UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |||
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||
☒ | Definitive Proxy Statement | |||
☐ | Definitive Additional Materials | |||
☐ | Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2. | |||
| ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
☒ | No fee required. | |||
☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12. | |||
(1) | Title of each class of securities to which transaction applies:
| |||
| ||||
(2) |
Aggregate number of securities to which transaction applies:
| |||
| ||||
(3) |
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
| ||||
(4) |
Proposed maximum aggregate value of transaction:
| |||
| ||||
(5) |
Total fee paid: | |||
| ||||
☐ | Fee paid previously with preliminary materials. | |||
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid:
| |||
| ||||
(2) |
Form, Schedule or Registration Statement No.:
| |||
| ||||
(3) |
Filing Party:
| |||
| ||||
(4) |
Date Filed:
| |||
|
DOVER CORPORATION 2018 PROXY Since 1955 Redefining what’s possible
May 4, 20188, 2020
9:00 a.m. Central Time
Hilton Chicago/Oak Brook Hills Resort, 3500 Midwest Road, Oak Brook,Dover Corporation Headquarters
3005 Highland Parkway
Downers Grove, Illinois 6052360515
Dear Fellow Shareholder:
You are cordially invited to attend ourthe Annual Meeting of Shareholders (the “Annual Meeting”) of Dover Corporation (“Dover” or the “Company”) at the Hilton Chicago/Oak Brook Hills Resort, 3500 Midwest Road, Oak Brook, Illinois 60523,our headquarters on May 4, 20188, 2020 at 9:00 a.m., Central Time, to be held for the following purposes:
1. | To elect |
2. | To ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for |
3. | To approve, on an advisory basis, named executive officer (“NEO”) compensation. |
4. | To |
5. |
To consider such other business as may properly come before the Annual Meeting, including any adjournments or postponements thereof. |
Although we intend to hold the Annual Meeting in person, we are monitoring the protocols that federal, state and local governments may recommend or require in light of the evolving coronavirus (COVID-19) outbreak. If we determine it is necessary or appropriate to take additional steps regarding how we conduct our meeting, we will announce our decision in advance, and details will be posted on our website and filed with the SEC.
All holders of record at the close of business on March 12, 20182020 are entitled to notice of and to vote at the Annual Meeting or any adjournments or postponements thereof.Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares as soon as possible.
March 22, 201826, 2020
By authority of the Board of Directors,
Ivonne M. Cabrera
Secretary
DOVER CORPORATION –20182020 Proxy Statement i
DOVER CORPORATION –20182020 Proxy Statement ii
Date: | May | |
Time: | ||
Record Date: | March 12, | |
Location: |
| |
For additional information about our Annual Meeting, please see “General Information About The Annual Meeting”. We are first mailing this Notice of Annual Meeting and Proxy Statement beginning on or about March 26, 2020. |
There are fivefour proposals to be voted on at the Annual Meeting:
ITEM | Proposal |
| Page Reference | |||||||||
ITEM 1
|
|
| ||||||||||
|
| 11 |
| |||||||||
ITEM 2
|
The ratification of the appointment of PwC as our independent registered public accounting firm for
| FOR | 33 | |||||||||
ITEM 3
|
An advisory resolution to approve NEO compensation
| FOR
| 75 |
| ||||||||
ITEM 4
|
| |||||||||||
|
| 76 |
Even if you plan to attend the Annual Meeting in person, please cast your vote as soon as possible using one of the following methods:
Viainternet by visiting www.proxyvote.com
Viatelephone by calling1-800-690-6903
Viamail by marking, signing and dating your proxy card or voting instruction form (if you received proxy materials by mail) and returning it to the address listed therein
DOVER CORPORATION –20182020 Proxy Statement 1
PROXY STATEMENT SUMMARY
Dover is a diversified global manufacturer delivering innovative equipment and components, specialty systems, consumable supplies, aftermarket parts, software and digital solutions and support services through fourfive operating segments: Engineered Systems, Fluids,Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions, and Refrigeration & Food EquipmentEquipment. We combine global scale with operational agility to lead the markets we serve. Recognized for our entrepreneurial approach for over 60 years, our team of approximately 24,000 employees takes an ownership mindset, collaborating with customers to redefine what’s possible.
Effective October 1, 2019, we transitioned from a three-segment to a five-segment structure as a result of a change to our management structure and Energy.operating model. Our entrepreneurialfive segments are now structured around businesses with similar business model encourages, promotes,models,go-to-market strategies and fosters deep customer engagementmanufacturing practices. We believe this new structure increases management efficiency and collaboration, which has ledbetter align our operations with our strategic initiatives and capital allocation priorities, and provides greater transparency about our performance to Dover’s well-established and valued reputation for providing superior customer service and industry-leading product innovation.
Our businesses are aligned in four segments and organized around our key end markets focused on growth strategies. The segment structure is also designed to provide increased opportunities to leverage our scale and capitalize on productivity initiatives.
Our Segmentsexternal stakeholders.
| ||||
![]() |
|
| ||
![]() |
|
| ||
![]() |
|
|
Spin-off of Upstream Energy Businesses
On December 7, 2017, following a comprehensive strategic review, we announced that we plan tospin-off, on atax-free basis, the upstream energy businesses within our Energy segment into a standalone, publicly-traded company named Apergy Corporation (“Apergy”). Upon completion ofthe spin-off, Apergy will be a leading provider of a full range of oil and gas production technologies and solutions, wellsite productivity software and Industrial Internet (IIot) solutions. Apergy will also be the industry leader in the development and production of polycrystalline diamond cutters used for oil and gas exploration. We expect to complete thespin-off transaction in May of 2018, subject to the satisfaction or waiver of certain customary conditions.
As part of thespin-off, Apergy is expected to raise $700 to $800 million of new debt, the proceeds of which will be paid to Dover in the form of a dividend. We anticipate returning the proceeds to shareholders as the primary source of funding for $1 billion of share repurchases to be completed in 2018.
DOVER CORPORATION – 2018 Proxy Statement 2
PROXY STATEMENT SUMMARY
Our Evolution Over The Past 10 Years
Management Philosophy
Our executive management team is committed to increasing shareholder value through a combination of sustained long-term profitable growth, operational excellence, and superior free cash-flow generation with productivere-deployment while adhering to a conservative financial policy.
Our businesses seek to be leaders in a diverse set of growing markets where customers are committedloyal to operational excellenceestablished brands and to being market leaders as measuredvalue product performance and differentiation evidenced by market share, customer satisfaction, growth, profitability,superior engineering, manufacturing precision, total solution development, and return on invested capital.excellent supply chain performance.
Our companies are long-time leaders in their respective markets, known for their innovation, engineering capability, and customer service excellence.
Our operating structure of fourfive business segments allows for focusedincreased differentiated acquisition activity,focus consistent with our portfolio and capital allocation priorities and accelerates opportunities to identify and capture operating synergies, includingsuch as global sourcing and supply chain integration, shared services, and manufacturing practices, and further advances the development of our executive talent.
Our segment and executive management team setsets strategic direction, initiatives and goals, provides oversight of strategy execution and achievement of these goals for our operating companies, and also providewith oversight allocate and managefrom our Board of Directors, makes capital are responsible forallocation decisions, including organic investment initiatives, major capital projects, acquisitions, and provide other services.the return of capital to our shareholders.
Ouroperating culture focuses onfosters high ethical and performance standards that value accountability, rigor, trust, respect, and open communication,communications, designed to allow individual growth and operational effectiveness.
OurOur businesses are committed to creating value for our customers, employees and shareholders through sustainable business practices that protect the environment, and the development ofwe are committed to developing products that help our customers meet their sustainability goals.
Strategic Focus on Long-Term Value Creation
DOVER CORPORATION –2020 Proxy Statement 2
PROXY STATEMENT SUMMARY
|
|
|
|
Company Goals
We are committed to driving superior shareholder return through three key objectives:
First, we are committed to achievingannual organic sales growth of 3% to 5% over a long-term business cycle, absent adverse economic conditions, complemented by acquisition growth.
Second, we continue to focus onsegment margin expansion through productivity initiatives, including supply chain activities, targeted restructuring activities, strategic pricing and portfolio shaping.
Third, we are committed togenerating adjusted free cash flow as a percentage of salesof approximately 10% through strong earnings performance, productivity improvements and active working capital management.
We are committed toachieving organic sales growth above gross domestic product growth (GDP+ or 3% to 5% annually on average) over a long-term business cycle, absent prolonged adverse economic conditions, complemented bygrowth through strategic acquisitions. | ||
We continue to focus onimproving returns on capital and margins by enhancing our capabilities and making investments across the organization in software and digital applications, operations management, information technology, and talent and by focusing on continuous, effective cost management and productivity initiatives, including automation and digitally-supported manufacturing, supply chain activities, restructuring activities, improved footprint utilization, strategic pricing, and portfolio management. | ||
We aim to generatestrong free cash flow as a percentage of revenue of approximately8-12% through strong earnings performance, productivity improvements, and active working capital management. |
We support achievement of these goals through (1) alignment ofby aligning management compensation with strategic and financial objectives, (2)executing on well-defined and actively managed M&Amerger and acquisition processes, and (3)investing in talent development programs.
DOVER CORPORATION –20182020 Proxy Statement 3
PROXY STATEMENT SUMMARY
US GAAP from continuing operations | FY2019 | FY2018 | D | ||||||||||||
Revenue ($M) | 7,136 | 6,992 | 2.1% | ||||||||||||
Earnings ($M) | 678 | 591 | 14.7% | ||||||||||||
Diluted EPS ($) | 4.61 | 3.89 | 18.5% | ||||||||||||
Non-GAAP(1) from continuing operations | |||||||||||||||
Adjusted Earnings ($M)(1) | 872 | 756 | 15.4% | ||||||||||||
Adjusted diluted EPS ($)(1) | 5.93 | 4.97 | 19.3% |
(1)Definitions and reconciliations ofNon-GAAP measures are included at the end of this proxy statement. For the full years ended December 31, 2019 and December 31, 2018, adjusted earnings excluded after tax acquisition-related amortization costs of $103.6 million and $109.3 million, respectively, and rightsizing and other costs of $25.4 million and $58.3 million, respectively. In addition, full year 2019 excluded a $46.9 millionnon-cashafter-tax loss on assets held for sale related to Finder Pompe S.R.L. (“Finder”), as well as a $18.4 million loss on extinguishment of debt. Full year 2018 excluded a $2.8 million net benefit from the Tax Cuts & Jobs Act (“Tax Reform Act”).
In 2019, we continued our long track record of delivering value to our shareholders.
Transformed Portfolio Producing Shareholder Value (TSR)1,2 |
1) Source: S&P Capital IQ; end date for returns periods is December 31, 2019. | ||||
|
DOVER CORPORATION –2020 Proxy Statement 4
PROXY STATEMENT SUMMARY
In 2019, we executed on our goals, accomplishing the following strategic initiatives and achieving the following results:
Portfolio Assessment & Re-segmentation |
• | |||||||||
• We
•
| ||||||||||
| Allocation | • We made
| ||||||||
• We continued our history of providing regular capital returns to shareholders. We increased our quarterly dividend by
• | ||||||||||
Profitability & Return on Invested Capital | • We executed ourmargin expansion program which is designed to reduce our selling, general and administrative cost base and rationalize our manufacturing and supply chain footprint across the • We continued to expandinitiatives to extract productivity across the businesses by expanding our capability to centralize shared service centers under ourDover Business Services, leveraging ourDigital Labs in the
| |||||||||
| the Business | • We made organic investments inresearch and development, developednew products and technologies, improved ourdigital capabilities and expanded thegeographic coverage of our business. | ||||||||
Sustainable Businesses | • Over the past several years, our businesses have accelerated
| |||||||||
|
| |||||||||
Continued Focus on Cash Flow | ||||||||||
| ||||||||||
•
|
DOVER CORPORATION –2020 Proxy Statement 5
PROXY STATEMENT SUMMARY
In 2019, we continued our focus on regularly engaging with our shareholders through a multi-stage engagement effort. Our Board was disappointed by the level of shareholder support for our Say on Pay proposal at our 2019 annual meeting, and recognized the importance of engaging infollow-up discussions with our shareholders to consider our next steps regarding Dover’s executive compensation program. During 2019, our management and Board undertook a significant multi-stage engagement effort to solicit shareholder feedback on topics ranging from executive compensation and other matters of importance to the Company and our shareholders, including business strategy, governance structures, Board composition and refreshment efforts, diversity, and environmental, social and governance (“ESG”) and sustainability initiatives. In direct response to the shareholder feedback we received through this effort, the Compensation Committee implemented meaningful changes to our executive compensation program for 2020, as discussed under “Say on Pay Vote Results and Shareholder Engagement” beginning on page 39 and continued our track record of evolving ourbest-in-class governance practices as discussed under “Shareholder Engagement and History of Board Responsiveness” beginning on page 28.
Our Board is committed to sound governance practices designed to promote the long-term interests of shareholders and strengthen Board and management accountability. Highlights include:
BOARD OF DIRECTORS | GOVERNANCE HIGHLIGHTS | |||
• Separate independent Chair and Chief Executive Officer (“CEO”) roles • In 2020, adopted a diversity search policy for external director and CEO searches conducted by third-party search firms • All directors are independent, other than the CEO • Annual election of directors • Majority voting for directors and director resignation policy in uncontested elections • Comprehensive annual individual evaluations ofone-third of the directors • Regular executive sessions of independent directors • Robust succession planning | • In 2019, achieved removal of all remaining supermajority voting provisions in our charter • In February 2020, reduced ownership threshold required to call a special meeting of shareholders to 15% from 25% • Finance Committee established in 2018 • Proxy access right at 3%/3 years/2 or 20% of Board/20 shareholder aggregation allowance • Strong share retention guidelines for directors and executive officers • Executive compensation driven bypay-for-performance philosophy • Executive officers not permitted to hedge or pledge company shares |
DOVER CORPORATION –20182020 Proxy Statement 46
PROXY STATEMENT SUMMARY
On March 20, 2018, Dover announced that following a successful nine-year tenure as our President and Chief Executive Officer (“CEO”), Robert A. Livingston will retire effective as of April 30, 2018. Mr. Livingston will resign from Dover’s Board of Directors (our “Board”) concurrent with his retirement. Richard J. Tobin, who serves as a member of Dover’s Board, will become our new President and CEO effective May 1, 2018. Mr. Tobin will remain a director on our Board, but, as of May 1, 2018, will no longer serve on the Compensation Committee. In connection with Mr. Tobin’s appointment, we entered into a three year employment agreement with him, described in our Form 8-K filed on March 20, 2018.
Mr. Tobin’s appointment as our incoming President and CEO represents the culmination of our Board’s active engagement in a thoughtful and comprehensive succession planning process.
In 2017, we continued our focus on regularly engaging with our shareholders. We reached out to holders of over 53% of our shares outstanding, and engaged with governance professionals and portfolio managers at investors holding 33% of our shares outstanding. During these discussions, investors expressed broad support for our governance structures and shared their views on matters related to shareholder rights and our independent, well-qualified Board. Further, investors highlighted the importance of engaging with them in the future on long-term corporate strategy and sustainability initiatives.
These discussions provide our Board with valuable insights into our shareholders’ views. In this proxy statement, we describe the feedback we received, and acted upon, regarding several matters, including our Board’s proposals to remove super-majority voting provisions from our charter. We plan to continue to actively engage with our shareholders on a regular basis to better understand and consider their views.
Management Proposals to Remove Super-Majority Voting Provisions
Proposals 4 and 5 of this proxy statement request that shareholders approve the removal of the remaining super-majority provisions in our charter. These provisions were originally designed to ensure that the interests of all shareholders were adequately represented in the event any of the actions contemplated by these provisions were to occur. However, the Board is aware that some shareholders oppose super-majority provisions, arguing that super-majority voting provisions may limit the ability of a majority of common shareholders to effect changes they desire.
Informed in part by engagement with our shareholders, we presented these proposals at our 2017 Annual Meeting, conducting a comprehensive campaign that included significant outreach to our retail investors to build support for the proposals. The proposals were supported by holders of just over 79% of our outstanding voting shares, a level of support below the required affirmative vote of the holders of at least 80% of our outstanding voting shares. Following the 2017 Annual Meeting, we sought shareholder input as our Board considered next steps regarding the remaining super-majority provisions. Shareholders expressed appreciation for our efforts to remove the provisions, including the retail solicitation campaign, and acknowledged the high hurdle presented by the current 80% voting requirement in our charter to approve amendments to remove the super-majority provisions. Several shareholders continued to express a preference for simple majority voting requirements and encouraged us to put forth another management proposal to remove the remaining super-majority voting provisions in our charter. Shareholder feedback was a factor in the Board’s decision to again present these two proposals at the 2018 Annual Meeting in order to continue evolving our governance practices to ensure we operate with abest-in-class governance structure. A comprehensive campaign with retail investors to build support for the management proposals is under way.
DOVER CORPORATION – 2018 Proxy Statement 5
PROXY STATEMENT SUMMARY
Our compensation program for executive officers is designed to emphasize performance-based compensation in alignment with our business strategy.
20172019 Executive Compensation
The following table summarizes pay mix for our CEO and other NEOs, which is highly performance based. The target pay mix will change based on the updates made to our executive compensation program in 2020.
Executive Compensation Program Highlights
CEO pay mix at Target Other NEO pay mix at Target
DOVER CORPORATION –20182020 Proxy Statement 67
PROXY STATEMENT SUMMARY
Executive Compensation Program Highlights & Updates
The following table details how we took action in response to the shareholder vote outcome of our 2019 Say on Pay proposal and made changes to our executive compensation program in order to directly address shareholders’ areas of focus.
COMPONENT | SHAREHOLDER FEEDBACK | DOVER RESPONSE | ||
ANNUAL INCENTIVE PLAN | • Increase disclosure regarding goals and outcomes of individual performance metrics | ✓ Provided additional detail regarding weighting, nature and performance outcomes for individual strategic objectives (pages 51 to 54) ✓ Improved disclosure regarding threshold, target and maximum levels for financial goals (page 52) | ||
• Consider inclusion of ESG themes into Annual Incentive Plan (“AIP”) | ✓ Integrated ESG oversight responsibility as an individual strategic objective for CEO (page 53) | |||
LONG-TERM INCENTIVE PLAN | • Shift to a more performance-based mix of awards | ✓ Increased PSU weighting to 40% from 20% and decreased SSAR weighting to 40% from 60% (page 58) | ||
• Enhance transparency of PSU performance metric | ✓ Shifted from internal Total Shareholder Return (“iTSR”) to relative Total Shareholder Return (“rTSR”) performance metric for PSUs with the S&P 500 Industrials index as the benchmark (page 58) | |||
• Maximum payout of 400% under iTSR is disproportionate to peers | ✓ Reduced maximum payout ceiling from 400% to 300% (page 57) | |||
OTHER | • Lack of formal clawback provision | ✓ Implemented comprehensive clawback structure (page 60) |
DOVER CORPORATION –2020 Proxy Statement 8
PROXY STATEMENT SUMMARY
EXECUTIVE COMPENSATION PROGRAM HIGHLIGHTS |
✓ Pay-for-performance philosophy — a substantial majority of NEO pay is performance based and tied to Dover’s stock price performance ✓ Significant portion of long-term compensation is performance based, with long-term incentives vesting over three years subject to rigorous three-year performance period ✓ Strong share ownership guidelines for NEOs ✓ Equity awards with anti-hedging and anti-pledging provisions ✓ For 2019, added enhanced disclosure regarding individual strategic objectives and financial metrics in our AIP and incorporated ESG oversight into our CEO’s individual strategic objectives in the AIP ✓ Adopted a robust clawback structure ✓ Reduced the maximum payout ceiling from 400% to 300% for PSU awards ✓ Implemented changes reflected in our 2020 executive compensation program, including increasing the proportion of LTIP awards dedicated to PSUs to 40% (from 20%) and shifting from iTSR to rTSR as the performance metric for PSUs |
DOVER CORPORATION –2020 Proxy Statement 9
PROXY STATEMENT SUMMARY
Our Governance and Nominating Committee maintains an active and engaged Board through a robust refreshment process, which focuses on ensuring our Board has a diverse skill set that benefits from both the industry- and company-specific knowledge of our longer-tenured directors, as well as the fresh perspectives brought by our newer directors.
Current director Michael B. Stubbs is not standing forre-election and will retire from the Board effective as of the Annual Meeting. The Board expresses its deep gratitude to Mr. Stubbs for his significant contributions to Dover during his more than 18 years of dedicated service on the Board.
Current director Robert A. Livingston will retire from the Board effective as of April 30, 2018 concurrent with his retirement as President and CEO. The Board wishes to thank Mr. Livingston for his outstanding leadership during his entire tenure at Dover.
NAME | OCCUPATION | INDEPENDENT | COMMITTEES MEMBERSHIPS* | OTHER PUBLIC COMPANY BOARDS | |||||||||||
|
Age: Director Since: | ||||||||||||||
| Kristiane C. Graham Age: Director Since: 1999 | Private Investor | C, G | 0 | |||||||||||
| Michael F. Johnston
Age: Director Since: 2013 | Retired CEO of Visteon | C, G | 2 | |||||||||||
| |||||||||||||||
| Eric A. Spiegel Age: Director Since: 2017 | Former President and CEO of Siemens | A, F (Chair) | 0 | |||||||||||
| Richard J. Tobin Age: Director Since: 2016 | President and CEO of | No ( |
| |||||||||||
Stephen M. Todd Age: Director Since: 2010 | Former Global Vice Chairman of Assurance Professional Practice of Ernst & Young Global Limited | A (Chair) | |||||||||||||
| Stephen K. Wagner Age: Director Since: 2010 | Former Senior Adviser, Center for Corporate Governance, Deloitte & Touche LLP | A, G (Chair) | ||||||||||||
| Keith E. Wandell Age: Director Since: 2015 | Former President and CEO of Harley-Davidson, Inc. | C | ||||||||||||
| Mary A. Winston Age: Director Since: 2005 | President of WinsCo Enterprises Inc.; Former Executive Vice President and | 3 |
*A=A = Audit Committee; C=C = Compensation Committee; G=G = Governance and Nominating Committee; F = Finance Committee
Our Board has the following composition:
DOVER CORPORATION –20182020 Proxy Statement 7
PROXY STATEMENT SUMMARY
Upon the retirement of Messrs. Livingston and Stubbs and Mr. Tobin’s appointment as CEO, the Board will have the following composition:
Our Board is committed to sound governance practices designed to promote the long-term interests of shareholders and strengthen Board and management accountability. Highlights include:
|
| |
|
|
DOVER CORPORATION – 2018 Proxy Statement 810
Proposal 1 — Election of Directors
Criteria for Director Nominees
The Board, in part through its delegation to the Governance and Nominating Committee, seeks to recommend qualified individuals to become members of the Board. The Board selects individuals as director nominees who, in the opinion of the Board, demonstrate the highest personal and professional integrity as well as exceptional ability and judgment, who can serve as a sounding board for our CEO on planning and policy, and who will be most effective, in connection with the other nominees to the Board, in collectively serving the long-term interests of all our shareholders.
Key areas of expertise for director nominees, which are reflected in our current director nominees, include:
✓ Strategic M&A |
|
Experience with international acquisitions, post-merger integration, and portfolio restructuring
| ||||
✓ Global Operations | Experience with cross-border transactions, global market entry and
| |||||
✓
|
|
| ||||
|
| Experience with capital markets and complex financing transactions
| ||||
✓ | Experience with diversified manufacturing in many of the markets and
| |||||
✓ | Experience evaluating risk management policies and procedures | |||||
✓Audit & Corporate | Experience with assurance and audit, regulation, and financial reporting
| |||||
✓ | Experience attracting, developing and retaining talent and building strong cultures | |||||
✓Executive Leadership | Leadership experience as former CEOs and CFOs of global public
|
In considering diversity in selecting director nominees, the Governance and Nominating Committee gives weight to the extent to which candidates would increase the effectiveness of the Board by broadening the mix of experience, knowledge, backgrounds, skills, ages and tenures represented among its members. In 2020, our Board adopted a policy reflected in our Corporate Governance Guidelines requiring that the initial list of potential director and external CEO candidates presented by third-party search firms include qualified diverse candidates.
The Governance and Nominating Committee also considers our current Board composition and the projected retirement date of current directors, as well as such other factors it may deem to be in the best interests of Dover and its shareholders, including a director nominee’s leadership and operating experience (particularly as a CEO), financial and investment expertise and strategic planning experience.
The Board prefers nominees to be independent, but believes it is desirable to have our CEO on the Board as a representative of current management. Given the global reach and broad array of the types of businesses operated by Dover, the Governance and Nominating Committee highly values director nominees with multi-industry and multi-geographic experience.
DOVER CORPORATION –2020 Proxy Statement 11
PROPOSAL 1 — ELECTION OF DIRECTORS
Whenever the Governance and Nominating Committee concludes that a new nominee to our Board is required or advisable, it will consider recommendations from directors, management, shareholders and, if it deems appropriate, consultants retained for that purpose. In such circumstances, it will evaluate individuals recommended by shareholders in the same manner as nominees recommended from other sources.
DOVER CORPORATION –2018 Proxy Statement 9
PROPOSAL 1 — ELECTION OF DIRECTORS
Shareholder Nominations for Director
Shareholders who wish to recommend an individual for nomination should send that person’s name and supporting information to the Governance and Nominating Committee, care of the Corporate Secretary at our principal executive offices, 3005 Highland Parkway, Downers Grove, Illinois, 60515, or through our communications coordinator. Shareholders who wish to directly nominate an individual for election as a director, without going through the Governance and Nominating Committee, must comply with the procedures in ourby-laws. Please see “General Information About the Annual MeetingMeeting” for nomination deadlines.
Proxy Access Shareholder Right
Following extensive engagement with our shareholders, our Board determined to adopt proxy access in February 2016, permitting a shareholder or group of up to 20 shareholders holding 3% of our outstanding shares of common stock for at least three years to nominate a number of directors constituting the greater of two directors or 20% of the number of directors on our Board, as set forth in detail in ourby-laws.
DOVER CORPORATION –20182020 Proxy Statement 1012
PROPOSAL 1 — ELECTION OF DIRECTORS
There are tennine nominees for election to our Board at this Annual Meeting, each to serve until the next annual meeting of shareholders or his or her earlier removal, resignation or retirement. All of the nominees currently serve on our Board and are being proposed forre-election by our Board.
Current director Michael B. Stubbs is not standing forre-election and will retire from the Board effective as of the Annual Meeting. Current director Robert A. Livingston will retire from the Board effective as of April 30, 2018 concurrent with his retirement as President and CEO.
If any nominee for election becomes unavailable or unwilling for good cause to serve as a director before the Annual Meeting, an event which we do not anticipate, the persons named as proxies will vote for a substitute nominee or nominees as may be designated by our Board, or the Board may reduce the number of directors. Directors will be elected by a majority of the votes cast in connection with their election.
![]() |
| |||
| ||||
Independent Director Nominee Age: Director since
| ||||
Business Experience: Former PresidentRetired Managing Director (1997 to 2012) at Goldman Sachs, a global investment banking, securities and CEO of J.M. Huber Corporation,investment management firm; also served as Advisory Director (2013 to 2015), andPartner-in-Charge, Midwest Region Investment Banking Services (2001 to 2010); prior thereto, various positions within Goldman Sachs (since 1987, except where noted). Mr. Gilbertson previously served as Managing Director at Travelers Group Inc. (1995), a privately-held, diversified company focused on engineered materials, natural resourcesfinancial services company; Associate, Mergers and technology-basedAcquisitions at Morgan Stanley & Co. Incorporated (1985 to 1987), a financial services (from 1994firm; Consultant, Corporate Strategy at Bain & Company (1982 to 2009); Managing Member of Mukilteo Investment Management1985), a management consulting firm; Assistant Treasurer, Corporate Banking at Chase Manhattan Bank (1979 to 1981), a commercial bank; and News Reporter at The Providence Journal Company responsible for investments in gas royalty and real estate partnerships, private equity funds, leveraged buyouts and stock portfolios (since 2011).(1978), a metropolitan daily newspaper.
Other Board Experience: Former ChairmanDirector and Chair of Audit Committee of Meijer, Inc. (“Meijer”) and Director J.M. Huber Corporation.
Skills and Qualifications:of AAR Corp.
Skills and Qualifications: |
Mr. FrancisGilbertson has extensive experience in corporate finance, capital markets, and mergers and acquisitions, and the insights he gained as an advisor to clients across a broad range of industries bring valuable perspective to our Board.
Throughout his career, Mr. Gilbertson has served as a strategic and financial advisor to his clients, forming deep relationships with companies in a range of industries including Baxter International, Walgreens, The Boeing Company, W.W. Grainger, Inc. and Exelon Corporation.
He has nearly four decades of experience in the professional and financial services industry, starting his career with Chase Manhattan Bank, then working at Bain & Company, where he lived abroad and served in a corporate strategy consulting role, next joining Morgan Stanley in mergers and acquisitions, and finally at Goldman Sachs, where he helped expand the Midwestern practice.
His deep expertise in financial management, coupled with his analytical and collaborative mindset, allow him to make invaluable contributions to our Board as it focuses on delivering greater returns from our businesses, funding investments to drive profitable growth, and enhancing shareholder value.
Mr. Gilbertson has a strong background in senior leadership development, succession planning, and organizational culture development, gained from his time at Goldman Sachs and his service as a director at Meijer, and has first-hand experience assisting in onboarding new CEOs.
He also brings to the Board extensive business experience and strategic leadership as a CEO, international business experience andconsiderable expertise in investment management.financial risk oversight and capital allocation.
He also contributes valuable perspectives on governance practicesearned a bachelor’s degree in political economy from Dartmouth College and change management informed in part by his role as a Faculty member at the Stanford University Graduate School of Business, where he teaches courses on business transition planning.
DOVER CORPORATION –20182020 Proxy Statement 1113
PROPOSAL 1 — ELECTION OF DIRECTORS
Kristiane C. Graham
| ||||
| ||||
Independent Director Nominee Age: Director since 1999
Committees Served: Compensation, Governance and Nominating
| ||||
Business Experience: Private Investor.
Skills and Qualifications: |
Ms. Graham’s experience as a private investor with substantial holdings of Dover stock and her shared interests in Dover, including interests through charitable organizations of which she is a director, makes her a good surrogate for our individual and retail investors.
Ms. Graham also has past experience with a commercial bank, primarily as a loan officer. She founded and operated an advisory company and a publication regarding international thoroughbred racing and nowco-manages her family’s investments.
During her time on the Board, she has devoted substantial time to monitoring the development of Dover operating company leaders, enabling her to provide the Board valuable insights regarding management succession.
As a member of one of the founding families of Dover, Ms. Graham also brings to the Board a sense of Dover’s historical values, culture and strategic vision which the Board believes is beneficial as it considers various strategic planning alternatives for shaping Dover’s future.
Michael F. Johnston
| ||||
| ||||
Independent Board Age: Director since 2013
Committees Served: Compensation, Governance and Nominating
| ||||
Business Experience: Former CEO (from 2004 to 2008) and President and Chief Operating Officer (“COO”) (from 2000 to 2004) of Visteon Corporation, an automotive components supplier; former President of North America/Asia Pacific, Automotive Systems Group (from 1999 to 2000), President of Americas Automotive Group (from 1997 to 1999), and other senior management positions at Johnson Controls, Inc., an automotive and building services company. In May 2009, Visteon filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Other Board Experience: Director of Armstrong Flooring, Inc. and Whirlpool Corporation. Former Chairman and Director of Visteon Corporation. Former Director of Armstrong World Industries and Flowserve Corporation.
Skills and Qualifications: |
Mr. Johnston brings to the Board industry insight, financial expertise and leadership experience garnered from his 17 years on the boards of global companies.
During his career, he has served as CEO of an $18 billion global manufacturer, and has been a lead Director and ChairmanChair of other major public companies.
Mr. Johnston also brings valuable corporate governance perspectives from his prior board service, while his operations experience has helped him gain knowledge and a deep understanding in manufacturing, design, innovation, engineering, accounting and finance and capital structure.
In addition, he has nearly 20 years of experience in building businesses in emerging economies.
Mr. Johnston holds a bachelor’s degree in industrial management from the University of Massachusetts and an MBA from Michigan State University.
DOVER CORPORATION –20182020 Proxy Statement 1214
PROPOSAL 1 — ELECTION OF DIRECTORS
![]() |
| |
|
Business Experience: Retired President of Lochridge & Company, Inc., a management consulting firm.
Other Board Experience: Director of Knowles Corporation. Former Director of The Lowe’s Company, Inc. and PETsMART Inc.
Skills and Qualifications:
DOVER CORPORATION – 2018 Proxy Statement 13
PROPOSAL 1 — ELECTION OF DIRECTORS
Eric A. Spiegel
| ||||
| ||||
Independent Director Nominee Age: Director since 2017
|
Business Experience: Special Advisor at General Atlantic,Brighton Park Capital, a private equity firm, where he supports the firm’s sector investment teams and portfolio companies by providing strategic counsel on industry trends and growth strategies. Former President and CEO (from 2010 to 2016) of Siemens USA, a global business focusing on the areas of electrification, automation and digitalization; former Managing Partner, Global Energy, Chemicals, and Power, and Managing Partner, Washington, D.C. office, and other roles at Booz & Company, Inc. (now known as Strategy&) and Booz Allen Hamilton, Inc., global consulting firms (1986 to 2010); former Associate, Energy and Industrials Practice, at Temple, Barker & Sloane, Inc., a management consulting firm (now known as Oliver Wyman) (1984 to 1985; 1980 to 1982):; former Marketing and Strategy Manager at Brown Boveri & Cie (now known as ABB), a Swiss group of electrical engineering companies (1982 to 1984). In connection with his position at General Atlantic,Brighton Park Capital, Mr. Spiegel serves as Chair of the Board of CLEAResult,Relatient, Inc., a privately held portfoliopatient-engagement software company that provides energy efficiency programs and services in North America.serving healthcare providers.
Other Board Experience: Director and Audit Committee Chair of Liberty Mutual Holding Company, Inc.
Skills and Qualifications: |
Mr. Spiegel is an experienced business leader with diversified, global experience who brings deep and valuable expertise in strategy development, corporate restructuring, portfolio management and M&A to our Board.
He has over 35 years of experience working with large, global companies in the energy and industrial markets, mostly recently as President and CEO of Siemens USA. At Siemens, he led strategic reviews across a portfolio of ~45 businesses in the company’s largest market with over $22 billion in revenue, 50,000 employees and over 60 manufacturing facilities. During that time, he led the acquisition, divestiture, joint venture andcarve-out of over 30 business units and segments. He also executed Siemens’ “Vision 2020” initiative to optimize growth and margins in the U.S., across all sectors.
Prior to Siemens, Mr. Spiegel was a global consultant at Booz Allen Hamilton focused on complex organizations in the energy, power, chemical, water, industrial and automotive fields. At Booz, he lived, and worked with major energy clients, in Asia, the Middle East, Europe, and Latin America on projects around corporate strategy, M&A, major capital projects, cost restructuring, margin enhancement and supply chainre-design and was also closely involved with the government sector.
• | An expert on the global energy industry, Mr. Spiegelco-authored the bookEnergy Shift: Game-changing Options for Fueling the Future. |
He holds a bachelor’s degree in economics from Harvard University and an MBA from the Tuck School of Business at Dartmouth College.
DOVER CORPORATION –20182020 Proxy Statement 1415
PROPOSAL 1 — ELECTION OF DIRECTORS
![]() | Richard J. Tobin
| |||
| ||||
Chief Executive Officer Age: Director since 2016
Committee Served:
| ||||
Business Experience: Incoming President and Chief Executive OfficerCEO of Dover effective May 1, 2018: currently(since 2018): former CEO (since 2013)(2013 to 2018) of CNH Industrial NV (“CNH Industrial”), a global manufacturer of agricultural and construction equipment, trucks, commercial vehicles, buses, specialty vehicles and powertrain applications; former Group Chief Operating Officer of Fiat Industrial S.p.A., a global capital goods manufacturer, and President and CEO (each from 2012 to 2013) of CNH Global NV, a multinational manufacturer of agricultural and construction equipment; former Chief Financial OfficerCFO of CNH Global NV (2010 to 2012); former Chief Finance Officer & Head of Information Technology (2004 to 2010) of SGS Group, a multinational provider of inspection, verification, testing and certification services; and former Chief Operating Officer for North America (2002 to 2004) of SGS Group. Solely in connection with his role as CEO of CNH Industrial,
Skills and Qualifications: |
Mr. Tobin serves as Vice Chairman of Turk Traktor, which is a 37.5%-owned CNH Industrial joint venture that manufactures and distributes various models of tractors under brand names owned by CNH Industrial. Turk Traktor, which tradesDover’s current CEO. The Board believes it is desirable to have one active management representative on the Istanbul Stock Exchange, is an unconsolidated subsidiaryBoard to facilitate its access to timely and relevant information and its oversight of CNH Industrial,management’s long-term strategy, planning, and not a separate, unrelated company of CNH Industrial.performance.
Other Board Experience: Director of CNH Industrial NV
Skills and Qualifications:
He has a broad range of industry and functional experiences acquired through regional and global leadership positions of significant responsibility and scope.
He currently serves asis the former CEO of CNH Industrial, a complex international industrial company, where he is leadingled efforts to increase efficiencies, innovate through new technologies, expand geographically, and maximize the company’s portfolio of businesses.
Mr. Tobin gained extensive experience in international finance, operations, management, and information technology in his prior roles as CFO of CNH Global NV and Chief Finance Officer & Head of Information Technology at SGS Group.
He has developed deep expertise with global capital markets through his international finance leadership roles. Mr. Tobin provides the Board with strategic insights on a wide variety of treasury matters including with respect to capital allocation, credit ratings and investor relations.
Prior to beginning his business career, Mr. Tobin was an officer in the United States Army.
He is a member of the Board of Trustees of the John G. Shedd Aquarium in Chicago. He formerly served on the U.S. Chamber of Commerce Board of Directors, and is a former member of the Business Roundtable. Mr. Tobin holds a bachelor of arts from Norwich University and an MBA from Drexel University.
DOVER CORPORATION –20182020 Proxy Statement 1516
PROPOSAL 1 — ELECTION OF DIRECTORS
Stephen M. Todd
| ||||
| ||||
Independent Director Nominee Age: Director since 2010
Committee Served: Audit(Chair)
| ||||
Business Experience: Former Global Vice Chairman (from 2003 to 2010) of Assurance Professional Practice of Ernst & Young Global Limited, London, UK, an assurance, tax, transaction and advisory services firm; and prior thereto, various positions with Ernst & Young (since 1971).
Other Board Experience: Director and Audit Committee member of Apergy Corporation and Member of the Board of Trustees and Chairman of the Audit Committee of PNC Funds and PNC Advantage Funds (registered management investment companies)company).
Skills and Qualifications:
Skills and Qualifications: |
Mr. Todd’s experience in the accounting profession makes him a valuable resource for the Board and Audit Committee.
Mr. Todd brings to the Board significant financial experience in both domestic and international business following a40-year career at Ernst & Young where he specialized in assurance and audit.
Mr. Todd developed and directed Ernst & Young’s Global Capital Markets Centers, which provide accounting, regulatory, internal control and financial reporting services to multinational companies in connection with cross-border debt and equity securities transactions and acquisitions, making him well suited to advise the Board on capital allocation decisions, financing alternatives, and acquisition activities.
His experience, especially his years as Global Vice Chairman of Ernst & Young Global Limited’s Assurance Professional Practice and as audit partner for several multinational companies, gives him unique insights into accounting and financial issues relevant to multinational companies like Dover, and he brings the perspective of an outside auditor to the Audit Committee.
DOVER CORPORATION – 2018 Proxy Statement 16
PROPOSAL 1 — ELECTION OF DIRECTORS
Stephen K. Wagner
| ||||
| ||||
Independent Director Nominee Age: Director since 2010
Committees Served: Audit, Governance and Nominating(Chair)
| ||||
Business Experience: Former Senior Advisor, Center for Corporate Governance, of Deloitte & Touche LLP, an audit, financial advisory, tax and consulting firm (from 2009 to 2011); Managing Partner, Center for Corporate Governance, of Deloitte (from 2005 to 2009); Deputy Managing Partner, Innovation, Audit and Enterprise Risk, United States, of Deloitte (from 2002 to 2007); andCo-Leader, Sarbanes-Oxley Services, of Deloitte (from 2002 to 2005).
SkillsOther Board Experience: Director and Qualifications:Audit Committee member of Apergy Corporation
Skills and Qualifications: |
Mr. Wagner’s over 30 years of experience in accounting make him a valuable resource for the Board and the Audit Committee.
His work with Sarbanes-Oxley and other corporate governance regulations, including his years as Managing Partner at Deloitte & Touche’s Center for Corporate Governance, makes him well suited to advise the Board on financial, auditing and finance-related corporate governance matters as well as risk management.
• | Mr. Wagner is an expert in risk oversight andco-authored a book on risk management entitledSurviving and Thriving in Uncertainty: Creating the Risk Intelligent Enterprise. |
He brings to the Board an outside auditor’s perspective on matters involving audit committee procedures, internal control and accounting and financial reporting matters.
DOVER CORPORATION –20182020 Proxy Statement 17
PROPOSAL 1 — ELECTION OF DIRECTORS
Keith E. Wandell
| ||||
| ||||
Independent Director Nominee Age: Director since 2015
Committees Served: Compensation
| ||||
Business Experience: Former President and CEO (from 2009 to 2015) of Harley-Davidson, Inc., a global motorcycle manufacturer; and former President and Chief Operating Officer (from 2006 to 2009), former Executive Vice President (from 2005 to 2006), former Corporate Vice President (from 1997 to 2005), former President of the Automotive Experience business (from 2003 to 2006) and President of the Power Solutions business (from 1997 to 2003) of Johnson Controls, Inc., a global manufacturer of automotive, power and building solutions.
Other Board Experience: Director of Dana Holding Corporation and Constellation Brands, Inc.Incorporated. Former Chairman of Harley Davidson, Inc. and former Director of Constellation Brands, Inc. and Clarcor, Inc.
Skills and Qualifications: |
Mr. Wandell brings to the Board the valuable perspective of a strategic, experienced leader with a strong record focused on growth, profitability, international expansion and innovation.
He has over 30 years of experience in diversified manufacturing businesses, most recently as the former Chairman and CEO of Harley-Davidson, Inc., where he led transformation efforts across the company’s product development, manufacturing and retail functions, focused on international expansion and implemented a restructuring plan.
Prior to joining Harley-Davidson, Inc., Mr. Wandell served as President and Chief Operating Officer of Johnson Controls, Inc. and helped manage the company’s entry into the Chinesecar-battery market as well as its subsequent joint venture with China’s largest battery manufacturer.
Mr. Wandell has gained valuable insights into the effective development of executive leadership capabilities and strong corporate cultures through his experience as a senior leader at companies such as Harley-Davidson and Johnson Controls.
In addition to his significant operating, financial and leadership experience in both domestic and international business, Mr. Wandell has served on the boards of four other public companies, including the two on which he currently serves.
He holds a bachelor’s degree in business administration from Ohio University and an MBA from the University of Dayton.
DOVER CORPORATION –20182020 Proxy Statement 18
PROPOSAL 1 — ELECTION OF DIRECTORS
Mary A. Winston
| ||||
| ||||
Independent Director Nominee Age: Director since 2005
| ||||
Business Experience: President of WinsCo Enterprises Inc., a consulting firm providing financial and board governance advisory services (since 2016); former Interim CEO, Bed Bath & Beyond Inc., a leading retailer of home products (from May 2019 to November 2019); former Executive Vice President and CFO of Family Dollar Stores, Inc., a general merchandise retailer (from 2012 to 2015); former Senior Vice President and CFO of Giant Eagle, Inc., a grocery and fuel retailer (from 2008 to 2012); former President of WinsCo Financial LLC, a financial and strategic consulting firm (from 2007 to 2008); and former Executive Vice President and CFO of Scholastic Corporation, a children’s publishing and media company (from 2004 to 2007).
Other Board Experience: Director of Bed Bath & Beyond, Inc., Domtar Corporation SUPER VALU, INC. and Acuity Brands, Inc.; Former Director of SUPERVALU INC. and Plexus Corporation.
Skills and Qualifications: |
Ms. Winston brings to the Board valuable experience and expertise based on her years of broad financial management and broad executive leadership experience.
Ms. Winston, who started her career as a CPA with Arthur Andersen & Co, has extensive experience with financial, accounting and internal control matters for large public companies.
Ms. Winston served as Chief Financial OfficerCFO of three large companies: Family Dollar Stores, Inc., Giant Eagle, Inc. and Scholastic, Inc., as well as prior global finance leadership roles (prior to 2004) at Visteon Corporation and Pfizer, Inc. Through these experiences, she developed deep expertise in capital markets, M&A, capital structure matters, capital allocation, financial risk management, real estate financing transactions, dividend and stock repurchase programs, and investor relations. In addition, Ms. Winston served as interim CEO of Bed Bath & Beyond Inc.
Ms. Winston’s background and experience make her a valuable contributor to the Board on matters involving audit committee matters, financial analysis, internal control,risk oversight and accounting and financial reporting matters,capital allocation, as well as executive compensation and general corporate governance matters.
She holds a bachelor’s degree in accounting from the University of Wisconsin and an MBA from Northwestern University’s Kellogg School of Management. She has been designated as a Board Leadership Fellow by the NACDNational Association of Corporate Directors (“NACD”) and serves as PresidentChair of the NACD Carolinas chapter.
THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH
OF THE NOMINEES NAMED ABOVE.
DOVER CORPORATION –20182020 Proxy Statement 19
PROPOSAL 1 — ELECTION OF DIRECTORS
Structure of Board Oversight and Governance Practices
Our Board is responsible for, and committed to, overseeing our long-term strategic development as well as managing the principal and most significant risks that we face. In carrying out this duty, our Board advises senior management to help drive long-term value creation for our shareholders. The following summarizes our Board’s key areas of oversight responsibility.
Board Oversight
KEY AREAS OF BOARD OVERSIGHT | ||
Long-Term Business Strategy | • One of the primary responsibilities of our Board is theoversight of management’s long-term strategy and planning. Accordingly, our Board maintains a deep level of engagement with management in setting and overseeing Dover’s long-term business strategy. | |
Capital Allocation | • Our Board is focused on theefficient allocation of capital to drive growth and provide returns to our shareholders. Our capital allocation priorities are organic investments, strategic acquisitions, and the return of capital to our shareholders. • We consistentlyreturn cash to shareholders by payingdividends, whichhave increased annually over each of the last 64 years. • We also undertake opportunisticshare repurchases as part of our capital allocation strategy, completing$1 billion of share repurchases in 2018, primarily funded with proceeds received in connection with the consummation of thespin-off of Apergy Corporation, and$143.3 million in 2019. • We employ aprudent financial policy to support our capital allocation strategy, which includes maintaining aninvestment grade credit rating. | |
Portfolio Management | • Businesses in our portfolio are continually evaluated forstrategic fit. • We seek to deploy capital in acquisitions in attractive growth areas across our five segments. We focus primarily onbolt-on acquisitions,applying strict selection criteria of market attractiveness (including growth, maturity, and performance-based competition),business fit (including sustained leading position, revenue visibility, and favorable customervalue-add versus switching cost or risk) andfinancial return profile(accretive growth and margins and double-digit return on capital). • We havesold or divested some of our businesses based on changes in specific market outlook, structural changes in financial performance, value-creation potential, or for other strategic considerations, which included an effort to reduce our exposure to cyclical markets or focus on our higher margin growth spaces. • Significant efforts tostreamline and improve the portfolio to less cyclical and higher growth businesses were undertaken in 2018 with thespin-off of Apergy Corporation. • Transition from a three-segment to a five-segment structure toincrease portfolio transparency and align with our management structure and operating model. |
DOVER CORPORATION –2020 Proxy Statement 20
PROPOSAL 1 — ELECTION OF DIRECTORS
KEY AREAS OF BOARD OVERSIGHT | ||
Risk | • Our Board has established acomprehensive enterprise risk management process to identify and manage risks, and periodically reviews the processes established by management to identify and manage risks andcommunicates with management about these processes. • We have established a risk assessment team consisting of senior executives, which annually, with the assistance of a consultant, oversees a risk assessment made at the segment and operating company levels and, with that information in mind, performs an assessment of the overall risks our company may face. Each quarter, this team reassesses the risks at the Dover level, the severity of these risks and the status of efforts to mitigate them andreports to the Board on that reassessment. | |
ESG | • Thefull Board hasoversight of Environmental, Social, and Governance (“ESG”) matters and is regularly briefed on strategic planning, risks, and opportunities related to ESG by senior management, including our CEO. • Integrated ESG oversight responsibility into our CEO’s individual strategic objectives within the Annual Incentive Plan. | |
Culture | • We fosteran operating culture with high ethical standards that values accountability, rigor, trust, respect, and open communication and is designed to encourage individual growth and operational effectiveness. We continue to make significant investments in talent development, especially in the area of operational management, andrecognize that the growth and development of our employees is essential for our continued success. • As part of our commitment to strong corporate governance practices,we maintain an active and robust ethics program. Our Code of Conduct & Business Ethics applies to all employees and directors of Dover and its subsidiaries. We enforce our Code fairly and consistently, regardless of one’s position in Dover, andwill not tolerate retaliation against those who report suspected misconduct in good faith. | |
Succession | • Another of the Board’s primary responsibilities isoverseeing a sound Board and management succession process. The Board has developed acomprehensive plan to address management succession — both over the long term and for emergency purposes. The framework for the long-term plan includes thoughtful, deliberate monitoring of management beyond our top executives to ensure Dover continues to build a deep internal bench of talent. • Our Board is also focused on itsown succession plan, which drives not only our director selection efforts, but also how we approach Board and committee leadership structure and membership, with afocus on critical board skills, diversity, and independence. | |
Cybersecurity | • The full Board is briefed on enterprise-widecybersecurity risk management and the overall cybersecurity risk environment, and oversees major tasks related to cybersecurity risk management, periodically reviews our response capabilities, and meets with the Chief Information Officer on at least an annual basis. • Dover employs the National Institute of Standards & Technology Framework for Improving Critical Infrastructure Cybersecurity (The NIST Framework). This voluntary guidance developed with much private sector input provides a framework and a toolkit for organizations to manage cybersecurity risk. |
DOVER CORPORATION –2020 Proxy Statement 21
PROPOSAL 1 — ELECTION OF DIRECTORS
Corporate Governance Practices
Our Board is committed to sound governance practices and regularly reviews and refines our profile to reflect evolving best practices and matters raised by our shareholders. The following summarizes key aspects of our governance framework.
Corporate Governance Highlights
GOVERNANCE HIGHLIGHTS | ||||
Independent Chair/Directors | • We have anindependent | |||
Commitment to Diversity | • In 2020, our Board adopted a policy reflected in our Corporate Governance Guidelines requiring that the initial list of potential director and external CEO candidates presented by third-party search firmsinclude qualified diverse candidates. | |||
Special Shareholder Meetings | • In 2020, we amended ourby-laws toreduce the ownership threshold required to call a special meeting of shareholders to 15% or more of the voting power of our outstanding stock from 25%. | |||
| • In 2019,we accomplished the removal of all remaining supermajority provisions in our charter. | |||
Finance Committee | •
• The Finance Committee | |||
Board Committee Refreshment | • Our Boardperiodically reviews committee composition and chair positions, seeking the appropriate blend of continuity and fresh perspectives on committees. | |||
Annual Majority Vote Director Elections & Mandatory Resignation Policy | • All of ourdirectors are elected annually by our shareholders.
• Ourdirectors must receive a majority of the votes cast in uncontested elections to be elected.
• We have a director resignation policy that requires a | |||
Proxy Access | • Ourby-laws permit a shareholder or a group of up to20 shareholders owning 3% or more of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials director candidates constituting up to the greater of two individuals or 20% of the Board, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in ourby-laws. | |||
| ||||
|
Director Independence
Our Board has determined that each of the current members of the Board, except for Robert A. Livingston who is our CEO, has no material relationship with Dover and satisfies all the criteria for being “independent” members of our Board. This includes the criteria established by the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”) listing standards, as well as our standards for classification as an independent director
DOVER CORPORATION – 2018 Proxy Statement 20
PROPOSAL 1 — ELECTION OF DIRECTORS
which are available on our website at www.dovercorporation.com. Our Board makes an annual determination of the independence of each nominee for director prior to his or her nomination forre-election. No director may be deemed independent unless the Board determines that he or she has no material relationship with Dover, directly or as an officer, shareholder or partner of an organization that has a material relationship with Dover. Mr. Tobin upon his appointment as President and CEO effective May 1, 2018, will cease to be an “independent” member of the Board.
Shareholder Engagement
In 2017, we continued our focus on regularly engaging with our shareholders. We reached out to holders of over 53% of our shares outstanding and engaged with governance professionals and portfolio managers at investors holding 33% of our shares outstanding.
Topics of discussion focused on Board oversight of our long-term business strategy, including our evolution over the past ten years and the Apergy separation plan, our key governance and compensation practices, and our Board refreshment practices. Our shareholders expressed their broad support for our governance practices and shareholder rights, including our Board leadership structure, thoughtful and active refreshment process, the formulation of our special meeting right and our use of annual director elections. We also discussed super-majority voting provisions, our executive compensation program and how the metrics in our compensation program, including our internal Total Shareholder Return (“iTSR”) metric, align our strategy with performance, and how we address sustainability, an area of increasing focus for both our shareholders and our Board.
The Board continues to find the feedback it receives from these discussions to be invaluable. We plan to continue our program of proactive, regular engagement to further deepen our relationship with our investors.
Sustainability
In response to concerns around global sustainability, in 2010, we developed and implemented a process to conduct an inventory of our greenhouse gas emissions. Since then, we have evaluated our climate change risks and opportunities, as well as developed an energy and climate change strategy that includes goals, objectives and related projects for reducing energy use and greenhouse gas emissions. To further promote our sustainability efforts, we have committed to reducing our overall energy and greenhouse gas intensity indexed to net revenue by 20% from 2010 to 2020. We are near our goal for reducing overall energy intensity and have surpassed our goal for reducing greenhouse gas intensity. Dover will continue to work proactively to reduce energy usage and carbon emissions amidst acquisition and business growth. We have also participated as a voluntary respondent in the Carbon Disclosure Project since 2010 and have maintained our scoring range since we began reporting.
We believe that enhancing efficiency in our operations reduces costs, improves margins and helps us achieve operational excellence. Our businesses assess the energy efficiencies related to their operations and the opportunities associated with the use of their products and services by customers. In some instances, our businesses may be able to help customers reduce energy use and greenhouse gas emissions. Sustainability-driven innovation presents a significant growth opportunity, while contributing to enhanced resource efficiency and reduced waste.
Board Leadership Structure
The Chairman of our Board is an independent director. We believe that having a Chairmanan independent leader of management provides strong leadership for the Board is important to the Board’s oversight role and helps ensuredecision-making involving corporate strategy, performance, succession, and other critical andmatters. Under our current Board leadership structure, our Board has leadership that is independent thinking with respect to our Company’s strategy and performance.from management by way of an independent Chair. Our CEO is also a member of the Board as a management representative. We believe this is important to make information and insight directly available to the directors in their deliberations. In our view, this board leadership structure gives us an appropriate, well-functioning balance betweennon-management and management directors that combines experience, accountability and effective risk oversight.
DOVER CORPORATION –20182020 Proxy Statement 2122
PROPOSAL 1 — ELECTION OF DIRECTORS
Board, Committee and Individual Director Evaluations
Our Board and its committees conduct robust annual self-evaluations of their performance. In addition, our Board evaluatesone-third of our directors on a rotating individual basis each year with the purpose of assisting each director to be a more effective member of the Board. New directors undergo the evaluation process in each of their first two years on the Board. Our directors believe the rotational nature of our evaluation process enables a morein-depth, comprehensive evaluation for each of our directors.
Directors’ Meetings and Attendance
During 2019, the Board met six times. No director attended less than 75% of the board and standing committee meetings held while he or she was a member of the Board and relevant standing committee. Average board attendance was over 97% in 2019. Our independent directors meet at regularly scheduled executive sessions at least quarterly without management representatives ornon-independent directors present. The Chair of the Board presides at these sessions. We expect our directors to attend the Annual Meeting. All directors then on the Board attended the 2019 Annual Meeting.
Our directors also regularly engage with management and outside subject matter experts outside of formal meetings. Examples include developing agendas and reviewing the content of materials in advance of meetings, calls orin-person meetings with members of management to prepare for meetings, receiving periodic updates from management on significant operational or strategic developments between meetings, and, from time to time, engaging with shareholders.
Management Meetings and Site Visits
We encourage our directors to meet with senior managers throughout the enterprise and attend management’s strategic planning sessions. When considering businesses to visit, priority goes to those businesses identified as strategically important as well as those that were recently acquired. From time to time, the Board makeson-site visits to our businesses to tour the manufacturing facilities and meetface-to-face with company management and employees. These visits serve as an important tool in the Board’s succession planning process for our senior leadership team and enable a deeper understanding of our businesses and our culture.
Director Orientation and Education
All new directors participate in our director orientation program. New directors meetin-person with senior corporate and segment leaders to review and discuss our businesses, operations, strategy, end markets, governance and culture. We believe that ouron-boarding approach, coupled with participation in regular Board and committee meetings, as well as additional exposure to our business through participation in management meetings and site visits, provides new directors a strong foundation in our businesses and accelerates their effectiveness to fully engage in Board deliberations.
Our Board also encourages directors to participate annually in continuing director education programs outside of the Boardroom, and we reimburse directors for their expenses associated with this participation.
Director Independence
Our Board has determined that each of the current members of the Board, except for Richard J. Tobin, who is our CEO, has no material relationship with Dover and satisfies all the criteria for being “independent” members of our Board. This includes the criteria established by the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”) listing standards, as well as our standards for classification as an independent director which are available on our website at www.dovercorporation.com. Our Board makes an annual determination of the independence of each nominee for director prior to his or her nomination forre-election. No director may be deemed independent unless the Board determines that he or she has no material relationship with Dover, directly or as an officer, shareholder or partner of an organization that has a material relationship with Dover.
Majority Standard for Election of Directors and Mandatory Resignation Policy
Under ourby-laws and corporate governance guidelines, the voting standard in director elections is a majority of the votes cast. Under this majority of the majorityvotes cast standard, a director must receive more votes in favor of his or her election than
DOVER CORPORATION –2020 Proxy Statement 23
PROPOSAL 1 — ELECTION OF DIRECTORS
votes against his or her election. Abstentions and brokernon-votes do not count as votes cast with respect to a director’s election. In contested director elections (where there are more nominees than available seats on the board), the plurality standard will apply.
For an incumbent director to be nominated forre-election, he or she must submit an irrevocable resignation letter. The resignation will be contingent on the nominee not receiving a majority of the votes cast in an uncontested election and on the Board’s acceptance of the resignation. If an incumbent director fails to receive a majority of the votes cast in an uncontested election, the Governance and Nominating Committee will make a recommendation to our Board concerning the resignation. Our Board will act on the resignation within 90 days following certification of the election results, taking into account the committee’s recommendation. The Board will publicly announce its decision and, if the resignation is rejected, the rationale for its decision.
DOVER CORPORATION – 2018 Proxy Statement 22
Key Areas of Board Oversight
| ||
| ||
| ||
| ||
|
DOVER CORPORATION – 2018 Proxy Statement 23
PROPOSAL 1 — ELECTION OF DIRECTORS
Governance Guidelines and Code of Ethics
Our Board long ago adopted written corporate governance guidelines that set forth the responsibilities of our Board and the qualifications and independence of its members and the members of its standing committees. The Board reviews these guidelines at least annually, in light of evolving best practices, shareholder feedback and the evolution of our business. In 2020, the Board amended the guidelines to require that initial lists of potential director and external CEO candidates presented by third-party search firms include qualified diverse candidates. In addition, our Board has a long-standing code of business conduct and ethics setting forth standards applicable to all of our companies and their employees, a code of ethics for our CEO and senior financial officers, and charters for each of its standing committees. All of these documents (referred to collectively as “governance materials”) are available on our website at www.dovercorporation.com.
Directors’ Meetings and Attendance
During 2017, the Board met 10 times. No director attended less than 75% of the board and standing committee meetings held while he or she was a member of the Board and relevant standing committee. Average board attendance was 96% in 2017. Our independent directors meet at regularly scheduled executive sessions at least quarterly without management representatives ornon-independent directors present. The Chairman of the Board presides at these sessions.
We expect our directors to attend the Annual Meeting. 11 of the 12 directors then on the Board attended the Annual Meeting held on May 5, 2017.
Board Site Visits; Strategic Planning Meetings
We encourage our directors to meet with senior managers throughout the enterprise. When considering businesses to visit, priority goes to those businesses identified as strategically important as well as those that were recently acquired. In 2017, the Board madeon-site visits to a business in the U.S. in the retail fueling portfolio in our Fluids segment as well as to several businesses in Italy in the Industrials platform and Printing & Identification platform in our Engineered Systems segment, touring the manufacturing facilities and meetingface-to-face with company management. Directors also participated in amulti-day onsite strategic meeting with senior-level corporate, segment and operating company management. These visits serve as an important tool in the Board’s succession planning process for our senior leadership team.
Director Orientation and Education
All new directors participate in our director orientation program. New directors meetin-person with senior corporate and segment leaders to review and discuss our businesses, operations, strategy, end markets, governance and culture. We believe that ouron-boarding approach, coupled with participation in regular Board and committee meetings, provides new directors a strong foundation in our businesses and accelerates their effectiveness to fully engage in Board deliberations.
Our Board also encourages directors to annually participate in continuing director education programs outside of the Boardroom, and we reimburse directors for their expenses associated with this participation.
DOVER CORPORATION – 2018 Proxy Statement 24
PROPOSAL 1 — ELECTION OF DIRECTORS
Board Committees
Our Board has three standing committees — the Audit Committee, the Compensation Committee and the Governance and Nominating Committee. The table below sets forth a summary of our committee structure and membership information. Prior to the first meeting of the Finance Committee, we will refresh the composition of our standing committees. Mr. Tobin will step down from the Compensation Committee concurrent with his becoming Dover’s President and CEO.
DIRECTOR | Audit Committee | Compensation Committee | Governance and Nominating | |||
PETER T. FRANCIS | ✓ | |||||
KRISTIANE C. GRAHAM | ✓ | ✓ | ||||
MICHAEL F. JOHNSTON | ✓ | ✓ | ||||
ROBERT A. LIVINGSTON* | ||||||
RICHARD K. LOCHRIDGE | ✓ (Chair) | |||||
ERIC A. SPIEGEL | ✓ | |||||
MICHAEL B. STUBBS** | ✓ | |||||
RICHARD J. TOBIN | ✓ | |||||
STEPHEN M. TODD | ✓ | |||||
STEPHEN K. WAGNER | ✓ | ✓ (Chair) | ||||
KEITH E. WANDELL | ✓ | ✓ | ||||
MARY A. WINSTON | ✓ (Chair) | |||||
MEETINGS IN 2017 | 8 | 6 | 4 |
DOVER CORPORATION – 2018 Proxy Statement 25
PROPOSAL 1 — ELECTION OF DIRECTORS
| ||
|
|
| ||
|
|
DOVER CORPORATION – 2018 Proxy Statement 26
PROPOSAL 1 — ELECTION OF DIRECTORS
| ||
|
|
Procedures for Approval of Related Person Transactions
We generally do not engage in transactions in which our senior executive officers or directors, any of their immediate family members or any of our 5% shareholders have a material interest. Should a proposed transaction or series of similar transactions involve any such persons and an amount that exceeds $120,000, it would be subject to review and approval by the Governance and Nominating Committee in accordance with a written policy and the procedures adopted by our Board, which are available with the governance materials on our website.
Under the procedures, management determines whether a proposed transaction requires review under the policy and, if so, presents the transaction to the Governance and Nominating Committee. The Governance and Nominating Committee reviews the relevant facts and circumstances of the transaction and approves or rejects the transaction. If the proposed transaction is immaterial or it is impractical or undesirable to defer the proposed transaction until the next committee meeting, the Chair of the committee decides whether to (i) approve the transaction and report the transaction at the next meeting or (ii) call a special meeting of the committee to review and approve the transaction. Should the proposed transaction involve the CEO or enough members of the Governance and Nominating Committee to prevent a quorum, the disinterested members of the committee will review the transaction and make a recommendation to the Board, and the disinterested members of the Board will then approve or reject the transaction. No director may participate in the review of any transaction in which he or she is a related person.
Communication with Directors
The Audit Committee has established procedures for (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters (“accounting matters”), and (ii) the confidential, anonymous submission by employees of concerns regarding questionable accounting matters. Such complaints or concerns may be submitted to Dover, care of our Corporate Secretary or through the communications coordinator, an external service provider, by mail, fax, telephone, or via the internet as published on our website. The communications coordinator forwards such communications to Dover without disclosing the identity of the sender if anonymity is requested.
Shareholders and other interested persons may also communicate with our Board and thenon-management directors in any of these same manners. Such communications are forwarded to the Chair of the Governance and Nominating Committee.
DOVER CORPORATION –20182020 Proxy Statement 24
PROPOSAL 1 — ELECTION OF DIRECTORS
Board Committees
Our Board has four standing committees — the Audit Committee, the Compensation Committee, the Governance and Nominating Committee, and the Finance Committee. The table below sets forth a summary of our committee structure and membership information.
DIRECTOR | Audit Committee | Compensation Committee | Governance and Nominating | Finance Committee | ||||
H. JOHN GILBERTSON, JR. | ✓ | ✓ | ||||||
KRISTIANE C. GRAHAM | ✓ | ✓ | ||||||
MICHAEL F. JOHNSTON | ✓ | ✓ | ||||||
ERIC A. SPIEGEL | ✓ | ✓ (Chair) | ||||||
RICHARD J. TOBIN | ||||||||
STEPHEN M. TODD | ✓ (Chair) | |||||||
STEPHEN K. WAGNER | ✓ | ✓ (Chair) | ||||||
KEITH E. WANDELL | ✓ (Chair) | ✓ | ||||||
MARY A. WINSTON | ✓ | ✓ | ||||||
MEETINGS HELD IN 2019 | 8 | 5 | 4 | 8 |
DOVER CORPORATION –2020 Proxy Statement 25
PROPOSAL 1 — ELECTION OF DIRECTORS
Overview of Committee Responsibilities
Audit Committee | ||||||||
Stephen M. Todd (Chair) H. John Gilbertson, Jr. Eric A. Spiegel Stephen K. Wagner | Key Responsibilities • Selecting and engaging our independent registered public accounting firm (“independent auditors”) • Overseeing the work of our independent auditors and our internal audit function • Approving in advance all services to be provided by, and all fees to be paid to, our independent auditors, who report directly to the committee • Reviewing with management and the independent auditors the audit plan and results of the auditing engagement • Reviewing with management and our independent auditors the quality and adequacy of our internal control over financial reporting The Audit Committee holds regular quarterly meetings at which it meets separately with each of our independent registered public accounting firm, PwC, our internal audit function, financial management and our general counsel to assess certain matters including the status of the independent audit process, management’s assessment of the effectiveness of internal control over financial reporting and the operation and effectiveness of our compliance program. In addition, the Audit Committee, as a whole, reviews and meets to discuss the contents of each Form10-Q and Form10-K (including the financial statements) prior to its filing with the SEC. Our Board has determined that all members of the Audit Committee qualify as “audit committee financial experts” as defined in the SEC rules. The Audit Committee’s responsibilities and authority are described in greater detail in its written charter. |
Compensation Committee | ||||||||
Keith E. Wandell (Chair) Kristiane C. Graham Michael F. Johnston Mary A. Winston | Key Responsibilities The Compensation Committee, together with our independent directors, approves compensation for the CEO of Dover. The functions of the Compensation Committee also include: • Approving compensation for executive officers who report directly to the CEO (together with the CEO, “senior executive officers”) • Granting awards and approving payouts under our 2012 Equity and Cash Incentive Plan (the “LTIP”) and our Executive Officer Annual Incentive Plan (the “AIP”) • Approving changes to our executive compensation plans • Reviewing and recommending compensation for the Board • Overseeing succession planning and management development programs The Compensation Committee’s responsibilities and authority are described in greater detail in its written charter. |
DOVER CORPORATION –2020 Proxy Statement 26
PROPOSAL 1 — ELECTION OF DIRECTORS
Governance and Nominating Committee | ||||||||
Stephen K. Wagner (Chair) Kristiane C. Graham Michael F. Johnston | Key Responsibilities • Developing and recommending corporate governance principles to our Board • Annually reviewing the requisite skills and characteristics of board members as well as the size, composition, functioning and needs of our Board as a whole • Considering and recommending to the Board nominees for election to, or for filling any vacancy on, our Board in accordance with ourby-laws, our governance guidelines, and the committee’s charter • Identifying and recommending to our Board any changes it believes desirable in the size and composition of our Board • Recommending to our Board any changes it believes desirable in structure and membership of our Board’s committees The Governance and Nominating Committee’s responsibilities and authority are described in greater detail in its written charter. |
Finance Committee | ||||||||
Eric A. Spiegel (Chair) H. John Gilbertson, Jr. Keith E. Wandell Mary A. Winston | Key Responsibilities • Reviewing and recommending for approval by the Board proposed changes to dividend policies, stock splits, and repurchase programs • Reviewing our capital structure, liquidity, and financing plans • Reviewing and approving the registration and issuance of debt or equity securities • Subject to thresholds determined from time to time by the Board, reviewing and approving, or reviewing and recommending for Board approval, capital expenditures • Reviewing and approving, or recommending for Board approval, capital expenditures and M&A • Oversight of treasury, insurance, and tax planning matters The Finance Committee’s responsibilities and authority are described in greater detail in its written charter. |
DOVER CORPORATION –2020 Proxy Statement27
PROPOSAL 1 — ELECTION OF DIRECTORS
Shareholder Engagement and History of Board Responsiveness
Shareholder Engagement
In 2019, we continued our focus on regularly engaging with our shareholders through a significant outreach effort. Our multi-stage engagement effort in 2019 was a comprehensive year-long process that encompassed three separate cycles:
1 | Spring 2019, leading up to our 2019 Annual Meeting, to understand shareholders’ position on the ballot items | |
2 | Fall 2019, following the 2019 Annual Meeting, to solicit specific feedback on executive compensation, along with governance, Board and ESG and sustainability topics | |
3 | Winter 2020 to preview potential compensation-related changes |
Over the course of these engagement periods, we reached out to holders of approximately 65% of our shares outstanding, and engaged with governance professionals and/or portfolio managers at investors holding approximately 41% of our shares outstanding. During these conversations, we discussed a range of topics with a key focus on executive compensation and potential changes to our program. Other discussion topics included our business strategy, governance structures, Board composition and refreshment efforts, diversity, and ESG and sustainability initiatives. We describe the feedback we received, and acted upon, in particular regarding our executive compensation program and our special meeting right on pages 39 to 41 and 76 to 77 of this proxy statement, respectively. After filing this proxy statement, we plan to actively engagewith our shareholders in advance of our 2020 annual meeting to discuss the outcomes of our 2019 compensation program and the changes made to our program for 2020. And, going forward, we plan to continue to actively engage with our shareholders on a regular basis to better understand and consider their views.
DOVER CORPORATION –2020 Proxy Statement 28
PROPOSAL 1 — ELECTION OF DIRECTORS
History of Board Responsiveness
We are committed to being responsive to our shareholders as demonstrated by the number of changes we have made over the years based on their input. In direct response to shareholder feedback, over the past 6 years, Dover has adopted and amended our special meeting right, adopted proxy access, implemented meaningful changes to our executive compensation program, removed all our super-majority voting provisions in our charter, adopted a robust clawback policy, and enhanced our public disclosures. The table below highlights many of the changes to our governance structures and compensation program that have been implemented over the past several years informed by shareholder feedback. These changes specifically address shareholders’ areas of focus and input gathered through our extensive shareholder engagements and outreach efforts.
Year | % of Outstanding Shares | Actions in Response to Shareholder Feedback | ||||
![]() | 2014 | - / - | ✓ Adoption of special meeting right | |||
2015 | 39% / 24% | ✓ Launch of governance-focused shareholder engagement program | ||||
2016 | 60% / 28% | ✓ Adoption of proxy access ✓ Put forth management proposal to provide shareholders with written consent right – did not pass | ||||
2017 | 53% / 33% | ✓ Updated AIP to 60% financial metrics / 40% strategic objectives from 50% / 50% ✓ Put forth management proposal to remove supermajority voting provisions – did not pass | ||||
2018 | 51% / 32% | ✓ Put forth management proposal to remove supermajority voting provisions alongside comprehensive campaign with retail investors to build support – did not pass | ||||
2019 | Lead-up to 2019 AGM: 63% / 37% Fall: 63% / 41% | ✓ Achieved removal of all supermajority provisions in our charter through submission of management proposal and comprehensive retail investor campaign ✓ Enhanced disclosure regarding individual strategic objectives and financial metrics in AIP ✓ Adopted comprehensive clawback policy ✓ Incorporated ESG oversight into CEO’s individual strategic objectives in AIP | ||||
2020 | Winter: 65% / 15% Lead-up to 2020 AGM: Ongoing | ✓ Implemented for 2020 executive compensation program: ✓ Increased proportion of LTIP dedicated to PSUs and shifted from iTSR to rTSR as metric for PSUs ✓ Reduced maximum payout ceiling from 400% to 300% in LTIP ✓ Reduced ownership threshold required to call a special meeting of shareholders to 15% from 25% ✓ ��Currently engaging with shareholders on corporate governance and executive compensation topics ahead of our 2020 Annual Meeting |
We look forward to ongoing engagement with our shareholders in order to continue to incorporate their views into our Board’s decision-making process. We aim to havebest-in-class governance and compensation structures at Dover.
DOVER CORPORATION –2020 Proxy Statement 29
PROPOSAL 1 — ELECTION OF DIRECTORS
Environmental, Social, and Governance Oversight (ESG)
We are committed to creating economic value for shareholders by developing products designed to help our customers meet their sustainability goals in response to evolving regulatory and environmental standards. We believe that sustainability-driven innovation presents a growth opportunity while contributing positively to enhanced resource efficiency and reduced waste. In that regard, over the past several years, our businesses have accelerated efforts and processes around innovation, focusing on technologies that create tangible value for our customers. We also believe that integrating awareness and management of material ESG risks, opportunities, objectives, metrics, and other sustainability factors into our strategy, operations, and governance will help create value for our stakeholders and inure to the benefit of our long-term success as a business.
ESG Prioritization Analysis
In early 2020, we began a materiality analysis to identify and prioritize the ESG topics that are the most important to our business and stakeholders such as employees, customers, and investors. We began by identifying an initial set of ESG topics believed to be the most relevant to Dover based on a survey of disclosures made by peer companies, topics identified as material by industry standard setters, and our strategic focus areas and long-term business plan. We also considered feedback received from investors on ESG and sustainability matters solicited during our engagement efforts. We used those topics to guide interviews with a wide variety of our business leaders, including representatives from our operating companies as well as human resources, supply chain, legal, investor relations, and operational resources. We will consider the feedback received on the list of topics through the lens of our long-term strategic plan and values, and will use the results to help support the prioritized allocation of resources and to promote clear and transparent reporting of ESG matters to key stakeholders.
ESG Disclosures & Reporting Framework
Following completion of the materiality analysis, we will launch a refreshed ESG landing page on our website to improve transparency of our ESG related disclosures and underlying business practices. We plan to begin disclosing using the Sustainable Accounting Standards Board reporting framework and will also report on key Global Reporting Initiative indicators. As part of our evolving strategy, we intend to deployESG-related goals and key performance indicators across our business, and to report on material goals and key performance indicators and our results. Our ESG focus areas will serve as the framework for evolving these goals and metrics to measure our future performance. They will also influence our approach to product creation and innovation, operational practices, stakeholder engagement, and the attraction and retention of employees.
Sustainability Goals
We are committed to fostering sustainable business practices across our businesses in order to reduce greenhouse gas emissions and energy consumption. In 2010, we implemented a process to conduct an inventory of our greenhouse gas emissions. Since then, we have evaluated our climate change risks and opportunities, as well as developed an energy and climate change strategy that includes goals, objectives, and related projects for reducing energy use and greenhouse gas emissions. To further promote our sustainability efforts, we committed to reducing our overall energy and greenhouse gas intensity indexed to net revenue by 20% from 2010 to 2020. We have achieved those goals ahead of schedule. We are in the process of evaluating our strategic approach to managing sustainability and plan to continue reporting on our energy and greenhouse gas intensity. We have participated as a voluntary respondent in the Carbon Disclosure Project (CDP) since 2010 and have maintained our scoring range since we began reporting. Further, we began participating in the CDP water security program in 2018 and expanded our reporting in 2019 with water data collection.
DOVER CORPORATION –2020 Proxy Statement 30
PROPOSAL 1 — ELECTION OF DIRECTORS
Ournon-employee directors receive annual compensation in an amount our Board sets from time to time. The directors’ annual compensation is payable partly in cash and partly in common stock in an allocation our Board may adjust from time to time. If any director serves for less than a full calendar year, the compensation to be paid to that director for the year will bepro-rated as deemed appropriate by theour Compensation Committee.
Our Board has adopted a policy that directors are expected to hold at any time a number of shares at least equal to the aggregate number of shares they received as the stock portion of their annual retainer during the past five years, net of an assumed 30% tax rate.
FOR |
Annual retainer of $250,000, payable $130,000 in common stock and $120,000 in cash |
Audit Committee Chair — additional annual cash retainer of $15,000 |
Compensation Committee Chair, |
Board |
Under our LTIP, eachnon-employee director can elect to defer the receipt of 0%, 50%, or 100% of the equity compensation payable in a year until termination of services as anon-employee director. Shares deferred are converted into deferred stock units representing the right to receive one share of our common stock for each unit held at the end of the deferral period. Dividend equivalents are credited on deferred stock units and will be distributed in cash at the time that shares are distributed in settlement of deferred stock units. Messrs. Francis, Johnston, Lochridge, Spiegel, Tobin, Todd and Wagner and Ms. Graham elected to defer receipt of their 20172019 equity compensation and received deferred stock units.
The table below sets forth the compensation paid to our directors (other than Mr. Livingston) for services in 2017.2019.
NAME | FEES EARNED OR PAID IN CASH ($)(1) | STOCK AWARDS ($)(1)(2) | TOTAL ($) | |||
PETER T. FRANCIS | 120,000 | 129,965 | 249,965 | |||
KRISTIANE C. GRAHAM | 120,000 | 129,965 | 249,965 | |||
MICHAEL F. JOHNSTON | 245,000 | 154,994 | 399,994 | |||
RICHARD K. LOCHRIDGE | 130,000 | 129,965 | 259,965 | |||
BERNARD G. RETHORE | 60,000 | 63,778 | 123,778 | |||
ERIC A. SPIEGEL | 107,178 | 116,153 | 223,331 | |||
MICHAEL B. STUBBS | 120,000 | 129,965 | 249,965 | |||
RICHARD J. TOBIN | 120,000 | 129,965 | 249,965 | |||
STEPHEN M. TODD | 120,000 | 129,965 | 249,965 | |||
STEPHEN K. WAGNER | 130,000 | 129,965 | 259,965 | |||
KEITH E. WANDELL | 120,000 | 129,965 | 249,965 | |||
MARY A. WINSTON | 135,000 | 129,965 | 264,965 |
NAME | FEES EARNED OR PAID IN CASH ($)(1) | STOCK AWARDS ($)(1)(2) | TOTAL ($) | |||||||||
PETER T. FRANCIS |
| 60,000 |
|
| 54,167 |
|
| 114,167 |
| |||
H. JOHN GILBERTSON, JR |
| 120,000 |
|
| 130,050 |
|
| 250,050 |
| |||
KRISTIANE C. GRAHAM |
| 120,000 |
|
| 130,050 |
|
| 250,050 |
| |||
RICHARD K. LOCHRIDGE |
| 60,000 |
|
| 54,167 |
|
| 114,167 |
| |||
MICHAEL F. JOHNSTON |
| 245,000 |
|
| 155,010 |
|
| 400,010 |
| |||
ERIC A. SPIEGEL |
| 130,000 |
|
| 130,050 |
|
| 260,050 |
| |||
STEPHEN M. TODD |
| 135,000 |
|
| 130,050 |
|
| 265,050 |
| |||
STEPHEN K. WAGNER |
| 130,000 |
|
| 130,050 |
|
| 260,050 |
| |||
KEITH E. WANDELL |
| 130,000 |
|
| 130,050 |
|
| 260,050 |
| |||
MARY A. WINSTON |
| 120,000 |
|
| 130,050 |
|
| 250,050 |
|
(1) | Amounts include the standard annual cash retainer, the |
DOVER CORPORATION – 2018 Proxy Statement 28
PROPOSAL 1 — ELECTION OF DIRECTORS
(2) | On November 15, |
DOVER CORPORATION –20182020 Proxy Statement 2931
PROPOSAL 1 — ELECTION OF DIRECTORS
Our Compensation Committee reviews ournon-employee director compensation policy biennially and proposes changes to the Board, as appropriate. In reviewing thenon-employee director compensation policy in 2020, our Compensation Committee worked with its independent compensation consultant to assess the competitiveness of ournon-employee director compensation policy based on benchmark information from peer companies and relevant compensation surveys. Based on its review, our Compensation Committee proposed and the Board adopted the following changes to ournon-employee director compensation policy to be effective in 2020: the portion of the annual retainer payable tonon-employee directors in common stock increased by $20,000, the additional cash retainers payable to the Audit Committee Chair, the Compensation Committee Chair, the Nominating and Governance Committee Chair, and the Finance Committee Chair increased by $15,000, $10,000, $5,000, and $5,000, respectively, and the portion of the annual retainer payable to the Chair in common stock increased by $35,000 and the portion payable in cash increased by $5,000.
DOVER CORPORATION –2020 Proxy Statement 32
Proposal 2 — Ratification of Appointment of
Independent Registered Public Accounting Firm
The Audit Committee has appointed the independent registered public accounting firm of PwC to audit the annual accounts of Dover and its subsidiaries for 2018.2020. PwC has audited the financial statements for the Company for more than three years.since 1995. Representatives of PwC are not expected to be present at the Annual Meeting.
Although shareholder ratification of PwC’s appointment is not required by Dover’sby-laws or otherwise, our Board is submitting the ratification of PwC’s appointment for the year 20182020 to Dover’s shareholders. If the shareholders do not ratify the appointment of PwC, the Audit Committee will reconsider whether or not to retain PwC as Dover’s independent registered public accounting firm for the year 20182020 but will not be obligated to terminate the appointment. Even if the shareholders ratify the appointment of PwC, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in Dover’s interests.
THE BOARD RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT
OF PWC AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR 2018.2020.
DOVER CORPORATION –20182020 Proxy Statement 3033
PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is composed of directors who, in the opinion of the Board, are independent and financially literate under NYSE rules and qualify as audit committee financial experts as defined by the SEC. Information concerning the credentials of the Audit Committee members can be found in the section of this proxy statement entitled “Proposal 1 — Election of Directors”.
The Audit Committee operates under a written charter adopted by the Board and available on Dover’s website. The Audit Committee assists the Board in overseeing the quality and integrity of Dover’s financial statements, compliance with legal and regulatory requirements, the qualifications, performance and independence of the independent auditors, and the performance of the internal audit function.
Among other things, the Audit Committee appoints the Company’s independent auditors and is directly involved in the selection of the lead audit engagement partner, discusses with the internal audit function and independent auditors the overall scope and plans for their respective audits, reviews the Company’s accounting policies and system of internal controls, reviews significant financial transactions, discusses with management and with the Board processes relating to risk management,pre-approves audit and permissiblenon-audit services provided by the independent auditors, and approves all fees paid to the independent auditors for such services.
For 2017, the Audit Committee engaged the independent registered public accounting firm PwC as Dover’s independent auditor. In selecting PwC, the Audit Committee considered, among other things: the experience and qualifications of the lead audit partner and other senior members of the PwC team; PwC’s historical performance on Dover’s audit and the quality of its communications with the Audit Committee; the results of the most recent internal quality control review or Public Company Accounting Oversight Board (“PCAOB”) inspection; PwC’s independence; its reputation for integrity and competence in the fields of accounting and auditing; the appropriateness of its fees; and its tenure as Dover’s independent auditors, including its understanding of the Company’s global businesses, accounting policies and practices, and internal control over financial reporting.
The Audit Committee discussed with PwC the overall scope and plans for the audit of Dover’s 2017 financial statements. The Audit Committee met with PwC, with
and without management present, to discuss the results of PwC’s examination, their assessment of internal controls and the overall quality of financial reporting.
The Audit Committee reviewed and discussed, with both the management of Dover and PwC, Dover’s 2017 audited financial statements, including a discussion of critical accounting policies, the quality, not just the acceptability, of the accounting principles followed, the reasonableness of significant judgments reflected in such financial statements and the clarity of disclosures in the financial statements. The Audit Committee met a total of ten times in 2017 and 2018 to discuss 2017 quarterly and full-year financial results and related disclosures.
The Audit Committee has received the written disclosures and the Rule 3526 letter from PwC required by the applicable requirements of PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence, and discussed with PwC its independence, including the impact of any relationships or permittednon-auditing services on PwC’s independence. The Audit Committee also discussed with PwC the matters required to be discussed under PCAOB Auditing Standard No. 1301. The Audit Committee has also received written materials addressing PwC’s internal control procedures and other matters required by NYSE listing standards.
Based upon the review and discussions referred to above, the Audit Committee recommended that the audited financial statements for the year ended December 31, 2017 be included in Dover’s Annual Report on Form10-K.
Audit Committee:
Mary A. Winston (Chair)
Eric A. Spiegel
Michael B. Stubbs
Stephen M. Todd
Stephen K. Wagner
This report does not constitute “soliciting material” and shall not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent we specifically incorporate this report by reference, and shall not otherwise be deemed filed under such Acts.
The Audit Committee is composed of directors who, in the opinion of the Board, are independent and financially literate under NYSE rules and qualify as audit committee financial experts as defined by the SEC. Information concerning the credentials of the Audit Committee members can be found in the section of this proxy statement entitled “Proposal 1 — Election of Directors”. The Audit Committee operates under a written charter adopted by the Board and available on Dover’s website. The Audit Committee assists the Board in overseeing the quality and integrity of Dover’s financial statements, compliance with legal and regulatory requirements, the qualifications, performance and independence of the independent auditors, and the performance of the internal audit function. Among other things, the Audit Committee appoints the Company’s independent auditors and is directly involved in the selection of the lead audit engagement partner, discusses with the internal audit function and independent auditors the overall scope and plans for their respective audits, reviews the Company’s accounting policies and system of internal controls, reviews significant financial transactions, discusses with management and with the Board processes relating to risk management,pre-approves audit and permissiblenon-audit services provided by the independent auditors, and approves all fees paid to the independent auditors for such services. For 2019, the Audit Committee engaged the independent registered public accounting firm PwC as Dover’s independent auditor. In selecting PwC, the Audit Committee considered, among other things: the experience and qualifications of the lead audit partner and other senior members of the PwC team; PwC’s historical performance on Dover’s audit and the quality of its communications with the Audit Committee; the results of the most recent internal quality control review or Public Company Accounting Oversight Board (“PCAOB”) inspection; PwC’s independence; its reputation for integrity and competence in the fields of accounting and auditing; the appropriateness of its fees; and its tenure as Dover’s independent auditors, including its understanding of the Company’s global businesses, accounting policies and practices, and internal control over financial reporting. The Audit Committee discussed with PwC the overall scope and plans for the audit of Dover’s 2019 financial statements. The Audit Committee met with PwC, with and without management present, to discuss the results of PwC’s examination, their assessment of internal controls and the overall quality of financial reporting. The Audit Committee reviewed and discussed, with both the management of Dover and PwC, Dover’s 2019 audited financial statements, including a discussion of critical accounting policies, the quality, not just the acceptability, of the accounting principles followed, the reasonableness of significant judgments reflected in such financial statements and the clarity of disclosures in the financial statements. The Audit Committee met a total of eight times in 2019 and 2020 to discuss 2019 quarterly and full-year financial results and related disclosures. The Audit Committee has received the written disclosures and the Rule 3526 letter from PwC required by the applicable requirements of PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence, and discussed with PwC its independence, including the impact of any relationships or permittednon-auditing services on PwC’s independence. The Audit Committee also discussed with PwC the matters required to be discussed under PCAOB Auditing Standard No. 1301. The Audit Committee has also received written materials addressing PwC’s internal control procedures and other matters required by NYSE listing standards. Based upon the review and discussions referred to above, the Audit Committee recommended that the audited financial statements for the year ended December 31, 2019 be included in Dover’s Annual Report on Form10-K. Audit Committee: Stephen M. Todd (Chair) H. John Gilbertson, Jr. Eric A. Spiegel Stephen K. Wagner This report does not constitute “soliciting material” and shall not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent we specifically incorporate this report by reference, and shall not otherwise be deemed filed under such Acts. |
DOVER CORPORATION –20182020 Proxy Statement 3134
PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees Paid to Independent Registered Public Accounting Firm
Fees paid to, or accrued for, PwC for services to us and our subsidiaries for 20172019 and 20162018 (including reimbursable expenses) were as follows:
2017 | 2016 | 2019 | 2018 | |||||||||||||
AUDIT FEES
| $
| 12,169,363
|
| $
| 8,446,948
|
| $ | 8,561,503 |
| $ | 9,658,287 |
| ||||
AUDIT-RELATED FEES
| $
| 400,000
|
| $
| 110,000
|
| $ | 23,850 |
| $ | 400,000 |
| ||||
TAX FEES
| $
| 283,394
|
| $
| 529,390
|
| $ | 174,439 |
| $ | 603,942 |
| ||||
ALL OTHER FEES
| $
| 3,600
|
| $
| 1,312,059
|
| $ | 689,979 |
| $ | 4,500 |
| ||||
|
|
|
| |||||||||||||
TOTAL
| $
| 12,856,357
|
| $
| 10,398,397
|
| $ | 9,449,771 |
| $ | 10,666,729 |
|
Audit Fees. Audit fees include fees for audit or review services in accordance with generally accepted auditing standards of our consolidated financial statements (including internal control over financial reporting), statutory and subsidiary audits and review of documents filed with the SEC. In 2017,2018, audit fees include fees for audit and review services in connection with thespin-off of Apergy from Dover, including associated filings with the SEC.
Audit-Related Fees. Audit-related fees include fees for assurance and related services that are reasonably related to the audit of our financial statements, such as due diligence services pertaining to potential business acquisitions and dispositions and consultations concerning the accounting and disclosure treatment of events and the impact of final or proposed rules and standards. In 2017,2018, audit-related fees include fees for services in connection with our adoption of the new revenue recognition standard.accounting standards.
Tax Fees. Tax fees include fees for services that are performed by professional tax staff other than in connection with the audit. These services include tax compliance, consulting and advisory services.
All Other Fees. Other fees include fees fornon-audit services not listed above that do not impair the independence of the auditor and are not prohibited by the SEC or PCAOB, such asPCAOB. In 2019, all other fees included fees for market assessment and commercial due diligence services in 2016.pertaining to potential business acquisitions and dispositions.
Pre-Approval of Services Provided by Independent Registered Public Accounting Firm
Consistent with its charter and applicable SEC rules, our Audit Committeepre-approves all audit and permissiblenon-audit services provided by PwC to us and our subsidiaries. With respect to certain services which PwC has traditionally provided, the Audit Committee has adopted specificpre-approval policies and procedures. In developing these policies and procedures, the Audit Committee considered the need to ensure the independence of PwC while recognizing that, in certain situations, PwC may possess the expertise and be in the best position to advise us and our subsidiaries on issues and matters other than accounting and auditing.
The policies and procedures adopted by the Audit Committee allow thepre-approval by the Audit Committee of permissible audit-related services,non-audit-related services and tax services. Under the policies and procedures,pre-approval is generally provided for up to one year and any generalpre-approval is detailed as to the particular services or category of services and is subject to a specific budget for each of them. The policies and procedures require that any other services be expressly and separately approved by the Audit Committee prior to such services being performed by the independent auditors. In addition,pre-approved services which are expected to exceed the budgeted amount included in a generalpre-approval require separate, specificpre-approval. For each proposed service, the independent auditors and management are required to provide detailed information to the Audit Committee at the time of approval. The Audit Committee considers whether eachpre-approved service is consistent with the SEC’s rules and regulations on auditor independence.
DOVER CORPORATION – 2018 Proxy Statement 32
PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
All audit-related andnon-audit-related services of PwC during 20172019 listed above under “Fees Paid to Independent Registered Public Accounting Firm” werepre-approved specifically or pursuant to the procedures outlined above. With respect to any tax services provided by PwC, PwC provided to the Audit Committee the communications required under PCAOB Rule 3524.
DOVER CORPORATION –20182020 Proxy Statement 3335
Compensation Discussion and Analysis
Dear Dover Shareholders:
The executive compensation programs at Dover are designed to attract and retain talented individuals who have the skills and experience Dover needs to achieve its business and financial objectives, and to align their interests with those of our shareholders.
When making executive pay decisions, we take into account our business strategy, considering both our annual financial performance and the long-term success of Dover. We ensure our compensation levels and programs are competitive, while maintaining consistency with market practices. We also ensure that compensation awards recognize the performance and contributions each executive makes toward Dover’s performance.
Thank you for being a Dover shareholder. We are pleased to share our compensation philosophy, our financial and strategic performance for the year, and the specifics of our compensation program for our senior executives.
Sincerely,
Richard K. Lochridge (Chair), Peter T. Francis, Kristiane C. Graham, Michael F. Johnston, Richard J. Tobin and Keith E. Wandell
This Compensation Discussion and Analysis (“CD&A”) describes Dover’s executiveour compensation programs in 2017.program and how it operates for our NEOs. It describes Dover’s pay philosophy, howalso discusses the Board, thechanges to our program for 2020 made by our Compensation Committee following our extensive engagement with shareholders during the spring and the CEO have applied that philosophy to Dover’s executives and the process the Compensation Committee uses to make executive pay decisions, assess performance goals and results, and implement updates to our compensation program. There are five officers who are a NEO:fall of 2019. Our Named Executive Officers (NEOs) for 2019 are:
NAMED EXECUTIVE OFFICERS | ||
RICHARD J. TOBIN | President & CEO | |
BRAD M. CEREPAK | Senior Vice President & CFO | |
|
| |
|
| |
WILLIAM W. SPURGEON, JR. | Former President & CEO, Dover Fluids (retired December 31, 2019) | |
IVONNE M. CABRERA | Senior Vice President & General Counsel | |
JAY L. KLOOSTERBOER | Former Senior Vice President, Human Resources (retired December 31, 2019) |
Our compensation programs areprogram is based on apay-for-performance philosophy and is designed to supportincent executives to achieve financial and strategic goals that are aligned with the primary objectiveCompany’s long-term business strategy and the creation of creating sustained, long-term value for our shareholders. To achieve this objective, management is required
2019 Performance & Results
In 2019, we delivered on our commitments to execute Dover’s strategy, resultingimprove margins, make advancements in sustainable revenueoperational excellence, deliver organic growth, reinvest in growth and earnings growth. The Compensation Committee believes that a strongpay-for-performance philosophy alignsproductivity initiatives, and deploy capital in keeping with our executives’ goals with long-term value creation for our shareholders.return-seeking strategic priorities.
Dover Business Overview
✓ | Generated revenue of $7.1 billion, up 2% (+4% organic) compared to the prior year |
Dover is a diversified global manufacturer delivering innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services through four operating segments: Engineered Systems, Fluids, Refrigeration & Food Equipment and Energy. Our entrepreneurial business model encourages, promotes, and fosters deep customer engagement and collaboration, which has led to Dover’s well-established and valued reputation for providing superior customer service and industry-leading product innovation.
✓ | Increased GAAP earnings from continuing operations and adjusted earnings from continuing operations, each by 15% |
Our businesses are aligned in four segments and organized around our key end markets focused on growth strategies. The segment structure is also designed to provide increased opportunities to leverage our scale and capitalize on productivity initiatives.
✓ | Increased GAAP andnon-GAAP earnings per share, each by 19% |
✓ | Increased free cash flow as a percent of revenue by 180 basis points |
✓ | Increased our quarterly dividend by 2%, marking our 64th consecutive year of dividend increases |
✓ | Conducted anin-depth analysis of our portfolio to assess the value creation and investment potential of each business |
✓ | Transitioned our business segment reporting structure to five segments (from three) to support enterprise value creation by providing greater transparency and enabling benchmarking comparability |
✓ | Acquired three businesses to expand our Fueling Solutions and Pumps & Process Solutions segments for an aggregate consideration of $216.4 million, net of cash acquired and including contingent consideration |
✓ | Evolved our operating model to includecenter-led value capture from digital opportunities, operational excellence and expanded shared services |
✓ | Increased our investment in growth and productivity initiatives, including automation, the development of digital technologies and digital commercial capabilities, capacity expansion, and the implementation of common corporate systems and measurement tools |
✓ | Improved our margin profile through rightsizing programs consisting of broad-based selling, general and administrative expense reduction initiatives and footprint consolidation actions |
DOVER CORPORATION –2018 Proxy Statement 34
COMPENSATION DISCUSSION AND ANALYSIS
2017 Company Performance Highlights
In 2017, we:
As a result of Dover’s strong financial performance and continued commitment to industry leadership through innovation and strong focus on our customers, annual bonuses were higher for 2017 than 2016. The slower growth in some of our end markets over the past three years resulted in no Performance Share payout for our NEOs, except for a below target payout for Mr. Fincher. Individual compensation varies widely based on the individual’s business unit and performance against specific strategic objectives.
![]() |
Dover’s Annual Revenue Dover’s Diluted EPS (Continuing Operations Only)
DOVER CORPORATION –2018 Proxy Statement 35
COMPENSATION DISCUSSION AND ANALYSIS
Components of Compensation Aligned with Company Performance
In light of the strong support from our shareholders for our compensation program structure and its close alignment with our pay for performance philosophy, our 2017 program structure was generally unchanged. For the AIP, our annual cash incentive plan, in 2017, we changed the weighting of the financial results and individual strategic objectives metrics to 60%/40% from the prior weighting of 50%/50%.
|
|
|
| |||||||||
|
|
|
| |||||||||
|
|
| ||||||||||
| ||||||||||||
|
|
|
| |||||||||
| ||||||||||||
|
| |||||||||||
|
|
2017 Compensation Drivers and Outcomes
The primary elements of our philosophy include a clear pay strategy, emphasis on incentive-driven pay based on metrics that align with value creation for our shareholders and objectives that support our strategy. The following are key elements of our program:
DOVER CORPORATION – 20182020 Proxy Statement 36
COMPENSATION DISCUSSION AND ANALYSIS
The following chart demonstratesThese tables reflect our success on these metrics over the variability of the CEO’spast three years (2017-2019):
(1) | Definitions and reconciliations of non-GAAP measures are included at the end of this proxy statement. |
2019 Pay Decisions Align with Dover’s Performance
Our compensation program structure aligns pay outcomes with our shareholders’ experience through an emphasis on variable,at-risk pay for our NEOs through our annual and the relationship between CEOlong-term incentive programs.
In 2019, pay and our performance over time,decisions were consistent with ourpay-for-performance philosophy. Our financial performance was strong in 2019 and we exceeded the Revenue and Adjusted Earnings targets under our AIP. In addition, our NEOs made significant progress against theirpre-defined individual strategic objectives as evaluated by our Compensation Committee under our AIP. Consistent with our value creation over the three-year performance period of 2017-2019, the performance shares that vested in 2019 based on the iTSR metric had a payout percentage of 210% for corporate NEOs.
Multi-Stage Shareholder Engagement
In 2019, our Say on Pay vote declined meaningfully from our historically high vote outcomes. In an effort to understand and address the issues that contributed to the decline, the Compensation Committee undertook a significant multi-stage engagement effort to solicit shareholder feedback on our compensation program and other important matters. In direct response to the shareholder feedback we received through this effort, our Compensation Committee implemented meaningful changes to our executive compensation program for 2020, which are discussed in detail in this CD&A.
DOVER CORPORATION –2020 Proxy Statement 37
COMPENSATION DISCUSSION AND ANALYSIS
Principal Components of 2019 Compensation Program and Changes for 2020
The following table describes the structure of our 2019 executive compensation program. In response to the shareholder feedback received through our robust shareholder engagement program over the past year (as described in this Executive Summary and in more detail throughout this CD&A), our Compensation Committee implemented several changes to our compensation program for 2020, which are also highlighted in the table below.
*New for 2020
![]() | ||||||||
Component | Pay Element | 2019 Metrics & Weighting | 2020 Metrics & Weighting | Objectives | ||||
Base Salary | Cash | ◾ Benchmark: Peer group median | ◾ Benchmark: Peer group median | ◾ Attract and retain qualified executives | ||||
Annual Plan | Cash | ◾ 60% Financial Results: ○ Adj. Earnings (60%) ○ Revenue (40%) ◾ 40% Individual Strategic Objectives ○ESG oversight included in CEO’s individual strategic objectives | ◾ 60% Financial Results: ○ Adj. Earnings (60%) ○ Revenue (40%) ◾ 40% Individual Strategic Objectives ○Continue to include ESG oversight in CEO’s individual strategic objectives | ◾ Intended to drive profitability, growth & progress against strategy ◾ Individual objectives are focused on a limited and measurable set of goals to benefit shareholders over the long-term ◾ ESG oversight added to CEO objectives to establish clear tone at the top regarding the importance of ESG | ||||
Long-Term Incentive Plan | Performance Shares | ◾ 20% LTIP weighting ◾ Performance Criteria:3-year iTSR (EBITDA growth and free cash flow generation) | ◾40% LTIP weighting ◾Performance Criteria:3-Year relative TSR (“rTSR”) with the S&P 500 Industrials index as the benchmark | ◾ Focus executives on shareholder value creation ◾ Weighting increased to 40% in keeping with input from our investors ◾ Shifted to rTSR to address market outperformance and more closely align our executive-level measurement system with the experience of shareholders | ||||
SSARs | ◾ 60% LTIP weighting ◾ Performance Criteria: Dover stock price, exercisable three years after grant date and remain exercisable for another seven years (subject to10-year stock price movement) | ◾40% LTIP Weighting ◾ Performance Criteria: Dover stock price, exercisable three years after grant date and remain exercisable for another seven years (subject to10-year stock price movement) | ◾ Focus executives on share price appreciation ◾ SSARs retained as important component of our program, reflecting input from investors, many of whom acknowledge the role SSARs play in emphasizing growth andgo-forward value creation | |||||
RSUs | ◾ 20% LTIP weighting ◾ Performance Criteria: Dover stock price; awards vest ratably over three years | ◾ 20% LTIP weighting ◾ Performance Criteria: Dover stock price; awards vest ratably over three years | ◾ Retention, ownership, and full alignment with the shareholder experience | |||||
Benefits | Consistent with other similarly situated employees |
In 2019, the long-term incentive plan mix for Mr. Spurgeon was different from that of the other NEOs due to his responsibilities at the segment level and consisted of 50% SSARs, 30% performance shares and 20% RSUs.
For
DOVER CORPORATION –2020 Proxy Statement 38
COMPENSATION DISCUSSION AND ANALYSIS
Say on Pay Vote Results and Shareholder Engagement
Historical Say on Pay Support
Our Board has a discussionstrong history of engaging with shareholders and soliciting feedback on a range of topics, including our executive compensation program. Historically, our program has received strong shareholder support as expressed during ourone-on-one engagement discussions with shareholders and through our Say on Pay vote levels. In 2019, approximately 67% of the Say on Pay votes cast were in support of the Company (down from more than 96% in each of the four preceding years). Following the 2019 annual meeting of shareholders, we extended invitations to shareholders holding approximately 63% of our outstanding shares to specifically discuss compensation and governance matters in an effort to better understand what led to the decline in the 2019 Say on Pay vote. We held meetings with shareholders holding approximately 41% of our outstanding shares. Below is a detailed account of the process that followed as the Compensation Committee considered the feedback received and utilized it in considering potential changes to the program. After conducting several rounds of engagement, reviewing market practices, and reflecting on the elements of our executiveprogram and how they align with our business objectives and long-term shareholder value creation, the Committee implemented meaningful changes to our program for 2020.
Multi-Stage Shareholder Engagement Program to Seek Shareholder Feedback
The discussion below summarizes the significant multi-stage engagement effort undertaken by the Compensation Committee to solicit shareholder feedback on compensation program, including incentive-based pay, see “Elements of Executive Compensation — Long-Term Incentive Compensation.”
2017Say-on-Pay Advisory Vote and Shareholder Outreach
96%governance matters to help us understand the decline in support for our Say on Pay support | 53%Shares Outstanding Contacted | 33% Shares Engaged
In 2017,vote at our executive2019 annual meeting. Understanding the views of our shareholders is essential in ensuring that we effectively address their interests and the Committee integrated the feedback received through these efforts in its decision-making regarding changes to our compensation program received 96% approval fromfor 2020.
LEAD-UP TO 2019 ANNUAL MEETING | FALL 2019 | WINTER 2020 | LEAD-UP TO 2020 ANNUAL MEETING | |||
Contacted 63% / Engaged 37% of outstanding shares | Contacted 63% / Engaged 41% of outstanding shares | Contacted 65% / Engaged 15% of outstanding shares | Extensive shareholder engagementon-going |
In thelead-up to our shareholders, which was the same level of support received in 2016, signifying shareholders’ ongoing approval of our compensation program. In 2017,2019 Annual Meeting, we continued our shareholder engagement program. We reached out to holders of over 53%approximately 63% of our outstanding shares and met or spokeengaged with governance professionals and portfolio managers at investors holding approximately 33%37% of our outstanding shares. In additionshares to discuss our executive compensation program. Investors were pleased with the governance topics detailed earlier in this proxy statement, we had thoughtful discussions withprogress made toward our shareholders regardingstrategic initiatives under our new CEO, Richard Tobin. The main area of feedback was that investors requested a better understanding of theone-time, make whole award made to secure the hiring of our new CEO. We discussed theone-time nature of the make whole award, and all other aspects of our compensation program. Our investors told us they believe Dover’s pay practices are aligned with ourpay-for-performance philosophy. The Board appreciated the feedback it received, particularly regarding shareholder opinions on our compensation program structure, metrics and the rigor of our target selection. Theperformance targets and supporting goal-setting process, referencing both our annual and long-term incentives.
Following the 2019 Annual Meeting, and in light of the disappointing outcome of our Say on Pay proposal, which passed with 67% support, our Compensation Committee will continue to consider this feedback, as well as the results from future shareholder advisory votes, in its ongoing evaluationundertook a thorough review of our executive compensation programsprogram and practices at Dover.again conducted extensive shareholder engagement to gather constructive feedback on our program to identify key areas of focus and develop potential changes for 2020. Our shareholder engagement team included members of senior management and the Board, with participation from the Chair of our Compensation Committee.We reached out to holders of approximately 63% of our outstanding shares and spoke with investors holding approximately 41% of our outstanding shares. These conversations provided our Board with additional insights into shareholders’ views of our compensation program and helped us ensure that shareholder feedback was incorporated into the program changes for 2020.
During these discussions, many shareholders expressed an understanding that the use of a make whole award for our new CEO Compensationin 2018 helped to ensure the recruitment of a highly qualified candidate. Shareholders suggested that we provide additional disclosure on both the financial and TSR Performance(1)strategic objectives in the AIP, and that we shift to a more performance-based mix of awards in our LTIP. We also shared that effective oversight and management of ESG matters was included as a
DOVER CORPORATION –20182020 Proxy Statement 3739
COMPENSATION DISCUSSION AND ANALYSIS
strategic objective for our CEO under the AIP in 2019, which was well received by our investors. Our Compensation Committee incorporated this feedback into its decision-making regarding changes to our executive compensation program for 2020, as described in further detail in this CD&A.
Throughout the Winter of 2020, we conducted an additional round of engagement with our shareholders to preview specific changes the Compensation Committee was considering in response to the feedback received in the fall.We reached out to holders of approximately 65% of our outstanding shares and engaged with investors holding approximately 15% of our outstanding shares. These significant engagement efforts provided the Compensation Committee with valuable feedback that directly informed the program changes for 2020.
During these engagements, we discussed our intention to provide additional detail regarding the weighting, nature and performance outcomes for the individual strategic objectives in our AIP, as well as improved disclosure regarding the threshold, target and maximum levels for the financial goals in our AIP. We also previewed our plan to increase the proportion of our LTIP awards dedicated to performance shares, and to shift to relative TSR from iTSR as the performance metric for performance shares. Our shareholders welcomed the prospect of increased disclosure, and indicated their support for increasing the weighting of performance shares in our LTIP. In addition, shareholders expressed support for including the effective oversight and management of ESG matters as a strategic objective for our CEO under the AIP and welcomed our recent adoption of a comprehensive clawback policy.
After filing this proxy statement, we plan to actively engagewith our shareholders in advance of the Annual Meeting to discuss the outcomes of our 2019 compensation program and the changes made to our program for 2020. Our Compensation Committee will consider and integrate the feedback received from our shareholders into future decision-making about our compensation program and practices.
DOVER CORPORATION –2020 Proxy Statement 40
COMPENSATION DISCUSSION AND ANALYSIS
Our Board’s Proactive Response to Shareholder Feedback
Our Board and Compensation Committee reviewed all feedback received from shareholders during our engagement meetings held in Spring 2019, Fall 2019 and again earlier this year in Winter 2020. In direct response to this feedback, our Compensation Committee approved key changes to our executive compensation program for 2020. These changes were previewed with shareholders during our engagement meetings. We believe the changes that have been approved and implemented address our shareholders’ key areas of focus and incorporate the constructive feedback that was received, and we have received positive feedback on the changes during our most recent round of engagement discussions.
The following table details how we took action and made changes to our compensation program for 2020 in order to directly address shareholders’ areas of focus:
COMPONENT | SHAREHOLDER FEEDBACK | DOVER RESPONSE | ||||
ANNUAL INCENTIVE PLAN (AIP) | • Increase disclosure regarding goals and outcomes of individual performance metrics | • Provided additional detail regarding weighting, nature and performance outcomes for individual strategic objectives (pages 51 to 54) • Improved disclosure regarding threshold, target and maximum levels for financial goals (page 52) | ||||
• Consider inclusion of ESG themes into AIP | • Continued to integrate ESG oversight responsibility as an individual strategic objective for our CEO (page 53) | |||||
LONG-TERM INCENTIVE PLAN (LTIP) | • Shift to a more performance-based mix of awards based on the prevailing input from recent discussions with our shareholders | • Increased performance share weighting to 40% from 20% and decreased SSAR weighting to 40% from 60% (page 58) | ||||
• Enhance transparency of metric for performance shares | • Shifted to rTSR from iTSR performance metric for performance shares with the S&P 500 Industrials index as the benchmark (page 58) | |||||
OTHER | • While several plans included clawback provisions, lack of formal overall clawback structure | • Implemented comprehensive clawback policy (page 60) |
DOVER CORPORATION –2020 Proxy Statement 41
COMPENSATION DISCUSSION AND ANALYSIS
Dover’s Alignment with Leading Compensation Governance Practices
| ||||||||
Yes
| ||||||||
✓ The majority of target NEO pay opportunity is performance based
✓
✓ | ||||||||
✓Compensation program includes ESG objective | NEW | |||||||
✓ All long-term incentives are paid in stock, not cash
✓ Executives must hold significant amounts of Dover stock: five-times salary for the CEO, three-times for other NEOs
✓ All long-term incentives are earned or vest over three years
✓ Change in control (“CIC”) provisions require double |
✓Comprehensive clawback policy | NEW |
✓ Executives participate in benefit and employee programs on the same basis as other Dover employees
✓
✓ Annual compensation risk assessment |
No | |||||
✗ No tax gross ups
✗ No repricing, reloads or exchanges of SSARs
✗ No SSARs granted below fair market value
✗ No hedging or pledging of Dover securities by executives, including margin loans
✗ No dividends are paid on performance shares or
✗ No special executive retirement arrangements
✗ No substantial executive perquisites, nor do we own or operate any corporate aircraft |
DOVER CORPORATION –20182020 Proxy Statement 3842
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Process: Aligning Business Strategy and PerformancePrinciples
Guiding Principles for Dover’s Executive Compensation Program
Dover’s executive compensation programs are designed to do the following:
Based on these principles, these were key elements of our program in 2019:
✓ | Financial metrics that are clearly linked to the creation of shareholder value: earnings from continuing operations, revenue, earnings per share and iTSR (increased enterprise value as measured by EBITDA growth plus free cash flow generation). | |||
✓ Focus executives on consistent long-term value creation and a balanced capital allocation program to outperform our investors’ alternative investment choices in our industry.
✓ | A focus on our business strategy to ensure our long-term compensation program aligns the interests of our executives with those of our shareholders by placing an emphasis on performance-based stock compensation. |
✓ Attract and retain the right executives to look after our shareholders’ interests and manage our businesses.
✓ | An annual review by our Compensation Committee of executive compensation levels and the components of our program. |
✓ |
median of our peer group for total direct compensation, with consideration for internal pay equity, sustained performance, specific responsibilities, and experience with comparable market talent. |
✓ | Total compensation opportunities designed so that the large majority of compensation is variable andat-risk based on financial, strategic, operational, and share price performance. |
✓ | An annual cash bonus plan designed to reward annual financial performance and the attainment of strategic objectives that the Board believes will assure the long-term success of Dover. |
✓ | Executive benefits and programs that are consistent with those offered to other employees. We provide substantially no executive perquisites, nor do we own or operate any corporate aircraft. |
DOVER CORPORATION –2020 Proxy Statement 43
COMPENSATION DISCUSSION AND ANALYSIS
Setting Executive Compensation — Roles
The process for determining our compensation program structure and payouts involves the dedicated participation of four parties: theour Compensation Committee, the independent directors of the Board, the CEO, and theour Compensation Committee’s independent consultant. The roles of each in making compensation decisions are:
|
| |||||||
|
| |||||||
DOVER CORPORATION –20182020 Proxy Statement 3944
COMPENSATION DISCUSSION AND ANALYSIS
Setting Executive Compensation – Timeline
The process for making executive compensation decisions for 20172019 began with goal setting at the beginning of the year and concluded with the actual compensation payout decisions in early 2018.2020. In 2019, we also undertook a robust shareholder engagement effort in response to our 2019 Say on Pay vote result to inform changes made for 2020 (as described in detail on pages 39 to 41 of this CD&A). As described below, this year-long process integrates key factors, such as Dover’s business strategy, our annual budget and market compensation data.
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
|
DOVER CORPORATION –20182020 Proxy Statement 4045
COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation Program Peer GroupingGroup
For assessing executive pay programs and levels, the Compensation Committee selected a group of companies that are similar to Dover in terms of end markets, complexity, revenues and market capitalization. In 2017,2019, with the help of its independent consultant, the Compensation Committee approved changes to that peer group, to arrive atreviewed the peer group below. FMC Technologies was removed following its merger with Technip SA. SPX Corporation was also removed after the completion of several divestitures significantly reduced its revenue.and made no changes in 2019 from 2018.
IN USD MILLIONS | FINANCIAL CONSIDERATIONS | QUALITATIVE CONSIDERATIONS | ||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL CONSIDERATIONS (IN USD MILLIONS) | QUALITATIVE CONSIDERATIONS | |||||||||||||||||||||||||||||||||||||||||||||||
COMPANY
|
2017
|
2017 MARKET CAP(1)
|
INDUSTRY |
>20% GLOBAL REVENUES
|
DOVER-LIKE STRUCTURE
|
SAME ANALYST COVERAGE(2)
| 2019 REVENUE | 2019 MARKET CAP(1) | INDUSTRY
| >20% GLOBAL REVENUES | DOVER-LIKE STRUCTURE | SAME ANALYST COVERAGE(2) | ||||||||||||||||||||||||||||||||||||
3M COMPANY | $ | 31,657 | $ | 140,188 |
Industrial Conglomerates
| ✗ | ✗ | ✗ | ||||||||||||||||||||||||||||||||||||||||
CARLISLE COMPANIES | $ | 4,812 | $ | 9,172 | | Industrial Conglomerates |
| ✗ | ✗ | |||||||||||||||||||||||||||||||||||||||
COLFAX CORPORATION | $ | 3,300 | $ | 4,878 |
Industrial Machinery
| ✗ | ✗ | ✗ | $ | 3,327 | $ | 4,284 | | Industrial Machinery |
| ✗ | ✗ | ✗ | ||||||||||||||||||||||||||||||
CARLISLE COMPANIES | $ | 4,090 | $ | 7,045 |
Industrial Conglomerates
| ✗ | ✗ | |||||||||||||||||||||||||||||||||||||||||
CORNING INCORPORATED | $ | 11,503 | $ | 22,389 | | Electrical Equipment |
| ✗ | ✗ | |||||||||||||||||||||||||||||||||||||||
EATON CORPORATION | $ | 20,404 | $ | 34,812 |
Electrical Equipment
| ✗ | ✗ | ✗ | $ | 21,390 | $ | 39,157 | | Electrical Equipment |
| ✗ | ✗ | ✗ | ||||||||||||||||||||||||||||||
EMERSON ELECTRIC CO. | $ | 15,264 | $ | 44,507 |
Electrical Equipment
| ✗ | ✗ | ✗ | $ | 18,372 | $ | 46,588 | | Electrical Equipment |
| ✗ | ✗ | ✗ | ||||||||||||||||||||||||||||||
FLOWSERVE CORPORATION | $ | 3,661 | $ | 5,504 |
Machinery
| ✗ | ✗ | $ | 3,945 |
| $ | 6,513 |
|
| Machinery |
| ✗ | ✗ | ||||||||||||||||||||||||||||||
FORTIVE CORPORATION | $ | 6,656 | $ | 25,146 |
Industrial
| ✗ | ✗ | ✗ | $ | 7,320 | $ | 25,652 | | Industrial Machinery | ✗ | ✗ | ✗ | |||||||||||||||||||||||||||||||
ILLINOIS TOOL WORKS INC. | $ | 14,314 | $ | 57,163 |
Machinery
| ✗ | ✗ | ✗ | $ | 14,109 |
| $ | 57,734 |
|
| Machinery |
| ✗ | ✗ | ✗ | ||||||||||||||||||||||||||||
INGERSOLL-RAND PLC | $ | 14,198 | $ | 22,286 |
Machinery
| ✗ | ✗ | ✗ | $ | 16,599 |
| $ | 31,677 |
|
| Machinery |
| ✗ | ✗ | ✗ | ||||||||||||||||||||||||||||
PARKER-HANNIFIN CORPORATION | $ | 12,029 | $ | 26,589 |
Machinery
| ✗ | ✗ | $ | 14,320 |
| $ | 26,441 |
|
| Machinery |
| ✗ | ✗ | ||||||||||||||||||||||||||||||
PENTAIR LIMITED | $ | 4,937 | $ | 12,824 |
Machinery
| ✗ | ✗ | |||||||||||||||||||||||||||||||||||||||||
ROCKWELL AUTOMATION INC. | $ | 6,311 | $ | 25,210 |
Electrical Equipment
| ✗ | ✗ | $ | 6,695 | $ | 23,479 | | Electrical Equipment |
| ✗ | ✗ | ||||||||||||||||||||||||||||||||
ROPER INDUSTRIES INC. | $ | 4,607 | $ | 26,512 |
Industrial Conglomerates
| ✗ | ✗ | ✗ | $ | 5,367 | $ | 36,860 | | Industrial Conglomerates |
| ✗ | ✗ | ✗ | ||||||||||||||||||||||||||||||
SNAP-ON INCORPORATED | $ | 4,068 | $ | 9,291 | | Industrial Machinery | ✗ | |||||||||||||||||||||||||||||||||||||||||
STANLEY BLACK & DECKER, INC. | $ | 14,442 | $ | 25,194 | | Industrial Machinery | ✗ | ✗ | ||||||||||||||||||||||||||||||||||||||||
TEXTRON INC. | $ | 14,198 | $ | 14,907 |
Aerospace & Defense
| ✗ | ✗ | $ | 13,630 | $ | 10,181 | | Aerospace & Defense |
| ✗ | ✗ | ||||||||||||||||||||||||||||||||
XYLEM, INC. | $ | 4,707 | $ | 12,249 |
Industrial Machinery
| ✗ | $ | 5,249 | $ | 14,188 | | Industrial Machinery |
| ✗ | ✗ | |||||||||||||||||||||||||||||||||
WEATHERFORD INTERNATIONAL LIMITED | $ | 5,699 | $ | 4,139 |
Energy Equipment &
| ✗ | ||||||||||||||||||||||||||||||||||||||||||
75TH PERCENTILE |
$
|
14,227
|
|
$
|
28,645
|
| $ | 14,351 |
| $ | 32,973 |
| ||||||||||||||||||||||||||||||||||||
MEDIAN
|
$
|
6,484
|
|
$
|
23,716
|
| $ | 9,412 |
| $ | 24,337 |
| ||||||||||||||||||||||||||||||||||||
25TH PERCENTILE
|
$
|
4,682
|
|
$
|
10,948
|
| $ | 5,140 |
| $ | 9,958 |
| ||||||||||||||||||||||||||||||||||||
DOVER
|
$
|
7,830
|
|
$
|
15,733
|
| $ | 7,136 |
| $ | 16,743 |
|
(1) | As of 12/31/ |
(2) | “Same analyst coverage” means company is covered by at least |
DOVER CORPORATION – 2018 Proxy Statement 41
COMPENSATION DISCUSSION AND ANALYSIS
Role of Internal Equity in Setting Executive Compensation
Management and theour Compensation Committee consider both market benchmarks (i.e., external equity), as well as the impact each executive role has relative to internal peers (i.e., internal equity), in establishing the executive pay structures used to govern pay.
DOVER CORPORATION –2020 Proxy Statement 46
COMPENSATION DISCUSSION AND ANALYSIS
Role of the Independent Compensation Consultant
TheOur Compensation Committee has the authority and discretion to retain external compensation consultants as it deems appropriate. TheOur Compensation Committee has adopted a policy to ensure the continuing independence and accountability to the committee of any advisor hired to assist the committee in the discharge of its duties. The policy formalizes the independent relationship between the committee’sCompensation Committee’s advisor and Dover, while permitting management limited ability to access the advisor’s knowledge of Dover for compensation matters. Under the policy, theour Compensation Committee will annually review andpre-approve the services that may be provided to management by the independent advisor without further committeeCompensation Committee approval. Compensation Committee approval is required prior to Dover retaining the independent advisor for any executive compensation services or other consulting services or products above an aggregate annual limit of $50,000.
Since February 2010, theour Compensation Committee has retained Semler Brossy Consulting Group, LLC (“Semler Brossy”) as its advisor. Semler Brossy does no other work for and has no other relationships with Dover. Semler Brossy focuses on executive compensation and does not have departments, groups or affiliates that provide services other than those related to executive compensation and benefits.
TheOur Compensation Committee looks to its consultant to periodically review and advise regarding the adequacy and appropriateness of our overall executive compensation plans, programs and practices and, from time to time, to answer specific questions raised by theour Compensation Committee or management. Compensation decisions are made by, and are the responsibility of, theour Compensation Committee and our Board, and may reflect factors and considerations other than the information and recommendations provided by theour Compensation Committee’s consultant.
To ensure independence of the compensation consultant, the consultant reports directly to the Chair of theour Compensation Committee and works specifically for the Compensation Committee solely on compensation and benefits.
Semler Brossy did not engage in any projects for management in 2017. The2019. Our Compensation Committee has assessed the independence of Semler Brossy and concluded that its work for the Compensation Committee does not raise any conflict of interest.
DOVER CORPORATION –20182020 Proxy Statement 4247
COMPENSATION DISCUSSION AND ANALYSIS
Elements of Executive Compensation
Focus on Variable, Performance-Based Compensation Program Structure Drives Pay For Performance Alignment
The pay packages of Dover executives consist predominantly of incentive-based pay, both annual and long-term. The ratio between fixed and variable pay varies by executive level, but for the CEO and his direct reports, including the NEOs, we feel it is appropriate that the vast majority of the pay package should be “at risk” incentive-based pay as shown in the chart below. Additionally, we believe that their incentive pay should be heavily weighted toward long-term performance and tied to share performance, with the annual incentives focused on key short-term drivers and progress on strategy.
Each of the compensation components has a specific role in the overall design of our executive pay program. While the components are designed to be mutually reinforcing, care is taken to minimize overlap between them. The following table below shows how each element fits into our overall executive payprovides an overview of the 2019 compensation program and incentivizes performance over multiple time horizons.structure.
* New for 2019
Component | ||||||||||
Base Salary | Cash | ◾ Benchmark: Peer group median | ◾ Attract and retain qualified executives | |||||||
Annual Incentive Plan | Cash | ◾60% Financial
○ Revenue (40%) ◾40% Individual Strategic Objectives | ◾ESG oversight included in CEO’s strategic objectives | ◾ Intended to drive profitability, growth & progress against strategy ◾Individual objectives are
| ||||||
Long-Term Incentive Plan | Performance Shares | ◾ 20% LTIP weighting ◾ Performance Criteria:3-year iTSR (EBITDA growth and free cash flow generation) ◾Reset the maximum payout to 300%, down from 400% | ◾ Focus executives on shareholder value creation | |||||||
| SSARs |
◾ Performance Criteria: Dover stock price, exercisable three years after grant date and remain exercisable for another seven years (subject to10-year stock price movement) | ◾ Focus executives on share price appreciation | |||||||
RSUs | ||||||||||
◾ 20% LTIP weighting ◾Performance |
| |||||||||
| Consistent with other similarly situated employees |
DOVER CORPORATION –2020 Proxy Statement 48
COMPENSATION DISCUSSION AND ANALYSIS
2019 Target Pay Mix
The ratio between fixed and variable pay varies by executive level, but for the CEO and his direct reports, including the NEOs, we feel it is appropriate that the vast majority of the compensation should be “at risk” incentive-based pay as shown in the chart below. Additionally, we believe that incentive pay should be heavily weighted toward long-term performance and tied to share performance, with the annual incentives focused on key short-term drivers and progress on strategy. The target pay mix at Target Other NEO pay mix at Targetwill change based on the updates made to our executive compensation program in 2020.
DOVER CORPORATION –20182020 Proxy Statement 4349
COMPENSATION DISCUSSION AND ANALYSIS
Pay-for-Performance Philosophy
Our Compensation Committee remains fully committed to itspay-for-performance philosophy. As shown in the graph below, historically our payouts have aligned with shareholder value creation.
DOV TSR vs. Proxy Peer Group since New CEO Start Date1,2,3 |
Transformed Portfolio Producing Shareholder Value (TSR)2,3 |
1) New CEO start date of 4/30/2018. 2) Source: S&P Capital IQ; end date for returns periods is December 31, 2019. 3) Annualized Total Shareholder Return including dividends and spin-offs. Fortive Corporation went public in July 2016 and Xylem, Inc. went public in Oct 2011; stocks are excluded from periods prior to go public dates. Ingersoll-Rand PLC data reflects TSR pre-merger with Gardner Denver Holdings, Inc. |
DOVER CORPORATION –2020 Proxy Statement 50
COMPENSATION DISCUSSION AND ANALYSIS
Annual Incentive Plan Compensation
An annual bonus may be earned each year based on an individual’sNEO’s performance against both financial objectives tied to the NEO’s business unit and individual strategic goals. For each NEO, the AIPEach NEO’s bonus target amount is determined according to the executive’sNEO’s business/function complexity, size and overall impact on Dover’s results, as well as strategic leadership and managerial responsibility.
For 2017, 60% We believe that balancing the measurement of an NEO’s annual bonus was based on the achievement of financial performance criteria based on earnings from continuing operations, revenue and/or operating earnings for segment executives. Restructuring charges which occurred in the fourth quarter of 2017 were not included in the calculation. The other 40% of the annual bonus between financial and strategic objectives is important in mitigating risk and executing on our long-term strategy for value creation.
Determination of AIP Payouts
Each executive officer is eligible for a bonus equal to his or her base salary multiplied by his or her target award percentage multiplied by the Overall Payout Factor (which is the sum of the Financial Objectives Factor (weighted 60%) and the Strategic Objectives Factor (weighted 40%)).
2019 AIP Financial Objectives Factor -- Targets
The financial objectives were set at the overall corporate level for corporate NEOs (Tobin, Cerepak, Cabrera and Kloosterboer) and at the Dover Fluids segment level for the segment NEO (Spurgeon). In setting these objectives, our Compensation Committee considered our annual budget, operational priorities, plans for capital allocation, historical performance, and external factors, among other things. For each measure, our Compensation Committee established threshold, target, and maximum levels of performance, as well as a payout percentage curve that relates each level of performance to a payout percentage.
Threshold and maximum performance levels are set at 80% and 120%, respectively, of target. There is no payout on the Financial Objectives Factor if performance is below the threshold. At threshold, the payout percentage curve begins at 0.1%. If performance is at the target level, the payout percentage is 100%. For performance at or above the maximum level of achievement, the payout percentage is capped at 200%.
The financial objectives measures as originally established by our Compensation Committee were adjusted to exclude the forecasted performance targets from the Finder business following its sale on April 2, 2019 and to include the forecasted contributions from the acquisition of theAll-Flo Pump Company, Limited business on May 7, 2019.
DOVER CORPORATION –2020 Proxy Statement 51
COMPENSATION DISCUSSION AND ANALYSIS
2019 AIP Financial Objectives Factor -- Results
Following the end of 2019, we calculated the Corporate Financial Objectives Factor and the Dover Fluids Financial Objectives Factor as follows:
2019 AIP FINANCIAL OBJECTIVES RESULTS (in millions) | ||||||||||
| TARGET PERFORMANCE LEVEL | ACTUAL PERFORMANCE LEVEL | PAYOUT % (BEFORE WEIGHTING) | WEIGHTING OF MEASURE | WEIGHTED PAYOUT % | |||||
Dover Corporation | ||||||||||
Revenue | $7,104 | $7,136 | 101% | 40% | 40% | |||||
Adjusted Earnings(1) | $846 | $872(1) | 108% | 60% | 65% | |||||
Financial Objectives Factor | 105% | |||||||||
Dover Fluids(2) | ||||||||||
Revenue | $2,871 | $2,959 | 108% | 40% | 43% | |||||
Adjusted Segment Earnings (EBIT)(1) | $509 | $530(2) | 113% | 60% | 68% | |||||
Financial Objectives Factor | 111% | |||||||||
Performance Payout Curve | ||||||||||
|
|
|
| PERFORMANCE LEVEL | PAYOUT PERCENTAGE | |||||
Threshold | >80% | 0.1% | ||||||||
Target | 100% | 100% | ||||||||
Maximum | 120% | 200% |
(1) | Definitions and reconciliations ofnon-GAAP measures are included at the end of this proxy statement. |
(2) | Mr. Spurgeon was the President & CEO of our former business segment Dover Fluids. We have calculated his awards as if Dover Fluids had remained in place following ourre-segmentation completed in the fourth quarter of 2019. |
2019 AIP Individual Strategic Objectives Factor
The Strategic Objective Factor is based on the achievement of individual strategic objectives designed to create long-term value for Doverour shareholders. These individualThe strategic objectives were set for the CEO were developed by the Boardour Compensation Committee at the beginning of the year, approved by our independent directors, and relatecommunicated to the CEO in February. The individual strategic objectives were based on specific strategic initiatives that the Board and management agreed were important for Dover to achieve in 2017.2019. These initiatives were communicated to the CEO in February, tracked throughout the year, and progress against them was reviewedmid-year with the CEO. Following the end of the year, the Board reviewed the CEO’s attainment of or progress towards those specific strategic objectives when deciding the CEO’s annual bonus. The CEO’s strategic objectives were cascaded to histhe CEO’s direct reports, as appropriate, based on their responsibilities or business portfolio. In 2017,The Board monitored progress on the individualCEO’s strategic objectives metric was capped at 100% achievement ifand, following the NEO’s business did not achieve its EBITDA asend of the year, reviewed the CEO’s performance against these objectives when determining his annual bonus.
Following the end of 2019, our Compensation Committee determined for each NEO a percentage of sales target.
Executives can achieve anywhereStrategic Objectives Factor between 0% and 200% of their target bonus. However, above target payout. Our Compensation Committee believes such judgment is only earnedan important risk-mitigating element to our compensation program and provides an opportunity to further align executive compensation with long-term value creation. To make this determination, our Compensation Committee took into account each executive’s execution against his or her personal strategic objectives for performance that is significantly above the targeted performance. Dover believes that balancingyear and the measurement ofexecutive’s overall performance for the AIP between financial and strategic objectives is an important factor in mitigating risk and in reinforcing the execution of Dover’s long-term strategy to create value for our shareholders.
2017 AIP Funding
AIP is designed to reward our NEOs for the achievement of financial and strategic objectives that are linked to Dover’s longer term goals. The AIP was funded for Section 162(m) of the Internal Revenue Code purposes by the achievement of an EPS goal, as determined under the plan. Achievement of our EPS target allows maximum bonuses to be paid, subject to the negative discretion of the Compensation Committee in determining the final bonuses. Achievement below the target reduces the bonus pool by 1% for every 1% below target; achievement above target does not increase the bonus pool. Taking into account the impact of businesses acquired during 2017, our 2017 EPS target was $3.50. We achieved adjusted EPS of $4.03 so bonuses were available to be paid at the maximum level.year.
DOVER CORPORATION –20182020 Proxy Statement 4452
COMPENSATION DISCUSSION AND ANALYSIS
2017 AIP Financial Results Performance
The actual bonuses paid forfollowing table summarizes the year were generally above target based on business results, reflecting ourpay-for-performance focus. Under the AIP, 60% of each NEO’s target annual incentive is tied to the achievement of financial results and 40% is tied to the achievement of individual strategic objectives. Targets are set atobjectives, weightings, and results the overall corporate levelCompensation Committee considered for corporate NEOs (Livingston, Cerepak) and at the segment levelour CEO in determining his Strategic Objectives Factor for segment NEOs (Fincher, Somasundaram, Spurgeon). The financial targets listed below were utilized to determine the 60% of each NEO’s bonus tied to financial results.2019.
NEO
|
2017 Targets |
2017 Results | ||||||||||||||||||||||||||||
In $millions | ||||||||||||||||||||||||||||||
Net Income(1)
|
Sales
|
EBITDA(2)
|
Net Income(1)
|
Sales
|
EBITDA(2)
| |||||||||||||||||||||||||
DOVER CORPORATION • Robert A. Livingston • Brad M. Cerepak
| 538 | 7,492 | NA | 614 | 7,830 | NA | ||||||||||||||||||||||||
DOVER ENGINEERED SYSTEMS • C. Anderson Fincher
| NA | 2,448 | 474 | NA | 2,576 | 481 | ||||||||||||||||||||||||
DOVER ENERGY • Sivasankaran Somasundaram
| NA | 1,270 | 276 | NA | 1,406 | 327 | ||||||||||||||||||||||||
DOVER FLUIDS • William W. Spurgeon, Jr.
| NA | 2,220 | 442 | NA | 2,251 | 435 |
|
|
✓ Executed anin-depth assessment of the ✓ Continued to effectively deploy capital to enhance the value of Dover’s portfolio through acquisitions and ✓ Drove strategic realignment of the portfolio into five reporting segments to enable better external assessment of performance and |
Shareholder Returns (25%) – Take actions to grow the value of Dover while returning capital to shareholders |
✓ Delivered on commitments relating to margin expansion, consistent execution against guidance, maintaining organic growth, priorities for organic reinvestment, and disciplined capital allocation balancing growth and return of capital to shareholders ✓ Clearly communicated the Company’s value-creation strategy and priorities, and reporting progress against articulated commitments to external parties ✓ Made substantial progress in expanding the Company’s digital growth capabilities and strengthened its processes around innovation to position the Company for long-term growth and profitability |
Talent Management (25%) – Attract, engage and develop talent |
✓ Led a deep talent assessment exercise across the enterprise with a focus on organizational structure, management development, diversity, and succession planning ✓ Demonstrated continued personal investment in the talent development process by participating in comprehensive assessments for leadership teams at the corporate, segment and operating company levels |
ESG (25%) – Provide effective oversight and management of Dover’s ESG matters |
✓ Evaluated Dover’s approach to managing ESG matters, including studying operational practices, soliciting shareholder feedback, and considering other external perspectives ✓ Developed a multi-year plan for strategic oversight of ESG matters that integrates awareness and management of material ESG risks, opportunities, objectives, metrics, and other |
Our Compensation Committee evaluated Mr. Tobin’s achievements against his strategic objectives and assigned him a Strategic Objectives Factor of 120%.
DOVER CORPORATION –20182020 Proxy Statement 4553
COMPENSATION DISCUSSION AND ANALYSIS
2017 AIP Individual Strategic Objective Performance
Each of the NEOs had unique strategic objectives that were utilized to determine the remaining 40% of their annual incentive. The individual NEO strategic goals were linked to the overall success of Dover as it continues to move forward on its strategic pathway to achieve consistent long-term success. The strategic goals for the CEO were developed by the Compensation Committee at the beginning of the year, approved by the Board and communicated to the CEO in February. They are intended to focus on a limited and measurable set of goals which, if accomplished, will benefit the shareholders of Dover over the long term. The CEO in turn develops strategic goals for his direct reports which focus on measurable accomplishments in their individual areas of responsibility that will also benefit our shareholders over the long term. In 2017,following table summarizes the individual strategic objectives metric was capped at 100% achievement if the NEO’s business did not achieve its EBITDA as a percentage of sales target.Compensation Committee considered for our other NEOs in determining their respective Strategic Objectives Factors for 2019.
|
In 2019, Mr.
|
William W. Spurgeon, Jr. (retired President & CEO, Dover Fluids) |
In 2019, Mr.
|
Ivonne M. Cabrera (Senior Vice President, General Counsel & Secretary) |
|
Jay L. Kloosterboer (former Senior Vice President, Human Resources) |
In 2019, Mr. responsibilities of our Senior Vice President of Operations; (4) successful completion of our transition to a single payroll system for our U.S. operations; (5) involvement in helping to evaluate and develop changes to our executive compensation program; and (6) development of a comprehensive plan to ensure a smooth transition to a new Senior Vice President, Human Resources following his announced retirement.
|
Our Compensation Committee assigned an average Strategic Objectives Factor of 102.5% to the2017 AIP Target Performancenon-CEO NEOs.
The Overall Payout Factors resulting from the above Financial Objective Factors and Payout
Overall, we performed above our financial targetsthe Strategic Objectives Factors resulted in 2017 and made progress on our strategic objectives, including key acquisitions and divestures. Actual compensation varies widely based on the individual’s business unit and performance against specific strategic objectives.payouts set forth in the 2019 Summary Compensation Table.
NEO | Annual Bonus in $ | Annual Bonus % of Target | ||||||||||||||||||||||
2015 | 2016 | 2017 | 2015 | 2016 | 2017 | |||||||||||||||||||
Robert A. Livingston | 988,125 | 880,000 | 1,725,000 | 79 | % | 68 | % | 130 | % | |||||||||||||||
Brad M. Cerepak | 530,000 | 530,000 | 970,000 | 84 | % | 79 | % | 142 | % | |||||||||||||||
C. Anderson Fincher | 450,000 | 500,000 | 580,000 | 87 | % | 94 | % | 106 | % | |||||||||||||||
Sivasankaran Somasundaram | 385,000 | 355,000 | 970,000 | 77 | % | 68 | % | 181 | % | |||||||||||||||
William W. Spurgeon, Jr. | 530,000 | 310,000 | 640,000 | 82 | % | 48 | % | 98 | % |
DOVER CORPORATION –20182020 Proxy Statement 4654
COMPENSATION DISCUSSION AND ANALYSIS
2017 Performance Shares
The 2017 performance shares are based on the three-year performance period of 2015-2017, and the performance is measured on iTSR, which is described below. The Compensation Committee believes our iTSR measure focuses executives on key financial and strategic drivers of long-term shareholder value.
NEO |
TARGET # OF SHARES |
ACTUAL SHARES AWARDED | ||||||||
2017 | 2017 | |||||||||
Robert A. Livingston | 17,740 | 0 | ||||||||
Brad M. Cerepak | 5,049 | 0 | ||||||||
C. Anderson Fincher | 4,503 | 2,100 | ||||||||
Sivasankaran Somasundaram | 4,503 | 0 | ||||||||
William W. Spurgeon, Jr. | 4,503 | 0 |
Long-Term Incentive Compensation
The following table summarizes the components of awards under our Dover Corporation 2012 Equity and Cash Incentive Plan (“LTIP”)LTIP and the related performance criteria for awards granted in 2017.2019. Note that all components are paid in stock rather than cash to encourage shareholder alignment through stock ownership. For changes to our 2020 LTIP structure in response to feedback received through our multi-stage shareholder engagement program, see pages 39 to 41.
Pay Element | Objectives | |||||
Performance Shares |
◾ 20% LTIP weighting
|
| ||||
Stock Settled Stock Appreciation Rights |
| |||||
|
| |||||
Restricted Stock Units |
◾ Performance Criteria: Dover stock price; awards vest ratably over three years | |||||
| ◾Retention and full alignment with the shareholder experience |
| ||||
|
|
|
|
Long-Term Incentive Plan Mix2019 Performance Shares
The 2019 performance shares are based on the three-year performance period of 2017-2019, and the performance is measured on iTSR, which is described below.
DOVER CORPORATION – 2018 Proxy Statement 47
COMPENSATION DISCUSSION AND ANALYSIS
Target # of Shares 2019
| Actual Shares Awarded 2019
| |||||
Richard J. Tobin | N/A | N/A | ||||
Brad M. Cerepak | 5,983 | 12,592 | ||||
William W. Spurgeon, Jr. | 4,936 | 15,803 | ||||
Ivonne M. Cabrera | 2,393 | 5,036 | ||||
Jay L. Kloosterboer | 2,393 | 5,036 |
Performance Shares & iTSR
The Compensation Committee believesperformance shares granted to NEOs prior to 2020 are measured based on the iTSR measure. In light of our iTSR measure focuses executives on key financialshareholders’ feedback and strategic drivers of long-term shareholder value. expressed preference for a more transparent metric for our performance shares, in 2020 the payout for our performance shares will be determined by relative TSR, utilizing the S&P 500 Industrials index as the relative performance benchmark.
iTSR, by definition, is a measure of value creation for our business segments and operating companies. The key components of iTSR are EBITDA Growth and Free Cash Flow. Based on rigorous testing over time, theour Compensation Committee continues to believebelieves iTSR is:
highly correlated with long-term shareholder value creation for a multi-industry company such as Dover,
highly correlated with the combination of return on invested capital (“ROIC”) and organic growth, and
effective in driving behaviors than relative TSR because it measures outcomes that are more within management’s control, such as revenue growth (organic and acquisition), and margin improvements.
Definition of iTSR.iTSR measures the change in enterprise value over a three-year period. EBITDA is assigned a multiple based on prevailing market multiples among industrial companies. iTSR tracks the change in that EBITDA-based value, along
DOVER CORPORATION –2020 Proxy Statement 55
COMPENSATION DISCUSSION AND ANALYSIS
with Free Cash Flow generated during the three-year performance period. The two together work similarly to an external TSR measure: the EBITDA-based value becomes a proxy for share price, and Free Cash Flow becomes a proxy for dividends. Further, EBITDA Growth and Free Cash Flow together focus our business leaders on growing our business, investing in continuing operations, and shaping our portfolio with capital-effective acquisitions and dispositions.
EBITDA Growth — We believe that EBITDA is useful for purposes of evaluating our ongoing operating profitability as it excludes the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating our operating performance in relation to our competitors.
Free Cash Flow — Free Cash Flow is operating cash flow less capital spending, less cash used for acquisitions, plus cash received from divestitures. We believe that Free Cash Flow is an important measure of our operating performance as it provides a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.
Safeguards.Since iTSR is an absolute measure of value creation, we have implemented safeguards to substantially eliminate large payouts resulting solely from economic cycles. Further, payouts under the program are in shares, and our shareholding requirements ensure that executives are exposed to the same stock price changes as our shareholders, including external stock market factors. Dividends are not accrued or paid on performance shares during the performance period.
CEO/CFO Other Neos
DOVER CORPORATION – 2018 Proxy Statement 48
COMPENSATION DISCUSSION AND ANALYSIS
Rigorous iTSR Targets, Threshold and Cap Levels.iTSR targets for our Performance Shares are demanding and were rigorously back-tested to confirm that they are set to tie performance share payouts with comparable relative TSR performance levels. Awards are earned three years after the grant, provided iTSR exceeds a threshold level. No payouts will be made unless iTSR equals or exceeds 6%. The payout to any individual may not exceed 500,000 shares.
Payouts of
DOVER CORPORATION –2020 Proxy Statement 56
COMPENSATION DISCUSSION AND ANALYSIS
For performance shares areshare grantsmade prior to 2019, payouts will be made on a sliding scale using the following formula:
For performance share grantsmade in 2019, payouts will be made on a sliding scale using the following formula with a maximum payout at 300% of target:
Stock Settled Stock Appreciation Rights
Similar to stock options, SSARs align executive interests with shareholder interests for stock price growth for several years into the future. They focus executives on increasing the stock price over the long term. SSARsStock Settled Stock Appreciation Rights (SSARs) give our NEOs the ability to participate in the price appreciation of a set number of shares of Company stock. Once SSARs vest, an NEO may exercise them any time prior to the expiration date. Thedate and the proceeds from the exercise are paid to the NEO in the form of shares of Dover common stock to encourage continued share ownership and shareholder alignment.
Illustration SSARs vest and are exercisable 3 years after grant date and remain exercisable for seven years, which means the awards are subject to10-year stock price movement thus aligning executive interests with shareholder interests over the long term. Importantly, in light of SSARs Exercise:
| ||||
| ||||
|
| ||||||
| ||||||
|
|
DOVER CORPORATION – 2018 Proxy Statement 49
COMPENSATION DISCUSSION AND ANALYSIS
our active acquisition program, SSARs’ forward-looking orientation is effective for incentivizing our newly-acquired companies and employees, who must create new value in order to realize gains. Furthermore, SSARs’10-year life cycle is essential to managing value creation with a business that has a portfolio of industrial companies whose economic cycles vary.
Restricted Stock Units
RSU grants attract and retain NEOs by providing them with some of the benefits associated with stock ownership during the vesting period. Executives do not actually own the shares underlying the units, nor do they enjoy the benefits of ownership
DOVER CORPORATION –2020 Proxy Statement 57
COMPENSATION DISCUSSION AND ANALYSIS
such as dividends and voting, until the vesting conditions are satisfied. Once vested, the NEO receives shares of Dover stock equivalent in number to the vested units and receives a cash amount equal to accrued dividends during the vesting period, net of withholding taxes.
2018 Changes to our Executive Compensation2020 LTIP Structure
ChangesBased on shareholder feedback received through our multi-stage shareholder outreach program and our review of current market practices, as well as our Compensation Committee’s continual evaluation of our program in Salary
Three oforder to ensure we appropriately align our executives’ incentives with our long-term strategy, we made the five NEOs received a salary increase, ranging between 2.8% and 3.8%. Mr. Spurgeon and Mr. Sivasankaran did not receive an increase.
Changes in Target Bonus and Long-Term Incentives
Mr. Sivasankaran will become the CEO of Apergy, upon the distributionfollowing changes to our shareholdersLTIP structure for 2020:
Increased the proportion of all of the common stock of Apergy. As a result, he did not receive a LTIP grant from Dover in 2018.awards dedicated to performance shares.
NEO | 2018 | |||||
Salary | Target Annual Incentive Plan Bonus | Target LTIP Award | ||||
ROBERT A. LIVINGSTON
|
$1,100,000
|
125%
|
$6,750,000(1) | |||
BRAD M. CEREPAK
|
$705,000 |
100% |
$2,000,000
| |||
C. ANDERSON FINCHER
|
$560,000 |
100% |
$1,100,000 | |||
SOMASUNDARAM SIVASANKARAN
|
$535,000
|
100%
|
NA
| |||
WILLIAM W. SPURGEON, JR.
|
$650,000
|
100%
|
$1,100,000
|
ChangesShifted from iTSR to a relative TSR performance metric for performance shares, with the S&P 500 Industrials as the benchmark index.
In response to shareholder feedback, effective for 2020, performance shares will be earned based on our relative TSR performance against the S&P 500 Industrials index. This relative TSR metric will provide our shareholders with a transparent and simple measure to gauge our performance against companies in AIP Financial Metric Calculationour industry, and aligns the interests of our executives with our shareholders. The relative TSR targets for our performance shares are highly competitive. Awards are earned three years after the grant, provided relative TSR exceeds a threshold level with a maximum payout capped at 300% of target. PSU payouts will be capped at 100% if absolute TSR is negative over the PSU performance period.
For 2018,performance share grants made in 2020, payouts will be made on a sliding scale using the AIP will include a modifier for the AIP metric tied to financial results (weighted at 60%). If the individual’s business unit exceeds its EBIT as a percentage of sales target, the financial results metric will increase by a maximum of 20%. If the individual’s business unit fails to achieve its EBIT as a percentage of sales target, the financial results metric will decrease by a maximum of 20%.following formula based on our rTSR performance:
DOVER CORPORATION –20182020 Proxy Statement 5058
COMPENSATION DISCUSSION AND ANALYSIS
401(k), Pension Plan and Health & Wellness Plans
Our executive officers are able to participate in retirement and benefit plans generally available to our employees on the same terms as other employees. Dover and most of our businesses offer a 401(k) plan to substantially all U.S.-based employees and provide a Company matching contribution denominated as a percentage of the amount of salary deferred into the plan by a participant during the course of the year. Some of our U.S.-based employees also participate in atax-qualified defined benefit pension plan. Effective December 31, 2013, we closed both our qualified andnon-qualified defined benefit retirement plans to new employees. We intend to freeze any future benefit accruals in both plans effective December 31, 2023. All of our U.S.-based employees are offered a health and wellness plan (including health, term life and disability insurance). NEOs do not receive enhanced health and wellness benefits.
Non-Qualified Retirement Plans
We offer twonon-qualified plans with participation generally limited to individuals whose annual salary and bonus earnings exceed the Internal Revenue Service (“IRS”) limits applicable to our qualified plans: our PRPPension Replacement Plan (“PRP”) and our deferred compensation plan. Effective for 2016, participationParticipation in the deferred compensation plan is open to employees with an annual salary equal to or greater than $175,000.
After December 31, 2009, benefits under the PRP before offsets are determined using the benefit calculation and eligibility criteria as under the pension plan, except that IRS limits on compensation and benefits do not apply. Prior to December 31, 2009, the participants in the PRP accrued benefits greater than those offered in the pension plan. Effective January 1, 2010, we modified this plan so that executives subject to IRS compensation limits will accrue future benefits that are substantially the same as benefits under the pension plan. Individuals who participated in the PRP prior to January 1, 2010 will receive benefits calculated under the prior benefit formula through December 31, 2009 and benefits calculated under the lower PRP benefit formula on and after January 1, 2010. Amounts receivable by the executives under the PRP are reduced by any amounts receivable by them under the pension plan, any qualifying profit sharing plan, Company-paid portion of social security benefits, and the amounts of the Company match in the 401(k) plan.
Effective December 31, 2013, the PRP was closed to new employees. All eligible employees as of December 31, 2013 will continue to earn PRP benefits through December 31, 2023 as long as they remain employed by Dover and its affiliates. Effective December 31, 2023, Dover intends to eliminate any future benefit accruals consistent with the freezing of benefit accruals under the pension plan.
We offer a deferred compensation plan to allow participants to elect to defer their receipt of some or all of their salary, bonuses and any payout of a cash performance award. The plan permits executive officers to defer receipt of part of their compensation to later periods and facilitates tax planning for the participants. Effective January 1, 2014, the deferred compensation plan was amended to provide for certain matching and additional contributions for participants who do not also participate in the PRP. OurOther than Mr. Tobin, our NEOs are participants in the PRP and are not eligible for matching or additional contributions under the deferred compensation plan. Accordingly, we do not consider the deferred compensation plan to play a major role in our compensation program for oursince it is designed to provide eligible NEOs as we do not match any amounts deferred or guarantee any particular return on deferrals.that otherwise would be limited by IRS limits.
Executive Severance
All of our NEOs are eligible to participate in our severance plan. Under the plan, if we terminate an NEO’s employment without cause (as defined in the severance plan), the NEO will generally be entitled to receive twelve months of salary and healthcare benefits continuation, and a prorated bonus for time worked during the year. See “Potential Payments Upon Termination orChange-in-Control.”
DOVER CORPORATION – 2018 Proxy Statement 51
COMPENSATION DISCUSSION AND ANALYSIS
Senior ExecutiveChange-in-Control Severance Plan
We have a senior executive CIC severance plan. The CIC severance plan which establishes the severance benefits payable to eligible executives if they are involuntarily terminated following achange-in-control. All of our NEOs are eligible to participate in the CIC severance plan. An executive eligible to participate in the CIC severance plan as of the date of achange-in-control will be entitled to receive severance payments under the plan if, within 18 months after thechange-in-control, either the executive’s employment is terminated by the Company without “cause” or he or she terminates employment for “good reason” (as such terms are defined in the plan). The severance payments and benefits will consist of: a lump sum payment equal to 2.0 times their annual salary
DOVER CORPORATION –2020 Proxy Statement 59
COMPENSATION DISCUSSION AND ANALYSIS
and target bonus, and a lump sum payment equal to the cost of Consolidated Omnibus Budget Reconciliation Act (COBRA) health care benefit continuation of the executive and covered family members for twelve months. See “Potential Payments Upon Termination orChange-in-Control.”
No executive may receive severance benefits under more than one plan or arrangement. Dover does not provide taxgross-ups in the CIC severance plan.
Other Elements of Compensation
Clawback Policy
Currently,In 2019, we adopted a formal clawback and recoupment policy applicable to our executive officers. If our Board determines, in its sole discretion acting in good faith, that any executive officer has engaged in fraud or intentional misconduct that caused or was a significant contributing factor to a material restatement of all or a portion of our consolidated financial statements, the Board may, to the extent permitted by law, and to the extent it determines that it is in Dover’s best interest, require reimbursement to Dover for, or reduce or cancel, any incentive compensation paid, granted or credited to such executive officer on or after November 7, 2019. We may effect any such recoupment by requiring the executive officer to pay Dover the relevant amount, byset-off, by reducing future compensation or by such other means or combination of means as the Board determines to be appropriate.
Apart from the clawback policy described above, our PRP includes clawback provisions for termination for cause and the severance plan and CIC severance plan provide for clawback of benefits for breaches of the plan. Our LTIP provides that awards will be subject to such clawback requirements and policies as may be required by applicable law or Dover policies in effect from time to time. We intend to adopt a broader recovery policy once the SEC issues final rules.
Anti-hedging and Anti-pledging Policy
Currently, all employeesOur Securities Trading and Confidentiality Policy prohibits directors, executive officers and any employee who receive anhas previously received or receives any type of long-term incentive plan award, under our LTIP, including all NEOs, are prohibitedand certain persons and entities related to any such persons, from engaging in short-sales, transactions in derivative securities or any other form of hedging transaction designed to hedge or pledging their positionoffset any decrease in the market value of Dover stock.securities granted to or held by such persons. In addition, such persons may not hold Dover securities in a margin account or pledge securities as collateral for a loan or any other obligation.
Perquisites
We provide substantially no executive perquisites, nor does the Company own or operate any corporate aircraft. Management and theour Compensation Committee believe that providing significant perquisites to executive officers would not be consistent with our overall compensation philosophy. As a result, we do not provide executive officers with social club memberships, company cars or car allowances, financial counseling, or any other perquisites. Executives participate only in programs generally available to Dover employees.
DOVER CORPORATION – 2018 Proxy Statement 52
COMPENSATION DISCUSSION AND ANALYSIS
Shareholding Guidelines
We believe that our executives will most effectively pursue the long-term interests of our shareholders if they are shareholders themselves. As a result, share ownership guidelines are in place for all NEOs (subject to exceptions that may be granted by theour Compensation Committee for significant personal events or retirement planning). Our CEO is required to hold shares equal in value to five-times salary and our other NEOs are required to hold shares equal in value to three-times salary. Our policy requires that NEOs hold/retain all equity grants until the share ownership guidelines are met. Based on current share ownership, all executives serving as NEOs are currently meetin compliance with the guidelines.
The Our Compensation Committee reserves the right to provide a portion of annual bonus in stock for any officer who fails to meet or make satisfactory progress toward satisfying the guidelines.
Risk Assessment
In 2017,2019, Dover, with the assistance of Willis Towers Watson, conducted aupdated the formal risk assessment that was conducted in 2017 and updated in 2018 for all our incentive compensation programs that have material impact on our financial statements. Willis Towers Watson inventoried incentive compensation programs at the corporate and operating company levels globally and conductedin-depth reviews of financially material plans, identified based on expected spend and income statement accounts tied to the program. The reviews focused on both the plan design features as well as internal risk mitigation controls in place. Based on this review, we have concluded that Dover’s compensation practices and policies do not create risks that are reasonably likely to have a material adverse effect on the Company.
DOVER CORPORATION –20182020 Proxy Statement 5360
We reviewed and discussed with management the Compensation Discussion and Analysis for the year ended December 31, 2017.
Based on the review and discussions referred to above, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in Dover’s Annual Report on Form10-K for the year ended December 31, 2017.
We reviewed and discussed with management the Compensation Discussion and Analysis for the year ended December 31, 2019. Based on the review and discussions referred to above, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in Dover’s Annual Report on Form10-K for the year ended December 31, 2019. | ||||||
Compensation Committee: | Keith E. Wandell (Chair) | |||||
Kristiane C. Graham Michael F. Johnston Mary A. Winston | ||||||
This report does not constitute “soliciting material” and shall not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this report by reference, and shall not otherwise be deemed filed under such Acts. |
This report does not constitute “soliciting material” and shall not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this report by reference, and shall not otherwise be deemed filed under such Acts.
DOVER CORPORATION –20182020 Proxy Statement 5461
The Summary Compensation Table and notes show all remuneration for 20172019 provided to our NEOs, consisting of the following officers:
Our President & CEO;
Our Senior Vice President & Chief Financial Officer;CFO; and
Our three other most highly compensated executive officers as of the end of 2017.2019.
The determination of the most highly compensated executive officers is based on total compensation paid or accrued for 2017,2019, excluding changes in the actuarial value of defined benefit plans and earnings on nonqualified deferred compensation balances.
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | |||||||||||||||||||||||||||
Robert A. Livingston President & Chief Executive Officer
| 2017 | 1,060,000 | 1,725,000 | 2,699,960 | 2,580,618 | 0 | 1,814,023 | 73,765 | 9,953,366 | |||||||||||||||||||||||||||
2016 | 1,030,000 | 880,000 | 2,599,952 | 2,519,488 | 0 | 1,225,883 | 37,932 | 8,293,255 | ||||||||||||||||||||||||||||
| 2015
|
|
| 1,000,000
|
|
| 988,125
|
|
| 2,599,974
|
|
| 3,097,433
|
|
| 0
|
|
| 586,000
|
|
| 19,341
|
|
| 8,290,873
|
| ||||||||||
Brad M. Cerepak Senior Vice President & Chief Financial Officer
| 2017 | 685,000 | 970,000 | 799,936 | 764,629 | 0 | 397,072 | 27,872 | 3,644,376 | |||||||||||||||||||||||||||
2016 | 670,000 | 530,000 | 740,014 | 717,089 | 0 | 278,934 | 320,331 | 3,256,368 | ||||||||||||||||||||||||||||
| 2015
|
|
| 670,000
|
|
| 530,000
|
|
| 739,982
|
|
| 881,585
|
|
| 0
|
|
| 229,000
|
|
| 11,857
|
|
| 3,062,424
|
| ||||||||||
C. Anderson Fincher President & Chief Executive Officer, Dover Engineered Systems
| 2017 | 545,000 | 580,000 | 549,965 | 350,458 | 0 | 607,677 | 19,903 | 2,653,003 | |||||||||||||||||||||||||||
2016 | 530,000 | 500,000 | 550,001 | 355,313 | 0 | 365,810 | 13,832 | 2,314,956 | ||||||||||||||||||||||||||||
| 2015
|
|
| 530,000
|
|
| 450,000
|
|
| 549,967
|
|
| 436,820
|
|
| 269,940
|
|
| 218,000
|
|
| 10,676
|
|
| 2,465,403
|
| ||||||||||
Sivasankaran Somasundaram President & Chief Executive Officer, Dover Energy
| 2017 | 535,000 | 970,000 | 549,965 | 350,458 | 0 | 322,496 | 21,903 | 2,749,822 | |||||||||||||||||||||||||||
2016 | 502,000 | 355,000 | 550,001 | 355,313 | 0 | 222,090 | 13,832 | 1,998,236 | ||||||||||||||||||||||||||||
| 2015
|
|
| 479,167
|
|
| 385,000
|
|
| 549,967
|
|
| 436,820
|
|
| 0
|
|
| 161,000
|
|
| 10,676
|
|
| 2,022,630
|
| ||||||||||
William W. Spurgeon President & Chief Executive Officer, Dover Fluids | 2017 | 650,000 | 640,000 | 549,965 | 350,458 | 0 | 1,119,977 | 21,289 | 3,331,689 | |||||||||||||||||||||||||||
2016 | 650,000 | 310,000 | 550,001 | 355,313 | 0 | 726,584 | 13,832 | 2,605,730 | ||||||||||||||||||||||||||||
2015 | 650,000 | 530,000 | 549,967 | 436,820 | 790,760 | 256,000 | 10,676 | 3,224,223 | ||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | |||||||||||||||||||||||||||
Richard J. Tobin
President & Chief
Executive Officer
|
| 2019
2018
|
|
| 1,200,000
776,924
|
|
| 1,665,000
2,000,000
|
|
| 2,800,022
22,013,074
|
|
| 3,232,903
3,071,394
|
|
| 0
0
|
|
| 0
0
|
|
| 251,150
70,009
|
|
| 9,149,075
27,931,401
|
| |||||||||
Brad M. Cerepak
Senior Vice President & Chief Financial Officer
|
| 2019
|
|
| 705,000
|
|
| 740,250
|
|
| 800,006
|
|
| 923,692
|
|
| 0
|
|
| 553,203
|
|
| 37,166
|
|
| 3,759,317
|
| |||||||||
| 2018
|
|
| 705,000
|
|
| 773,000
|
|
| 800,049
|
|
| 901,146
|
|
| 0
|
|
| 123,659
|
|
| 30,830
|
|
| 3,333,684
|
| ||||||||||
| 2017
|
|
| 685,000
|
|
| 970,000
|
|
| 799,936
|
|
| 764,629
|
|
| 0
|
|
| 397,072
|
|
| 27,872
|
|
| 3,644,509
|
| ||||||||||
William W. Spurgeon
Retired President &
|
| 2019
|
|
| 650,000
|
|
| 692,900
|
|
| 549,936
|
|
| 423,359
|
|
| 0
|
|
| 2,606,809
|
|
| 27,525
|
|
| 4,950,529
|
| |||||||||
| 2018
|
|
| 650,000
|
|
| 601,700
|
|
| 550,003
|
|
| 413,019
|
|
| 0
|
|
| 0
|
|
| 22,057
|
|
| 2,236,779
|
| ||||||||||
Chief Executive Officer, Dover Fluids
|
| 2017
|
|
| 650,000
|
|
| 640,000
|
|
| 549,965
|
|
| 350,458
|
|
| 0
|
|
| 1,119,977
|
|
| 21,289
|
|
| 3,331,689
|
| |||||||||
Ivonne M. Cabrera
Senior Vice President &
General Counsel
|
| 2019
2018
|
|
| 540,000
540,000
|
|
| 396,900
434,000
|
|
| 319,930
319,987
|
|
| 369,480
360,455
|
|
| 0
0
|
|
| 408,519
177,611
|
|
| 23,238
18,672
|
|
| 2,058,067
1,850,725
|
| |||||||||
Jay L. Kloosterboer
Retired Senior Vice President,
Human Resources
|
| 2019
2018
|
|
| 540,000
540,000
|
|
| 389,340
434,000
|
|
| 319,930
319,987
|
|
| 369,480
360,455
|
|
| 0
0
|
|
| 167,684
37,317
|
|
| 23,031
19,759
|
|
| 1,809,465
1,711,518
|
|
(1) | Bonus amounts generally represent payments under our AIP for the year indicated, for which payments are made in the first quarter of the following year. The AIP constitutes anon-equity incentive plan under FASB ASC Topic 718. Although they are based on the satisfaction ofpre-established performance targets, |
(2) | The amounts generally represent (a) the aggregate grant date fair value of performance shares granted during the year indicated, |
Under FASB ASC Topic 718, the |
The amounts represent the aggregate grant date fair value of awards granted during the year indicated, calculated in accordance with FASB ASC Topic 718 and do not correspond to the actual value that might be realized by the named executives.
DOVER CORPORATION –20182020 Proxy Statement 5562
EXECUTIVE COMPENSATION TABLES
The grant date fair value of restricted stock unit awards was calculated in accordance with FASB ASC Topic 718 using the assumptions set forth in the footnotes to financial statements in the Company’s Annual Report onForm 10-K for the year ended December 31, 2017. All restricted stock unit grants are eligible for dividend equivalent payments which are paid upon vesting.
For a discussion of the assumptions relating to calculation of the cost of equity awards, see Note 12 to the Notes to the Financial Statements contained in our Annual Report on Form10-K for the year ended December 31, 2017.
(3) | The amounts represent the aggregate grant date fair value of SSAR awards granted during the year indicated, calculated in accordance with FASB ASC Topic 718, and do not correspond to the actual value that may be realized by the named executives. |
(4) | See Note (1) for a discussion of annual bonuses under the |
(5) | Amounts represent changes in present value of accumulated benefits under the pension plan and/or PRP during the year indicated. For more information, see “— Pension Benefits through |
(6) |
|
CEO Employment Agreement
In connection with the hiring of Mr. Tobin as our CEO, Mr. Tobin and Dover entered into a three-year employment agreement commencing May 1, 2018. Under the terms of the agreement, Mr. Tobin is entitled to a minimum annual base salary of $1.2 million and a target annual bonus equal to 125% of his base salary, and the receipt of an annual equity grant for each of Dover’s fiscal years ending during the term of the agreement with a grant date fair value of not less than $7 million. During the term of the agreement, Mr. Tobin will also be entitled to employee benefits on the same basis as those generally available to executive officers of Dover.
In connection with his hiring, Mr. Tobin received aone-time make-whole equity grant consisting of 75,971 performance shares, and 164,603 RSUs. Mr. Tobin also received aone-time make-whole cash payment of $1,000,000.
Mr. Tobin is entitled to receive certain severance payments and benefits in the event his employment is terminated by Dover without cause or by him for good reason. See “Potential Payments upon Termination orChange-in-Control”.
At the end of the term of the agreement, Mr. Tobin will continue to be employed by Dover as anat-will employee and participate in severance and other benefit plans on the same terms as other executives.
CEO Pay Ratio
As permitted under SEC rules, to calculate our 2019 CEO pay ratio we have used the same median employee who was used to calculate our 2018 CEO pay ratio. That median employee’s total compensation was $45,141 for 2019. We are providingidentified the following information aboutmedian employee for 2018 using a methodology in accordance with SEC rules, as explained in our proxy statement for our 2018 annual meeting, filed with the relationship of theSEC on Schedule 14A on March 21, 2019.
We calculated 2019 annual total compensation offor both our employeesmedian employee and Mr. Tobin using the same methodology that we use to determine our NEOs’ annual total compensation of Robert A. Livingston, our President and CEO. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K. As is permitted underfor the SEC rules, to determine our median employee, we chose “base salary” as our consistently applied compensation measure. We estimated annual base salary for hourly workers using their hourly rate and a reasonable estimate of hours worked in a given year; for employees who commenced work during 2017, we annualized base. Fifteen countries were excluded (3% of the total workforce), with employee counts as follows: Argentina (31), Austria (2), Costa Rica (13), Czech Republic (48), Dominican Republic (37), Kenya (8), Malaysia (170), Mexico (168), Norway (13), Oman (185), Portugal (10), South Korea (22), Taiwan (21), Thailand (147), and Turkey (9). Using December 13, 2017 as the determination date, a valid statistical sampling methodology was used to estimate the median base salary for 28,902 employees (16,013 U.S. and 12,889non-U.S.) and, after country exclusions, 28,018 employees (16,013 U.S. and 12,005non-U.S.). We then produced a sample of employees who were paid within a 5% range of that median and selected an employee from within that group as our median employee. We determined that employee’s (SummarySummary Compensation Table)Table. Mr. Tobin’s total compensation was $41,943. The President & CEO’s total compensation was $9,952,918$9,149,075, resulting in an estimated ratio of 237:203:1 for CEO pay to median worker pay.
Our global headcount was 24,012 employees (12,447 U.S. and 11,565non-U.S) as of December 31, 2019. We used December 31 as our determination date, rather than last year’s determination date of December 10, so that the date aligned with the end of the calendar year, which made it easier for us to gather the required payroll information. Thirteen countries were excluded (2.5% of the total workforce) under the permissible 5% exclusion, with employee counts as follows: Argentina (24), Austria (2), Costa Rica (16), Czech Republic (24), Dominican Republic (55), Kenya (2), Malaysia (111), Mexico (154), Norway (12), Portugal (11), South Korea (20), Taiwan (21), and Thailand (150). After country exclusions, our total headcount was 23,410 employees (12,447 U.S. and 10,963non-U.S.).
DOVER CORPORATION –20182020 Proxy Statement 5663
EXECUTIVE COMPENSATION TABLES
Grants of Plan-Based Awards in 20172019
All awards listed in the table below have a grant date of February 10, 2017.15, 2019 for all executive officers. For a discussion of the awards, see “Compensation Discussion and Analysis – Elements of Executive Compensation”.
Name | Type | Estimated Future Payouts UnderNon-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | Type | Estimated Future Payouts UnderNon-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock Option Awards ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thresh- old ($)(1) | Target ($) | Maximum ($) | Thresh- old (#)(1) | Target (#) | Maximum (#) | Thresh- old ($)(1) | Target ($) | Maximum ($) | Thresh- old (#)(1) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert A. Livingston | SSAR (2) | 204,339 | $ | 79.28 | $ | 2,580,618 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares (3) | 17,028 | 68,112 | $ | 1,349,980 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU (4) | 17,028 | $ | 1,349,980 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AIP (5) | 1,325,000 | 2,650,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Richard J. Tobin | AIP (2) |
| 1,500,000 |
|
| 3,000,000 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SSAR (3) |
| 184,211 |
|
| 91.20 |
|
| 3,232,903 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance |
| 15,351 |
|
| 46,053 |
|
| 1,400,011 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU (5) |
| 15,351 |
|
| 1,400,011 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brad M. Cerepak | SSAR (2) | 60,545 | $ | 79.28 | $ | 764,629 | AIP (2) |
| 705,000 |
|
| 1,410,000 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares (3) | 5,045 | 20,180 | $ | 399,968 | SSAR (3) |
| 52,632 |
|
| 91.20 |
|
| 923,692 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU (4) | 5,045 | $ | 399,968 | Performance |
| 4,386 |
|
| 13,158 |
|
| 400,003 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AIP (5) | 685,000 | 1,370,000 | RSU (5) |
| 4,386 |
|
| 400,003 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C. Anderson Fincher | SSAR (2) | 27,750 | $ | 79.28 | $ | 350,458 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares (3) | 4,162 | 16,648 | $ | 329,963 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU (4) | 2,775 | $ | 220,002 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AIP (5) | 545,000 | 1,090,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sivasankaran Somasundaram | SSAR (2) | 27,750 | $ | 79.28 | $ | 350,458 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares (3) | 4,162 | 16,648 | $ | 329,963 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU (4) | 2,775 | $ | 220,002 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AIP (5) | 535,000 | 1,070,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
William W. Spurgeon, Jr. | SSAR (2) | 27,750 | $ | 79.28 | $ | 350,458 | AIP (2) |
| 650,000 |
|
| 1,300,000 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares (3) | 4,162 | 16,648 | $ | 329,963 | SSAR (3) |
| 24,123 |
|
| 91.20 |
|
| 423,359 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU (4) | 2,775 | $ | 220,002 | Performance |
| 3,618 |
|
| 10,854 |
|
| 329,962 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AIP (5) | 650,000 | 1,300,000 | RSU (5) |
| 2,412 |
|
| 219,974 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ivonne M. Cabrera | AIP (2) |
| 378,000 |
|
| 756,000 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SSAR (3) |
| 21,053 |
|
| 91.20 |
|
| 369,480 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance |
| 1,754 |
|
| 5,262 |
|
| 159,965 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU (5) |
| 1,754 |
|
| 159,965 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jay L. Kloosterboer | AIP (2) |
| 378,000 |
|
| 756,000 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SSAR (3) |
| 21,053 |
|
| 91.20 |
|
| 369,480 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance |
| 1,754 |
|
| 5,262 |
|
| 159,965 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSU (5) |
| 1,754 |
|
| 159,965 |
|
(1) | Represents the minimum amount payable for a certain level of performance. Under each of our plans, there is no guaranteed minimum payment. |
(2) | The amounts shown in this row reflect the potential payouts in February 2020 for 2019 under the AIP. The bonus amount actually paid in February 2020 is disclosed in the Summary Compensation Table in the column “Bonus” for 2019 for the executive officer. |
(3) | Represents an award of SSARs under the LTIP that will not be exercisable until February |
Represents an award of performance shares under the LTIP. The performance shares vest and become payable after the three-year performance period ending December 31, |
Represents an award of |
DOVER CORPORATION –20182020 Proxy Statement 5764
EXECUTIVE COMPENSATION TABLES
Outstanding Equity Awards at FiscalYear-End 20172019
Awards listed below with grant dates beginning in 2013 were made under the LTIP. Awards listed below with grant dates between 2006 through 2012 were made under the 2005 Plan. All equity awards outstanding as of February 28, 2014May 9, 2018 were adjusted as a result of thespin-off of Knowles CorporationApergy to preserve the value of the awards in accordance with the Employee Matters Agreement, dated February 28, 2014,May 9, 2018, between Dover and Knowles Corporation.Apergy.
Option Awards |
| Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Option Awards | Stock Awards | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of of Stock That Have Not | Market Vested ($) | Equity Units or | Equity Market or | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Unvested | Option Exercise Price ($) | Option Expiration Date | Number of of Stock That Have Not | Market Vested ($) | Equity Units or | Equity Market or | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert A. Livingston | 204,339 | (1) | 79.28 | 2/10/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
272,489 | (2) | 57.25 | 2/11/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
212,882 | (3) | 73.28 | 2/12/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
189,068 | (4) | 82.51 | 3/10/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
293,708 | (5) | 63.33 | 2/14/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
249,924 | (6) | 57.62 | 2/9/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
204,485 | (7) | 58.69 | 2/10/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
317,553 | (8) | 37.79 | 2/11/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
176,023 | (9) | 25.96 | 2/12/2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
17,028 | (10) | 1,719,658 | (13) | 68,112 | (14) | 6,878,631 | (16) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15,138 | (11) | 1,528,787 | (13) | 90,828 | (15) | 9,172,720 | (16) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,914 | (12) | 597,255 | (13) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Richard J. Tobin |
| 184,211 | (1) |
| 91.20 |
|
| 2/15/2029 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 210,658 | (2) |
| 79.75 |
|
| 5/23/2028 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 15,351 | (10) |
| 1,769,356 | (15) |
| 15,351 | (16) |
| 1,769,356 | (19) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 98,763 | (11) |
| 11,383,423 | (15) |
| 75,971 | (17) |
| 8,756,417 | (19) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 11,818 | (12) |
| 1,362,143 | (15) |
| 17,726 | (17) |
| 2,043,099 | (19) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brad M. Cerepak | 60,545 | (1) | 79.28 | 2/10/2027 |
| 52,632 | (1) |
| 91.20 |
|
| 2/15/2029 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
77,555 | (2) | 57.25 | 2/11/2026 |
| 58,478 | (3) |
| 82.09 |
|
| 2/9/2028 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
60,590 | (3) | 73.28 | 2/12/2025 |
| 71,806 | (4) |
| 66.85 |
|
| 2/10/2027 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
50,903 | (4) | 82.51 | 3/10/2024 |
| 91,981 | (5) |
| 48.28 |
|
| 2/11/2026 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
79,032 | (5) | 63.33 | 2/14/2023 |
| 71,860 | (6) |
| 61.79 |
|
| 2/12/2025 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
47,728 | (6) | 57.62 | 2/9/2022 |
| 60,371 | (7) |
| 69.57 |
|
| 3/10/2024 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
37,489 | (7) | 58.69 | 2/10/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
58,218 | (8) | 37.79 | 2/11/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,045 | (10) | 509,495 | (13) | 20,180 | (14) | 2,037,978 | (16) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,309 | (11) | 435,166 | (13) | 25,852 | (15) | 2,610,793 | (16) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,683 | (12) | 169,966 | (13) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C. Anderson Fincher | 27,750 | (1) | 79.28 | 2/10/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
38,428 | (2) | 57.25 | 2/11/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
30,022 | (3) | 73.28 | 2/12/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
24,239 | (4) | 82.51 | 3/10/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
14,211 | (5) | 63.33 | 2/14/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15,620 | (6) | 57.62 | 2/9/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15,336 | (7) | 58.69 | 2/10/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23,816 | (8) | 37.79 | 2/11/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,775 | (10) | 280,247 | (13) | 16,648 | (14) | 1,681,282 | (16) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,562 | (11) | 258,736 | (13) | 23,056 | (15) | 2,328,425 | (16) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,001 | (12) | 101,091 | (13) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 93,732 | (8) |
| 53.40 |
|
| 2/14/2023 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4,386 | (10) |
| 505,530 | (15) |
| 4,386 | (16) |
| 505,530 | (19) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,249 | (13) |
| 374,480 | (15) |
| 4,873 | (18) |
| 561,662 | (19) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1,995 | (14) |
| 229,944 | (15) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
William W. Spurgeon, Jr.(21) |
| 24,123 | (1) |
| 91.20 |
|
| 12/31/2022 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 26,802 | (3) |
| 82.09 |
|
| 12/31/2022 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 32,911 | (4) |
| 66.85 |
|
| 12/31/2022 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,412 | (10) |
| 278,007 | (15) |
| 0 | (21) |
| 0 | (19) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1,787 | (13) |
| 205,970 | (15) |
| 0 | (21) |
| 0 | (19) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1,097 | (14) |
| 126,440 | (15) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ivonne M. Cabrera |
| 21,053 | (1) |
| 91.20 |
|
| 2/15/2029 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 23,391 | (3) |
| 82.09 |
|
| 2/9/2028 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 28,722 | (4) |
| 66.85 |
|
| 2/10/2027 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 39,775 | (5) |
| 48.28 |
|
| 2/11/2026 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 31,074 | (6) |
| 61.79 |
|
| 2/12/2025 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 25,873 | (7) |
| 69.57 |
|
| 3/10/2024 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 28,841 | (8) |
| 53.40 |
|
| 2/14/2023 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,880 | (9) |
| 48.59 |
|
| 2/9/2022 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1,754 | (10) |
| 202,166 | (15) |
| 1,754 | (16) |
| 202,166 | (19) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1,300 | (13) |
| 149,838 | (15) |
| 1,949 | (18) |
| 224,642 | (19) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 798 | (14) |
| 91,977 | (15) |
DOVER CORPORATION –20182020 Proxy Statement 5865
EXECUTIVE COMPENSATION TABLES
Name | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Unvested | Option Exercise Price ($) | Option Expiration Date | Number of of Stock That Have Not | Market Vested ($) | Equity Units or | Equity Market or | |||||||||||||||||||||||||
Sivasankaran Somasundaram | 27,750 | (1) | 79.28 | 2/10/2027 | ||||||||||||||||||||||||||||
38,428 | (2) | 57.25 | 2/11/2026 | |||||||||||||||||||||||||||||
30,022 | (3) | 73.28 | 2/12/2025 | |||||||||||||||||||||||||||||
24,239 | (4) | 82.51 | 3/10/2024 | |||||||||||||||||||||||||||||
14,211 | (5) | 63.33 | 2/14/2023 | |||||||||||||||||||||||||||||
15,620 | (6) | 57.62 | 2/9/2022 | |||||||||||||||||||||||||||||
15,336 | (7) | 58.69 | 2/10/2021 | |||||||||||||||||||||||||||||
23,816 | (8) | 37.79 | 2/11/2020 | |||||||||||||||||||||||||||||
2,775 | (10) | 280,247 | (13) | 16,648 | (14) | 1,681,282 | (16) | |||||||||||||||||||||||||
2,562 | (11) | 258,736 | (13) | 23,056 | (15) | 2,328,425 | (16) | |||||||||||||||||||||||||
1,001 | (12) | 101,091 | (13) | |||||||||||||||||||||||||||||
William W. Spurgeon, Jr. | 27,750 | (1) | 79.28 | 2/10/2027 | ||||||||||||||||||||||||||||
38,428 | (2) | 57.25 | 2/11/2026 | |||||||||||||||||||||||||||||
30,022 | (3) | 73.28 | 2/12/2025 | |||||||||||||||||||||||||||||
24,239 | (4) | 82.51 | 3/10/2024 | |||||||||||||||||||||||||||||
28,423 | (5) | 63.33 | 2/14/2023 | |||||||||||||||||||||||||||||
2,775 | (10) | 280,247 | (13) | 16,648 | (14) | 1,681,282 | (16) | |||||||||||||||||||||||||
2,562 | (11) | 258,736 | (13) | 23,056 | (15) | 2,328,425 | (16) | |||||||||||||||||||||||||
1,001 | (12) | 101,091 | (13) |
Option Awards |
| Stock Awards | ||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of of Stock That Have Not | Market Vested ($) | Equity Units or | Equity Market or | ||||||||||||||||||||||||||||
Jay L. Kloosterboer |
| 0 | (20) |
| 91.20 |
|
| 12/31/2021 |
| |||||||||||||||||||||||||||
| 23,391 | (3) |
| 82.09 |
|
| 12/31/2021 |
| ||||||||||||||||||||||||||||
| 28,722 | (4) |
| 66.85 |
|
| 12/31/2021 |
| ||||||||||||||||||||||||||||
| 1,169 | (20) |
| 134,739 | (15) |
| 0 | (20) |
| 202,166 | (19) | |||||||||||||||||||||||||
| 1,300 | (13) |
| 149,838 | (15) |
| 0 | (20) |
| 224,642 | (19) | |||||||||||||||||||||||||
| 798 | (14) |
| 91,977 | (15) |
(1) | SSARs granted on February 15, 2019 that are not exercisable until February 15, 2022. |
(2) | SSARs granted on May 23, 2018 that are not exercisable until May 23, 2021. |
(3) | SSARs granted on February 9, 2018 that are not exercisable until February 9, 2021. |
(4) | SSARs granted on February 10, 2017 that |
SSARs granted on February 11, 2016 that |
SSARs granted on February 12, 2015 that |
SSARs granted on March 10, 2014 that |
SSARs granted on February 14, 2013 that became exercisable on February 14, 2016. |
SSARs granted on February 9, 2012 that became exercisable on February 9, 2015. |
(10) | Unvested portion of |
(11) | Unvested portion of RSUs granted on May 23, 2018. The units vest in five equal annual installments beginning on December 15, 2018. |
(12) | Unvested portion of RSUs granted on May 23, 2018. The units vest in three equal annual installments beginning on March 15, 2019. |
(13)Unvested | portion of RSUs granted on February 9, 2018. The units vest in three equal annual installments beginning on March 15, 2019. |
(14) | Unvested portion of RSUs granted on February 10, 2017. The units vest in three equal annual installments beginning on March 15, 2018. |
The amount reflects the number of units granted multiplied by |
Performance shares granted on February |
DOVER CORPORATION – 2018 Proxy Statement 59
EXECUTIVE COMPENSATION TABLES
Performance shares granted on |
Performance shares granted on February 9, 2018 become payable after December 31, 2020 subject to the achievement of the applicable performance goal. The amount reflected in the table represents the number of shares payable based on achievement of the target level of performance (100%). |
(19) | The amount reflects the number of performance shares payable based on achievement of the |
(20) | Mr. Kloosterboer retired on December 31, 2019. Under the retirement provisions of the LTIP, Mr. Kloosterboer will not vest in his 2019 grant of 21,053 SSARs, so the number of SSARs is presented as zero in the table. Similarly, he will not vest in the third tranche of his 2019 grant of 585 RSUs. The 1,169 RSUs in the table above represents 584 RSUs vesting in 2020 and 585 RSUs vesting in 2021. Lastly, he will not vest in 1,949 performance shares granted in 2018 and 1,754 performance shares granted in 2019. |
(21) | Mr. Spurgeon retired on December 31, 2019. Under the retirement provisions of the LTIP, Mr. Spurgeon will vest in his 2019 grant of 24,123 SSARs, and all tranches of his 2019 grant of 2,412 RSUs. Also, he will not vest in 4,020 performance shares granted in 2018 and 3,618 performance shares granted in 2019. |
DOVER CORPORATION –2020 Proxy Statement 66
EXECUTIVE COMPENSATION TABLES
Option Exercises and Stock Vested in 20172019
Name | Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||
Number of Shares Exercise (#)(1) | Value Realized on Exercise ($)(2) | Number of Shares Vesting (#)(3) | Value Realized on Vesting ($)(4) | Number of Shares Exercise (#)(1) | Value Realized | Number of Shares Vesting (#)(3) | Value Realized | |||||||||||||||||||||||||||
Robert A. Livingston
|
18,734
|
1,465,053
| ||||||||||||||||||||||||||||||||
Richard J. Tobin |
| 38,828 |
|
| 4,295,645 |
| ||||||||||||||||||||||||||||
Brad M. Cerepak
|
5,251
|
410,768
|
| 101,067 |
|
| 4,068,358 |
|
| 18,765 |
|
| 2,011,585 |
| ||||||||||||||||||||
C. Anderson Fincher
|
|
44,727
|
|
|
2,166,297
|
|
5,190
|
453,851
| ||||||||||||||||||||||||||
Sivasankaran Somasundaram
|
3,090
|
241,772
| ||||||||||||||||||||||||||||||||
William W. Spurgeon, Jr.
|
|
61,912
|
|
|
1,846,829
|
|
3,090
|
241,772
|
| 143,637 |
|
| 5,156,932 |
|
| 19,312 |
|
| 2,139,913 |
| ||||||||||||||
Ivonne M. Cabrera |
| 34,050 |
|
| 1,941,392 |
|
| 7,588 |
|
| 812,056 |
| ||||||||||||||||||||||
Jay L. Kloosterboer |
| 131,407 |
|
| 4,753,698 |
|
| 7,588 |
|
| 812,056 |
|
(1) | Represents exercise of SSARs; number of shares reported as acquired is the total number of shares underlying the |
(2) | The “value realized on exercise” provided in the table represents the difference between the average of the high and low trading price on the exercise date and the exercise or base price, multiplied by the number of shares acquired upon exercise of the award. |
(3) | This column represents the vesting of a portion of the |
(4) | This value represents |
DOVER CORPORATION – 2018 Proxy Statement 60
EXECUTIVE COMPENSATION TABLES
Pension Benefits through 20172019
Name | Plan Name | Number of (#) | Normal (#) | Present ($)(1) | Payments During Last Fiscal Year ($) | |||||||||||||
Robert A. Livingston (2), (3), (4) |
Pension Plan
|
| 16
|
|
| 65
|
|
| 624,230
|
|
| Not Offered
|
| |||||
PRP
|
| 30
|
|
| 65
|
|
| 16,287,170
|
|
| Not Offered
|
| ||||||
Brad M. Cerepak |
Pension Plan
|
| 9
|
|
| 65
|
|
| 347,713
|
|
| Not Offered
|
| |||||
PRP
|
| 8.6
|
|
| 65
|
|
| 1,397,242
|
|
| Not Offered
|
| ||||||
C. Anderson Fincher (2), (6) |
Pension Plan
|
| 24
|
|
| 65
|
|
| 548,969
|
|
| Not Offered
|
| |||||
PRP
|
| 23.9
|
|
| 65
|
|
| 1,870,377
|
|
| Not Offered
|
| ||||||
Sivasankaran Somasundaram (2), (7) |
Pension Plan
|
| 14
|
|
| 65
|
|
| 429,803
|
|
| Not Offered
|
| |||||
PRP
|
| 13.8
|
|
| 65
|
|
| 1,068,509
|
|
| Not Offered
|
| ||||||
William W. Spurgeon, Jr. (2), (5) |
Pension Plan
|
| 25
|
|
| 65
|
|
| 968,715
|
|
| Not Offered
|
| |||||
PRP
|
| 24.9
|
|
| 65
|
|
| 6,312,737
|
|
| Not Offered
|
|
Name | Plan Name | Number of (#) | Normal (#) | Present ($)(1) | Payments During Last Fiscal Year ($) | |||||||||||||
Richard J. Tobin (2) | Pension Plan |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
| |||||
PRP |
| N/A |
|
| N/A |
|
| N/A |
|
| N/A |
| ||||||
Brad M. Cerepak | Pension Plan |
| 11.0 |
|
| 65 |
|
| 490,921 |
|
| N/A |
| |||||
PRP |
| 10.6 |
|
| 65 |
|
| 1,930,897 |
|
| N/A |
| ||||||
William W. Spurgeon, Jr. (4) | Pension Plan |
| 27.0 |
|
| 65 |
|
| 1,112,219 |
|
| N/A |
| |||||
PRP |
| 26.9 |
|
| 65 |
|
| 8,553,925 |
|
| N/A |
| ||||||
Ivonne M. Cabrera (3) | Pension Plan |
| 16.6 |
|
| 65 |
|
| 552,690 |
|
| N/A |
| |||||
PRP |
| 15.9 |
|
| 65 |
|
| 1,155,116 |
|
| N/A |
| ||||||
Jay L. Kloosterboer (4) | Pension Plan |
| 11.0 |
|
| 65 |
|
| 417,303 |
|
| N/A |
| |||||
PRP |
| 11.0 |
|
| 65 |
|
| 846,365 |
|
| N/A |
|
(1) | This amount was earned by the NEO over his or her years of service. |
DOVER CORPORATION –2020 Proxy Statement 67
EXECUTIVE COMPENSATION TABLES
(2) | Mr. Tobin is not eligible to participate in the Dover pension plan or the PRP, since the pension plan and the PRP were closed to new employees on December 31, 2013. |
|
|
The amounts shown in the Pension Benefits table above are actuarial present values of the benefits accumulated through December 31, 2017.2019. An actuarial present value is calculated by estimating expected future payments starting at an assumed retirement age, weighting the estimated payments by the estimated probability of surviving to each post-retirement age, and discounting the weighted payments at an assumed discount rate to reflect the time value of money. The actuarial present value represents an estimate of the amount which, if invested today at the assumed discount rate, would be sufficient on an average basis to provide estimated future payments totaling the current accumulated benefit. For purposes of the table, the assumed retirement age for each NEO is 65, the normal retirement age under each plan. Actual benefit present values will vary from these estimates depending on many factors, including an executive’s actual retirement age.
Pension Plan
We have a pension plan for which eligible Dover employees, and the salaried employees of our participating subsidiaries, were eligible to become participants after they completed one year of service. Benefits under the pension plan for Dover employees, including those for the applicable NEOs, are determined by multiplying a participant’s years of credited service (up to a maximum of 35 years) by a percentage of their final average compensation, subject to
DOVER CORPORATION – 2018 Proxy Statement 61
EXECUTIVE COMPENSATION TABLES
statutory limits applicable totax-qualified pension plans. Benefits for a number of the participating subsidiaries are determined under different benefit formulae.
Pension plan participants generally vest in their benefits after five years of employment or, if earlier, upon reaching age 65, which is the normal retirement age under the plan. All NEOs who participate in the pension plan are vested in their pension plan benefits and are eligible to begin receiving reduced benefits if their employment terminates before normal retirement age.
Effective December 31, 2013, the pension plan is closed to new employees. All pension eligible employees as of December 31, 2013 will continue to earn pension benefits through December 31, 2023 as long as they remain employed by an operating company participating in the plan. It is Dover’s present intention to eliminate any future benefit accruals after December 31, 2023.
Pension Replacement Plan
We also maintain the PRP, which is anon-qualified plan for tax purposes, to provide benefits to certain employees whose compensation and pension plan benefits are greater than the compensation and benefit limits applicable totax-qualified pension plans. Prior to January 1, 2010, our plan which providednon-qualified retirement benefits was the Supplemental Executive Retirement Plan (“SERP”). Effective January 1, 2010, the SERP was amended to provide reduced benefits that are more consistent with the benefits provided under the pension plan and its name was changed to the PRP.
Employees are eligible to participate in the PRP if they hold certain positions within Dover, or its subsidiaries, are U.S. taxpayers and earn more than a set percentage above the Internal Revenue Code’s compensation limits fortax-qualified pension plans. Dover’s CEO may designate other employees as eligible and may revoke the eligibility of participants.
The formula for determining benefits accrued under the PRP after December 31, 2009, before offsets, is determined using the same benefit formula as under the pension plan, except that the Internal Revenue Code’s limits on compensation and benefits applicable totax-qualified pension plans will not apply. Benefits under the former SERP, before offsets, were determined by multiplying the participant’s years of actual service with Dover companies, plus, in limited cases, prior service credit by a percentage of the participant’s final average compensation as defined under the plan.
Benefits payable under the PRP or SERP are reduced by the amount of Company-provided benefits under any other retirement plans, including the pension plan, as well as the Company-paid portion of social security benefits. PRP participants
DOVER CORPORATION –2020 Proxy Statement 68
EXECUTIVE COMPENSATION TABLES
must complete five years of service to vest in their benefits. All NEOs who participate in the PRP are fully vested in their benefits and will commence receiving benefits upon termination of employment. PRP benefits may be forfeited for “cause” (defined as conviction of a felony which places a Dover company at legal or other risk or is expected to cause substantial harm to the business of a Dover company or its relationships with employees, distributors, customers or suppliers).
Normal retirement age for purposes of the PRP is age 65. Certain employees who were participants on or before March 1, 2010 will be entitled to receive the portion of their benefits that accrued through December 31, 2009 without any reduction due to early retirement if they retire after they reach age 62 and complete 10 years of service. Generally, benefits accrued after December 31, 2009 will be subject to early retirement reduction factors consistent with the reduction factors in the pension plan.
Effective December 31, 2013, the PRP is closed to new employees. All eligible employees as of December 31, 2013 will continue to earn to their PRP benefits through December 31, 2023 as long as they remain employed by Dover and its affiliates. It is Dover’s intention to eliminate any future benefit accruals after December 31, 2023, consistent with the freezing of benefit accruals under the pension plan.
DOVER CORPORATION – 2018 Proxy Statement 62
EXECUTIVE COMPENSATION TABLES
Nonqualified Deferred Compensation in 20172019
Name | Plan Name | Executive contributions in last FY ($)(1) | Registrant contributions in last FY ($) | Aggregate earnings ($) | Aggregate distributions ($) | Aggregate balance ($) | Plan Name | Executive contributions in last FY ($)(1) | Registrant contributions in last FY ($) | Aggregate earnings ($) | Aggregate distributions ($) | Aggregate balance ($) | ||||||||||||||||||||||||||||
Robert A. Livingston | Deferred Compensation Plan
| n/a | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||||||||||||
Executive Deferred
| n/a | n/a | 15,591 | n/a | 402,473 | |||||||||||||||||||||||||||||||||||
Richard J. Tobin | Deferred Compensation Plan | 599,856 | N/A | 32,230 | N/A | 793,189 | ||||||||||||||||||||||||||||||||||
Brad M. Cerepak |
Deferred Compensation Plan
| n/a | n/a | n/a | n/a | n/a | Deferred Compensation Plan | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||
C. Anderson Fincher |
Deferred Compensation Plan
| 250,000 | n/a | 70,529 | n/a | 514,611 | ||||||||||||||||||||||||||||||||||
Sivasankaran Somasundaram |
Deferred Compensation Plan
| 163,958 | n/a | 366,100 | (129,453 | ) | 2,546,862 | |||||||||||||||||||||||||||||||||
William W. Spurgeon, Jr. |
Deferred Compensation Plan
| 192,000 | n/a | 329,706 | n/a | 2,566,804 | Deferred Compensation Plan | 250,340 | N/A | 581,322 | N/A | 3,390,434 | ||||||||||||||||||||||||||||
Ivonne M. Cabrera | Deferred Compensation Plan | N/A | N/A | 31,491 | N/A | 142,053 | ||||||||||||||||||||||||||||||||||
Jay L. Kloosterboer | Deferred Compensation Plan | N/A | N/A | 4,545 | N/A | 64,674 |
(1) | If any amounts were shown as executive contributions in |
Our deferred compensation plan is a nonqualified plan that permits select key management and highly compensated employees on a U.S. payroll with an annual salary equal to or greater than $175,000 to irrevocably elect to defer a portion of their salary and bonus. The deferred compensation plan provides participants who are not eligible to participate in the Pension Replacement Plan with the same level of matching and other employer contributions that they would have received if certain compensation limits under our Retirement Savings plan did not apply. OurAll of our NEOs other than Mr. Tobin participate in the Pension Replacement Plan and are therefore not eligible to receive matching and other employer contributions under the deferred compensation plan. As amended, the plan operates similar to an “excess” deferred compensation plan in that it provides for employer contributions on salary and bonuses in excess of the compensation limit permitted under thetax-qualified retirement savings plan.
Under the amended deferred compensation plan, an eligible participant’s account will be credited with matching employer contributions on salary and bonus deferred under the plan each year on or after January 1, 2014, at the same rate as under our retirement savings plan plus additional employer contributions at the same rate that the participant’s business unit makes “automatic” contributions under our retirement savings plan each year.
Amounts deferred under the plan are credited with hypothetical investment earnings based on the participant’s investment elections made from among investment options designated under the plan. Participants are 100% vested in all amounts they
DOVER CORPORATION –20182020 Proxy Statement 6369
EXECUTIVE COMPENSATION TABLES
in all amounts they defer, as adjusted for any earnings and losses on such deferred amounts. Effective as of January 1, 2010, a hypothetical investment option that tracks the value of Dover common stock, including any dividend payments, was added to the plan. This Dover stock unit fund does not actually hold any Dover stock, and participants who elect to participate in this option do not own any Dover common stock, or have any voting or other rights associated with the ownership of our common stock. Participants’ accounts are credited with the net returns of shares of our common stock equal to the number of stock units held by the participant. All distributions from the stock unit fund will be paid in cash. Balances allocated into the stock unit fund must remain in the stock unit fund for the remainder of the participant’s participation in the plan.
Generally, deferred amounts will be distributed from the plan only on account of retirement at age 65 (or age 55 with 10 years of service), disability or other termination of service, or at a scheduledin-service withdrawal date chosen by the participant.
Potential Payments upon Termination orChange-in-Control
The discussion and tablestable below describe the incremental payments or values to which each of the NEOs would be entitled in the event of termination of such executive’s employment or achange-in-control.
In November 2010, Dover adopted The only compensation plans under which an executive may be entitled to incremental payments are the severance plan, (the “severance plan”) and senior executivethe CIC severance plan. See “Compensation Discussion and Analysis — Other Compensation Programs and Policies” for a description of the plans. The severance plan creates a consistent and transparent severance policy for determining benefits for all similarly-situated executives and formalizes Dover’s current executive severance practices. All of our executives, including our NEOs, are eligible to participate in the severance plan. The CIC severance plan likewise establishes a consistent policy regarding double-triggerchange-in-control severance payments based on current market practices. The CIC severance plan applies to all executives who are subject to Dover’s senior executive shareholding guidelines on the date of achange-in-control (as defined in the plan), including all NEOs. Each of the severance plan and the CIC severance plan gives Dover the right to recover amounts paid to an executiveLTIP. No incremental values would be payable under the PRP, pension plan as required under any clawback policy of Dover as in effect from time to time or under applicable law.
The 2005 Plan, the LTIP and Dover’s other benefit plans each have their own provisions relating to rights and obligations under thedeferred compensation plan upon termination.
The table below shows the aggregate amount of potential payments and other benefits that each NEO would have been entitled to receive if his employment had terminated in certain circumstances, other than as a result of achange-in-control, on December 31, 2017. The amounts shown assume that termination was effective as of December 31, 2017, include amounts earned through such timeevent orchange-in-control.
Voluntary termination. If an NEO voluntarily terminates his or her employment, he or she will not be entitled to any incremental payments and are estimates ofunvested equity awards will be forfeited, unless the amounts which could have been paid out to the executives upon their termination at that time. The actual amounts to be paid out can only be determined at the time of each executive’s separation from our Company. Annual bonuses are discretionary and are therefore omitted from the tables. No NEO wasexecutive is eligible for normal or early retirement under the LTIP as discussed below.
Involuntary termination without cause. If Dover terminates the employment of December 31, 2017 so we have omittedan NEO without cause (excluding termination due to death or disability), the NEO will be entitled to a cash severance payment under the severance plan consisting of:
Base salary continuation for 12 months following the date of termination;
A pro rata portion (based on the completed calendar months worked in the year of termination) of the NEO’s target annual incentive bonus payable for the year of termination, subject to potential reduction in the discretion of the compensation committee based upon attainment of the applicable performance criteria; and
A monthly amount equal to the then cost of COBRA health continuation coverage, based on the level of health care coverage in effect on the termination date, for the lessor of 12 months or the period that column from the table. As of December 31, 2017, Messrs. Livingston and Spurgeon wereNEO receives COBRA benefits.
Unvested equity awards will be forfeited.
Retirement. Under the LTIP, an NEO eligible for normal or early retirement will be entitled to continued vesting of SSARs and restricted stock unit awards for awards for 24 months in the case of early retirement under the Rule of 65, 36 months in the case of early retirement under the Rule of 70 (as defined below)and 60 months in the case of normal retirement at or after age 65. In the case of normal retirement, the outstanding performance share awards for the performance period ending the soonest will continue to vest, subject to the satisfaction of the applicable performance targets. In the case of early retirement under the 2005 Plan and LTIP in respectRule of all65 or 70, outstanding performance share awards grantedare payable, subject to them prior to such date.the satisfaction of the applicable performance targets, only at the compensation committee’s discretion.
NormalEarly retirement is defined as (i) age 65 under the pension plan and PRP (however, as noted in the PRP plan description, certain participants including the NEOs other than Mr. Fincher can receive an unreduced portion of their PRP benefit as of age 62), (ii) age 65 (or 55 with 10 years of service) under the deferred compensation plan, and (iii) age 62 under the LTIP for awards prior to August 6, 2014 and 65 for all grants thereafter. Early retirement is defined in each of the deferred compensation plan, the PRP and the pension plan as described in the applicable plan description above.
DOVER CORPORATION – 2018 Proxy Statement 64
EXECUTIVE COMPENSATION TABLES
With respect to awards under the LTIP, early retirement is defined as termination for any reason other than normal retirement, death, disability or cause, under one of the following circumstances:circumstances applicable to the NEOs:
The executive has at least 10 years of service with a Dover company, the sum of his or her age and years of service on the date of termination equals at least 65, and for awards granted on or after August 6, 2014, is at least 55 years old (the “Rule of 65”), and the executive complies with certain notice requirements; or
The executive has at least 15 years of service with a Dover company, the sum of his or her age and years of service on the date of termination equals at least 70, and for awards granted on or after August 6, 2014, is at least 60 years old (the “Rule of 70”), and the executive complies with certain notice requirements; or
requirements.
Any person who takes early or normal retirement under the LTIP is deemed to have expressly agreed that he or she will not compete with us on the following terms: the participant will not compete with us or any of our companies at which he or she was employed within the three years immediately prior to his or
DOVER CORPORATION –2020 Proxy Statement 70
EXECUTIVE COMPENSATION TABLES
her termination, in the geographic areas in which we or that company actively carried on business at the end of the participant’s employment, for the period during which such retirement affords him or her enhanced benefits.
benefits (24 months in the case of the Rule of 65, 36 months in the case of the Rule of 70 or 60 months in the case of normal retirement). If the participant fails to comply with thenon-compete provision, he or she forfeits theany enhanced benefits referred to aboveunder the LTIP and must return to Dover the economic value previously realized by reason of such benefits.
Voluntary Termination ($)(1) | Involuntary Not for Cause Termination ($)(2) | For Cause Termination ($)(3) | Early Retirement ($)(4) | |||||
Robert A. Livingston | ||||||||
Cash severance (5) | N/A | 1,940,000 | N/A | N/A | ||||
Performance share award (6) | N/A | 2,293,180 | 0 | 2,293,180 | ||||
Stock options/SSARs (7) | N/A | 89,574,123 | 0 | 89,574,123 | ||||
Restricted Stock Units (8) | N/A | 3,845,699 | 0 | 3,845,699 | ||||
Retirement plan payments (9) | N/A | 17,940,795 | 625,603 | 17,940,795 | ||||
Deferred comp plan | N/A | 0 | 0 | 0 | ||||
Health and welfare benefits (11) | N/A | 19,615 | 0 | 0 | ||||
Outplacement | N/A | 10,000 | N/A | N/A | ||||
Total: | N/A | 115,623,412 | 625,603 | 113,653,798 | ||||
Brad M. Cerepak | ||||||||
Cash severance (5) | N/A | 1,370,000 | N/A | N/A | ||||
Performance share award (6) | 0 | 0 | 0 | N/A | ||||
Stock options/SSARs (7) | 11,252,158 | 11,252,158 | 0 | N/A | ||||
Restricted Stock Units | 0 | 0 | 0 | N/A | ||||
Retirement plan payments (9) | 1,601,807 | 1,601,807 | 337,124 | N/A | ||||
Deferred comp plan | 0 | 0 | 0 | N/A | ||||
Health and welfare benefits (11) | 0 | 19,615 | 0 | N/A | ||||
Outplacement | N/A | 10,000 | N/A | N/A | ||||
Total: | 12,853,965 | 14,253,580 | 337,124 | N/A |
DOVER CORPORATION – 2018 Proxy StatementChange-in-Control (without termination of employment). 65
EXECUTIVE COMPENSATION TABLES
Voluntary Termination ($)(1) | Involuntary Not for Cause Termination ($)(2) | For Cause Termination ($)(3) | Early Retirement ($)(4) | |||||
C. Anderson Fincher | ||||||||
Cash severance (5) | N/A | 1,045,000 | N/A | N/A | ||||
Performance share award (6) | 212,079 | 212,079 | 0 | N/A | ||||
Stock options/SSARs (7) | 3,814.446 | 3,814,446 | 0 | N/A | ||||
Restricted Stock Units (8) | 0 | 0 | 0 | N/A | ||||
Retirement plan payments (9) | 2,727,466 | 2,727,466 | 522,549 | N/A | ||||
Deferred comp plan (10) | 514,611 | 514,611 | 514,611 | N/A | ||||
Health and welfare benefits (11) | 0 | 19,615 | 0 | N/A | ||||
Outplacement | N/A | 10,000 | N/A | N/A | ||||
Total: | 7,268,603 | 8,343,217 | 1,037,160 | N/A | ||||
Sivasankaran Somasundaram | ||||||||
Cash severance (5) | N/A | 890,000 | N/A | N/A | ||||
Performance share award (6) | 0 | 0 | 0 | N/A | ||||
Stock options/SSARs (7) | 3,814,446 | 3,814,446 | 0 | N/A | ||||
Restricted Stock Units | 0 | 0 | 0 | N/A | ||||
Retirement plan payments (9) | 1,618,375 | 1,618,375 | 411,116 | N/A | ||||
Deferred comp plan (10) | 2,546,862 | 2,546,862 | 2,546,862 | N/A | ||||
Health and welfare benefits (11) | 0 | 18,981 | 0 | N/A | ||||
Outplacement | N/A | 10,000 | N/A | N/A | ||||
Total: | 7,979,683 | 8,898,665 | 2,957,978 | N/A | ||||
William W. Spurgeon, Jr. | ||||||||
Cash severance (5) | N/A | 960,000 | N/A | N/A | ||||
Performance share award (6) | N/A | 582,106 | 0 | 582,106 | ||||
Stock options/SSARs (7) | N/A | 4,031,097 | 0 | 4,031,097 | ||||
Restricted Stock Units (8) | N/A | 546,659 | 0 | 546,659 | ||||
Retirement plan payments (9) | N/A | 8,498,693 | 969,456 | 8,498,693 | ||||
Deferred comp plan (10) | N/A | 2,566,804 | 2,566,804 | 2,566,804 | ||||
Health and welfare benefits (11) | N/A | 15,717 | 0 | 0 | ||||
Outplacement | N/A | 10,000 | N/A | N/A | ||||
Total: | N/A | 17,211,077 | 3,506,260 | 16,225,360 |
DOVER CORPORATION – 2018 Proxy Statement 66
EXECUTIVE COMPENSATION TABLES
Potential Payments in Connection with aChange-in-Control (Without Termination)
As discussed below, the payment of severance benefits following achange-in-control is subject to a double-trigger —that is, such benefits are payable only upon certain specified termination events following achange-in-control. However, rights of an executive under the 2005 Plan, the LTIP, the deferred compensation plan, the pension plan, the PRP and other incentive and benefit plans are governed by the terms of those plans and typically are effected by thechange-in-control event itself, even if the executive continues to be employed by us or a successor company following thechange-in-control.
All equity and cash performance awards outstanding as of December 31, 2017 were granted under the 2005 Plan or the LTIP. Under the 2005 Plan, upon achange-in-control, all outstanding options and SSARs will immediately become exercisable in accordance with the terms of the appropriate stock option or SSAR agreement. All outstanding cash performance awards and performance share awards immediately vest and become immediately due and payable. The performance periods of all outstanding cash performance awards and performance share awards terminate on the last day of the month prior to the month in which thechange-in-control occurs. The participant is entitled to a payment, the amount of which is determined in accordance with the plan and the relevant cash performance award or performance share award agreement, which is then prorated based on the portion of the performance period that the participant completed prior to thechange-in-control.
DOVER CORPORATION – 2018 Proxy Statement 67
EXECUTIVE COMPENSATION TABLES
Under the LTIP, upon a change in control of Dover (as defined in the LTIP) and if, within 18 months following the date of the change in control, the participant is either involuntarily terminated other than for cause, death or disability, such that the participant is no longer employed by a Dover company or an event or condition that constitutes “good reason” under the LTIP occurs, and the participant subsequently resigns for good reason within applicable time limits and other applicable requirements under the LTIP:
In the event of a change in control in which a participant’s outstanding awards are impaired in value or rights as determined solely in the discretion of Dover’s “continuing directors” (as defined in the plan), are not assumed by a successor corporation or an affiliate thereof, or are not replaced with an award or grant that, solely in the discretion of the Dover’s continuing directors, will preserve the existing value of the outstanding awards at the time of the change in control:
period.
Each person granted an award under the 2005 Plan or LTIP is deemed to agree that, upon a tender or exchange offer, proxy solicitation or other action seeking to effect achange-in-control of Dover, he or she will not voluntarily terminate employment with us or any of our companies and, unless terminated by us, will continue to render services to us until the person seeking to effect achange-in-control of our Company has abandoned, terminated or succeeded in such person’s efforts to effect thechange-in-control.
Under the PRP, upon achange-in-control, each participant will become entitled to receive the actuarial value of the participant’s benefit accrued through the date of thechange-in-control. Under the deferred compensation plan,No additional incremental amounts deferredare payable under the plan will continue to accrue any earnings and will be payablePRP upon a change in accordance with the elections made by the executive officer.control.
DOVER CORPORATION – 2018 Proxy Statement 68
EXECUTIVE COMPENSATION TABLES
TheTermination following table shows the aggregate potential equity values and potential payments under plans to which each of the continuing NEOs would have been entitled upon achange-in-control on December 31, 2017.
Named Executive Officer | Stock Options/ | Restricted Stock Awards ($) | Performance Share Awards ($) | PRP and Pension Plan ($) | Deferred Compensation Plan ($) | |||||||||
Robert A. Livingston
|
| 52,765,275
|
| 0
| 0
|
| 17,315,193
|
| 0
| |||||
Brad M. Cerepak
|
| 7,335,126
|
| 0
| 0
|
| 1,264,683
|
| 0
| |||||
C. Anderson Fincher
|
| 2,831,323
|
| 0
| 212,079
|
| 2,204,917
|
| 514,611
| |||||
Sivasankaran Somasundaram
|
| 2,831,323
|
| 0
| 0
|
| 1,207,259
|
| 2,546,862
| |||||
William W. Spurgeon, Jr.
|
| 0
|
| 0
| 0
|
| 7,559,238
|
| 2,566,804
|
Potential Payments upon Termination Following. Upon the double-trigger events of a termination of employment following aChange-in-Controlchange-in-control,
Under the CIC severance plan, an NEO covered by the planmay be eligible for certain cash severance payments and accelerated vesting of equity awards as described below.
An NEO will be entitled to receive severance payments if, within 18 months after thechange-in-control, either his or her employment is terminated by Dover without “cause” or the executive terminates employment for “good reason,” under and as such terms are defined in the CIC severance plan. The severance payments will consist of the following:
A lump sum payment equal to 2.0 multiplied by the sum of (i) the executive’s annual salary on the termination date or thechange-in-control date, whichever is higher, and (ii) his or her target annual incentive bonus for the year in which the termination or the date of thechange-in-control occurs, whichever is higher; and
A lump sum payment equal to the then cost of COBRA health continuation coverage, based on the level of health care coverage in effect on the termination date, if any, for one year.
No executive may receive severance benefits under more than one plan or arrangement. If Dover determines that (i) any payment or distribution to an executive in connection withchange-in-control, whether under the CIC severance plan or otherwise, would be subject to excise tax as an excess parachute payment under the Internal Revenue Code and (ii) the executive would receive a greaternet-after-tax amount by reducing the amount of the severance payment, Dover will reduce the severance payments made under the CIC severance plan to the maximum amount that might be paid (but not less than zero) without the executive becoming subject to the excise tax. The CIC severance plandoes not provide anygross-up for excise taxes.
In addition, if, within 18 months following a change of control of Dover (as defined in the LTIP) the executive is either involuntarily terminated other than for cause, death or disability or an event or condition that constitutes “good reason” occurs, and the executive subsequently resigns for good reason within applicable time limits and other requirements under the LTIP:
All unvested SSARs and RSUs immediately vest upon the date of termination and become exercisable in accordance with the terms of the applicable award agreement; and
All performance share awards will be deemed to have been earned “at target” as if the performance target had been achieved and such awards will immediately vest and become immediately due and payable on the date of termination
DOVER CORPORATION –20182020 Proxy Statement 6971
EXECUTIVE COMPENSATION TABLES
Potential Payments upon Termination orChange-in-Control Table. The following table below shows the potential payments and other benefits thatincremental amounts payable to each of the NEOs would have been entitled to receive upon involuntaryNEO if his or good reason termination following achange-in-controlher employment had terminated in certain circumstances on December 31, 2017.2019. The amounts shown assume that termination was effective as of December 31, 2019. The actual amounts to be paid out can only be determined at the time of each executive’s separation from Dover. As of December 31, 2019, no NEO was eligible for normal retirement under the LTIP; accordingly such event is not included in the table. As of December 31, 2019, Mr. Spurgeon retired under the Rule of 70 for the LTIP and Mr. Kloosterboer retired under the Rule of 65 under the LTIP. Annual bonuses under the AIP are discretionary and are therefore omitted from the table, except as covered by the severance plan or the CIC severance plan. Mr. Tobin is obligated to repay a pro-rata portion of his $1,000,000 cash make-whole amount if he terminates his employment without good reason or if Dover terminates his employment for cause prior to May 1, 2020.
Named Executive Officer | Lump Sum Amount | Health and Welfare Benefits ($) | Outplace- ment ($) | Stock Options/ SSARs ($)(1) | Restricted Stock Units ($)(2) | Perfor- mance Share Awards ($)(3) | 280G Tax Gross-Up /Cutback Amount ($)(4) | Total ($)(5) | ||||||||||||||||||
Robert A. Livingston
|
| 4,770,000
|
| 19,615
| 10,000
|
| 36,808,849
|
|
| 3,845,699
|
|
| 4,012,838
|
| 0
|
| 49,467,000
|
| ||||||||
Brad M. Cerepak
|
| 2,740,000
|
| 19,615
| 10,000
|
| 10,302,669
|
|
| 1,114,627
|
|
| 1,162,193
|
| 0
|
| 15,349,103
|
| ||||||||
C. Anderson Fincher
|
| 2,180,000
|
| 19,615
| 10,000
|
| 4,098,326
|
|
| 640,075
|
|
| 1,002,427
|
| 0
|
| 7,950,442
|
| ||||||||
Sivasankaran Somasundaram
|
| 2,140,000
|
| 18,981
| 10,000
|
| 4,098,326
|
|
| 640,075
|
|
| 1,002,427
|
| 0
|
| 7,909,809
|
| ||||||||
William W. Spurgeon Jr.
|
| 2,600,000
|
| 15,717
| 10,000
|
| 4,633,550
|
|
| 640,075
|
|
| 1,002,427
|
| 0
|
| 8,901,768
|
|
Voluntary Termination ($)(1) | Involuntary Not for Cause Termination ($)(2) | For Cause Termination ($)(3) | Early Retirement ($) | Involuntary or Good Reason Termination following a Change-in-Control ($)(4) | ||||||||||||||||
Richard J. Tobin | ||||||||||||||||||||
Cash severance | 0 | 4,050,000(5) | 0 | N/A | 5,400,000(6) | |||||||||||||||
Performance share award | 0 | 8,756,417(7) | 0 | N/A | 12,568,872(8) | |||||||||||||||
Stock options/SSARs | 0 | 0 | 0 | N/A | 11,912,582(9) | |||||||||||||||
Restricted Stock Units | 0 | 11,383,423(10) | 0 | N/A | 14,514,922(11) | |||||||||||||||
Health and welfare benefits | 0 | 39,495(12) | 0 | N/A | 39,495(12) | |||||||||||||||
Outplacement | 0 | 10,000 | 0 | N/A | 10,000 | |||||||||||||||
Total: | 0 | 24,239,335 | N/A | 44,445,871 | ||||||||||||||||
Brad M. Cerepak | ||||||||||||||||||||
Cash severance | N/A | 1,328,000(5) | 0 | 0 | 2,820,000(6) | |||||||||||||||
Performance share award | N/A | 561,662(7) | 0 | 561,662(7) | 1,067,192(8) | |||||||||||||||
Stock options/SSARs | N/A | 5,415,844(13) | 0 | 5,415,844(13) | 6,682,170(9) | |||||||||||||||
Restricted Stock Units | N/A | 941,444(10) | 0 | 941,444(10) | 1,109,954(11) | |||||||||||||||
Health and welfare benefits | N/A | 26,330(12) | 0 | 0 | 26,330(12) | |||||||||||||||
Outplacement | N/A | 10,000 | 0 | 0 | 10,000 | |||||||||||||||
Total: | N/A | 8,283,280 | 0 | 6,918,950 | 11,715,646 | |||||||||||||||
William W. Spurgeon, Jr. | ||||||||||||||||||||
Cash severance | N/A | 1,251,700(5) | 0 | 0 | 2,600,000(6) | |||||||||||||||
Performance share award | N/A | 463,345(7) | 0 | 463,345(7) | 880,356(8) | |||||||||||||||
Stock options/SSARs | N/A | 3,062,643(13) | 0 | 3,062,643(13) | 3,062,643(9) | |||||||||||||||
Restricted Stock Units | N/A | 610,417(10) | 0 | 610,417(10) | 610,417(11) | |||||||||||||||
Health and welfare benefits | N/A | 20,514(12) | 0 | 0 | 20,514(12) | |||||||||||||||
Outplacement | N/A | 10,000 | 0 | 0 | 10,000 | |||||||||||||||
Total: | N/A | 5,418,619 | 0 | 4,136,405 | 7,183,930 |
DOVER CORPORATION –2020 Proxy Statement 72
EXECUTIVE COMPENSATION TABLES
Voluntary Termination ($)(1) | Involuntary Not for Cause Termination ($)(2) | For Cause Termination ($)(3) | Early Retirement ($) | Involuntary or Good Reason Termination following a Change-in-Control ($)(4) | ||||||||||||||||
Ivonne M. Cabrera | ||||||||||||||||||||
Cash severance | 0 | 874,000(5) | 0 | N/A | 1,836,000(6) | |||||||||||||||
Performance share award | 0 | 0 | 0 | N/A | 426,808(8) | |||||||||||||||
Stock options/SSARs | 0 | 0 | 0 | N/A | 2,672,847(9) | |||||||||||||||
Restricted Stock Units | 0 | 0 | 0 | N/A | 443,982(11) | |||||||||||||||
Health and welfare benefits | 0 | 26,330(12) | 0 | N/A | 26,330(12) | |||||||||||||||
Outplacement | 0 | 10,000 | 0 | N/A | 10,000 | |||||||||||||||
Total: | 910,330 | 0 | N/A | 5,415,967 | ||||||||||||||||
Jay L. Kloosterboer | ||||||||||||||||||||
Cash severance | N/A | 874,000(5) | 0 | 0 | 1,836,000(6) | |||||||||||||||
Performance share award | N/A | 224,642(7) | 0 | 224,642(7) | 426,808(8) | |||||||||||||||
Stock options/SSARs | N/A | 2,166,311(13) | 0 | 2,166,311(13) | 2,672,847(9) | |||||||||||||||
Restricted Stock Units | N/A | 376,554(10) | 0 | 376,554(10) | 443,982(11) | |||||||||||||||
Health and welfare benefits | N/A | 15,333(12) | 0 | 0 | 15,333(12) | |||||||||||||||
Outplacement | N/A | 10,000 | 0 | 0 | 10,000 | |||||||||||||||
Total: | N/A | 3,666,840 | 0 | 2,767,507 | 5,404,970 |
Messrs. Cerepak, Spurgeon and Kloosterboer are eligible for early retirement under the LTIP. Accordingly, we have assumed that each of them would take early retirement, rather than voluntary termination. Mr. Spurgeon and Mr. Kloosterboer retired on December 31, 2019. |
Dover anticipates allowing anyone eligible for early retirement under the |
(3) | A NEO whose employment is terminated by us for cause will forfeit all outstanding cash and equity awards, whether or not vested or exercisable. The executive will also forfeit benefits under the PRP in accordance with the PRP terms. |
(4) | For purposes of this column, we have assumed that Messrs. Spurgeon and Kloosterboer had not given notice of their intention to retire as of December 31, 2019. |
(5) | Represents 12 month salary continuation plus an amount equal to the pro rata portion of the annual bonus paid for the prior year, subject to the Compensation Committee’s discretion to reduce the payment amount, or in the case of Mr. Tobin the amount is equal to 1.5 times the sum of his annual salary plus target bonus. |
(6) | Represents a payment equal to 2 times the sum of (i) the executive’s annual salary on the termination date or thechange-in-control date, whichever is higher, and (ii) his or her target annual incentive bonus for the year in which the termination or the date of thechange-in-control occurs, whichever is higher. |
(7) | Per his employment agreement, Mr. Tobin’ssign-on performance shares for 2018-2020 will fully vest subject to performance. Since Messrs. Cerepak and Kloosterboer are eligible for early retirement under the Rule of 65 and Mr. Spurgeon is eligible for early retirement under the Rule of 70, the amounts reflect the performance share awards for the three-year performance period 2018-2020 at target. This calculation assumes that the Compensation Committee approves payout for the performance periods for the NEOs. |
(8) | Represents payout at target of performance share awards granted under the LTIP for the |
DOVER CORPORATION –20182020 Proxy Statement 7073
EXECUTIVE COMPENSATION TABLES
(9) | Represents acceleration of vesting of unvested SSAR awards granted under the LTIP, calculated as the difference between the closing price of $115.26 per share of our common stock on December 31, 2019, and the exercise price of each unvested SSAR award multiplied by the number of shares covered by such award. |
(10) | For Messrs. Cerepak and Kloosteboer the amount reflects the value of unvested RSUs as of December 31, 2019 that will vest within the following 24 months. For Mr. Spurgeon the amount reflects the value of unvested RSUs as of December 31, 2019 that will vest within the following 36 months. Mr. Tobin is eligible per his employment agreement to fully vest allsign-on RSUs, and the amount shown represents the three remaining tranches that vest after 2019. |
(11) | Represents acceleration of vesting of unvested RSUs granted under the LTIP. |
(12) | Represents COBRA health continuation coverage costs under the severance plan or CIC severance plan as applicable. Under the CIC severance plan, an executive is entitled to a lump sum payment equal to the then cost of COBRA health continuation coverage for 12 months. Mr. Tobin would receive 18 months per his employment agreement. |
(13) | Reflects for Messrs. Cerepak and Kloosterboer, the value of unvested SSARs that would vest within 24 months and for Mr. Spurgeon, the value of unvested SSARs that would vest within 36 months. |
DOVER CORPORATION –2020 Proxy Statement 74
Proposal 3 — Advisory Resolution to Approve
Named Executive Officer Compensation
Each year, we offer our shareholders an opportunity to vote to approve, on an advisory and nonbinding basis, the compensation of our NEOs as disclosed in this Proxy Statement in accordance with Section 14A of the Exchange Act.
We are asking our shareholders to indicate their support for our NEO compensation as described in this Proxy Statement. This proposal, commonly known as a“say-on-pay” “Say on Pay” proposal, gives our shareholders the opportunity to express their views on our NEOs’ compensation. We believe that Dover’s compensation programs are well designed and reinforce our strategic focus on continued revenue and profit growth. Over
Our Board has a strong history of engaging with shareholders and soliciting feedback on a range of topics, including our executive compensation program. Historically, our program has received strong shareholder support as expressed during ourone-on-one engagement discussions with shareholders and through our Say on Pay vote levels. In 2019, approximately 67% of the past few years, Dover has enacted manySay on Pay votes cast were in support of the Company (down from more than 96% in each of the four preceding years).
Following the 2019 annual meeting of shareholders, we extended invitations to shareholders holding approximately 65% of our outstanding shares to specifically discuss compensation and governance matters in an effort to better understand what led to the decline in the 2019 Say on Pay vote. We held meetings with shareholders holding approximately 41% of our outstanding shares. After conducting several rounds of engagement, reviewing market practices, and reflecting on the elements of our program and how they align with our business objectives and long-term shareholder value creation, our Compensation Committee implemented meaningful changes to its programs thatour program for 2020. These changes are outlined in the Compensation Discussion and Analysis section of this Proxy Statement. We believe these changes have further strengthened the linkage between our compensation programs and the creation of shareholder value. At the 2017 Annual Meeting, 96% of the voting shareholders approved the compensation of the NEOs.proxy statement.
This vote is not intended to address any specific item of compensation but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that Dover’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in Dover’s Proxy Statement for the 20182020 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosures.”
Thesay-on-pay Say on Pay vote is advisory and therefore not binding on Dover, our Compensation Committee or our Board. Our Board and our Compensation Committee value the opinions of our shareholders and, to the extent there is any significant vote against the NEO compensation as disclosed in this Proxy Statement, we will consider our shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NEOs, AS
DISCLOSED IN THIS PROXY STATEMENTSTATEMENT.
DOVER CORPORATION –20182020 Proxy Statement 7175
Management ProposalsShareholder Proposal
Background of ProposalsProposal 4 and 5— Shareholder Proposal Regarding the Right to Act by Written Consent
Subject MatterJohn Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, beneficial owner of Vote
Ourno fewer than 50 shares of Dover’s common stock, has given notice that he intends to present a proposal for consideration at the Meeting. In accordance with SEC rules, the proposed resolution and supporting statement are printed verbatim below. The Board accepts no responsibility for the content and accuracy of the proposal and the Governancesupporting statement.
Proposal 4 — Right to Act by Written Consent
Shareholders request that our board of directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and Nominatingvoting. This written consent is to give shareholders the fullest power to act by written consent consistent with applicable law. This includes shareholder ability to initiate any appropriate topic for written consent.
Hundreds of major companies enable shareholder action by written consent. This proposal topic won majority shareholder support at 13 major companies in a single year. This included 67%-support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent. This proposal topic might have received a still higher vote than 67% at Allstate and Sprint if more shareholders had access to independent corporate governance data and recommendations.
Taking action by written consent in place of a meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle like the election of a new director.
This is important to consider after the large number of 2019 negative votes in regard to Dover executive pay. 33% of shares voted against Dover executive pay in 2019 when normally only 5% of shares vote against. Adoption of written consent might incentivize Keith Wandell, the Chairman of the Executive Pay Committee, believe that adherence to soundmore carefully consider shareholder views on executive pay. Why didn’t Mr. Wandell see the 33% negative vote coming and do something about it?
This proposal topic also won outstanding 95%-support at our 2016 annual meeting. Plus a proxy advisor has set certain minimum requirements for a company adopting written consent in case management is tempted to adopt a “fig leaf’ version of written consent.
Please vote yes:
Right to Act by Written Consent — Proposal 4
Opposition Statement of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” THE PROPOSAL FOR THE FOLLOWING REASONS:
The Board is committed to strong corporate governance and responsiveness to Dover’s shareholders and believes in maintaining policies and practices informed by evolvingthat serve the best practices and shareholder feedbackinterests of all shareholders. After careful consideration, the Board of Directors has determined that the proposal is important, and they are committed to ensuring that Dover is governed and managed with the highest standards of responsibility andnot in the best interests of Dover and its shareholders.
To The Board of Directors believes that end, our Board and Governance and Nominating Committee have carefully considereda written consent right is unnecessary given the advantages and disadvantagesability of Dover’s current super-majority voting provisions and, after careful consideration and upon the recommendation by the Governance and Nominating Committee, our Board has adopted, declared advisable and recommends thatDover shareholders approve amendments to our charter to eliminate the super-majority voting provisions contained therein, which are limited to the following matters:
The proposal would deprive the right of all shareholders to be consulted on important matters concerning their investment in Dover.
Dover’s governing documents require that actions subject to a shareholder vote be considered at a meeting of shareholders. This requirement ensures that all shareholders receive advance notice of the proposed action and have an opportunity to discuss it and consider all points of view. In contrast, the proposal would allow one group of shareholders to approve and adopt critical actions relating to the company without notice to other shareholders and without an opportunity for discussion at a shareholder meeting. Action by written consent can occur with little or no advance notice to the Company, other shareholders or the market. As a result, the Board may not have a meaningful opportunity to consider the merits of the proposed action, to consider alternative courses of action or to communicate its views to shareholders. As a result, this proposal, if adopted, could disenfranchise shareholders and may deprive them of their rights, while enabling other short-term or special interest investors to approve proposals that are not in the best interest of all shareholders. Because of these deficiencies, the Board believes that the written consent process is not appropriate for a widely held public company like Dover.
DOVER CORPORATION –2020 Proxy Statement 76
SHAREHOLDER PROPOSAL
We have a robust shareholder engagement program and our shareholders have indicated that a 15% special meeting right is preferable to a written consent right.
In 2019, we continued our focus on regularly engaging with our shareholders through a multi-stage engagement effort. Over the course of our multi-stage engagement, we reached out to holders of approximately 65% of our shares unless heldoutstanding, and engaged with governance professionals and/or portfolio managers at investors holding approximately 41% of our shares outstanding. As described under “Shareholder Engagement and History of Board Responsiveness” on pages 28 to 29, our engagement addressed strategy, governance, compensation, diversity and sustainability matters. Although shareholders possess a variety of views, many of our shareholders expressed that the right to act by written consent was unnecessary in light of our shareholders’ right to call special meetings. Moreover, to the extent some shareholders desired greater rights, the feedback was that adoption of a 15% ownership threshold for more than four years) or the ability forspecial meetings was preferable to a written consent right.
Our shareholder right to call special meetings allows shareholders to use cumulative voting in the election of directors once therepropose actions without waiting for Dover’s next annual meeting. A special meeting right set at an appropriate threshold is a “substantial stockholder” (defined in our charter as a beneficial holder of 40% or more of our shares) (Proposal 4); and
Under Dover’s existing governing documents, a majority vote requirement appliesproposed action, and allows the Board to all other matters submittedmake a thoughtful recommendation about the action. As a result, a strong shareholder special meeting right is better suited to a vote (other than the useculture of plurality voting in the event of a contested election). There are no super-majority provisions in ourby-lawstransparency and the only super-majority provisions in our charter are described above and subject to Proposals 4 and 5.
Board Analysis
These super-majority voting provisions have been part of our charter for many years and were originally designed to ensure that the interests of all shareholders were adequately represented in the event any of the actions contemplated by these provisions were to occur. On the other hand, the Board is aware that some shareholders oppose super-majority provisions, arguing that super-majority voting provisions may limit the ability of holders of a majority of our common stock to effect changes they desire.good corporate governance.
The Board also tookbelieves that having a special meeting right at a 15% ownership threshold strikes the right balance for Dover, as it is a low enough threshold to provide a meaningful right for shareholders to act between annual meetings yet high enough to prevent a single shareholder (or small group of shareholders) from acting without broad shareholder support.
We have a strong corporate governance structure and a record of accountability.
Our corporate governance structure reflects a significant and ongoing commitment to strong and effective corporate governance and accountability and responsiveness to shareholders. Dover’s Board regularly assesses and refines our governance policies and procedures to take into account that:
✓ | Annual |
Company’s directors are elected on an annual basis.
✓ |
|
DOVER CORPORATION –2018 Proxy Statement 72
MANAGEMENT PROPOSALS
✓ |
Proxy Access – Under ourby-laws, governance structure
✓ | Independent Board Chairman – Our |
✓ | Substantial Majority of Board Is Independent – All of our directors, other than our CEO, are independent. |
✓ | Elimination of Supermajority Voting Provisions – All of the supermajority voting provisions in our charter have been eliminated. |
✓ | Shareholder Engagement – Shareholders can communicate directly with the Board and/or individual directors. In addition, the Company regularly engages with its shareholders regarding strategy, governance, compensation and sustainability matters. In 2019, over the course of a |
Therefore, after careful consideration
✓ | No Shareholder Rights Plan – We do not have a shareholders rights plan. |
In light of Dover’s existing right of shareholders to call special meetings with a 15% ownership threshold, as well as the Board’s continuing commitment to effective corporate governance, the Board believes that adoption of the foregoing matters, the Board, upon the recommendation of the Governanceshareholder proposal is unnecessary and Nominating Committee, has determined that it is appropriate to propose amendments to the charter to eliminate the super-majority voting provisions and that doing so isnot in the best interests of Dover and its shareholders.
You are being provided with an opportunity to vote separately on the amendments to each of the Articles of our charter currently containing super-majority voting provisions as described below under Proposals 4 and 5. In accordance with Delaware law, the Board has adopted resolutions approving and declaring advisable these proposed amendments and is recommending them to shareholders for approval. Under our charter and Delaware law, approval of each of Proposal 4 and 5 requires the affirmative vote of the holders of at least 80% of our outstanding common stock.
DOVER CORPORATION – 2018 Proxy Statement 73
Proposal 4 — Approval of Amendments to
Article 15 of Our Charter to Eliminate Super-
Majority Voting Requirement
Subject Matter of Vote
Article FIFTEENTH of our charter (“Article 15”) requires that, subject to certain exceptions, any purchases by Dover or its subsidiaries of “voting shares” (defined in our charter as the outstanding shares of our capital stock entitled to vote generally in the election of directors) held by an “interested stockholder” (defined in our charter, among other things, as a beneficial owner of 5% or more of our voting shares that has been such a beneficial owner for less than four years) at a per share price in excess of the applicable market price must be approved by the affirmative vote of not less than a majority of the votes entitled to be cast by holders of all outstanding voting shares not beneficially owned by the “interested stockholder.” In addition, Article 15 provides shareholders with cumulative voting rights in the election of directors if at the time of such election there exists a “substantial stockholder” (defined in our charter as a beneficial owner of 40% or more of our voting shares). As of December 31, 2017, we are not aware of any beneficial owner that holds more than 11% of our outstanding voting shares.
Subsection (E) of Article 15 currently provides that amendments, alterations, changes or repeals (“Changes”) to or of Article 15 must be approved, subject to certain exceptions, by the affirmative vote of the holders of at least 80% of our outstanding voting shares (the “Article 15 Amendment Provision”).
On the recommendation of the Governance and Nominating Committee, and based on the careful review of the advantages and disadvantages of the Article 15 Amendment Provision as described in the “Background of Proposals 4 and 5” above, the Board has approved, and recommends that shareholders approve, this Proposal 4 to amend the charter by removing the Article 15 Amendment Provision in its entirety.
If this Proposal 4 is approved by shareholders, future Changes to Article 15 may be effected in accordance with Delaware law and will not be subject to a super-majority voting requirement. If this Proposal 4 is adopted, under Delaware law, future Changes to Article 15 would need to be approved by the Board and by the holders of at least a majority of the voting power of the capital stock of Dover outstanding and entitled to vote on the amendment.
The approval of this Proposal 4 is not conditioned on the approval of any other Proposal.
This summary of the proposed amendment is qualified in its entirety by reference to the text of the proposed amendment to the charter attached as Appendix A to this Proxy Statement, with deletions indicated by strike outs and additions indicated by underlining.
Required Vote
In accordance with Delaware law, our Board has approved and declared advisable the proposed amendment and is recommending it to shareholders for approval. Under our charter and Delaware law, approval of Proposal 4 will require the affirmative vote of holders at least 80% of our outstanding shares of common stock.
Abstentions and brokernon-votes will have the effect of votes against the proposal. If this Proposal 4 is approved by shareholders, the Board has authorized the officers of Dover to file with the Delaware Secretary of State a certificate of amendment to our charter incorporating the amendment to Article 15 set forth in Appendix A. The amendment to our charter will become effective on the date the certificate of amendment is filed with the Delaware Secretary of State (or at such later effective date set forth in the certificate of amendment). If Proposal 4 is not approved by the requisite vote, the proposed amendment to Article 15 of our charter will not be implemented and Dover’s current voting requirements contained therein will remain in place.
THE BOARD RECOMMENDS A VOTE “FOR”“AGAINST” THE AMENDMENTSHAREHOLDER PROPOSAL
REGARDING THE RIGHT TO ARTICLE 15 OF OUR CHARTER TO ELIMINATE SUPER-MAJORITY VOTING PROVISIONS CONTAINED THEREIN.ACT BY WRITTEN CONSENT.
DOVER CORPORATION –20182020 Proxy Statement 74
Proposal 5 — Approval of Amendments to
Article 16 of Our Charter to Eliminate Super- Majority Voting Requirement
Subject Matter of Vote
The first paragraph of Article SIXTEENTH of our charter (“Article 16”) contains a prohibition on shareholder action by written consent. The second paragraph of Article 16 currently provides that Changes to Article 16 must be approved, subject to certain exceptions, by the affirmative vote of the holders of at least 80% of our outstanding voting shares (the “Article 16 Amendment Provision”).
On the recommendation of the Governance and Nominating Committee, and based on the careful review of the advantages and disadvantages of the Article 16 Amendment Provision as described in the “Background of Proposals 4 and 5” above, the Board has approved, and recommends that shareholders approve, this Proposal 5 to amend the charter by removing the Article 16 Amendment Provision in its entirety.
If this Proposal 5 is approved by shareholders, future Changes to Article 16 may be effected in accordance with Delaware law and will not be subject to a super-majority voting requirement. If this Proposal 5 is adopted, under Delaware law, future Changes to Article 16 would need to be approved by the Board and by the holders of at least a majority of the voting power of the capital stock of Dover outstanding and entitled to vote on the amendment.
The approval of this Proposal 5 is not conditioned on the approval of any other Proposal.
This summary of the proposed amendment is qualified in its entirety by reference to the text of the proposed amendment to the charter attached as Appendix B to this Proxy Statement, with deletions indicated by strike outs and additions indicated by underlining.
Required Vote
In accordance with Delaware law, our Board has approved and declared advisable the proposed amendment and is recommending it to shareholders for approval. Under our charter and Delaware law, approval of Proposal 5 will require the affirmative vote of holders of at least 80% of our outstanding shares of common stock.
Abstentions and brokernon-votes will have the effect of votes against the proposal. If this Proposal 5 is approved by shareholders, the Board has authorized the officers of Dover to file with the Delaware Secretary of State a certificate of amendment to our charter incorporating the amendment to Article 16 set forth in Appendix B. The amendment to our charter will become effective on the date the certificate of amendment is filed with the Delaware Secretary of State (or at such later effective date set forth in the certificate of amendment). If Proposal 5 is not approved by the requisite vote, the proposed amendment to Article 16 of our charter will not be implemented and Dover’s current voting requirements contained therein will remain in place.
THE BOARD RECOMMENDS A VOTE “FOR” THE AMENDMENT TO ARTICLE 16 OF OUR CHARTER TO ELIMINATE SUPER-MAJORITY VOTING PROVISIONS CONTAINED THEREIN.
DOVER CORPORATION –2018 Proxy Statement 7577
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial ownership, as of March 12, 20182020 (except as otherwise stated), of our common stock by the following:
Each director and each of our executive officers named in “Executive Compensation — Summary Compensation Table”;
All of the directors and executive officers as a group including the NEOs; and
Each person known to us to own beneficially more than 5% of our outstanding common stock.
The beneficial ownership set forth in the table is determined in accordance with the rules of the SEC. The percentage of beneficial ownership for directors and executive officers is based on 154,576,877144,083,998 shares of common stock outstanding on March 12, 2018.2020. Unless otherwise indicated in the footnotes below, the persons and entities named in the table have sole voting and investment power as to all shares beneficially owned.
NAME OF BENEFICIAL OWNER
|
Number of
| Percentage(1)
| ||||||
DIRECTORS (EXCEPT MR. LIVINGSTON):
| ||||||||
PETER T. FRANCIS
|
|
20,881
|
(2)
|
|
*
|
| ||
KRISTIANE C. GRAHAM
|
|
590,259
|
(3)
|
|
*
|
| ||
MICHAEL F. JOHNSTON
|
|
12,245
|
(4)
|
|
*
|
| ||
RICHARD K. LOCHRIDGE
|
|
19,758
|
(5)
|
|
*
|
| ||
ERIC A. SPIEGEL
|
|
1,253
|
(6)
|
|
*
|
| ||
MICHAEL B. STUBBS
|
|
388,718
|
(7)
|
|
*
|
| ||
RICHARD J. TOBIN
|
|
2,149
|
(8)
|
|
*
|
| ||
STEPHEN M. TODD
|
|
15,884
|
(9)
|
|
*
|
| ||
STEPHEN K. WAGNER
|
|
11,884
|
(10)
|
|
*
|
| ||
KEITH E. WANDELL
|
|
2,240
|
|
|
*
|
| ||
MARY A. WINSTON
|
|
16,153
|
|
|
*
|
| ||
NEOS:
| ||||||||
BRAD M. CEREPAK
|
|
385,367
|
(11)
|
|
*
|
| ||
C. ANDERSON FINCHER
|
|
157,032
|
(12)
|
|
*
|
| ||
ROBERT A. LIVINGSTON
|
|
1,841,475
|
(13)
|
|
1.2
|
%
| ||
SIVASANKARAN SOMASUNDARAM
|
|
61,003
|
(14)
|
|
*
|
| ||
WILLIAM W. SPURGEON, JR.
|
|
112,282
|
(15)
|
|
*
|
| ||
DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
|
|
4,111,264
|
(16)
|
|
2.6
|
%
| ||
5% BENEFICIAL OWNERS:
| ||||||||
BLACKROCK, INC.
|
|
10,116,807
|
(17)
|
|
6.5
|
%
| ||
STATE STREET CORPORATION
|
|
8,385,852
|
(18)
|
|
5.38
|
%
| ||
THE VANGUARD GROUP
|
|
16,908,509
|
(19)
|
|
10.85
|
%
| ||
JPMORGAN CHASE & CO.
|
|
9,307,666
|
(20)
|
|
5.9 �� |
%
|
NAME OF BENEFICIAL OWNER | Number of Shares(1) | Percentage(1) | ||||||
DIRECTORS (EXCEPT MR. TOBIN): | ||||||||
H. JOHN GILBERTSON, JR. | 1,816 | * | ||||||
KRISTIANE C. GRAHAM (2) | 500,699 | * | ||||||
MICHAEL F. JOHNSTON (3) | 16,991 | * | ||||||
ERIC A. SPIEGEL (4) | 5,182 | * | ||||||
STEPHEN M. TODD (5) | 20,048 | * | ||||||
STEPHEN K. WAGNER (6) | 16,048 | * | ||||||
KEITH E. WANDELL | 6,338 | * | ||||||
MARY A. WINSTON | 15,751 | * | ||||||
NEOS: | ||||||||
RICHARD J. TOBIN (7) | 55,651 | * | ||||||
BRAD M. CEREPAK (8) | 472,408 | * | ||||||
WILLIAM W. SPURGEON, JR. (9) | 49,364 | * | ||||||
IVONNE M. CABRERA (10) | 181,170 | * | ||||||
JAY L. KLOOSTERBOER (11) | 24,369 | * | ||||||
DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (19 PERSONS) (12) | 1,405,016 | * | ||||||
5% BENEFICIAL OWNERS: | ||||||||
BLACKROCK, INC. (13) | 11,985,220 | 8.3% | ||||||
BOSTON PARTNERS (14) | 7,267,959 | 5% | ||||||
JPMORGAN CHASE & CO. (15) | 9,590,123 | 6.6% | ||||||
STATE STREET CORPORATION (16) | 7,901,337 | 5.44% | ||||||
THE VANGUARD GROUP (17) | 17,569,176 | 12.09% |
* | Less than one percent. |
DOVER CORPORATION –2018 Proxy Statement 76
SHARE OWNERSHIP INFORMATION
(1) | In computing the number of shares beneficially owned by an executive officer and the percentage ownership of such executive officers, we have included (i) shares of common stock subject to stock-settled appreciation rights (“SSARs”) held by that person that are currently exercisable or exercisable within 60 days of March 12, |
DOVER CORPORATION –2020 Proxy Statement 78
SHARE OWNERSHIP INFORMATION
the executive being an employee of Dover on the date of vesting. Such shares, however, are not deemed to be outstanding for purposes of computing the percentage ownership of any other person. Information about shares held through Dover’s 401(k) plan is as of March |
In computing the number of shares beneficially owned by anynon-employee directors and the percentage of suchnon-employee directors, we have included shares of common stock subject to deferred stock units which will be payable in an equal number of shares of common stock at the time such director departs from the Board. Such shares, however, are not deemed to be outstanding for purposes of computing the percentage ownership of any other person.
(2) | Includes |
(3) | Includes 12,991 deferred stock units. |
(4) | Includes |
(5) |
|
(6) |
|
(7) | Includes |
Includes |
Includes |
Includes |
Includes |
Includes |
Number of shares beneficially owned and percentage ownership based on information contained in a Schedule 13G/A filed with the SEC on February 5, 2020 by BlackRock, Inc. with respect to beneficial ownership of Dover common stock as of December 31, 2019. BlackRock reported sole dispositive power with regard to all shares and sole voting power with regard to 6,284,380 of such shares. BlackRock, Inc.’s offices are located at 55 East 52nd Street, New York, NY 10055. |
(14) | Number of shares beneficially owned and percentage ownership based on information contained in a Schedule 13G filed with the SEC on February 13, 2020 by Boston Partners with respect to beneficial ownership of Dover common stock as of December 31, 2019. Boston Partners reported sole dispositive power with regard to all of the shares and sole voting power with regard to 6,284,380 of such shares. Boston Partner’s offices are located at One Beacon Street 30th Floor, Boston MA 02108. |
(15) | Number of shares beneficially owned and percentage ownership based on information contained in a Schedule 13G/A filed with the SEC on January |
Number of shares beneficially owned and percentage ownership based on information contained in a Schedule 13G filed with the SEC on February |
DOVER CORPORATION – 2018 Proxy Statement 77
SHARE OWNERSHIP INFORMATION
Number of shares beneficially owned and percentage ownership based on information contained in a Schedule 13G/A filed with the SEC on February |
DOVER CORPORATION –2020 Proxy Statement 79
SHARE OWNERSHIP INFORMATION
Stock Ownership Guidelines
Our Board has adopted a policy that directors are expected to hold at any time a number of shares at least equal to the aggregate number of shares they received as the stock portion of their annual retainer during the past five years, net of an assumed 30% tax rate.
Executive officers are expected to hold a number of shares with a value at least equal to a multiple of their annual salary. For a discussion of the executive officer share ownership guidelines, see “Executive“Executive Compensation —Compensation Discussion and Analysis — Other Compensation Programs and Policies.”
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires that our directors and certain of our officers file reports of ownership and changes of ownership of our common stock with the SEC and the NYSE. Based solely on copies of such reports provided to us, we believe that all directors and officers filed on a timely basis all such reports required of them with respect to stock ownership and changes in ownership during 2017.
DOVER CORPORATION –20182020 Proxy Statement 7880
General Information About the Annual Meeting
We are providing this Proxy Statement to our shareholders in connection with the solicitation of proxies by the Board for use at the Annual Meeting. We are mailing this Notice of Annual Meeting and Proxy Statement beginning on or about March 22, 2018.26, 2020.
Record Date
The record date for determining shareholders eligible to vote at the Annual Meeting is March 12, 2018.2020. As of the close of business on that date, we had outstanding 154,576,877144,083,998 shares of common stock. Each share of common stock is entitled to one vote on each matter.
Electronic Delivery of Proxy Materials
As permitted under SEC rules, we are making this Proxy Statement and our Annual Report to Shareholders (which includes our Annual Report on Form10-K for the year ended December 31, 2017 (which is our Annual Report)2019) available to shareholders electronically via the internet. We believe electronic delivery expedites receipt of our proxy materials by shareholders, while lowering the costs and reducing the environmental impact of the Annual Meeting. If you receive a notice of internet availability of proxy materials by mail, you will not receive a printed copy of the proxy materials by mail unless you specifically request them. Instead, the notice of internet availability will provide instructions as to how you may review the proxy materials and submit your voting instructions over the internet. If you receive the notice by mail and would like to receive a printed copy of the proxy materials, you should follow the instructions in the notice of internet availability for requesting a printed copy. In addition, the proxy card contains instructions for electing to receive proxy materials over the internet or by mail in future years.
Shareholders of Record; Beneficial Owners
Most holders of our common stock hold their shares beneficially through a broker, bank or other nominee rather than of record directly in their own name. As summarized below, there are some differences in the way to vote shares held of record and those owned beneficially.
If your shares are registered directly in your name with our transfer agent, you are considered the shareholder of record of those shares, and the notice of internet availability or proxy materials are being sent directly to you. As a shareholder of record, you have the right to
grant your voting proxy directly to the persons named as proxy holders or to vote in person at the Annual Meeting. If you received or requested printed copies of the proxy materials, Dover has enclosed a proxy card for you to use. You may also submit your proxy on the internet or by telephone as described in the proxy card.
If your shares are held in a brokerage account or by a bank or other nominee, you are considered the beneficial owner of the shares held in “street name,” and these proxy materials are being forwarded to you by your broker or nominee who is considered the shareholder of record of those shares. As the beneficial owner, you generally have the right to direct your broker on how to vote and are also invited to attend the Annual Meeting. However, since you are not the shareholder of record, you may not vote those shares in person at the Annual Meeting unless you have a proxy, executed in your favor, from the holder of record of your shares. Your broker or nominee has enclosed a voting instruction card for you to use in directing your broker or nominee as to how to vote your shares. We strongly encourage you to instruct your broker or nominee how you wish to vote.
Vote Required; Abstentions and BrokerNon-Votes; Quorum
For Proposal 1, a majority of the votes cast at the Annual Meeting is required to elect directors. This means that the number of votes cast “FOR” a director must exceed the number of votes cast “AGAINST” that director in order for that director to be elected. Our organizational documents do not provide for cumulative voting.
Proposal 2 will require the affirmative vote of at least a majority of shares present in person or by proxy and entitled to vote at the Annual Meeting.thereon.
Proposal 3 is a nonbinding, advisory resolution so its ultimate adoption is at the discretion of the Board. The affirmative vote of a majority of shares present in person or by proxy and entitled to vote at the Annual Meetingthereon will be deemed to be approval by the shareholders of Proposal 3.
ProposalsProposal 4 and 5 will require the affirmative vote of at least 80%a majority of shares present in person or by proxy and entitled to vote thereon. Proposal 4 is a shareholder advisory resolution that will not itself affect any amendment to our outstanding shares of common stock.charter orby-laws.
DOVER CORPORATION –2020 Proxy Statement 81
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
If you are a shareholder of record and you sign and return your proxy card or vote electronically without
DOVER CORPORATION –2018 Proxy Statement 79
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
making any specific selection, then your shares will be voted FOR all director nominees listed in Proposal 1 and FOR Proposals 2 and 3, 4 and 5.AGAINST Proposal 4.
If you specify that you wish to “ABSTAIN” from voting on an item, then your shares will not be voted on that particular item. Abstentions will not affect the outcome of the vote on Proposal 1. However, they will have the same effect as a vote against Proposals 2, 3, 4 and 5.4.
If you are a beneficial owner and hold your shares through a broker or other nominee and do not provide your broker or nominee with voting instructions, the broker or nominee will have discretionary authority to vote your shares on routine matters only and will not vote your shares onnon-routine matters. This is generally referred to as a “brokernon-vote.” Only Proposal 2 will be considered a routine matter for the Annual Meeting. Accordingly, a broker or other nominee will not be able to vote on Proposals 1, 3, and 4 without voting instructions. Brokernon-votes will not affect the outcome of the vote on ProposalProposals 1, but will have the same effect as a vote against Proposals 3 4 and 54 as they will not be counted as being present.present and entitled to vote on such proposals.
For purposes of the Annual Meeting, there will be a quorum if the holders of a majority of the outstanding shares of our common stock entitled to vote at the Annual Meeting are present in person or by proxy. Abstentions and brokernon-votes will be counted for purposes of determining if a quorum is present.
Voting Procedures
If you are a shareholder of record, you may vote in person at the Annual Meeting or submit your proxy or voting instruction form over the internet, by telephone or by mail by following the instructions provided in our notice of internet availability, in the proxy materials or in the voting instruction form. If you hold your shares beneficially in “street name” through a broker or other nominee, you must follow the instructions provided by your broker or nominee to vote your shares.
Revoking Your Proxy/Changing Your Voting Instructions
If you are a shareholder of record, whether you give your proxy over the internet, by telephone or by mail, you may revoke it at any time before it is exercised. You may submit a new proxy by using the internet or the telephone or by mailing a new proxy card bearing a later date so long as it is received before the Annual
Meeting. You may also revoke your proxy by attending the Annual Meeting and voting in person, although attendance at the Annual Meeting will not, by itself, revoke your proxy. If you hold your shares beneficially in “street name” through a broker or other nominee, you must follow the instructions provided by your broker or nominee as to how you may change your voting instructions.
Shareholders Sharing the Same Address
SEC rules permit us to deliver one copy of the Proxy Statement or a notice of internet availability of the Proxy Statement to multiple shareholders of record who share the same address and have the same last name, unless we have received contrary instructions from one or more of such shareholders. This delivery method, called “householding,” reduces our printing and mailing costs. Shareholders who participate in householding will continue to receive or have internet access to separate proxy cards.
If you are a shareholder of record subject to householding and wish to receive a separate copy of the Proxy Statement or notice of internet availability of the proxy materials, now or in the future, at the same address or if you are currently receiving multiple copies of such materials at the same address and wish to receive only a single copy, please write to or call the Corporate Secretary, Dover Corporation, 3005 Highland Parkway, Downers Grove, Illinois 60515, telephone:(630) 541-1540.
Beneficial owners sharing an address who are currently receiving multiple copies of the proxy materials or notice of internet availability of the proxy materials and wish to receive only a single copy in the future, or who currently receive a single copy and wish to receive separate copies in the future, should contact their bank, broker or other holder of record to request that only a single copy or separate copies, as the case may be, be delivered to all shareholders at the shared address in the future.
Proxy Solicitation Costs
We will pay the reasonable and actual costs of printing, mailing and soliciting proxies, but we will not pay a fee to any of our officers or employees or to officers or employees of any of our subsidiaries as compensation for soliciting proxies. We have retained Morrow Sodali, LLC to solicit brokerage houses and other custodians,
DOVER CORPORATION – 2018 Proxy Statement 80
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
nominees or fiduciaries, and to send proxies and proxy materials to the beneficial owners of such shares, for a fee of approximately $12,000$20,000 plus expenses.
DOVER CORPORATION –2020 Proxy Statement 82
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
Other Matters
Our Board and management have not received notice of, and are not aware of, any business to come before the Annual Meeting other than the agenda items referred to in this Proxy Statement and the submission of the Additional Proposal. If, however, any other business properly comes before the meeting, the persons named as proxies will use their best judgment in voting the proxies.
Shareholder Proposals and Director Nominations for 20192021 Annual Meeting
In order for shareholder proposals to be included in our proxy statement for the Annual Meeting of Shareholders to be held in 20192021 (the “2019“2021 Annual Meeting”), they must be received by our Corporate Secretary at our principal executive offices, 3005 Highland Parkway, Downers Grove, Illinois, 60515, no later than the close of business on November 22, 2018.27, 2020.
In 2016, we adopted a proxy access right to permit a shareholder or a group of up to 20 shareholders owning 3% or more of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials director candidates
constituting up to the greater of two individuals or 20% of the Board, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in ourby-laws. In order to be timely, notice of proxy access director nominees must be received by our Corporate Secretary at our principal executive offices at the address above no earlier than the open of business on October 23, 201828, 2020 and no later than the close of business on November 22, 201827, 2020 being, respectively, 150 days and 120 days prior to the first anniversary of the date we first distributed this proxy statement.
All other shareholder nominations and proposals, in order to be voted on at the 20192021 Annual Meeting, must be received by us no earlier than the open of business on January 4, 2019,9, 2021, and no later than the close of business on Sunday, February 3, 20198, 2021 being, respectively, 120 days and 90 days prior to the date of the first anniversary of the 20182019 Annual Meeting.
Where You Can Find Additional Information
Our website is located at www.dovercorporation.com. Although the information contained on or connected to our website is not part of this Proxy Statement, you can view additional information on our website, such as:
Charters of our Board committees
Corporate Governance Guidelines
Code of Business Conduct & Ethics
Related Person Transactions Policy
Standards for Director Independence
Other governance materials and reports that we file with the SEC. Copies of these documents also may be obtained free of charge by writing or calling the Corporate Secretary, Dover Corporation, 3005 Highland Parkway, Downers Grove, Illinois 60515, telephone:(630) 541-1540
Caution Concerning Forward-Looking Statements andNon-GAAP Measures
This proxy statement contains forward-looking statements that are inherently subject to uncertainties and risks. We
caution investors to be guided in their analysis of Dover by referring to the documents we file with the SEC, including our Annual Report on Form10-K for 2017,2019, for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statements. This proxy statement also containsnon-GAAP financial information. Reconciliations ofnon-GAAP measures are included in our filings with the SEC and are available on the Investor Relations section of our website.
DOVER CORPORATION –20182020 Proxy Statement 8183
Appendix AGENERAL INFORMATION ABOUT THE ANNUAL MEETING
PROPOSED AMENDMENT TO ARTICLE FIFTEENTH OF RESTATED
CERTIFICATE OF INCORPORATION TO ELIMINATE THE SUPER-MAJORITYNon-GAAP Disclosures
VOTE REQUIREMENT EXPLAINED IN PROPOSAL 4
(matterIn an effort to provide investors with additional information regarding our results as determined by accounting principles generally accepted in the United States of America (“GAAP”), we also disclosenon-GAAP information that we believe provides useful information to investors. Adjusted earnings from continuing operations, adjusted diluted earnings per common share, total segment earnings (EBIT), adjusted segment EBIT margin, and free cash flow are not financial measures under GAAP and should not be deleted is stricken)
FIFTEENTH: (A) (1) Except as otherwise expressly provided in paragraph (A)(2) below, any purchase by the corporation, or any subsidiary of the corporation, of Voting Shares (as hereinafter defined) from a person or persons known by the corporation to be an Interested Stockholder (as hereinafter defined) at a per share price in excess of the Market Price (as hereinafter defined) at the time of such purchase of the shares so purchased, shall require the affirmative vote of not less than a majority of the votes entitled to be cast by the holders of all then outstanding Voting Shares not beneficially owned by the Interested Stockholder, voting togetherconsidered as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote may be required,substitute for net earnings or that a lesser percentage or separate class vote may be specified, by law ordiluted earnings per common share as determined in any agreementaccordance with any national securities exchange or otherwise.
(2) The provisions of Paragraph (A)(1) of this Article Fifteenth shall not be applicable to any purchase of Voting Shares, if such purchase is pursuant to (i) an offer, made available on the same terms, to the holders of all of the outstanding shares of the same class of those purchased or (ii) a purchase program effected on the open marketGAAP, and not the result of a privately-negotiated transaction.
(B) (1) In the event that there shall exist a Substantial Stockholder (as hereinafter defined) of the corporation and such existence shall be known or made known to the corporation in advance of a meeting of stockholders at which directors will be elected, each holder of Voting Shares shall be entitled, in connection with any vote taken for such election of directors, to as many votes as shall equal the number of votes which (except for this provision as to cumulative voting) such stockholder would be entitled to cast for the election of directors with respect to such stockholder’s Voting Shares multiplied by the number of directors to be elected, and such stockholder may cast all of such votes for a single director may distribute them among the number of directors to be voted for, or for any two or more of them as such stockholder may see fit.
(2) In connection with any election of directors in which stockholders are entitled to cumulative voting:
(a) The Board of Directors shall appoint a committee (the “Committee”) consisting of three Directors.
(b) The Committee shall send to all stockholders of the corporation entitled to vote in the election of directors at least 90 days in advance of such election a written notice informing stockholders (i) that the cumulative voting provisions of this Article will be in effect, (ii) that persons meeting the eligibility requirements of subparagraph (B)(2)(c) may submit nominations to the Committee, if such nominations are received at least 60 days in advance of the election and contain relevant information concerning the nominee, including all information required to be included in a proxy statement under the Securities and Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations), and the nominee’s consent to be nominated, and (iii) as to the time, place and date of the meeting at which such election will be held.
(c) The Committee will review all nominees, and the corporation’s proxy materials being prepared in connection with such meeting will include information relating to, and afford stockholders the opportunity to vote for, all nominees who are included by the Committee in the corporation’s proxy materials. The Committee shall be required to include in such proxy materials at least one nominee of each stockholder or group of stockholders who beneficially own Voting Shares with a Market Price (as herein defined) of at least $250,000 at the time notice of such meeting is sent to stockholders and who submit the information required with respect to such nominee under subparagraph (B)(2)(b). The Committee may include more than one nominee of such person or persons, provided that the number of nominees included by the Committee which are submitted by any one person or group of persons may not exceed the number of directors to be elected at such a meeting.
(d) The corporation’s proxy statement and other communications with respect to the election shall contain, on an equal basis and at the expense of the corporation, descriptions and other statements of or with respect to all nominees for election which qualify under the procedures set forth in this Article.
(3) If necessary to assure that the provisions of this Paragraph (B) are fairly applied and complied with, the Board of Directors may postpone any meeting of stockholders to which this Article would apply for such period of time as shall be necessary to permit the Committee to perform its responsibilities hereunder.
(4) Notwithstanding any other provision which may be contained from time to time in this Certificate of Incorporation or theby-laws of the corporation concerning the manner in which the size of the Board of Directors of the corporation may be established or changed, in the event that a person becomes a Substantial Stockholder, the number of directors at the time such person becomes a Substantial Stockholder shall remain fixed andthey may not be changedcomparable to similarly titled measures reported by other companies.
Adjusted Earnings Per Share
Earnings from continuing operations are adjusted by the Boardeffect of Directorsacquisition-related amortization, rightsizing and other costs, loss on extinguishment of debt, loss on assets held for sale, the Tax Reform Act, gains on disposition of businesses, disposition costs, and a product recall reversal to derive at adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:
(in thousands, except per share data) | 2019 | 2018 | 2017 | |||||||||
Adjusted earnings from continuing operations: | ||||||||||||
Earnings from continuing operations | $ | 677,918 | $ | 591,145 | $ | 746,663 | ||||||
Acquisition-related amortization,pre-tax1 | 138,336 | 146,297 | 151,277 | |||||||||
Acquisition-related amortization, tax impact2 | (34,768 | ) | (37,001 | ) | (48,881 | ) | ||||||
Rightsizing and other costs,pre-tax3 | 32,153 | 72,828 | 49,379 | |||||||||
Rightsizing and other costs, tax impact2 | (6,789 | ) | (14,531 | ) | (14,746 | ) | ||||||
Loss on extinguishment of debt,pre-tax4 | 23,543 | — | — | |||||||||
Loss on extinguishment of debt, tax impact2 | (5,163 | ) | — | — | ||||||||
Loss on assets held for sale5 | 46,946 | — | — | |||||||||
Tax Cuts and Jobs Act 6 | — | (2,832 | ) | (54,908 | ) | |||||||
Gain on dispositions,pre-tax 7 | — | — | (205,334 | ) | ||||||||
Gain on dispositions, tax impact 2 | — | — | 32,753 | |||||||||
Disposition costs,pre-tax 8 | — | — | 5,245 | |||||||||
Disposition costs, tax impact 2 | — | — | (2,015 | ) | ||||||||
Product recall reversal,pre-tax | — | — | (7,200 | ) | ||||||||
Product recall reversal, tax impact 2 | — | — | 2,614 | |||||||||
|
| |||||||||||
Adjusted earnings from continuing operations | $ | 872,176 | $ | 755,906 | $ | 654,847 | ||||||
|
| |||||||||||
Diluted average shares outstanding | 146,992 | 152,133 | 157,744 | |||||||||
Adjusted diluted earnings per common share*: | ||||||||||||
Earnings from continuing operations | $ | 4.61 | $ | 3.89 | $ | 4.73 | ||||||
Acquisition-related amortization,pre-tax1 | 0.94 | 0.96 | 0.96 | |||||||||
Acquisition-related amortization, tax impact2 | (0.24 | ) | (0.24 | ) | (0.31 | ) | ||||||
Rightsizing and other costs,pre-tax3 | 0.22 | 0.48 | 0.31 | |||||||||
Rightsizing and other costs, tax impact2 | (0.06 | ) | (0.10 | ) | (0.09 | ) | ||||||
Loss on extinguishment of debt,pre-tax4 | 0.16 | — | — | |||||||||
Loss on extinguishment of debt, tax impact2 | (0.04 | ) | — | — | ||||||||
Loss on assets held for sale 5 | 0.32 | — | — | |||||||||
Tax Cuts and Jobs Act 6 | — | (0.02 | ) | (0.35 | ) | |||||||
Gain on dispositions,pre-tax 7 | — | — | (1.30 | ) | ||||||||
Gain on dispositions, tax impact 2 | — | — | 0.21 | |||||||||
Disposition costs,pre-tax 8 | — | — | 0.03 | |||||||||
Disposition costs, tax impact 2 | — | — | (0.02 | ) | ||||||||
Product recall reversal,pre-tax | — | — | (0.05 | ) | ||||||||
Product recall reversal, tax impact 2 | — | — | 0.02 | |||||||||
|
| |||||||||||
Adjusted diluted earnings per common share | $ | 5.93 | $ | 4.97 | $ | 4.15 | ||||||
|
|
¹ Includes amortization on acquisition-related intangible assets and inventorystep-up.
2 Adjustments were tax effected using the statutory tax rates in the applicable jurisdictions or the stockholders until such time as such person is no longer a Substantial Stockholder.effective tax rate, where applicable, for each period.
(C) For purposes of this Article Fifteenth:
(1) “Interested Stockholder” shall mean any person (other than the corporation or any Subsidiary;3 Rightsizing and other than any profit sharing,costs include actions taken on employee stock ownership, orreductions, facility consolidations and site closures, product line exits and other employeeassociated asset charges.
DOVER CORPORATION –2020 Proxy Statement 84
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
4 Represents a loss on early extinguishment of €300,000 2.125% notes due 2020 and $450,000 4.30% notes due 2021.
5 Represents a loss on assets held for sale of Finder. Under local law, no tax benefit planis realized from the loss on the sale of a wholly-owned business.
6 2017 Tax impact primarily related to the enactment of the corporation or any subsidiary, or any trusteeTax Reform Act. This benefit also includes decreases in statutory tax rates of or fiduciary with respectforeign jurisdictions. 2018 adjustment represents tax benefits related to any such plan when acting in such capacity) who or which:additional Tax Reform Act regulatory guidance covered by SAB 118.
(a) is7 Includes gains from the beneficial owner, directly or indirectly,sales of not less than 5% of the Voting SharesPerformance Motorsports International (“PMI”) and has been such a beneficial owner for less than four years; or
(b) is an Affiliate of the corporation and at any time within two years prior thereto was the beneficial owner, directly or indirectly, for a period of less than four years of not less than 5% of the then outstanding Voting Shares; or
(c) is an assignee of or has otherwise succeeded to any shares of capital stock of the corporation which were at any time within two years prior thereto beneficially owned by any Interested Stockholder and such assignment or succession shall have occurredWarn Industries, Inc. (“Warn”) in the coursefirst and fourth quarters of 2017.
8 Disposition costs include costs related to the fourth quarter 2017 sale of Warn.
* Per share data and totals may be impacted by rounding.
Adjusted Segment EBIT Margin
Segment earnings (EBIT) is adjusted by the effect of rightsizing and other costs, loss on assets held for sale, gain on dispositions, disposition costs, and product recall reversal to derive at total adjusted segment earnings (EBIT). Total adjusted segment earnings (EBIT) is divided by total segment revenue to derive at adjusted segment EBIT margin as follows:
(in thousands) | 2019 | 2018 | 2017 | |||||||||
Segment earnings (EBIT): | ||||||||||||
Engineered Products | $ | 291,848 | $ | 252,368 | $ | 437,079 | ||||||
Fueling Solutions | 231,873 | 152,255 | 159,180 | |||||||||
Imaging & Identification | 229,484 | 198,902 | 167,404 | |||||||||
Pumps & Process Solutions | 240,081 | 237,549 | 209,451 | |||||||||
Refrigeration & Food Equipment | 118,832 | 136,119 | 193,822 | |||||||||
Total segment earnings (EBIT)1 | 1,112,118 | 977,193 | 1,166,936 | |||||||||
Rightsizing and other costs | 26,555 | 58,587 | 33,151 | |||||||||
Loss on assets held for sale2 | 46,946 | — | — | |||||||||
Gain on dispositions3 | — | — | (205,334 | ) | ||||||||
Disposition costs4 | — | — | 5,245 | |||||||||
Product recall reversal | — | — | (7,200 | ) | ||||||||
Adjusted segment EBIT | $ | 1,185,619 | $ | 1,035,780 | $ | 992,798 | ||||||
| ||||||||||||
Adjusted segment EBIT margin | 16.6% | 14.8% | 14.5% |
1 Refer to the table below for reconciliaiton of total segment earnings (EBIT) to net earnings.
2 Represents a loss on assets held for sale of Finder. Under local law, no tax benefit is realized from the loss on the sale of a transaction or serieswholly-owned business.
3 Includes gains from the sales of transactions not involving a public offering withinPMI and Warn in the meaningfirst and fourth quarters of 2017.
4 Disposition costs include costs related to the Securities Actfourth quarter 2017 sale of 1933.Warn.
(2) The term “Substantial Stockholder” shall mean any person (other than the corporation or any Subsidiary; and other than any profit sharing, employee stock ownership or other employee benefit plan of the corporation or any subsidiary, or any trustee of or fiduciary with respect to any such plan when acting in such capacity) who or which is the beneficial owner, directly or indirectly, of not less than 40% of the Voting Shares.
(in thousands) | 2019 | 2018 | 2017 | |||||||||
Net Earnings: | ||||||||||||
Total segment earnings (EBIT) | $ | 1,112,118 | $ | 977,193 | $ | 1,166,936 | ||||||
Corporate expense / other | 147,817 | 129,724 | 154,664 | |||||||||
Interest expense | 125,818 | 130,972 | 144,948 | |||||||||
Interest income | (4,526 | ) | (8,881 | ) | (8,491 | ) | ||||||
Earnings from continuing operations before provision for income taxes | 843,009 | 725,378 | 875,815 | |||||||||
Provision for income taxes | 165,091 | 134,233 | 129,152 | |||||||||
Earnings from continuing operations | 677,918 | 591,145 | 746,663 | |||||||||
Earnings (loss) from discontinued operations, net | — | (20,878 | ) | 65,002 | ||||||||
Net earnings | $ | 677,918 | $ | 570,267 | $ | 811,665 | ||||||
(3) For the purpose of determining whether a person is an Interested Stockholder or a Substantial Stockholder, the number of Voting Shares deemed to be outstanding shall include shares deemed beneficially owned by such person through application of subparagraph (4) of Paragraph (C) of Article Fourteenth, but shall not include any other Voting Shares that may be issuable pursuant to any agreement, or upon exercise of conversion rights, warranties or options, or otherwise.
(4) For purposes of this Article Fifteenth, the terms “Voting Shares,” “beneficial owner,” “person,” “Affiliate,” “Associate,” “Subsidiary,” and “Market Price” shall have the meanings set forth in Article Fourteenth of this Certificate of Incorporation, except that “Market Price” shall mean the last closing sale price or the last closing bid quotation immediately preceding the date in question instead of the highest closing sale price or the highest closing bid quotation during the30-day period immediately preceding the date in question; and
(D) The Board of Directors shall have the power and the duty to determine for the purposes of this Article Fifteenth (a) whether the provisions of the Article are applicable to a particular transaction, (b) whether a person is an Interested Stockholder or a Substantial Stockholder, (c) the number of Voting Shares or other securities beneficiallyDOVER CORPORATION –2020 Proxy Statement 85
owned by any person, (d) whether a person is an Affiliate or Associate of another, (e) what the Market Price is and whether a price is above the Market Price as of a given date, and (f) whether any person nominating directors in accordance with Paragraph B.2. beneficially owns Voting Shares with an aggregate Market Price of at least $250,000.
(E) Notwithstanding any other provisions of this Certificate of Incorporation or theBy-laws of the corporation to the contrary (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation or theby-laws of the corporation), any amendment, alteration, change or repeal of this Article Fifteenth of this Certificate of Incorporation shall require the affirmative vote of the holders of at least 80% of the then outstanding Voting Shares; provided, however, that this Paragraph E shall not apply to and such 80% vote shall not be required for, any amendment, alteration, change or repeal recommended to the stockholders by the majority vote of the Board of Directors and at the time such amendment, alteration, change or repeal is under consideration there is, to the knowledge of the Board of Directors, neither an Interested Stockholder nor a Substantial Stockholder.
PROPOSED AMENDMENT TO ARTICLE SIXTEENTH OF RESTATED
CERTIFICATE OF INCORPORATION TO ELIMINATEGENERAL INFORMATION ABOUT THE SUPER-MAJORITY
VOTE REQUIREMENT EXPLAINED IN PROPOSAL 5
(matter to be deleted is stricken)
SIXTEENTH: No action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied.
Notwithstanding any other provisions of this Certificate of Incorporation or theBy-laws of the corporation to the contrary (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation or theBy-laws of the corporation), any amendment, alternation, change or repeal of this Article Sixteenth of this Certificate of Incorporation shall require the affirmative vote of the holders of at least 80% of the then outstanding Voting Shares; provided, however, that such 80% vote of the then outstanding vote shall not required for, any amendment, alteration, change or repeal recommended to the stockholders by the majority vote of the Board of Directors and at the time such amendment, alteration, change or repeal is under consideration there is, to the knowledge of the Board of Directors, neither an Interested Stockholder nor a Substantial Stockholder.
| ||
| ||
| ||
| ||
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E39441-P05102-Z71999 KEEP THIS PORTION FOR YOUR RECORDS
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.ANNUAL MEETING
Free Cash Flow | ||||||||||||
Free cash flow represents net cash provided by operating activities minus capital expenditures as follows: |
| |||||||||||
(in thousands) | 2019 | 2018 | 2017 | |||||||||
Cash flow from operating activities | $ | 945,306 | $ | 789,193 | $ | 739,409 | ||||||
Less: Capital expenditures | (186,804 | ) | (170,994 | ) | (170,068 | ) | ||||||
Free cash flow | $ | 758,502 | $ | 618,199 | $ | 569,341 | ||||||
Free cash flow as a percentage of revenue | 10.6% | 8.8 | % | 8.3 | % |
Revenue Growth Factors
| 2019 | |||||||||||||||||||||||||||||||||||
Full Year | ||||||||||||||||||||||||||||||||||||
| 3.8 | % | ||||||||||||||||||||||||||||||||||
Acquisitions | 0.8 | % | ||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| (0.5 | )% | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
(2.0 |
|
|
|
|
|
| )% | |||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
Total* | 2.1 | |||||||||||||||||||||||||||||||||||
% |
* Total may be impacted by rounding.
Non-GAAP Disclosures
Adjusted earnings from continuing operations represents earnings from continuing operations adjusted for the effect of acquisition-related amortization, rightsizing and other costs, loss on extinguishment of debt, loss on assets held for sale, the Tax Cuts and Jobs Act, gains on disposition of businesses, disposition costs, and a product recall reversal. We excludeafter-tax acquisition-related amortization because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions the Company consummates. We exclude the other items because they occur for reasons that may be unrelated to the Company’s commercial performance during the period and/or Management believes they are not indicative of the Company’s ongoing operating costs or gains in a given period.
Adjusted diluted earnings per share from continuing operations represents adjusted earnings from continuing operations divided by average diluted shares.
Total segment earnings (EBIT) is defined as earnings from continuing operations before income taxes, net interest expense and corporate expenses.
Adjusted segment EBIT is defined as earnings from continuing operations before income taxes, net interest expense, corporate expenses, rightsizing and other costs, 2019 loss on assets held for sale, 2017 gain on dispositions, 2017 disposition costs, and 2017 product recall reversal. Adjusted segment EBIT Margin is defined as adjusted segment EBIT divided by total segment revenue.
Management believes these measures are useful to investors to better understand the Company’s ongoing profitability as it will better reflect the Company’s core operating results, offer more transparency and facilitate easier comparability to prior and future periods and to its peers.
Free cash flow represents net cash provided by operating activities minus capital expenditures. Free cash flow as a percentage of revenue equals free cash flow divided by revenue. Management believes that free cash flow and free cash flow as a percentage of revenue are important measures of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.
Management believes that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions and dispositions, provides a useful comparison of our revenue performance and trends between periods.
DOVER CORPORATION –2020 Proxy Statement 86
DOVER CORPORATION 3005 HIGHLAND PARKWAY DOWNERS GROVE, IL 60515 DOVER CORPORATION The Board of Directors recommends a vote FOR each director under Item 1: 1. Election of Directors 1a. H. J. Gilbertson, Jr. 1b. K. C. Graham 1c. M. F. Johnston 1d. E. A. Spiegel 1e. R. J. Tobin 1f. S. M. Todd 1g. S. K. Wagner 1h. K. E. Wandell 1i. M. A. Winston For Against Abstain !!! !!! !!! !!! !!! !!! !!! !!! !!! VOTE BY INTERNET -www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on May 7, 2020 for shares held directly and by 11:59 p.m. Eastern Time on May 5, 2020 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on May 7, 2020 for shares held directly and by 11:59 p.m. Eastern Time on May 5, 2020 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. E95869-P33772-Z76380 The Board of Directors recommends a vote FOR Items 2 and 3: For Against 2. To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm !! for 2020. 3. To approve, on an advisory basis, named executive officer !! compensation. The Board of Directors recommends a vote AGAINST Item 4: 4. To consider a shareholder proposal regarding the right to !! allow shareholders to act by written consent. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. Abstain ! ! ! Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting are available through 11:59 PM Eastern Time
the day before the annual meeting date.
Your Internet or telephone vote authorizes the named proxies to vote these shares in the
same manner as if you marked, signed and returned your proxy card.
|
|
|
INTERNET OR TELEPHONE http://www.proxyvote.com 1-800-690-6903 Use the Internet to vote your proxy. Use any touch-tone telephone to Have your proxy card in hand when vote your proxy. Have your proxy you access the website. card in hand when you call. If you vote your proxy by Internet or telephone, you do NOT need to mail back your proxy card.
To vote by mail, sign and date your proxy card and return it in the enclosed postage-paid envelope.
|
|
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E95870-P33772-Z76380 PROXY
DOVER CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING
MAY 4, 2018
8, 2020 The undersigned hereby appoints Richard J. Tobin, Brad M. Cerepak and Ivonne M. Cabrera, and each of them, as the undersigned’sundersigned's proxy or proxies, each with full power of substitution, to vote all shares of Common Stock of Dover Corporation which the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held in Oak Brook,Downers Grove, IL on May 4, 20188, 2020 at 9:00 A.M., local time, and any adjournments thereof, as fully as the undersigned could if personally present, upon the proposals set forth on the reverse side hereof, revoking any proxy or proxies heretofore given. For participants in the Company’sCompany's Retirement Savings Plan, this proxy will govern the voting of stock held for the account of the undersigned in the Plan.
IMPORTANT - You have the option of voting these shares by returning the enclosed proxy card, voting via Internet or by using a toll-free telephone number above and on the reverse side. On the reverse side of this proxy card are instructions on how to vote via the Internet or by telephone. If you vote by either of these methods, your vote will be recorded as if you mailed in your proxy card. If you vote by returning this proxy card, you must sign and date this proxy on the reverse side.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE REVERSE SIDE, BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ON THE REVERSE SIDE, AND FOR PROPOSALS 2 AND 3 4 AND 5.
AGAINST PROPOSAL 4. Continued and to be signed on reverse side