 2009 until 2010, Mr.Parry was Executive Vice President of ITW with responsibility for the Polymers and Fluids Group.
Mr.Parrysstrategic and operating leadership skills and global commercial perspective gained from over 30 years of international business leadership experience, his significant acquisition experience and his extensive
expertise in the industrial products manufacturing industry led to the conclusion that he should serve on the Board of Directors. During 18 yearsof executive and management experience in various senior management positions at ITW, a multinational manufacturer of a diversified range of industrial products and equipment, Mr.Parry successfully grew the operations and profitability ofmultiple business units and helped ITW complete numerous acquisitions.
David C. Parry Age: 65 Director since December 2012 Independent Committees:Compensation Nominating and Corporate Governance
Prior to joining ITW in 1994, Mr.Parry spent 17 years in various executive and managementpositions at Imperial Chemical Industries, which at the time was one of the largest chemical producers in the world.
Mr.Parry received a bachelorof science degree in chemistry, a master of science degree in chemistry and a Ph.D. in polymer chemistry from Victoria University of Manchester, Manchester, England.
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Framework for Corporate Governance
The Board of Directors has the ultimate authority for the management of the Companys business. The Corporate Governance Guidelines, the charters of theBoard committees, the Code of Business Conduct and Ethics, and the Standards for Director Independence (Governance Documents) provide the framework for the governance of the Company. Copies of the current Governance Documents are available under theInvestors link on the Companys website at www.idexcorp.com.
Corporate Governance Guidelines and Code
of Business Conduct and Ethics
The CorporateGovernance Guidelines address matters such as election of directors, size and retirement age for the Board, Board composition and membership criteria, the role and responsibilities of the Board and each of its committees, Board evaluations and thefrequency of Board meetings (including meetings to be held without the presence of management).
The Code of Business Conduct and Ethics sets forth theguiding principles of business ethics and certain legal requirements applicable to all of the Companys employees and directors.
The Board has adopted standards for determining whether a director is independent. These standards are based upon thelisting standards of the New York Stock Exchange (NYSE) and applicable laws and regulations and are available on the Companys website as described above. The Board also reviewed commercial relationships between the Company and organizationswith which directors were affiliated by service as an executive officer. The relationships with these organizations involved the Companys sale or purchase of products or services in the ordinary course of business that were made on arms-length terms and other
circumstances that did not affect the relevant directors independence under applicable law and NYSE listing standards.
The Board has affirmatively determined, based on these standards and after considering the relationships described immediately above, that the followingdirectors are independent: Messrs.Beck, Buthman, Christenson, Cook, Mrozek, Parry and Satterthwaite, and Mss. Helmkamp and Warner. The Board has also determined that Mr.Silvernail is not independent because he is the Chief ExecutiveOfficer of the Company (and was, until February21, 2020, President of the Company). All standing Board committees are, and throughout fiscal year 2019 were, composed entirely of independent directors.
TheBoard believes that maintaining a diverse membership with varying backgrounds, skills, expertise and other differentiating personal characteristics promotes inclusiveness, enhances the Boards deliberations and enables the Board to betterrepresent all of the Companys constituents. Accordingly, the Board is committed to seeking out highly qualified women and minority candidates as well as candidates with diverse backgrounds, skills and experiences as part of each Board searchthe Company conducts. The Board considers the following in selecting nominees for the Board:
Experience (in one or more of the following):
| | high level leadership experience in business or administrative activities; |
| | specialized expertise in the industries in which the Company competes; |
| | financial expertise; |
| | breadth of knowledge about issues affecting the Company; |
| | ability and willingness to contribute special competencies to Board activities; and |
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Director generally presides at these non-management executive sessions.During 2019, the Board held seven meetings.
The Board believes that its current leadership structure provides independent board leadership and engagementwhile deriving the benefit of having the Chief Executive Officer also serve as Chairman of the Board.
The Chief Executive Officer, as the individual withprimary responsibility for managing the Companys day-to-day operations, is best positioned to chair regular Board meetings and to oversee discussion on businessand strategic issues. Coupled with the existence of a Lead Director and regular executive sessions of the non-management directors, this structure provides independent oversight, including risk oversight,while facilitating the exercise of the Boards responsibilities.
During 2019, each director attended more than 75% of the aggregate number ofmeetings of the Board and of committees of the Board of which he or she was a member. The Company encourages its directors to attend the annual meeting of stockholders but has no formal policy with respect to that attendance. All of the currentdirectors attended the 2019 Annual Meeting of Stockholders.
Boards Role in Risk Oversight
The Board oversees an annual assessment of enterprise risk exposure, and the management of such risk, conducted by the Companys executives.
When assessing enterprise risk, the Board focuses on the achievement of organizational objectives, including strategic objectives, to improve long-termperformance and enhance stockholder value. Direct oversight allows the Board to assess managements inclination for risk, to determine what constitutes an appropriate level of risk for the Company and to discuss with management the means bywhich to control risk.
Board and Committee Assessment Process
On an annual basis, the Board and each Committee conduct assessments, which consist of written self-assessment questionnaires, supplemented by individualinterviews of each director conducted by the Chair of the Nominating and Corporate Governance Committee. The results of the assessment process are then reviewed and discussed by the Board and each Committee and have led to process and oversightimprovements.
Boards Engagement with Management
The Board approves the Companys executive officers, delegates responsibilities for the conduct of the Companys operations to those officers andmonitors their performance. In addition, members of the Board informally mentor executive officers, meeting with such officers individually to share insights and experiences accumulated over the course of the directors careers.
Each year, some directors visit Company manufacturing facilities and meet with their leaders. During 2019, directors visited sites in the United States,Europe and China. Some directors attend the Companys annual global leadership conference of about 150 leaders each year. In addition, each year the Board holds at least one meeting at a Company manufacturing facility where all directors attenda daily management meeting, receive a tour of the facility and participate in an operational review with senior leadership.
Boards Role in Talent Development and Strategic Planning
Our Board calendar includes at least one meeting per year at which the Boardparticipates in an extensive review of the Companys talent management and retention strategies, leadership development pipeline and succession plans for senior management.
Each fall the Board participates in a multi-day three-year enterprise strategy review with the
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Companys executive officers and other senior management. Management and the Board agree
upon astrategy and it is used as a lens for decision making at each Board meeting following the annual comprehensive review. As a result, strategy discussions are a regular feature of Board meetings throughout the year.
Director Onboarding and Education
All new directors participate in our director onboarding program. The onboarding process includes in-person meetingsat the Companys headquarters with senior leaders to familiarize new directors with the Companys strategic vision, values and culture; operational and financial reporting structure; and legal, compliance and governance framework. Inaddition, new directors have also attended training courses led by IDEX senior leaders covering the 80/20 business process that serves as the foundation of IDEXs operating model and seeks to accelerate profitable growth by focusing resourceson our highest value opportunities.
The Board encourages all directors to participate in continuing director education programs, either individually ortogether with other Committee members, and directors are reimbursed for their expenses for such programs. Over the past year, directors attended off-site education seminars covering a variety of topics,including board and audit committee leadership, strategy, cybersecurity, shareholder activism and regulatory developments. In addition, last spring all directors participated in an educational session led by an outside expert on responsible supplychain practices, which was delivered as part of a regularly-scheduled Board meeting.
We value the input of our stockholders and believe that it is important to understand their questions and concerns about the Company. During 2019, we met witha number of our stockholders and prospective stockholders to
answer questions about the Company and learn about matters that are important to them. We plan to continue our investor outreach efforts during 2020.
Corporate Social Responsibility/Non-Financial Highlights
As an embodiment of our commitment to focus on what matters to our various stakeholders, in March 2019, we published our first Corporate Social ResponsibilityReport, which is available under the Corporate Social Responsibility link on our website at www.idexcorp.com. We continued to make great progress in 2019 as a Company in building a culture and environment where all of our employees are engaged andhave the tools and support they need in order to truly do and be their best every day.
Employee Engagement: We have best-in-class employee engagement. In 2019, we were in the top quartile of manufacturing companies in all three indices (employee engagement, manager effectiveness and performance enablement) of our employeeengagement survey, with a response rate of 88% to the survey. In 2018, we were in the top quartile on employee engagement and manager effectiveness.
Community Involvement: We are proud of the efforts of our employees during 2019 to positively impact the communities in which we live and work. The IDEXFoundation provides all business units globally a way to give back to the communities in which we live. From partnering with local food banks and soup kitchens, to helping to build or improve schools, to providing toys, clothing and other essentialsto impoverished or sick children, to donating and assembling toiletry kits for the homeless, IDEX employees around the world are solving problems and improving the lives of the people around them. In partnership with the IDEX Foundation, in 2019more than 2,594 IDEX employees participated in over 66 community or charitable events, spanning three continents and touching thousands of lives.
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The objectives of our director compensation program are to attract highly-qualified individuals to serve on our Board and to align our directorsinterests with the interests of our stockholders. The Compensation Committee periodically reviews the program to ensure that it continues to meet these objectives.
The Company believes that to attract and retain qualified directors, pay levels should be targeted at the 50th percentile (or median) of pay levels fordirectors at comparable companies. On at least a biennial basis, the Compensation Committee, with the assistance of F.W. Cook, evaluates the competitiveness of director compensation. The primary reference point for the determination of market pay isthe peer group of companies. The peer group used in this analysis was the same peer group used for the Companys executive compensation analysis.
For further details on this topic, refer to Peer Companies under Setting Executive Compensation in the Compensation Discussion andAnalysis below. Market composite data derived from pay surveys available to F.W. Cook and to the Company is also used.
Our director compensation for 2019and 2020 is set forth below. The changes for 2020 are detailed in the Companys Amended and Restated Non-Employee Director Compensation Policy (Director Compensation Policy) and reflect market-basedadjustments as a result of the analysis described above.
Under the Director Compensation Policy, equity grants upon initial election to the Board are made on the date ofappointment. Initial equity grant values are equal to the annual grant value prorated for the remaining period of time until the next Annual Meeting. Annual equity grants to continuing directors are made on the date of the Annual Meeting. All grantsare structured to provide 100% of the expected value in the form of restricted stock unit awards and are made under the IDEX Corporation Incentive Award Plan (Incentive Award Plan). The restricted
stock units vest in full on the earliest of the third anniversary of the grant date, retirement, failure of thedirector to be re-elected to the Board, or a change in control of the Company. The restricted stock units are non-transferable until the recipient is no longer servingas a director and are subject to forfeiture if the director terminates service as a director for reasons other than death, disability, retirement, or failure to be re-elected to the Board.
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Table of Contents
Since the start of 2015, directors have had the ability to defer payment of all or a portion of their annualequity grant.
Directors Deferred Compensation Plan
Under the Companys Directors Deferred Compensation Plan, directors are permitted to defer their cash compensation as of the date their compensationwould otherwise be payable. In general, directors must make elections to defer fees payable during a calendar year by the end of the preceding calendar year. Newly appointed directors have up to 30 days from their appointment to elect to deferfuture fees.
All amounts deferred are recorded in a memorandum account for each director and are credited or debited with earnings or losses as if suchamounts had been invested in an interest- bearing account or certain mutual funds, at the option of the director. The deferred compensation credited to the interest-bearing account is adjusted on at least a quarterly basis with hypothetical earningsequal to the lesser of the Barclays Capital Long Term Bond AAA Corporate Bond Index as of the first business day in November of the calendar year preceding the year for which the earnings are to be credited or 120% of the long-term applicablefederal rate as of the first business day in November.
In accordance with SEC rules, no earnings on deferred compensation are shown in the DirectorCompensation table below because no above market rates were earned on deferred amounts in 2019. Directors must elect irrevocably to
receive the deferred funds either in a lump sum or in equal annual installments of up to 10 years, and to begin receiving distributions either at termination of Board service or at a futurespecified date.
If a director should die before all amounts credited under the Directors Deferred Compensation Plan have been paid, the unpaid balance inthe participating directors account will be paid to the directors beneficiary. The memorandum accounts are not funded, and the right to receive future payments of amounts recorded in these accounts is an unsecured claim against theCompanys general assets.
Under the Director Compensation Policy, non-management directors are subject to a stock ownership guideline. Non-management directors are required to maintain direct ownership of shares of Common Stock equal to or greater in value to five times the current annual Board service retainer. Nonon-management director is permitted to sell shares of Common Stock until the director satisfies the stock ownership guideline, and after a director meets the stock ownership guideline, the director may notsell shares if the sale would put the director below the stock ownership guideline.
As of March13, 2020, allnon-management directors were in compliance with the stock ownership guideline or subject to the mandatory holding requirement until the ownership guideline is met.
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Table of Contents
The following table summarizes the total compensation earned in 2019 for the Companys non-management directors.Mr.Silvernail receives no additional compensation for his service as a director.
| Name | Fees Earned orPaidinCash ($) | StockAwards ($)(1) | All Other Compensation ($)(2) | Total($) | ||||
Mark A. Beck | 85,000 | 130,000 | 1,000 | 216,000 | ||||
Mark A. Buthman | 97,500 | 130,000 | | 227,500 | ||||
Carl R. Christenson | 45,770 | 115,913(3) | | 161,683 | ||||
William M. Cook | 100,000 | 145,000 | | 245,000 | ||||
Katrina L. Helmkamp | 88,995 | 130,000 | | 218,995 | ||||
Ernest J. Mrozek | 87,500 | 130,000 | 10,000 | 227,500 | ||||
David C. Parry | 85,000 | 130,000 | 10,000 | 225,000 | ||||
LivingstonL.Satterthwaite | 95,000 | 130,000 | 10,000 | 235,000 | ||||
Cynthia J. Warner | 91,005 | 130,000 | | 221,005 | ||||
| (1) | Reflects the aggregate grant date fair value of the restricted stock units granted in 2019, determined inaccordance with FASB ASC Topic 718 using the assumptions set forth in the footnotes to financial statements in the Companys Annual Report on Form 10-K for the year ended December31, 2019, assumingno forfeitures. |
| (2) | Reflects matching gifts of up to $10,000 per year directed to Internal Revenue Code 501(c)(3) tax-exempt, non-profit organizations under the IDEX Corporation Matching Gift Program. |
| (3) | Reflects Mr.Christensons prorated initial grant awarded upon his election to the Board onJune17, 2019. |
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Table of Contents
Directors Outstanding Equity Awards at 2019 Fiscal Year End
The following table provides information on restricted stock units and stock option awards held by the Companysnon-management directors and the value of those awards as of December31, 2019. All outstanding awards are in or exercisable for shares of Common Stock.
Option Awards | Stock Awards | |||||||||||||||||||||||||
Number of Securities | Numberof Sharesor UnitsofStock thatHaveNot Vested(#)(b) | MarketValue | ||||||||||||||||||||||||
| Name | GrantDate | Type | #Shares (#) | Shares Exercised (#) | Exercisable (#) (a) | Unexercisable (#) (a) | Option Exercise Price($) | Option Expiration Date | ||||||||||||||||||
Mark A. Beck | 01/02/18 | RSU | 310 | 53,320 | ||||||||||||||||||||||
| 04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
| 05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
MarkA.Buthman | 04/06/16 | RSU | 1,290 | 221,880 | ||||||||||||||||||||||
| 02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
| 04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
| 05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
Carl R. Christenson | 06/17/19 | RSU | 725 | 124,700 | ||||||||||||||||||||||
WilliamM.Cook | 02/22/11 | NQSO | 3,190 | 0 | 3,190 | 0 | 40.89 | 02/22/2021 | ||||||||||||||||||
| 02/21/12 | NQSO | 3,530 | 0 | 3,530 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||
| 02/15/13 | NQSO | 3,075 | 0 | 3,075 | 0 | 50.45 | 02/15/2023 | |||||||||||||||||||
| 02/22/17 | RSU | 1,450 | 249,400 | |||||||||||||||||||||||
| 04/25/18 | RSU | 1,055 | 181,460 | |||||||||||||||||||||||
| 05/10/19 | RSU | 940 | 161,680 | |||||||||||||||||||||||
KatrinaL. Helmkamp | 02/19/16 | RSU | 1,610 | 276,920 | ||||||||||||||||||||||
| 02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
| 04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
| 05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
ErnestJ.Mrozek | 02/22/11 | NQSO | 3,190 | 0 | 3,190 | 0 | 40.89 | 02/22/2021 | ||||||||||||||||||
| 02/21/12 | NQSO | 3,530 | 0 | 3,530 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||
| 02/15/13 | NQSO | 3,075 | 0 | 3,075 | 0 | 50.45 | 02/15/2023 | |||||||||||||||||||
| 02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
| 04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
| 05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
DavidC.Parry | 12/06/12 | NQSO | 4,930 | 0 | 4,930 | 0 | 45.08 | 12/06/2022 | ||||||||||||||||||
| 02/15/13 | NQSO | 3,075 | 0 | 3,075 | 0 | 50.45 | 02/15/2023 | |||||||||||||||||||
| 02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
| 04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
| 05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
LivingstonL. Satterthwaite | 04/05/11 | NQSO | 4,800 | 0 | 4,800 | 0 | 45.16 | 04/05/2021 | ||||||||||||||||||
| 02/21/12 | NQSO | 3,530 | 0 | 3,530 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||
| 02/15/13 | NQSO | 3,075 | 0 | 3,075 | 0 | 50.45 | 02/15/2023 | |||||||||||||||||||
| 02/20/15 | RSU | 1,405 | 241,660 | |||||||||||||||||||||||
| 02/19/16 | RSU | 1,610 | 276,920 | |||||||||||||||||||||||
| 02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
| 04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
| 05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
CynthiaJ.Warner | 02/15/13 | NQSO | 4,610 | 0 | 4,610 | 0 | 50.45 | 02/15/2023 | ||||||||||||||||||
| 02/22/17 | RSU | 1,290 | 221,880 | |||||||||||||||||||||||
| 04/25/18 | RSU | 945 | 162,540 | |||||||||||||||||||||||
| 05/10/19 | RSU | 845 | 145,340 | |||||||||||||||||||||||
| (a) | All options expire on the 10th anniversary of the grantdate. |
| (b) | See footnote 1 to table under SECURITY OWNERSHIP below for vesting provisions. |
| (c) | Determined based upon the closing price of the Companys Common Stock on December31, 2019. |
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The following table furnishes information as of March13, 2020, except as otherwise noted, with respect to shares of Common Stock beneficially owned by(i)each director and nominee for director, (ii)each executive officer named in the Summary Compensation Table, (iii)directors, nominees and executive officers of the Company as a group, and (iv)any person who is known by theCompany to be a beneficial owner of more than five percent of the outstanding shares of Common Stock.
Except as indicated by the notes to the followingtable, the holders listed below have sole voting power and investment power over the shares beneficially held by them. Under SEC rules, the number of shares shown as beneficially owned includes shares of Common Stock subject to options that areexercisable currently or will be exercisable within 60 days of March13, 2020. Shares of Common Stock subject to options that are exercisable within 60 days of March13, 2020, are considered to be outstanding for the purpose of determiningthe percentage of shares held by a holder, but not for the purpose of computing the percentage held by others. An * indicates ownership of less than one percent of the outstanding Common Stock.
For purposes of the following table, the address for each of the directors, nominees for director and executive officers of the Company is c/o 1925 West FieldCourt, Suite 200, Lake Forest, Illinois60045.
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| (1) | Includes 9,795, 9,795, 8,005, 11,405 and 4,610 shares under exercisable options for Messrs. Cook, Mrozek, Parryand Satterthwaite, and Ms.Warner, respectively. Ms.Helmkamp and Messrs.Buthman, Beck and Christenson do not have any options. Includes 1,405 restricted stock units issued to Mr.Satterthwaite on February20, 2015 forwhich Mr.Satterthwaite elected to defer vesting; 1,610 restricted stock units issued to Ms.Helmkamp and Mr.Satterthwaite on February19, 2016, who each elected to defer vesting; 1,290 restricted stock units issued toMr.Buthman on April6, 2016, for which Mr.Buthman elected to defer vesting; 310 restricted stock units issued to Mr.Beck on January2, 2018, for which Mr.Beck elected to defer vesting; 945 restricted stock unitsissued to each of Mss.Helmkamp and Warner and Messrs. Beck, Buthman, Mrozek, Parry and Satterthwaite on April25, 2018, which vest on April25, 2021 (except Messrs. Beck, Buthman and Satterthwaite, who each elected to defer vesting);1,055 restricted stock units issued to Mr.Cook on April25, 2018, which vest on April25, 2021; 845 restricted stock units issued to each of Mss.Helmkamp and Warner and Messrs. Beck, Buthman, Mrozek, Parry and Satterthwaite onMay10, 2019, which vest on May10, 2022 (except Messrs. Beck, Buthman and Satterthwaite, who each elected to defer vesting); 940 restricted stock units issued to Mr.Cook on May10, 2019, which vest on May10, 2022; and 725restricted stock units issued to Mr.Christenson on June17, 2019, for which Mr.Christenson elected to defer vesting. The restricted shares and restricted stock units held by the directors may vest earlier than the dates indicatedabove upon a change in control of the Company, retirement, or failure to be re-elected to the Board. All shares of restricted stock and restricted stock units are eligible for dividends. |
| (2) | Includes 258,296, 49,024, 49,394, 29,187 and 18,041 shares under exercisable options for Messrs. Silvernail,Grogan, Ashleman and Bucklew and Ms.Cade, respectively. |
| (3) | Includes 432,268 shares under options that are exercisable currently or will be exercisable within 60 days ofMarch13, 2020. |
| (4) | Based solely on information in Schedule 13G, as of December31, 2019, filed by Vanguard Group (Vanguard)with respect to Common Stock owned by Vanguard and certain subsidiaries. Vanguard reports beneficial ownership of shares for itself, Vanguard Fiduciary Trust Company, a wholly-owned subsidiary, and Vanguard Investments Australia, Ltd., awholly-owned subsidiary. Vanguard has sole power to vote or to direct the vote of 117,928 shares of Common Stock, shared power to vote or direct the vote of 21,431 shares of Common Stock, sole power to dispose or to direct the disposition of8,150,543 shares of Common Stock and shared power to dispose or to direct the disposition of 129,142 shares of Common Stock. |
| (5) | Based solely on information in Schedule 13G, as of December31, 2019, filed by BlackRock Inc. (BlackRock)with respect to Common Stock owned by BlackRock and certain subsidiaries, including BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Fund Advisors, BlackRock InstitutionalTrust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock InvestmentManagement (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Asset Management North Asia Limited, BlackRock(Singapore) Limited and BlackRock Fund Managers Ltd. BlackRock has sole power to vote or to direct the vote of 5,778,181 shares of Common Stock and sole power to dispose or to direct the disposition of all 6,677,748 shares of Common Stock. |
| (6) | Based solely on information in Schedule 13G, as of December31, 2019, filed by Capital World Investors, adivision of Capital Research and Management Company (Capital World). Capital World has sole power to vote or to direct the vote of 5,664,584 shares of Common Stock and sole power to dispose or to direct the disposition of all 5,751,716 shares ofCommon Stock. |
| (7) | Based solely on information in Schedule 13G, as of December31, 2019, filed by T. Rowe Price Associates,Inc. (Price Associates). Price Associates has sole power to vote or to direct the vote of 1,991,663 shares of Common Stock and sole power to dispose or to direct the disposition of all 5,358,445 shares of Common Stock. |
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Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes our executive compensation philosophy and programs, and compensation decisions made under those programsfor our named executive officers (NEOs) for fiscal year 2019, who are listed below.
Name | Title | |
AndrewK.Silvernail | Chairman, President andChief Executive Officer(1) | |
William K.Grogan | Senior Vice President andChief Financial Officer | |
Eric D.Ashleman | Senior Vice President andChief Operating Officer(1) | |
Denise R.Cade | Senior Vice President,General Counsel and Corporate Secretary | |
Jeffrey D.Bucklew | Senior Vice President andChief Human Resources Officer |
| (1) | On February21, 2020, the Board voted Mr. Ashleman President and Chief Operating Officer.Mr.Silvernail retained his positions as Chairman and Chief Executive Officer. |
Principles of Our CompensationPrograms
Pay-for-Performance | The key principle of our compensation philosophy is | |
Alignment with Stockholders | We reward performance that meets or exceeds the performance | |
Variation Based on Performance | We favor variable pay opportunities that are based on |
Compensation Philosophy
Thefollowing table describes our compensation philosophy that guides our pay programs, structure and decisions.
CompensationPhilosophy | How WeDeliver | |
Attract and retain an effective management team | We offer a total pay package that consists of both compensation and benefitsthat are targeted to be competitive with the market. We seek to retainour executives by regularly benchmarking our total compensation package relative to companies of similar size, scope and complexity our peer group is constructed to include companies within an appropriate range of revenue and marketcapitalization values. | |
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CompensationPhilosophy | How WeDeliver | |
Motivate and reward management team with a focus onpay-for-performance | We tie a meaningful portion of total compensation to financial and stockprice performance between 70% to 80% of our compensation mix is tied to performance. Our compensation program provides a mix of base salary, short-term incentivesand long-term incentives the balance of our compensation elements provides direct line of sight with our objectives, motivating executives to outperform on our goals. In line with our compensation philosophy to align pay and performance, when the Companyoutperforms or underperforms the goals in our incentive plans, payouts can result in above or below target levels, respectively. | |
Create a strong financial incentive that aligns with our stockholders and long-term objectives | Through a combination of appropriate performance metrics and targets,executives are paid according to how the Company performs. Specificfinancial measures used in our incentive programs include: Earnings pershare (EPS), cash flow conversion, and organic sales growth in our short-term incentive plan; and Total stockholder return (TSR) relative to companies in the relevant marketindex used in our long-term incentive plan. | |
Align the interests of management and stockholders | In order to emphasize long-term stockholder returns, we require ourexecutives to maintain significant stock ownership levels through the use of stock ownership guidelines. | |
Governance Best Practices
The Company employs compensation principles in delivering executive pay that we believe are supportive of the business strategy and governance best practices.
What We Do
| Ö | AnnualSay-on-Pay Vote: We conduct an annual say-on-pay advisory vote. At our 2019Annual Meeting of Stockholders, more than 96% of the votes cast on the say-on-pay proposal were in favor of the fiscal year 2018 compensation of our NEOs. |
| Ö | Clawback Policy: Our clawback policy allows the Board to recoup any excessincentive compensation paid to our executive officers and other employees if the financial results on which the awards were based are materially restated due to fraud, intentional misconduct or gross negligence of the executive officer or otheremployee. |
| Ö | Short-Term and Long-Term Incentives/Measures: Our annual and long-termplans provide a balance of incentives and include different measures of performance. |
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| Ö | Independent Compensation Consultant: The Compensation Committee engages anindependent compensation consultant, who does not provide any services to management. |
| Ö | Stock Ownership Guidelines: To further align the interests of managementand our directors with our stockholders, we have significant stock ownership guidelines, which require our executive officers and directors to hold a multiple of their annual compensation in Common Stock. |
| Ö | Limited Perquisites and Related TaxGross-Ups: We provide limited perquisites and tax gross-ups. |
| Ö | Mitigate Inappropriate Risk Taking: In addition to our clawback policy,stock ownership guidelines and prohibition of hedging and pledging, we structure our compensation programs so that they minimize inappropriate risk taking by our executive officers and other employees, including using multiple performance metricsand multi-year performance periods and capping our annual incentive awards and performance share awards. |
What WeDont Do
| × | Gross-ups for Excise Taxes: Ourexecutive severance agreements do not contain a gross-up for excise taxes that may be imposed as a result of severance or other payments deemed made in connection with a change in control. |
| × | Reprice Stock Options: Our equity incentive plan prohibits the repricing ofstock options and stock appreciation rights without prior stockholder approval. |
| × | Fixed Term Employment Agreements: Employment of our executive officers(other than our CEO) is at will and may be terminated by either the Company or the employee at any time. |
| × | Hedging and Pledging: Our insider trading policy prohibits all employeesand directors from hedging and pledging their economic interest in the Common Stock they hold. |
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Performance Highlights and Impact on Incentive Compensation
Despite facing challenging market conditions in 2019, the Company continued to perform against its strategic and business plans, with full year organic salesincreasing for the third year in a row and gross margin of 45%, up 10 basis points. The performance highlights and accomplishments indicated in the chart below are closely related to performance metrics under our executive compensation programs.
2019 Performance Highlights* Orders and sales were flat Adjusted EPS up 7% Cash from operations of $528.1 million, up 10%from the prior year, led to free cash flow of $477.2 million, up 13%, 107% of Adjusted Net Income Increased quarterly dividend by 16% Acquired Velcora Holding AB and its operating subsidiaries, Roplan and Steridose Annual TSR of 38% How IncentivesSupport Performance Short-Term Goals Adjusted EPS Adjusted Cash Flow Conversion Organic Sales Growth Long-Term Goals Relative TSR Incentive Plan Results 2019 Bonus Payout of 87% Adjusted EPS of $5.70 Adjusted Cash Flow Conversion of 107% of AdjustedNet Income Organic Sales Growth of 1.1% 2017-2019 PSU Payout of 250% Three-year TSR of 88% (82 nd percentile relative ranking)
| * | A reconciliation from GAAP to non-GAAP financial measures and otherrelated information is included in Item 6 of the Companys Annual Report on Form 10-K for the year ended December31, 2019. In addition to the adjustments noted in the Form 10-K, additional adjustments are used to determine the short-term incentive payouts, including adjustments related to acquisitions and divestitures, actual capital expenditures and actual share count compared to theannual plan. |
Key Takeaways of our 2019 Executive Compensation Program
For 2019, our executive compensation programs were designed to directly link compensation opportunities to the financial performance metrics that we believeare the best measures of success in our business: EPS, cash flow conversion, organic sales growth and relative TSR.
| | The 2019 bonus payouts were 87% of target. |
| | Our TSR for the 2017-2019 period was 88%, which resulted in an82nd percentile performance compared to the companies in the Russell Midcap Index and resulted in a 250% payout of performance stock units (PSUs). |
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NEO Compensation Aligns with Company Performance
The compensation opportunities of our executives are directly tied to the performance of the Company. Our pay-for-performance philosophy is demonstrated by the following elements of our executive compensation program for 2019:
Approximately 83% of our CEOs 2019 total targeted pay was performance-based, and an average of approximately 71% of our other NEOs total targetedpay in 2019 was performance-based. The charts
below show the allocation of 2019 targeted pay across base salary, the annual cash incentive award, and thelong-term incentive award for our CEO and other NEOs.
In 2019, our long-term incentives continued to represent the single largest component of our CEOs and otherNEOs targeted pay, representing approximately 63% and 50% of total targeted pay, respectively.
Maintaining a balanced perspective is a core part ofthe Companys business strategy, which requires employees to take calculated risks to capitalize on anticipated changes in the Companys numerous businesses. The Compensation Committee believes that balancing the proportion of cash and non-cash awards, as well as short-term versus long-term awards, is important to motivate performance while mitigating risk. Cash-based awards are important in motivating executives for the short-term, whilelong-term incentives focus executives who have the greatest ability to impact business results on managing the business for the long-term and reinforce the link between their earnings opportunity and the long-term growth of the Company.
Our 2019 incentive awards are directly tied to performance metrics that balance absolute and relative performance goals: EPS, cash flow conversion, organicsales growth and TSR (measured on a relative basis). We believe these are the best measures of our financial success and support the creation of stockholder value.
Role of Say-on-Pay
The Company held an advisory vote on executive compensation (say-on-pay) atthe Companys 2019 Annual Meeting of Stockholders. The say-on-pay advisory vote received support from over 96% of the shares voted at the 2019 Annual Meeting. TheCompensation Committee believes this affirms stockholders support of the Companys approach to executive compensation. Accordingly, the Compensation Committee did not make any material changes to the underlying structure of our executivecompensation program for fiscal year 2019. The Compensation Committee will continue to
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review and consider the outcome of the Companys say-on-pay votes when making future compensation decisionsfor the NEOs.
2019 Executive Compensation Program
The following discussion describes our 2019 compensation elements and 2019 compensation decisions related to our NEOs.
2019 Key Compensation Elements
The material elements of 2019 compensation for the NEOs are outlined below:
Element | Type ofPay | Purpose | General Characteristics | |||
Base Salary | Fixed | Provides a fixed level ofcurrent cash compensation consonant with the executives primary duties and responsibilities and necessary to attract, retain and reward NEOs. | Reviewed annually and adjusted as necessary to reflect market changes, salary budgets and individual performance. | |||
Short-Term | Performance- | Focuses NEOs on annualperformance by rewarding corporate and individual performance and achievement of pre-determined goals. | Variable cash payments. Annual awards based on performance against pre-determined individual and corporate performancegoals. | |||
Long-Term | Performance- | Provides retention throughvesting schedules and aligns each NEOs interests with long-term stockholder interests by linking a substantial portion of each executives compensation to increases in the price of Common Stock. | Variable compensation based on stock value. Options are granted with exercise prices not less than fair market value at grant date and vest ratably over fouryears. | |||
Long-Term | Performance- | Ties long-term compensation torelative performance, further aligning the interests of NEOs with stockholders. | PSUs vest based on continued service and relative TSR compared to companies in the Russell Midcap Index over a cumulative three-year period. | |||
Retirement/Other | Fixed/ | Provides overall wealthaccumulation and retention. | Various market-based retirement and welfare benefits and perquisites. |
Base Salary
Base salaries are reviewed annually and may be adjusted to reflect market data, as well as individual responsibility, experience and performance. The tablebelow highlights the change in 2019 base salary for each NEO, reflecting one or more of the following: annual merit increase, market and/or performance-related adjustments.
NEO | 2018 | 2019 ($) | Percentage | |||||||||
Andrew K. Silvernail | 1,000,000 | 1,030,000 | 3 | % | ||||||||
William K. Grogan | 470,000 | 515,000 | 10 | % | ||||||||
Eric D. Ashleman | 585,000 | 630,000 | 8 | % | ||||||||
Denise R. Cade | 460,000 | 474,000 | 3 | % | ||||||||
Jeffrey D. Bucklew | 400,000 | 412,000 | 3 | % | ||||||||
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Short-Term Incentives
The Company administers the short-term incentive plan under the Management Incentive Compensation Plan (MICP).The amount of the annual cash bonus paid to each participant is determined under the following formula:
Annual Bonus = Base Salary x Individual TargetBonus Percentage x Business Performance Factor
Individual Target Bonus Percentage for the year is a percentage of the participants base salary andis based on the participants position and market data. The Business Performance Factor (discussed in more detail below) is calculated based on measurable corporate quantitative objectives, which are given a combined 70% weighting, and onestrategic measure with a 30% weighting.
For 2019, the measurable quantitative objectives within the Business Performance Factor were adjusted EPS andadjusted cash flow conversion. Adjusted EPS excludes from reported earnings per share the impact of acquisition and
divestiture-related income and charges, and restructuring charges (EPS Adjustments). Adjusted cash flow conversion is cash flow as a percent of net income excluding the impact of the EPSAdjustments. The payout of each quantitative objective is a function of the amount by which actual performance exceeds or falls short of goal, with a maximum payout of 200% of target for each objective.
For 2019, the 30% strategic measure was organic sales growth. Organic sales growth is a critical business metric and helps identify the underlying health ofthe Companys businesses and managements ability to increase sales through innovation and customer focus. Organic sales is defined as net sales of the Company adjusted to exclude the impact of foreign currency translation and sales fromacquired businesses during the first twelve months of ownership. The goal for organic sales growth is established relative to expected growth in key markets, such as industrial, health and science instrumentation, energy and fire and rescue.
For 2019, the relative weightings and theperformance against the quantitative and strategic measures resulted in a recommended Business Performance Factor of 87%, as shown in the table below.
| MICP Objective | Goal | Actual* | Payout | MICP Weighting | Business Performance Factor | |||||||||||||||
Adjusted EPS | $5.60 | $ | 5.70 | 112.5% | 50% | 56.3% | ||||||||||||||
Adjusted Cash Flow Conversion | 105% | 107% | 110.0% | 20% | 22.0% | |||||||||||||||
Organic Sales Growth | 4.0% | 1.1% | 27.5% | 30% | 8.3% | |||||||||||||||
Total | 100% | 86.6% | ||||||||||||||||||
| * | A reconciliation from GAAP to non-GAAP financial measures and otherrelated information is included in Item 6 of the Companys Annual Report on Form 10-K for the year ended December31, 2019. In addition to the adjustments noted in the Form 10-K, additional adjustments are used to determine the short-term incentive payouts, including adjustments related to acquisitions and divestitures, actual capital expenditures and actual share count compared to theannual plan. |
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The short-term incentive payments are included in the 2019 Summary Compensation Table under the Non-Equity Incentive Plan Compensation column and summarized in the table below.
NEO | BaseSalaryRate | IndividualTarget | Business | Actual 2019Short- | ||||||||||||
Andrew K. Silvernail | 1,030,000 | 120 | % | 87% | 1,075,320 | |||||||||||
William K. Grogan | 515,000 | 75 | % | 87% | 336,038 | |||||||||||
Eric D. Ashleman | 630,000 | 80 | % | 87% | 438,480 | |||||||||||
Denise R. Cade | 474,000 | 70 | % | 87% | 288,666 | |||||||||||
Jeffrey D. Bucklew | 412,000 | 70 | % | 87% | 250,908 | |||||||||||
Prior to 2018, the Company also provided short-term incentive payments under the Incentive Award Plan (IAP) to allowperformance-based bonuses to certain executives to be fully deductible under Internal Revenue Code (IRC) Section162(m). The Tax Cut and Jobs Act eliminated the deductibility of excess qualified performance-based compensation under IRCSection162(m). The MICP, under which the 2019 short-term incentives were administered, is the plan that has historically governed annual incentives for the broader executive population and also the plan under which the CFO received short-termincentive awards prior to 2018. Final awards under the MICP are calculated the same as awards under the IAP had been calculated.
2019 Long-Term Incentive Awards
Long-term incentive awards are generally made on an annual basis, or at the time of a special event (such as upon hiring or promotion). We typically grantawards at the February Board meeting each year, or the date of the annual meeting of stockholders. We attempt to make awards during periods when we do not have non-public information that could impact ourstock price. Working with its independent compensation consultant, the Compensation Committee granted long-term incentive awards to the NEOs in early 2019. Each NEO has a long-term incentive target established on an individual basis taking intoconsideration market practice for each role, and individual impact and performance.
In 2019, the NEOs received annual long-term incentive awardsconsisting of PSUs and stock options, which are intended to emphasize the link between pay and performance. The target
number of PSUs granted was determined by dividing the PSU award value by the closing price of Common Stock on the date of grant. The number of stock options granted was determined by dividing thestock option award value by the grant date fair value, utilizing the Binomial lattice option-pricing model. For additional details of the assumptions made in the valuation of such awards, see note 15 Share-Based Compensation of thefinancial statements in the Companys Annual Report on Form 10-K for the year ended December31, 2019.
The Compensation Committee may grant awards above or below target based on individual and Company performance. In February 2019, the Committee reviewed theCompanys performance compared to one- and three-year TSR, revenue and EPS growth of companies in the executive pay peer group (listed below), as well as performance against strategic goals established atthe beginning of the year. Based on this review, the Compensation Committee determined to grant above-target long-term incentive award values
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to the NEOs for 2019 due to the Companys strong performance in 2018. The Compensation Committee intends to perform a similar review annually and may adjust annual long-term incentives aboveor below target levels as appropriate to support the Companys pay-for-performance philosophy.
2019 CEO Awards. For 2019, the Board granted Mr.Silvernail an award based on the Compensation Committees recommendation, whichconsidered Mr.Silvernails compensation position relative to the market, his outstanding performance in leading the Company, and the Companys strong performance during the prior three-year period. The following chart shows the grantvalue recommended by the Compensation Committee and approved by the Board, and the Summary Compensation Table reported value of Mr.Silvernails long-term incentive awards for 2018 and 2019. The Summary Compensation Table reported valuereflects the grant date fair value determined in accordance with FASB ASC Topic 718. Similar to the other NEOs, the Compensation Committee and the Board will consider similar criteria in assessing future awards for Mr.Silvernail to determinewhether an upward or downward adjustment is warranted.
| 2018 | 2019 | |||||
GrantValue | $ | 5,250,000 | $5,475,000 | |||
Reported Value | $ | 6,742,378 | $6,575,467 | |||
2019 COO Award. The Compensation Committee approved a special grant of PSUs to Mr.Ashleman in recognitionof his outstanding performance, with a grant value of $1,000,000. This award is subject to the same terms as the annual 2019 PSU awards.
Objectives of Long-Term Incentive Vehicles
The Compensation Committee believes that PSUs and stock options both motivate management actions that drive the creation of stockholder value and promoteexecutive stock ownership. However, each long-term incentive
component has different characteristics. The value of the PSUs after the three-year performance period is directly linked to relative TSR, as described above, as well as the stock price movementduring the performance period. Stock options provide value only to the extent that the Companys stock price appreciates above the stock price on the date of grant.
PSU Design Features
The PSUshave a three-year performance period and measure the Companys relative TSR against the TSR of companies in the Russell Midcap Index at the end of such period. If the Company achieves 50th percentile TSR performance as compared to the group ofcompanies, each NEO will receive the target number of performance units, paid out in shares of Common Stock. Threshold performance is at the 33rdpercentile, which will result in a payoutequal to 33% of target; performance below this level will result in zero payout. Maximum payout is 250% of the target number of shares for 80th percentile performance or higher. Payouts areinterpolated between the 33rd percentile and 50thpercentile and between the 50thpercentile and 80th percentile performance. Cumulative dividend equivalent payments will be made at the end of the performance period based on the number of shares of Common Stock received by eachexecutive.
In selecting relative TSR as the measure, the Compensation Committee noted that TSR is highly correlated with a combination of other metricsthat are important to the Company and to investors, notably: return on invested capital, operating profit margin and compound annual sales growth rate (CAGR).
Consistent with 2018, the Compensation Committee selected the Russell Midcap Index companies as the comparator group for relative TSR for the 2019 PSU grant.In selecting the Russell Midcap Index companies, the Compensation Committees objective was to have a sizeable group of companies similar in revenue and market capitalization to the
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Company. In addition, the Compensation Committee seeks to align with the mutual funds within the Companys largest stockholders as they generally hold a broad range of investments coveringmultiple industries.
For the 2020 PSU grant, the Committee selected the S&P 500 index companies as the comparator group for relative TSR, as IDEX wasadded to this index in August 2019. In addition, there will be a one-year post-vest holding requirement beginning with the 2020 PSU grant, which will further align our executives interests with those ofshareholders.
Our PSU grant for the 2017-2019 performance period resulted in a 250% payout based on a 88% TSR, which placed the Company in the 82nd percentile of companies in the Russell Midcap Index.
Role of Compensation Committee
The Compensation Committee establishes the Companys compensation philosophy, structures the Companys compensation programs to be consistent withthat philosophy, and approves each element of NEO compensation. In the case of the CEO, the Board reviews, ratifies and approves compensation recommendations made by the Compensation Committee.
The Compensation Committee performs periodic reviews of executive pay tally sheets. The tally sheets outline each executives recent annual target andactual pay history, unvested equity holdings and termination payments under various scenarios. Data from the tally sheets is considered by the Compensation Committee when setting target total compensation. Generally, the Compensation Committeereviews and adjusts target total compensation levels annually. Actual total compensation may vary from target based on performance and changes in stock price over time.
Generally, the amount of compensation realized historically, or potentially realizable in the future, from pastequity awards does not directly impact the level at which future pay opportunities are set. When granting equity awards, the Compensation Committee considers market data and Company and individual performance.
Role of Compensation Consultant
The Compensation Committee has the sole authority to retain and replace, as necessary, compensation consultants to provide it with independent advice. TheCompensation Committee has engaged F.W. Cook as its independent consultant to advise it on executive and non-employee director compensation matters. This selection was made without the input or influence ofmanagement.
Under the terms of its agreement with the Compensation Committee, F.W. Cook will not provide any other services to the Company, unlessdirected to do so by the Compensation Committee. During fiscal year 2019, F.W. Cook provided no services to the Company other than to advise the Compensation Committee on executive and non-employee directorcompensation issues. In its review, the Compensation Committee did not identify any conflicts of interest raised by the work F.W. Cook performed in fiscal year 2019, nor any business or personal relationships that would impair F.W. Cooksindependence.
Setting Individual Executive Pay
The Compensation Committee formulates a recommendation of CEO pay based on the financial and operating performance of the Company, the CompensationCommittees assessment of the CEO and a thorough review of the market benchmarking data discussed below. The CEO pay recommendations put forth by the Compensation Committee are then reviewed and subject to approval by the Board.
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The pay packages for the other NEOs are set by the Compensation Committee after taking into consideration therecommendations of the CEO. Individual pay decisions are based on an assessment of the individual executive, utilizing the following criteria:
| 1. | Contribution |
| | Value to IDEX; short- and long-term |
| | Individual contribution and impact to team performance |
| 2. | Market attractiveness |
| | Supply-demand of role |
| | Experience, background, track record |
| 3. | Replacement difficulty |
| | Challenge of replacing the role with equivalent capability |
| 4. | Experience in role |
| | Overall experience in current or similar role |
| 5. | Company Performance |
| | In determining the long-term incentive award value, the Compensation Committee reviews the Companys performance relative to our peers against key performance indicators, including growth and returns and stockprice performance |
| | The Compensation Committee has the latitude to adjust awards up and down relative to the executives target |
The Compensation Committee reviews pay data from two primary sources (third party surveys and peer company data) as one input in
determining appropriate target compensation levels. The Compensation Committee utilizes the expertise of its independent compensation consultant, F.W. Cook, in developing compensationrecommendations for the NEOs, including the CEO. The Compensation Committee believes that to attract and retain qualified management, total direct compensation should be competitively targeted within a range that includes the market median forcomparable positions at comparable companies, with market compensation data being only one of many factors considered by the Compensation Committee when setting the compensation levels for any particular executive. While an individualexecutives target compensation is positioned within the competitive range based on the individual factors listed above, actual compensation in any given year should and does vary from target based on Company and individual performance.
The Compensation Committee undertook a review and analysis to ensure that the 2019 executive compensation programs appropriately reflected the market fortalent. The Compensation Committee considered relevant market pay practices to ensure the Companys ability to recruit and retain high performing talent across its diversified markets and global footprint. Two surveys and a peer group analysiswere utilized for the 2019 executive compensation market analysis for the NEOs.
Survey Data
The Willis Towers Watson Executive Compensation Database Survey and the Equilar Top 25 Survey were used because they include a broad range of manufacturingcompanies that are comparable to the Company in size, geography and industry.
Peer Companies
The peer group of companies identified below consists of companies that are similar to the Company in terms of their size (i.e., revenue, and marketcapitalization), diversified industry
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profile (ranging from customized manufacturing solutions to emerging markets in highly specialized health science technology), investment in research and development and global presence. Inaddition, the peer companies have executive officer positions that are comparable to the Companys in terms of breadth, complexity and scope of responsibilities. F.W. Cook reviewed the composition of the peer group used to benchmark pay in 2018with the Compensation Committee. Based on that review, the companies listed below for the 2019 review are the same group of companies used to benchmark pay in 2018.
AMETEK,Inc. |
Bruker Corporation |
Colfax Corporation |
Crane Co. |
Donaldson Company, Inc. |
Dover Corporation |
Enerpac Tool Group(1) |
Flowserve Corporation |
Graco Inc. |
ITT Corporation |
KLA-Tencor Corporation |
Lincoln Electric Holdings, Inc. |
Nordson Corporation |
Pentair Ltd. |
PerkinElmer, Inc. |
Roper Technologies, Inc. |
SPX Flow, Inc. |
Watts Water Technologies, Inc. |
Woodward, Inc. |
Xylem Inc. |
| (1) | Formerly known as Actuant Corporation |
The Compensation Committee believes that multiple data sources provide for a clearer perspective of the market.As such, with the assistance of management and F.W. Cook, the Compensation Committee developed an aggregate composite of the market data to establish target compensation levels for the executives weighted as follows:
| Position(s) | Survey Weighting | Peer Group Weighting | Rationale | |||
| President and Chief Executive Officer; and Senior Vice President and Chief Financial Officer | 20% | 80% | Positions are required to be represented in all of the proxy peer group companies; closest representation of the corporate profile;balance of peer and survey data. | |||
| Senior Vice President, General Counsel and Corporate Secretary | 70% | 30% | Limited number of position matches in the proxy group; pool for talent would include the broader industry representation in the surveydata. | |||
Senior Vice President and Chief OperatingOfficer; and Senior Vice President and Chief Human Resources Officer | 100% | 0% | Very limited number of position matches in the proxy group; pool for talent would include the broader industry representation in thesurvey data. |
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Employee Benefits
The NEOsparticipate in group health, welfare and qualified retirement programs available to all of the Companys employees. The NEOs also participate in nonqualified supplemental retirement plans, deferred compensation arrangements and supplementaldisability benefits. Participation in these nonqualified plans is intended to provide the NEOs with the opportunity to accumulate retirement benefits at levels above the limitations imposed by tax qualified plans. For a more complete explanation ofthese plans, see the Narrative to 2019 Summary Compensation Table, the Narrative to Nonqualified Deferred Compensation at 2019 Fiscal Year End Table, and the discussion under Potential Payments upon Termination orChange in Control.
Severance and Change in Control Benefits
Each of the NEOs is entitled to severance benefits under the terms of written agreements in the event that their employment is actually or constructivelyterminated without cause. The amount of the benefit, which varies with the individual, depends on whether or not the termination is in connection with a change in control. The level of each NEOs severance benefits reflects the Companysperception of the market for their positions at the time the agreements were put in place. For additional information, see the section below entitled Potential Payments upon Termination or Change in Control.
Perquisites
The CompensationCommittee believes in providing limited perquisites in line with market practice. The NEOs are provided a car allowance. The CEO is entitled to limited use of the Companys leased aircraft fornon-business purposes. For further details on these perquisites, see the Narrative to 2019 Summary Compensation Table below.
Other Executive Compensation Matters
Stock Grant Practices
For allnewly issued stock option awards, the exercise price of the stock option award will be the closing price of Common Stock on the NYSE on the date of the grant. If the grant date for the annual awards falls on a weekend, the exercise price of stockoption awards will be the closing price of Common Stock on the NYSE on the last trading day preceding the date of grant.
StockOwnership
Consistent with its executive pay philosophy, the Company requires that executive officers maintain minimum ownership levels ofCommon Stock as follows:
| Executive | OwnershipasaMultiple ofBaseSalary | |||
CEO | 5x | |||
CFO,COO | 3x | |||
OtherNEOs | 2x | |||
NEOs must comply with these ownership requirements within five years of their date of hire or promotion. Counted for purposesof satisfying ownership requirements are shares directly owned, unvested restricted shares and PSUs at target. As of December31, 2019, all NEOs met or exceeded the ownership guidelines.
Hedging and Pledging
Alldirectors and employees (including officers) of the Company are prohibited from (i)pledging Company securities (including through holding Company securities in margin accounts), and (ii)engaging in any transaction in which they mayprofit from short-term speculative swings in the value of the Companys securities (hedging). For this purpose, hedging includes short-sales (selling borrowed securities that the seller hopes can be purchasedat a lower price in the future) or short sales against the box (selling, but not delivering,
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owned securities), put and call options (publicly available rights to sell or buy securities within a certain period of time at a specified price or the like), and otherhedging transactions designed to minimize the risk inherent in owning Common Stock, such as zero-cost collars and forward sales contracts.
Clawbacks
To the extent notin violation of applicable law, the Company reserves the right to recover, or clawback, from current or former directors and officers any wrongfully earned performance-based compensation, including stock-based awards, upon the determination by theCompensation Committee that:
| | the Companys financial statements have been restated due to material noncompliance with any financial reporting requirement; |
| | the cash incentive or equity compensation to be recouped was calculated on, or its realized value was affected by, the financial results that were subsequently restated; |
| | the cash incentive or equity compensation would have been less valuable than that actually awarded or paid based upon the application of the correct financial results; and |
| | the pay affected by the calculation was earned or awarded within three years of the restatement. |
Tax Gross-Up Provisions
The Company has not entered into any new agreementsthat include excise tax gross-up provisions with respect to payments contingent upon a change in control since the adoption of such a policy by the Compensation Committee in February 2011. No executives areeligible for an excise tax gross-up.
The Compensation Committee has exclusive authority to modify, interpret and enforce this policy in compliancewith applicable law.
Accounting and Tax Implications Deductibility of Executive Compensation
In developing compensation programs, the Compensation Committee reviews the estimated accounting and tax impact of all elements of the executive compensationprogram. Generally, an accounting expense is accrued over the requisite service period of the particular pay element (generally equal to the performance period) and the Company realizes a tax deduction upon payment to, or realization by, theexecutive. Previously, many of the awards granted were generally intended to satisfy the requirements for performance-based compensation under IRC Section162(m). However, the Tax Cuts and Jobs Act (the Act), which became law onDecember22, 2017, significantly amended IRC Section162(m). Pursuant to the Act, the definition of covered employees under IRC Section162(m) was amended to expand the scope of executive officers subject to the deductionlimitation, including coverage of a companys chief financial officer. The Act also eliminated the performance-based compensation exception with respect to tax years beginning January1, 2018, but included a transition rule with respect tocompensation that is provided pursuant to a written binding contract that was in effect on November2, 2017 and not materially modified after that date. Accordingly, commencing in 2018, the Companys tax deduction with regard tocompensation of covered employees is limited to $1million per taxable year for each officer.
While it is a goal of the CompensationCommittee to maximize the deductibility of executive compensation, the Compensation Committee retains the discretion to compensate officers in a manner commensurate with performance and the competitive environment for executive talent, while alsoconsistent with
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its compensation philosophy and in the Companys and its stockholders best interests. Accordingly, achieving these goals may have resulted (and may continue to result, in light of therecent changes in law) in compensation that, in certain cases, is not deductible for federal income tax purposes. The Compensation Committee did not make any significant changes to the Companys executive compensation program for 2019 inresponse to the changes to IRC Section162(m).
The Compensation Committee periodically reviews the potential risks arising from our compensation policies, practices and programs to determine whether anypotential risks are material to the Company. In approving the 2019 compensation program design, the Compensation Committee engaged in discussions with its independent compensation consultant and management regarding any potential risks and concludedthat the Companys compensation policies and practices are designed with the appropriate balance of risk and reward in relation to the Companys overall business strategy, do not incentivize employees, including executive officers, to takeunnecessary or excessive risks, and that any risks arising from the Companys policies and practices are not reasonably likely to have a material adverse effect on the Company.
In this review, the Compensation Committee considered the attributes of the Companys policies and practices, including:
| | the mix of fixed and variable compensation opportunities; |
| | the balance between annual cash and long-term, stock-based performance opportunities; |
| | multiple performance factors tied to key measures of short-term and long-term performance that motivate sustained performance and are based on quantitative measures; |
| | caps on the maximum payout for cash incentives; |
| | stock ownership requirements for executives that encourage a long-term focus on performance; |
| | an insider trading policy that prohibits hedging and pledging; |
| | a clawback policy that applies to performance-based compensation, including stock-based awards, for directors and officers; and |
| | oversight by an independent compensation committee. |
The Compensation Committee has reviewed the Compensation Discussion and Analysis and discussed its contents with management. Based on thisreview and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Livingston L. Satterthwaite, Chair
Carl R. Christenson
Katrina L. Helmkamp
David C. Parry
Cynthia J. Warner
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2019 Summary Compensation Table
The table below and related footnotes summarize the total compensation earned or paid in 2019, 2018 and 2017 for the Companys CEO, CFO, and each of thethree most highly compensated executive officers other than the CEO and CFO.
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Compensation Plan ($) (3) | All Other ($) (4) | Total ($) | ||||||||||||||||||||||||||||||||
Andrew K. Silvernail, Chairman, President and Chief Executive Officer | 2019 | 1,023,654 | 3,837,834 | 2,737,633 | 1,075,320 | 445,155 | 9,119,596 | |||||||||||||||||||||||||||||||||
2018 | 996,808 | 4,117,376 | 2,625,002 | 1,968,000 | 418,464 | 10,125,650 | ||||||||||||||||||||||||||||||||||
2017 | 977,900 | 2,730,307 | 2,200,053 | 1,779,954 | 343,028 | 8,031,242 | ||||||||||||||||||||||||||||||||||
William K. Grogan, Senior Vice President and Chief Financial Officer | 2019 | 505,481 | 792,949 | 565,006 | 336,038 | 130,315 | 2,329,789 | |||||||||||||||||||||||||||||||||
2018 | 463,808 | 785,139 | 500,181 | 578,100 | 123,367 | 2,450,595 | ||||||||||||||||||||||||||||||||||
2017 | 429,688 | 921,635 | 839,392 | 554,693 | 79,829 | 2,825,237 | ||||||||||||||||||||||||||||||||||
Eric D. Ashleman, Operating Officer | 2019 | 620,481 | 2,597,181 | 725,030 | 438,480 | 165,614 | 4,546,786 | |||||||||||||||||||||||||||||||||
2018 | 574,519 | 1,114,356 | 710,045 | 767,520 | 156,558 | 3,322,998 | ||||||||||||||||||||||||||||||||||
2017 | 527,519 | 760,412 | 612,540 | 720,154 | 129,352 | 2,749,977 | ||||||||||||||||||||||||||||||||||
Denise R. Cade, andCorporate Secretary | 2019 | 471,038 | 634,563 | 452,638 | 288,666 | 128,824 | 1,975,729 | |||||||||||||||||||||||||||||||||
2018 | 457,231 | 701,752 | 447,620 | 528,080 | 127,374 | 2,262,057 | ||||||||||||||||||||||||||||||||||
2017 | 443,100 | 431,710 | 347,593 | 524,248 | 104,609 | 1,851,260 | ||||||||||||||||||||||||||||||||||
Jeffrey D. Bucklew, Senior Vice President and Chief Human Resources Officer | 2019 | 409,461 | 484,298 | 345,018 | 250,908 | 111,339 | 1,601,024 | |||||||||||||||||||||||||||||||||
2018 | 395,635 | 533,894 | 340,032 | 459,200 | 109,081 | 1,837,842 | ||||||||||||||||||||||||||||||||||
2017 | 375,185 | 359,951 | 290,043 | 478,039 | 91,305 | 1,594,523 | ||||||||||||||||||||||||||||||||||
| (1) | Reflects the aggregate grant date fair value of restricted stock awards and PSUs for the year indicated inaccordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation of those awards granted in 2019, see note 15 Share-Based Compensation of the financial statements in the Companys Annual Report on Form 10-K for the year ended December31, 2019. For PSUs granted in 2019, the grant date fair value is based on the probable outcome of the related performance conditions which reflects the target level ofperformance. The grant date fair value of the PSUs granted in 2019 based on the maximum level of performance is as follows: Mr.Silvernail, $9,594,585; Mr.Grogan, $1,982,373; Mr.Ashleman, $6,492,952; Ms.Cade, $1,586,406; andMr.Bucklew, $1,210,745. All shares of restricted stock are eligible for dividend equivalent payments when paid on Common Stock and, with respect to PSUs, cumulative dividend equivalents are paid based on actual number of shares delivered atthe end of the performance period. |
| (2) | Reflects the aggregate grant date fair value for the year indicated in accordance with FASB ASC Topic 718. Fora discussion of assumptions made in the valuation of stock options granted in 2019, see note 15 Share-Based Compensation of the financial statements in the Companys Annual Report on Form 10-Kfor the year ended December31, 2019. |
| (3) | For 2019 and 2018, reflects the annual cash bonus under the MICP; for 2017, reflects Messrs. Silvernails,Ashlemans and Bucklews, and Ms. Cades annual cash performance award under the IAP and the annual cash bonus under the MICP for Mr. Grogan. |
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| (4) | Consists of the following for 2019: |
| (a) | Consists of auto and gas allowance and supplemental disability premiums. |
| (b) | Represents Mr.Silvernails personal use of the Companys leased aircraft. The Companysmethodology for calculating the value of the personal use of the Company leased aircraft is to calculate the incremental costs of such usage to the Company, which includes fuel, landing fees, hangar fees, catering, additional expenses related to thecrew and other expenses which would not have otherwise been incurred by the Company if the aircraft had not been used for personal travel. |
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Narrative to 2019 Summary Compensation Table
Perquisites and Supplemental Disability
In addition to benefits generally available to all other U.S.-based non-union employees, the CEO andother NEOs receive an auto allowance and participate in a supplemental long-term disability program. The supplemental disability benefit is in addition to the group long-term disability benefit generally available to all U.S.-based non-union employees. The group long-term disability plan provides an annual benefit of 60% of the first $300,000 of base salary, or an annual maximum benefit of $180,000 per year. For the NEOs, the supplementalprogram provides an annual benefit of 60% of their base salary above $300,000, with a maximum supplemental benefit of $60,000 per year. The CEO is also offered the personal use of the Company leased aircraft (limited to 25 hours per year covered bythe Company and up to an additional 25 hours per year for which the CEO is required to reimburse the Company for all incremental costs related to such additional use).
Retirement Benefits
The Company maintains a tax-qualified retirement plan for employees, the IDEX Corporation SavingsPlan, in which the CEO and other NEOs participate, which consists of a 401(k) with a prescribed matching contribution (401(k)) and a defined contribution portion (Defined Contribution).
Defined Contribution
The Defined Contribution portion of the IDEX Corporation Savings Plan is an ongoing tax-qualifieddefined contribution plan that provides contributions based on a participants compensation and a combination of the participants age and years of service as shown below:
Age+Yearsof Service | Company Contribution | |
| Less than 40 | 3.5% of Eligible Compensation | |
| 40 but less than 55 | 4.0% of Eligible Compensation | |
| 55 but less than 70 | 4.5% of Eligible Compensation | |
| 70 or more | 5.0% of Eligible Compensation |
Under the plan, participants are entitled to receive the lump-sum value of theirvested account at termination of employment subject to distribution rules under the law. Account balances are 100% vested after three years of service.
401(k)
The 401(k) is an ongoing tax-qualified 401(k) plan thatprovides a matching contribution based on the employees contribution up to 8% of eligible compensation. The maximum matching contribution by the Company is 4% of eligible compensation. The matching contribution vests 20% for each year ofservice and is 100% vested after 5 years of service.
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2019 Grants of Plan-Based Awards
The following table provides information on plan-based awards for all NEOs for 2019.
EstimatedFuturePayouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Numberof Shares of Stock(#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exerciseor BasePriceof Option Awards ($/Sh) (3) | Grant Date FairValueof Stock and Option Awards ($) (4) | |||||||||||||||||||||||||||||||||||
| Name | GrantDate | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||
AndrewK.Silvernail | 03/01/2019 | 1,236,000 | 2,472,000 | 6,300 | 18,900 | 47,250 | - | 77,840 | 144.85 | 6,575,467 | ||||||||||||||||||||||||||||||
William K. Grogan | 03/01/2019 | 386,250 | 772,500 | 1,302 | 3,905 | 9,763 | - | 16,065 | 144.85 | 1,357,955 | ||||||||||||||||||||||||||||||
Eric D. Ashleman | 03/01/2019 | 504,000 | 1,008,000 | 1,670 | 5,010 | 12,525 | - | 20,615 | 144.85 | 1,742,361 | ||||||||||||||||||||||||||||||
03/28/2019 | (5) | - | - | - | 2,202 | 6,605 | 16,513 | - | - | - | 1,579,850 | |||||||||||||||||||||||||||||
Denise R. Cade | 03/01/2019 | 331,800 | 663,600 | 1,042 | 3,125 | 7,813 | - | 12,870 | 144.85 | 1,087,201 | ||||||||||||||||||||||||||||||
Jeffrey D. Bucklew | 03/01/2019 | 288,400 | 576,800 | 795 | 2,385 | 5,963 | - | 9,810 | 144.85 | 829,316 | ||||||||||||||||||||||||||||||
| (1) | Amounts reflect payment levels under the MICP at a percentage of base salary for each executive and a BusinessPerformance Factor of 0% for threshold, 100% for target and 200% for maximum. See Short-Term Incentives under Compensation Discussion and Analysis 2019 Executive Compensation Program. The amounts actually earned by theNEOs are reflected in the Non-Equity Incentive Plan Compensation column in the 2019 Summary Compensation Table. |
| (2) | Reflects the range of the number of shares of Common Stock that could be issued pertaining to the PSUs awardedin 2019 under the IAP. The target number of PSUs is used to determine the grant date fair value for this award. |
| (3) | Reflects closing price of Common Stock on the grant date, which is the fair market value of the stock under theterms of the IAP. |
| (4) | Represents the grant date fair value of PSUs and stock options granted under the IAP to each NEO in accordancewith FASB ASC Topic 718. For a discussion of the assumptions made in the valuation of those awards, see note 15 Share-Based Compensation of the financial statements in the Companys Annual Report on Form 10-K for the year ended December31, 2019. For PSUs, the grant date fair value is based on the probable outcome of the related performance conditions which reflects the target level of performance. The grantdate fair value of the PSUs granted in 2019 based on the maximum level of performance is as follows: Mr.Silvernail, $9,594,585; Mr.Grogan, $1,982,373; Mr.Ashleman, $6,492,952; Ms.Cade, $1,586,406; and Mr.Bucklew,$1,210,745. With respect to PSUs, cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the performance period. For options, the actual value a NEO realizes from the stock option will depend on thedifference between the market price of the underlying share at exercise and the exercise price of the stock option established at the time of the grant. |
| (5) | Reflects the special performance grant awarded to Mr.Ashleman. See 2019 COO Award under2019 Long-Term Incentive Awards. |
Narrative to 2019 Grants of Plan-Based Awards Table
Stock options awarded to the NEOs in 2019 had the following characteristics:
| | all are nonqualified stock options; |
| | all have an exercise price equal to the closing price of Common Stock on the grant date; |
| | all vest annually in equal amounts over a four-year period based on the NEOs continued service; |
| | all vest upon retirement if retirement eligible (for the CEO as defined in his employment agreement and for NEOsother than the CEO, NEO is at least age 50, with a minimum of five years of service, and the NEOs age plus years of service equals 70); and |
| | all expire 10 years after the date of grant. |
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PSUs awarded to the NEOs in 2019 had the following characteristics:
| | all have a three-year performance period with vesting based on relative TSR and the NEOs continued service; |
| | all shares vest upon retirement if the NEO is retirement eligible (for the CEO as defined in his employmentagreement and for NEOs other than the CEO, the NEO is retirement eligible when he or she is at least age 50, with a minimum of five years of service, and the NEOs age plus years of service equals 70); but are paid out only based on theCompanys actual TSR as compared to the companies in the Russell Midcap Index determined as of the last day of the performance period; and |
| | cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the performanceperiod. |
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Outstanding Equity Awards at 2019 Fiscal YearEnd
The following table provides information on all PSU, restricted stock and stock option awards held by the NEOs as of December31, 2019.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
| NumberofSecuritiesUnderlying Unexercised Options | Option ($) | Option Expiration Date | Number of SharesofStock that Have Not Vested (#) (2) | MarketValueof Shares of Stock that Have Not Vested ($) (3) | EquityIncentive | EquityIncentive | ||||||||||||||||||||||||||
Name | Exercisable (#) (1) | Unexercisable (#)(1) | ||||||||||||||||||||||||||||||
AndrewK.Silvernail | 101,902 | 33,968 | 74.74 | 02/19/2026 | - | - | 64,846 | 11,153,512 | ||||||||||||||||||||||||
45,587 | 45,588 | 93.27 | 02/22/2027 | |||||||||||||||||||||||||||||
17,292 | 51,878 | 138.12 | 02/22/2028 | |||||||||||||||||||||||||||||
- | 77,840 | 144.85 | 03/01/2029 | |||||||||||||||||||||||||||||
William K. Grogan | 843 | - | 50.45 | 02/15/2023 | 5,485 | 943,420 | 12,827 | 2,206,244 | ||||||||||||||||||||||||
1,798 | - | 72.73 | 02/13/2024 | |||||||||||||||||||||||||||||
1,383 | - | 67.49 | 10/15/2024 | |||||||||||||||||||||||||||||
2,575 | - | 78.43 | 02/20/2025 | |||||||||||||||||||||||||||||
4,076 | 1,359 | 74.74 | 02/19/2026 | |||||||||||||||||||||||||||||
10,557 | 10,558 | 91.22 | 01/03/2027 | |||||||||||||||||||||||||||||
7,032 | 7,033 | 93.27 | 02/22/2027 | |||||||||||||||||||||||||||||
3,295 | 9,885 | 138.12 | 02/22/2028 | |||||||||||||||||||||||||||||
- | 16,065 | 144.85 | 03/01/2029 | |||||||||||||||||||||||||||||
Eric D. Ashleman | 8,850 | - | 77.61 | 07/15/2025 | - | - | 27,497 | 4,729,484 | ||||||||||||||||||||||||
- | 6,998 | 74.74 | 02/19/2026 | |||||||||||||||||||||||||||||
12,692 | 12,693 | 93.27 | 02/22/2027 | |||||||||||||||||||||||||||||
4,677 | 14,033 | 138.12 | 02/22/2028 | |||||||||||||||||||||||||||||
- | 20,615 | 144.85 | 03/01/2029 | |||||||||||||||||||||||||||||
Denise R. Cade | 2,092 | - | 76.79 | 10/26/2025 | - | - | 10,906 | 1,875,832 | ||||||||||||||||||||||||
- | 3,234 | 74.74 | 02/19/2026 | |||||||||||||||||||||||||||||
- | 7,203 | 93.27 | 02/22/2027 | |||||||||||||||||||||||||||||
2,948 | 8,847 | 138.12 | 02/22/2028 | |||||||||||||||||||||||||||||
- | 12,870 | 144.85 | 03/01/2029 | |||||||||||||||||||||||||||||
Jeffrey D. Bucklew | 9,930 | 3,310 | 74.74 | 02/19/2026 | - | - | 8,309 | 1,429,148 | ||||||||||||||||||||||||
6,010 | 6,010 | 93.27 | 02/22/2027 | |||||||||||||||||||||||||||||
2,240 | 6,720 | 138.12 | 02/22/2028 | |||||||||||||||||||||||||||||
- | 9,810 | 144.85 | 03/01/2029 | |||||||||||||||||||||||||||||
| (1) | All options expire on the 10th anniversary of the grant date and vest 25% per year on the anniversary of thegrant date. As discussed in Potential Payments upon Termination or Change in Control, all stock options vest 100% upon a qualifying termination of employment following a change in control. |
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| (2) | The following table sets forth grant and vesting information for the outstanding restricted stock awards forMr.Grogan, the only NEO who held an outstanding restricted stock award as of December31, 2019. The award will vest 100% upon a qualifying termination of employment following a change in control. |
| GrantDate | Shares (#) | Market ValuePer Share at Grant ($) | Numberof | MarketValue | Vesting | |||||||||||||||||||
William K. Grogan | 01/03/2017 | 5,485 | 91.22 | 5,485 | 943,420 | 100%veston01/03/2020 | ||||||||||||||||||
| (3) | Determined based upon the closing price of the Companys Common Stock on December31, 2019 of$172.00. |
| (4) | Represents the number and value of outstanding PSU awards based on performance as of December31, 2019 asset forth in the following table. Actual number of shares delivered upon vesting will be based on performance through December31, 2020 for the 2018 PSU award and performance through December31, 2021 for the 2019 PSU award. The 2018 PSUawards are disclosed at 189% of the target and the 2019 PSU awards are disclosed at 153% of the target based on performance through December31, 2019. |
| GrantDate | Numberof (#) | Marketor | Vesting | |||||||||||||
Andrew K. Silvernail | 02/22/2018 | 19,010 | 6,179,788 | Awardvestson12/31/2020 | ||||||||||||
03/01/2019 | 18,900 | 4,973,724 | Award vests on 12/31/2021 | |||||||||||||
William K. Grogan | 02/22/2018 | 3,625 | 1,178,544 | Awardvestson12/31/2020 | ||||||||||||
03/01/2019 | 3,905 | 1,027,700 | Award vests on 12/31/2021 | |||||||||||||
Eric D. Ashleman | 02/22/2018 | 5,145 | 1,672,700 | Awardvestson12/31/2020 | ||||||||||||
03/01/2019 | 5,010 | 1,318,552 | Awardvestson12/31/2021 | |||||||||||||
03/28/2019 | 6,605 | 1,738,232 | Award vests on 12/31/2021 | |||||||||||||
Denise R. Cade | 02/22/2018 | 3,240 | 1,053,328 | Awardvestson12/31/2020 | ||||||||||||
03/01/2019 | 3,125 | 822,504 | Award vests on 12/31/2021 | |||||||||||||
Jeffrey D. Bucklew | 02/22/2018 | 2,465 | 801,348 | Awardvestson12/31/2020 | ||||||||||||
03/01/2019 | 2,385 | 627,800 | Award vests on 12/31/2021 | |||||||||||||
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2019 Option Exercises and Stock Vested
The following table provides information on stock option exercises and stock vesting for all NEOs in 2019.
Option Awards | Stock Awards | |||||||||||||||
Name | NumberofShares | ValueRealized | NumberofShares | ValueRealized | ||||||||||||
Andrew K. Silvernail | 166,905 | 14,344,221 | 58,975 | 10,143,700 | ||||||||||||
William K. Grogan | - | - | 9,100 | 1,565,200 | ||||||||||||
Eric D. Ashleman | 10,644 | 722,298 | 16,425 | 2,825,100 | ||||||||||||
Denise R. Cade | 12,527 | 922,597 | 9,325 | 1,603,900 | ||||||||||||
Jeffrey D. Bucklew | 17,935 | 1,613,871 | 7,775 | 1,337,300 | ||||||||||||
| (1) | Calculated based on the difference between the closing price of Common Stock on the date of exercise and theexercise price. |
| (2) | Calculated based on the closing price of Common Stock on the vesting date or the previous trading day. For 2017PSUs vesting on December31, 2019 after the end of the three-year performance period with a vesting price of $172.00 and a multiplier of 250% due to IDEXs 3-year relative TSR performance at the 82nd percentile as compared to companies in the Russell Midcap Index, Mr.Silvernail had 58,975 shares vest, Mr.Grogan had 9,100 shares vest, Mr.Ashleman had 16,425 shares vest,Ms.Cade had 9,325 shares vest and Mr.Bucklew had 7,775 shares vest. |
NonqualifiedDeferred Compensation at 2019 Fiscal Year End
The Supplemental Executive Retirement and Deferred Compensation Plan (SERP) is an unfunded,nonqualified plan designed to provide supplemental executive retirement benefits. The following table provides information related to the benefits payable to each NEO under the defined contribution portion of the SERP, which is the Companysonly defined contribution nonqualified deferred compensation plan:
| Name | Executive | Registrant | Aggregate | Aggregate | Aggregate | |||||||||||||||
Andrew K. Silvernail | - | 292,024 | 569,999 | 10,959 | 2,642,638 | |||||||||||||||
William K. Grogan | - | 87,658 | 50,564 | 3,162 | 282,241 | |||||||||||||||
Eric D. Ashleman | - | 123,640 | 148,008 | 4,505 | 859,237 | |||||||||||||||
Denise R. Cade | - | 82,808 | 60,536 | 2,989 | 314,398 | |||||||||||||||
Jeffrey D. Bucklew | - | 69,110 | 13,351 | 2,478 | 385,138 | |||||||||||||||
| (1) | None of the NEOs contributed to the SERP in 2019. |
| (2) | Amounts are reflected in All Other Compensation column of the Summary Compensation Table. |
| (3) | The following amounts have been previously reported as All Other Compensation in the SummaryCompensation Table for prior years: Mr.Silvernail $1,408,397; Mr.Grogan $122,075; Mr.Ashleman $374,500; Ms.Cade $178,232; and Mr.Bucklew $117,145. |
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Supplemental Executive Retirement and Deferred Compensation Plan
Eligible employees may defer until a future date payment of all or any portion of their annual salary or bonus under the defined contribution portion of theSERP. Deferral elections may be made annually. These amounts are fully vested. The Company also contributes to an eligible employees account additional amounts, as described below, that are fully vested after the employee has completed threeyears of service.
The Company contributes an amount equal to 4% of the eligible employees compensation up to the IRS limit on compensation reducedby the amount of any Company matching contribution that is made to the 401(k) Plan. Additionally, the Company makes annual contributions to the accounts of eligible employees based on the employees compensation above the IRS limit oncompensation in the Defined Contribution Plan, determined based on the following table:
Sum of Participants Age Plus Years of Service | Contribution Percentage | |||
Less than 40 | 7.5 | |||
40 but less than 55 | 8.0 | |||
55 but less than 70 | 8.5 | |||
70 or more | 9.0 | |||
Certain eligible employees designated by the Compensation Committee, including the NEOs, also receive an additionalcontribution equal to 2% of the employees compensation.
Deferred Compensation Account
All amounts deferred are recorded in a memorandum account for each employee and are credited or debited with earnings or losses as if such amounts had beeninvested in either an interest-bearing account or receive an investment return as if the funds were invested in certain mutual funds, as selected by the employee. The deferred compensation credited
to the interest-bearing account is adjusted on at least a quarterly basis with hypothetical earnings equal to the lesser of the Barclays Capital Long Term Bond AAA Corporate Bond Index asof the first business day in November of the calendar year preceding the year for which the earnings are to be credited or 120% of the long-term applicable Federal rate as of the first business day in November. The memorandum accounts are notfunded, and the right to receive future payments of amounts recorded in these accounts is an unsecured claim against the Companys general assets.
The deferred compensation account amounts are payable upon separation of service within the meaning of IRC Section409A; however, no benefits are payableprior to the date that is six months after the date of separation of service, or the date of death of the employee, if earlier. Account balances will be paid either in a single lump sum or in up to ten substantially equal annual installments, aselected by the employee at the time he or she first becomes eligible for the Deferred Compensation Plan.
Prior to separation from service, amounts may bepaid only on the occurrence of an unforeseeable emergency, within the meaning of IRC Section409A. On the occurrence of a change in control event within the meaning of IRC Section409A, all amounts become vested and are distributed at thattime in a single lump-sum payment.
Potential Payments upon Termination or
Change in Control
Mr.Silvernail
TheCompany entered into an employment agreement with Mr.Silvernail effective as of February22, 2018. The employment agreement provides for a term of approximately four years (expiring December31, 2021) and is substantially similar toMr.Silvernails prior
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employment agreement. If Mr.Silvernails employment is terminated by the Company other than forcause and not in connection with a change in control (each as defined in the employment agreement), then, subject to his execution and non-revocation of a general release of claims andhis continued compliance with applicable restrictive covenants, he will receive (i)continuing salary payments and health benefits for 24 months following termination, (ii)a pro rata portion of his annual bonus for the year in which histermination occurs (based on the portion of the year he was employed), (iii) a payment equal to 200% of his base salary payable over 24 months commencing approximately 60 days after his termination, (iv)fully accelerated vesting and immediateexercisability of all unvested time-based equity awards (the time-based acceleration), and such awards will remain exercisable for one year following the date of termination of Mr.Silvernails employment or until expiration ofthe option term, if earlier, and (v)vesting of all unvested performance-based equity awards granted prior to February22, 2018 on the December31 next following his termination of employment with respect to that number of shares ofCommon Stock (or performance units or dividend equivalents, as applicable) based on the performance level achieved with respect to the performance goal(s) under each such award from the beginning date of the performance period applicable theretothrough such December31 (the performance-based acceleration). Vesting of all unvested performance-based equity awards granted on or following February22, 2018 will occur at the end of the applicable performance period withrespect to that number of shares of Common Stock (or performance units or dividend equivalents, as applicable) based on the performance level achieved through the end of such performance period.
If Mr.Silvernails employment is terminated due to his disability or death, he or his estate, as applicable, will receive a pro rata portion of hisannual bonus for the year in which his
termination occurs (based on the portion of the year he was employed) as well as the time-based acceleration and the performance-based acceleration with respect to performance-based equity awardsgranted prior to February22, 2018, as described above. With respect to the time-based acceleration, (i)for time-based awards granted before February22, 2018, such awards will remain exercisable for one year following the date ofsuch termination of employment or until expiration of the option term, if earlier, and (ii)for time-based awards granted on or following February22, 2018, such awards will remain exercisable for five years following the date oftermination of employment, or until expiration of the term, if earlier. Additionally, under Mr.Silvernails employment agreement, in the case of such termination for disability or death, vesting of all unvested performance-based equityawards granted on or following February22, 2018 will vest at the end of the applicable performance period with respect to that number of shares of Common Stock (or performance units or dividend equivalents, as applicable) based on theperformance level achieved through the end of such performance period.
If Mr.Silvernails employment is terminated due to his retirement (asdefined in the employment agreement), (i)he will receive the time-based acceleration, with such time-based awards granted before February22, 2018 remaining exercisable for one year following the date of termination of employment or untilexpiration of the option term, if earlier, and with such time-based awards granted on or following February22, 2018, remaining exercisable for five years following the date of termination of employment or until expiration of the option term,if earlier, and (ii)he will receive (A)the performance-based acceleration with respect to performance-based equity awards granted prior to February22, 2018 and (B)vesting at the end of the applicable performance period withrespect to that number of shares of Common Stock (or performance units or dividend equivalents, as applicable) based on the
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performance level achieved through the end of such performance period, with respect to all unvested performance-based equity awards granted on or following February22, 2018.
If Mr.Silvernails employment is terminated by the Company without cause or by him for good reason (as defined in the employmentagreement), in either case, in contemplation of or within the 24-month period following a change in control, then, subject to his execution and non-revocation of ageneral release of claims and his continued compliance with applicable restrictive covenants, he will receive (i)continuing salary payments and health benefits for 36 months following termination, (ii)a pro rata portion of his annualbonus for the year in which his termination occurs (based on the portion of the year he was employed), (iii) a payment equal to 300% of his base salary, payable over 36months commencing approximately 60 days after his termination,(iv)time-based acceleration, and (v)in lieu of performance-based acceleration, a cash payment in respect of all performance-based equity awards with respect to which he has not yet received payment, based on the performance levelachieved with respect to the performance goal(s) under each such award from the beginning date of the performance period applicable thereto through such change in control, with such cash payment adjusted to reflect hypothetical earnings (equal tothe lesser of the Barclays Long Aaa US Corporate Index or 120% of the applicable federal long-term rate, in each case, determined as of the first business day of November of the calendar year preceding the change in control and compounded) for theperiod between such change in control and the date of payment.
In addition, to the extent that any payment or benefit received in connection with achange in control would be subject to an excise tax under Section4999 of the IRC, such payments and/or benefits will be subject to a best pay cap reduction if such reduction would result in a greater net after-tax benefit to Mr.Silvernail than receiving the full amount of such payments.
Mr.Silvernail is subject to the non-competition and employee andbusiness non-solicitation covenants set forth in the Confidential Information, Work Product and Restrictive Covenant Agreement previously entered into between Mr.Silvernail and the Company.
Messrs. Grogan, Ashleman and Bucklew and Ms. Cade
The Company has entered into letter agreements with Messrs. Grogan, Ashleman and Bucklew and Ms.Cade providing for (a)severance pay in an amountequal to two times the sum of the executives annual base salary and target MICP bonus in the event of an involuntary termination within two years following a change in control, payable over the 24-monthperiod following termination and (b)severance pay in an amount equal to the sum of one year of salary and target MICP bonus in the event of an involuntary termination without cause other than in connection with a change in control, in exchangefor a signed release.
Equity Awards
The IAP provides that if a change in control occurs, then each outstanding award will continue in effect, or be assumed or an equivalent award substituted bythe Companys successor; provided, that if the grantee incurs a termination of service without cause or for good reason (each as defined in the IAP) within 24 months following such change in control, the awards will become fully exercisable andall forfeiture restrictions will lapse. If an outstanding award is not assumed or substituted upon a change in control or if, following a change in control, neither the Company nor its successor has equity securities that are readily tradable on aregulated securities exchange, then the awards will vest in full.
2018 and 2019 PSU Grants
Notwithstanding the foregoing, the award agreements for PSUs granted in 2018 and 2019 provide that if a change in control occurs, the grantee will receive acash payment in respect of
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such PSUs valued based on the actual level of achievement of the performance goals against target measured as of the date of the change in control, including dividend equivalents earned up to thechange in control, with such value adjusted to the date of payment to reflect hypothetical earnings (equal to the lesser of the Barclays Long Aaa U.S. Corporate Index or 120% of the applicable federal long-term rate, in each case, determined as ofthe first business day of November of the calendar year preceding the change in control and compounded) for the period between such change in control and the date of payment. The cash payment will be paid as soon as practicable following theearliest to occur of the following events: (i)if, as of the time of the change in control, the grantee is eligible for retirement, as of the date of the change in control, (ii)as of the date the grantee first becomes eligible forretirement following the change in control if that date occurs prior to the end of the performance period, (iii)if the grantees service is terminated by the Company without cause or by the grantee for good reason and the date oftermination occurs (or the event giving rise to good reason occurs), in each case, within 24 months following the change in control, on the date of such termination, (iv)if the grantee remains employed through the end of the applicableperformance period, as of the end of the applicable performance period, or (v)if the grantees employment is terminated due to death or disability prior to the end of the performance period, as of the date of death or disability.
Termination due to Death, Disability or Retirement
The award agreements for stock options and restricted stock awards provide that if the grantees service is terminated by reason of death, disability orretirement, the award will become fully vested and exercisable. The award agreements for the 2018 and 2019 PSU grants provide that if the grantees service is terminated by reason of death, disability or retirement, the PSUs and any dividendequivalents thereon will become fully vested and earned based on the
actual level of achievement of the performance goals against target measured through the end of the performance period.
SERP
Pursuant to the SERP, ifa change in control occurs then not later than the closing date for the change in control event the amount credited to each participants deferred compensation account shall be distributed in one lump sum in cash and/or Common Stock.
Quantification of Termination Payments and Benefits Change in Control
The following tables set forth the amount each NEO would receive in the event of a termination of employment, as severance or as a result of acceleratedvesting if his or her employment was terminated without cause or for good reason, or for disability or death, upon a change in control or in connection with a termination of employment following a change in control, using the following assumptions:
| | change in control and/or termination of employment on December31, 2019; |
| | accelerated vesting of options and restricted stock, and exercise of all accelerated vested options based on the closing market price of $172.00 per share of Common Stock on December31, 2019; |
| | accelerated vesting of PSUs and payment of cumulative dividend equivalents as valued based on performance as of December31, 2019; and |
| | accelerated vesting of benefits under the SERP, paid in a lump sum. |
All potential termination payments setforth in the tables below reflect full payments under the potential scenarios and do not reflect any reductions that could occur if the payment is subject to excise tax under Section280G of the Internal Revenue Code.
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Change in Control and Termination Payments and Benefits for Andrew K. Silvernail
| Incremental Benefits Due to Termination Event | Involuntary NotforCause Termination ($) | DisabilityorDeath ($) | ChangeinControl ($) | InvoluntaryNotfor Cause Termination orVoluntary Good Reason | ||||||||||||
CashSeverance (incl. Incentives) | 4,120,000 | - | - | 6,180,000 | ||||||||||||
UnvestedRestricted Stock | - | - | - | - | ||||||||||||
UnvestedOptions | 10,763,854 | 10,763,854 | - | 10,763,854 | ||||||||||||
UnvestedPerformance Shares (1) | 11,558,256 | 11,558,256 | - | 11,338,307 | ||||||||||||
SERP | 2,642,638 | 2,642,638 | 2,642,638 | 2,642,638 | ||||||||||||
Health andWelfare Benefits | 45,360 | - | - | 68,040 | ||||||||||||
Total | 29,130,108 | 24,964,748 | 2,642,638 | 30,992,839 | ||||||||||||
Change in Control and Termination Payments and Benefits for William K. Grogan
Incremental Benefits Due to Termination Event | Involuntary NotforCause Termination ($) | DisabilityorDeath ($) | ChangeinControl ($) | InvoluntaryNotfor Cause Termination orVoluntary Good Reason | ||||||||||||
CashSeverance (incl. Incentives) | 901,250 | - | - | 1,802,500 | ||||||||||||
UnvestedRestricted Stock | - | 943,420 | - | 943,420 | ||||||||||||
UnvestedOptions | - | 2,309,828 | - | 2,309,828 | ||||||||||||
UnvestedPerformance Shares (1) | - | 2,286,392 | - | 2,242,374 | ||||||||||||
SERP | 282,241 | 282,241 | 282,241 | 282,241 | ||||||||||||
Total | 1,183,491 | 5,821,881 | 282,241 | 7,580,363 | ||||||||||||
Change in Control and Termination Payments and Benefits for Eric D. Ashleman
Incremental Benefits Due to Termination Event | Involuntary NotforCause Termination ($) | DisabilityorDeath ($) | ChangeinControl ($) | InvoluntaryNotfor Cause Termination orVoluntary Good Reason | ||||||||||||
CashSeverance (incl. Incentives) | 1,134,000 | - | - | 2,268,000 | ||||||||||||
UnvestedRestricted Stock | - | - | - | - | ||||||||||||
UnvestedOptions | - | 2,715,081 | - | 2,715,081 | ||||||||||||
UnvestedPerformance Shares (1) | - | 4,902,977 | - | 4,798,695 | ||||||||||||
SERP | 859,237 | 859,237 | 859,237 | 859,237 | ||||||||||||
Total | 1,993,237 | 8,477,295 | 859,237 | 10,641,013 | ||||||||||||
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Change in Control and Termination Payments and Benefits for Denise R. Cade
Incremental Benefits Due to Termination Event | Involuntary NotforCause Termination ($) | DisabilityorDeath ($) | ChangeinControl ($) | InvoluntaryNotfor Cause Termination orVoluntary Good Reason | ||||||||||||
CashSeverance (incl. Incentives) | 805,800 | - | - | 1,611,600 | ||||||||||||
UnvestedRestricted Stock | - | - | - | - | ||||||||||||
UnvestedOptions | - | 1,530,788 | - | 1,530,788 | ||||||||||||
UnvestedPerformance Shares (1) | - | 1,943,875 | - | 1,907,046 | ||||||||||||
SERP | 314,398 | 314,398 | 314,398 | 314,398 | ||||||||||||
Total | 1,120,198 | 3,789,061 | 314,398 | 5,363,832 | ||||||||||||
Change in Control and Termination Payments and Benefits for Jeffrey D. Bucklew
Incremental Benefits Due to Termination Event | Involuntary NotforCause Termination ($) | DisabilityorDeath ($) | ChangeinControl ($) | InvoluntaryNotfor Cause Termination orVoluntary Good Reason | ||||||||||||
CashSeverance (incl. Incentives) | 700,400 | - | - | 1,400,800 | ||||||||||||
UnvestedRestricted Stock | - | - | - | - | ||||||||||||
UnvestedOptions | - | 1,289,113 | - | 1,289,113 | ||||||||||||
UnvestedPerformance Shares (1) | - | 1,480,991 | - | 1,452,918 | ||||||||||||
SERP | 385,138 | 385,138 | 385,138 | 385,138 | ||||||||||||
Total | 1,085,538 | 3,155,242 | 385,138 | 4,527,969 | ||||||||||||
| (1) | In the event of a termination for disability or death, PSU grants and cumulative dividend equivalents willbecome fully vested at the end of the applicable performance period. For purposes of the termination payment calculation, PSU grants have been valued based on performance as of December31, 2019. |
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CEO and Median Employee Pay Ratio
We believe our executive compensation program must be consistent and internally equitable to motivate our employees to perform in ways that enhancestockholder value. We are committed to providing market-competitive compensation and to internal pay equity. The following CEO to median employee pay ratio is provided pursuant to Item 402(u) of SEC RegulationS-K.
Methodology for Identifying the Median Employee
The Compensation Committee reviewed a comparison of our CEOs annual total compensation in 2019 to that of the median employee for the same period. TheCompany used total annual cash compensation (salary/hourly earnings, commissions, bonuses paid, and allowances/fixed payments) as of December31, 2017 to determine the median employee. The Company determined there were no changes to theemployee population or employee compensation arrangements over the last two fiscal years that would result in a significant change to the pay ratio disclosure and as permitted under the Item 402(u) median employee identification instructions,elected to use the same median employee in the 2019 calculation. Under the Item 402(u)(4)(ii) (de minimis) exemption, the Company may exclude non-U.S. employees up to a 5% threshold whenidentifying the median employee. As noted in the Companys 2018 Proxy Statement, in determining such median employee, the Company excluded 220 employees from the following jurisdictions, comprising less than 5% of the 6,957 total Companypopulation (with number of employees):
| Australia (33) | Columbia (1) | Japan (33) | Singapore (15) | |||
| Austria (44) | Czech Republic (1) | Korea (4) | South Africa (1) | |||
| Belgium (15) | France (5) | Mexico (10) | Taiwan (1) | |||
Brazil (9) | Ireland (33) | Poland (2) | UnitedArabEmirates(13) |
The 6,737 employees who were included in identifying the median employee are located in the following countries:
| Canada | India | The Netherlands | ||||
| China | Italy | United Kingdom | ||||
Germany | Switzerland | United States of America | ||||
Pay Ratio
We calculated annual total compensation for the median employee consistent with the same methodology we use for our NEOs as set forth in the 2019 SummaryCompensation Table. The annual total compensation of the CEO is $9,119,596. The median of the annual total compensation of all employees, except the CEO, is $66,703. The pay ratio is 137:1.
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OurBoard of Directors recommends that you vote FOR the approval of the Companysexecutive compensation |
PROPOSAL 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are soliciting a non-binding advisory vote (say-on-pay) on the compensation of the Companys NEOs, as described in the Compensation Discussion and Analysis, the compensation tables, and the accompanying narrative disclosure set forth in thisProxy Statement, as required under Section14A of the Securities Exchange Act of 1934, as amended.
The Company maintains a balanced approach toexecutive compensation with a mix of both cash and non-cash awards and short- and long-term incentives, with total direct compensation targeted within a range that includes market median for comparablepositions at comparable companies. Where an individual executives target compensation is positioned within the competitive range is based on the individual factors listed in the Compensation Discussionand Analysis. Actual compensation inany given year should and does vary from target based on Company and individual performance. In this way, the Company motivates and rewards both vital short-term performance and long-term value creation. The Board of Directors strongly endorses theCompanys executive compensation program and recommends that the stockholders vote in favor of the following resolution:
RESOLVED, that thestockholders approve, on an advisory basis, the compensation paid to the Companys named executive officers as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K, including theCompensation Discussion and Analysis, compensation tables and accompanying narrative discussion contained in this Proxy Statement.
Because the vote isadvisory, it will not be binding on the Company. However, the Compensation Committee will consider the outcome of the vote in determining future compensation policies and decisions. Currently, stockholders are given an opportunity to cast anadvisory vote on this topic annually, with the next opportunity occurring in connection with the Companys 2021 Annual Meeting of Stockholders.
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For the year ended December31, 2019, the Audit Committee has reviewed and discussed the audited financial statements with management and theCompanys independent registered public accounting firm, Deloitte& Touche LLP. The Committee discussed with Deloitte& Touche LLP the matters required to be discussed by the Auditing Standard No.16, as adopted by thePublic Company Accounting Oversight Board in PCAOB Release No.2012-004 and approved by the SEC in Release No.34-68453, and reviewed the results of theindependent registered public accounting firms examination of the financial statements.
The Audit Committee also received the written disclosuresand the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte& Touche LLPs communications with the Audit Committeeconcerning independence, discussed with the auditors their independence, and satisfied itself as to the auditors independence.
Based on the abovereviews and discussions, the Audit Committee recommends to the Board of Directors that the financial statements be included in the Annual Report on Form 10-K for the year ended December31, 2019, forfiling with the SEC.
Notwithstanding anything to the contrary set forth in any of the Companys previous filings under the Securities Act of 1933,as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate future filings made by the Company under those statutes, in whole or in part, this report shall not be deemed to be incorporated by reference into any suchfilings, nor will this report be incorporated by reference into any future filings made by the Company under those statutes.
Mark A. Buthman, Chair
Mark A. Beck
William M. Cook
Ernest J. Mrozek
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PRINCIPAL ACCOUNTANT FEES AND SERVICES
The aggregate fees billed to the Company for each of the last two fiscal years for professional services rendered by the Companysprincipal accounting firm, Deloitte& Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, the Deloitte Entities), are set forth in the table below. All such fees were pre-approved by the Audit Committee in accordance with the pre-approval policy discussed below.
| 2019 | 2018 | |||||||||
Audit fees(1) | $3,448,291 | $ | 4,129,916(2) | |||||||
Audit-related fees(3) | - | - | ||||||||
Tax fees(4) | $1,722,719 | $ | 1,207,429 | |||||||
All other fees(5) | - | - | ||||||||
Total | $5,171,010 | $ | 5,337,345 | |||||||
| (1) | Audit fees represent the aggregate fees billed for the audit of the Companys financial statements, reviewof the financial statements included in the Companys quarterly reports, and services in connection with statutory and regulatory filings or engagements. |
| (2) | Audit fees include $655,354 of additional fees related to the 2017 audit of the Companys financialstatements that were billed after the Companys 2018 Proxy Statement was filed on March16, 2018. |
| (3) | Audit-related fees represent the aggregate fees billed for assurance and related services that are reasonablyrelated to the performance of the audit or review of the Companys financial statements and are not reported under audit fees. |
| (4) | Tax fees represent the aggregate fees billed for professional services for tax compliance, tax advice and taxplanning. |
| (5) | All other fees represent the aggregate fees billed for products and services that are not included in the auditfees, audit-related fees, and tax fees. The Audit Committee has determined that the provision of these services is not incompatible with maintaining the Deloitte Entities independence. |
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy that requires the pre-approval of audit andnon-audit services rendered by the Deloitte Entities. For audit services, the accounting firm provides the Audit Committee with an audit services plan during the second quarter of each fiscal year outliningthe scope of the audit services proposed to be performed for the fiscal year and the associated fees. This audit services plan must be formally accepted by the Audit Committee.
For non-audit services, management submits to the Audit Committee for approval during the second quarter of eachfiscal year and from time-to-time during the fiscal year a list of non-audit services that it recommends the Audit Committeeengage the accounting firm to provide for the current year, along with the associated fees. Company management and the accounting firm each confirm to the Audit Committee that any non-audit service on the listis permissible under all applicable legal requirements.
The Audit Committee approves both the list of permissiblenon-audit services and the budget for such services. The Audit Committee delegates to its Chair the authority to amend or modify the list of approved permissiblenon-audit services and fees. The Chair reports any such actions taken to the Audit Committee at a subsequent Audit Committee meeting.
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Our Board of Directors recommends that youvote FOR the ratification of the appointment of Deloitte& Touche LLP |
PROPOSAL 3 APPROVAL OF AUDITORS
The Audit Committee has appointed Deloitte& Touche LLP as the Companys independent registered public accounting firm for 2020. Representativesof Deloitte& Touche LLP will attend the Annual Meeting and will have the opportunity to make a statement if they desire to do so. They will also be available to respond to appropriate questions.
Although the rules of the U.S. Securities and Exchange Commission and the corporate governance listing standards of the New York Stock Exchange require thatthe Audit Committee be directly responsible for selecting and retaining the independent registered public accounting firm, we are providing stockholders with the opportunity to express their views on this issue. While this vote cannot be binding, ifthe stockholders do not ratify the appointment of Deloitte& Touche LLP, the Audit Committee will take the vote into account in making future appointments.
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Our Board of Directors recommends that youvote |
PROPOSAL 4 STOCKHOLDER PROPOSAL REGARDING A REPORT RELATED TOEMPLOYEE REPRESENTATION ON THE COMPANYS BOARD OF DIRECTORS
NorthStar Asset Management, Inc. Funded Pension Plan, P.O. Box 301840 Boston,MA 02130, the beneficial owner of 441 shares of IDEX Corporation common stock, intends to propose the following resolution at the Annual Meeting.
Employee Representation on the Board of Directors
WHEREAS: Our companys employees are crucial to our ability to offer shareholders continued return on their investment. A 2018 Forbes articleemphasized the need for retaining top employees by focus[ing] on excellence in engagement;
In August 2019, the Business Roundtable, anassociation of chief executive officers of Americas leading companies, issued a new Statement on the Purpose of a Corporation which emphasized a fundamental commitment to all of our stakeholders. Shareholders believe that part offulfilling the Roundtables commitment to invest[] in our employees could come from a direct line of communication between employees and the board;
In 2018, the Accountable Capitalism Act was introduced into the U.S. Congress to combat Americas fundamental economic problems such ascompanies failure to reinvest proceeds in their operations, including employees. The Act would require that boards include substantial employee participation ensur[ing] that no fewer than 40% of [a boards] directorsare selected by the corporations employees;
Several European countries require employee representation on boards. Academic analysis of onesuch policy stated that it offer[s] advantages for technical efficiency, skill development and knowledge generation through its protection of specific human capital investments;
A recent poll found that a majority of Americans would support allowing employees at large companies to elect representatives to those companiesboards of directors ;
Competitiveness in our sector is evolving quickly due to technology such as artificial intelligence, machine learning,and cognitive analytics. The Manufacturing Leadership Council lists the need to attract, develop, train, retain, and inspire both the current workforce and the next generation of employees as a critical issue for themanufacturing industry; Shareholders believe that our company can advance long-term value creation through a board that includes non-management employee representation.
RESOLVED: Shareholders of IDEX Corporation urge the Board of Directors to prepare a report to shareholders describing opportunities for the company toencourage the inclusion of non-management employee representation on the Board.
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SUPPORTING STATEMENT: The report should be prepared within one year, at reasonable cost and excludingproprietary and privileged information. The Board is encouraged to assess:
| 1. | Any legal, technical, practical, or organizational impediments tonon-management employees gaining board nomination; |
| 2. | Benefits and challenges associated with board membership ofnon-management employees; |
| 3. | Opportunities or procedures through which non-management employeescould gain nomination to the board, such as allocation of board slots or special board nomination processes for non-management employees, and any needed changes to corporate governance documents to accomplishsuch changes. |
For purposes of this proposal, the term non-management employeesshould be understood to be employees that are neither management nor company executives.
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OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTEAGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS: |
COMPANY STATEMENT IN OPPOSITION TO THE PROPOSAL
We have best-in-class employee engagement. Engagement is a combination of satisfaction, advocacy, retention and pride, and we conduct an anonymous companywideiSay engagement survey on an annual basis to measure our employee engagement, as well as manager effectiveness and performance enablement. In 2019, we were in the top quartile (25%) of manufacturing companies in all three indices, with a responserate of 88% (best in class is 80% and above). Last year, we were in the top quartile on employee engagement and manager effectiveness. Results are shared with departmental groups and also reviewed by function and by business unit to enable targetedfocus on matters of local importance to particular teams (which avoids a one size fits all approach). Our latest CSR Report, which is available under the Corporate Social Responsibility link on our website at www.idexcorp.comencapsulates the many ways we are actively invested in and engage our employees in the office and in their communities.
We have many avenues for employeeengagement with management and our Board. We believe a key element of our continued success is our ability to establish a work environment where employees feel connected to the Company and recognize that their role matters. We offer numerous waysfor employees to be heard and exert influence outside of Board representation. For example, our CEO, COO and senior leaders regularly host meetings to provide business updates and answer questions posed by employees. Those questions can be presentedanonymously prior to the meetings or at the meetings themselves. Employees can provide feedback and raise any questions on any topic when completing our annual iSay survey. Our CEO regularly asks employees to email him directly with concerns orsuggestions and has a blog where he speaks on topics of interest and welcomes feedback.
We have an Open Door Policy under which we encourage employees toreport concerns, ask for guidance and voice their opinions to any member of management or Human Resources. We also have a hotline in place that allows employees to raise concerns they may have about the Company on an anonymous and confidential basis(except where prohibited by local privacy laws) 24 hours a day anywhere in the world. Management regularly, as well as Board members numerous times a year, visit manufacturing facilities and interact with employees, who have an opportunity to askquestions and give feedback. Finally, employees and all other stakeholders may contact directors in writing. We take information communicated through these multiple avenues very seriously and regularly provide responses and updates on issues thatemployees raise. In addition, we believe that information collected from employees can be valuable to decision making.
Further, we continually invest inthe training of our people, from on-the-ground learning and mentorships at our business units around the world, to our IDEX Academy programs that help develop teammembers at all levels so they can advance in their careers.
We have a thoughtful and inclusive director nominee selection process. Our existing directorselection process is designed to identify and nominate the strongest director candidates from all available sources, including our employees, and is motivated by our focus on long-term value creation. Although we currently only have one employee(our CEO, Andrew Silvernail) serving on the Board, our nominating process permits other employees, including those who are not members of management, to
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serve on the Board. Stockholders may recommend Board candidates to be considered by the Nominating and Corporate Governance Committee (Nominating Committee). The Nominating Committee is committedto giving the same consideration toward stockholder-recommended nominees as those recommended from other sources. We describe in this Proxy Statement, the process for making director nominee recommendations to the Nominating Committee.
From a process standpoint, we believe the Board and the Nominating Committee are best situated to assess the particular qualifications of potential directornominees. In selecting potential nominees for the Board, the Nominating Committee considers several qualities, including specialized expertise in the industries in which we compete, a breadth of knowledge about issues affecting us, executiveleadership in business or administrative activities, financial expertise, personal integrity, and a willingness to assume fiduciary responsibilities.
Ourcurrent process for selecting director nominees has resulted in an effective Board composed of a diverse group of leaders with a complementary blend of backgrounds, experiences, skills, expertise and perspectives. Collectively, the current membersof the Board have senior leadership experience at major domestic and international companies, key management skills, such as financial expertise in mergers and acquisitions, industrial manufacturing, organizational leadership, and expertise ininternational business; and experience on boards of other global public companies.
The proposal suggests that we allocate board slots or use a specialboard nomination process for non-management employees. This would require us to deviate from our existing thoughtful and inclusive process and seriously undercut the role of our Nominating Committee and Boardin one of the most crucial elements of corporate governancethe election of directors. This could diminish the effectiveness of our Board and would decrease the number of directors who qualify as independent.
CONCLUSION
As a result of our best-in-class employee engagement, the methods we make available to employees to communicate with management and the Board, our continual investment in the training of ourpeople, and our thoughtful and inclusive director nominee selection process (which permits employees to be recommended as potential director candidates), we believe our current director nominee selection process is sufficient and that the reportrequested by your proposal is not necessary.
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STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR 2021 ANNUAL MEETING OF STOCKHOLDERS
A stockholder desiring to submit a proposal for inclusion in the Companys proxy statement for the 2021 Annual Meeting of Stockholders must deliver theproposal so that it is received by the Company no later than November20, 2020. The Company requests that all such proposals be addressed to Denise R. Cade, Senior Vice President, General Counsel and Corporate Secretary, IDEX Corporation, 1925West Field Court, Suite 200, Lake Forest, Illinois 60045, and mailed by certified mail, return receipt requested.
In addition, the Companys Bylawsrequire that any stockholder desiring to nominate a director for election or propose other business for consideration at the 2021 Annual Meeting of Stockholders must provide written notice. Such notice must contain the information required by theBylaws and must be received by the Corporate Secretary not less than 90 nor more than 120 days before the first anniversary of the preceding years annual meeting of stockholders. To be timely for the 2021 Annual Meeting of Stockholders, anysuch notice must be received by the Corporate Secretary, at the address above, on any date beginning on January7, 2021 and ending on February6, 2021.
The Board of Directors does not know of any business to be brought before the Annual Meeting other than the matters described in the Notice of Annual Meeting.However, if any other matters are properly presented for action, it is the intention of each person named in the accompanying proxy to vote said proxy in accordance with his or her judgment on those matters.
By Order of the Board of Directors,
DENISE R. CADE
Senior VicePresident, General Counsel
and Corporate Secretary
March20, 2020
Lake Forest, Illinois
A copy of the Companys Annual Report on Form 10-K for the year ended December31, 2019, including thefinancial statement schedules, as filed with the Securities and Exchange Commission, may be obtained by stockholders without charge by sending a written request to Chief Financial Officer, IDEX Corporation, 1925 West Field Court, Suite 200, LakeForest, Illinois 60045.
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1925 W. FIELD CT, SUITE 200 LAKE FOREST, IL 60045 SCAN TO VIEW MATERIALS& VOTE VOTE BY INTERNET - www.proxyvote.com Use theInternet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when youaccess 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 proxymaterials, 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 instructionsabove to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meetingdate. 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, 51Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E97707-P32565 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY THIS PROXY, WHENPROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 AND AGAINST PROPOSAL 4. IF ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING,THE PERSONS NAMED IN THIS PROXY WILL VOTE IN THEIR DISCRETION. 1. To elect four directors each for a term of three years Nominees: 01) ANDREW K. SILVERNAIL 02) KATRINA L. HELMKAMP 03) MARK A. BECK 04) CARL R. CHRISTENSON 2. Advisory vote to approvenamed executive officer compensation. 3. Ratification of the appointment of Deloitte& Touche LLP as our independent registered accounting firm for 2020. 4. To consider a stockholder proposal regarding a report related to employeerepresentation on the Companys Board of Directors, if properly presented at the meeting. For address changes and/or comments, please check this box and write them on the back where indicated. Yes No Please indicate if you plan to attend thismeeting. For All Withhold All For All Except To withhold authority to vote for any individual nominee(s), mark For All Except and write the name(s) of the nominee(s) on the line below. For Against Abstain Please sign exactly as nameappears hereon. When shares are held by joint tenants, both should sign. When signed as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president orother authorized officer. If a partnership, please sign in partnership name by authorized person. Signature [PLEASE SIGN WITHIN BOX] Date Signature [Joint Owners] Date
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IDEX CORPORATION NOTICE OF ANNUAL MEETING OF STOCKHOLDERS MAY7, 2020 The Annual Meeting of Stockholders of IDEX Corporation (theCompany) will be held on Thursday, May7, 2020, at 9:00 a.m., Central Time, at the DoubleTree Hotel, 5460 N. River Road, Rosemont, Illinois 60018, for the purposes listed on the reverse side. The Board of Directors fixed the closeof business on March13, 2020, as the record date for the determination of Stockholders entitled to notice of, and to vote at, the Annual Meeting. You may obtain directions to the location of the Annual Meeting by visiting our website atwww.idexcorp.com. YOUR VOTE IS IMPORTANT Regardless of whether you plan to attend the Annual Meeting of Stockholders, you can be sure these shares are represented at the meeting by promptly returning your proxy in the enclosed envelope. ImportantNotice Regarding the Availability of Proxy Materials for the 2020 Annual Meeting The Notice and Proxy Statement and Form 10-K of IDEX Corporation are available at:http://phx.corporate-ir.net/phoenix.zhtml?c=83305&p=irol-reportsAnnual Proxy card must be signed and dated on the reverse side. Please fold and detach card at perforation before mailing. E97708-P32565 IDEXCORPORATION 1925 West Field Court, Suite 200 Lake Forest, Illinois 60045-4824 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints William M. Cook, Eric D. Ashleman and Denise R. Cade, and each of them, asProxies, with full power of substitution, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of common stock of IDEX Corporation held of record by the undersigned on March13, 2020, at theAnnual Meeting of Stockholders to be held on May7, 2020, at 9:00 a.m. Central Time, at the DoubleTree Hotel, 5460 N. River Road, Rosemont, Illinois 60018, or at any adjournment thereof. Address Changes/Comments: (If you noted any AddressChanges/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side
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