SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
IDEX CORPORATION
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(Name of Registrant as Specified in Its Charter)
IDEX CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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[IDEX CORPORATION LOGO]
March 5, 2003
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of Shareholders of
IDEX Corporation which will be held on Tuesday, March 25, 2003, at 10:00 a.m.
Central Time, at Bank of America, LaSalle Room, 21st Floor, 231 South LaSalle
Street, Chicago, Illinois.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement. Included with the
Proxy Statement is a copy of the Company's 2002 Annual Report. We encourage you
to read the Annual Report. It includes information on the Company's operations,
markets, products and services, as well as the Company's audited financial
statements.
Whether or not you attend the Annual Meeting it is important that your
shares be represented and voted. Therefore, we urge you to sign, date, and
promptly return the enclosed proxy card in the enclosed envelope. If you decide
to attend the Annual Meeting, you will of course be able to vote in person, even
if you have previously submitted your proxy card.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company. We look
forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Dennis K. Williams
Dennis K. Williams
Chairman of the Board, President
and Chief Executive Officer
IDEX CORPORATION
---------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 25, 2003
---------------------------------
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of IDEX Corporation (the "Company") will
be held on Tuesday, March 25, 2003, at 10:00 a.m. Central Time, at Bank of
America, LaSalle Room, 21st Floor, 231 South LaSalle Street, Chicago, Illinois,
for the following purposes:
1. To elect one director for a term of three years.
2. To approve the adoption of the Third Amended and Restated 1996 Stock
Option Plan for Non-Officer Key Employees of IDEX Corporation.
3. To ratify the appointment of Deloitte & Touche LLP as auditors of the
Company for 2003.
4. To transact such other business as may properly come before the meeting.
The Board of Directors fixed the close of business on February 20, 2003, as
the record date for the determination of shareholders owning the Company's
Common Stock entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of
Directors
/s/ Frank J. Notaro
FRANK J. NOTARO
Vice President-General
Counsel
and Secretary
March 5, 2003
Northbrook, Illinois
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PROXY STATEMENT
------------------------------------
The Company has prepared this Proxy Statement in connection with the
solicitation by the Company's Board of Directors of proxies for the Annual
Meeting of Shareholders of IDEX Corporation to be held on Tuesday, March 25,
2003, at 10:00 a.m. Central Time, in the LaSalle Room of Bank of America, 231
South LaSalle Street, Chicago, Illinois. The Company commenced distribution of
this Proxy Statement and the materials which accompany it on March 5, 2003.
The Company will bear the costs of preparing and mailing this Proxy
Statement and other costs of the proxy solicitation made by the Company's Board
of Directors. Certain of the Company's officers and employees may solicit the
submission of proxies authorizing the voting of shares in accordance with the
Board of Directors' recommendations, but no additional remuneration will be paid
by the Company for the solicitation of those proxies. Such solicitations may be
made by personal interview, telephone and facsimile transmission. Arrangements
have also been made with brokerage firms and others for the forwarding of proxy
solicitation materials to the beneficial owners of Common Stock held of record
by such persons, and the Company will reimburse such brokerage firms and others
for reasonable out-of-pocket expenses incurred by them in connection therewith.
The Company has engaged Morrow & Co. to assist in proxy solicitation and
collection, and has agreed to pay such firm $4,500, plus out-of-pocket costs and
expenses.
1
VOTING AT THE MEETING
The record of shareholders entitled to notice of and to vote at the Annual
Meeting was taken as of the close of business on February 20, 2003, and each
shareholder will be entitled to vote at the meeting any shares of IDEX Common
Stock held of record at that date. An aggregate of 32,505,604 shares of the
Company's Common Stock was outstanding at the close of business on February 20,
2003. Each share entitles its holder of record to one vote on each matter upon
which votes are taken at the Annual Meeting. No other securities are entitled to
be voted at the Annual Meeting.
A quorum of shareholders is necessary to take action at the Annual Meeting.
A majority of outstanding shares of Common Stock of the Company present in
person or represented by proxy will constitute a quorum. The Company will
appoint election inspectors for the meeting to determine whether or not a quorum
is present, and to tabulate votes cast by proxy or in person at the Annual
Meeting. Under certain circumstances, a broker or other nominee may have
discretionary authority to vote certain shares of Common Stock if instructions
have not been received from the beneficial owner or other person entitled to
vote. The election inspectors will treat directions to withhold authority,
abstentions and broker non-votes (which occur when a broker or other nominee
holding shares for a beneficial owner does not vote on a particular proposal
because such broker or other nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner) as present and entitled to vote for purposes of determining the presence
of a quorum for the transaction of business at the Annual Meeting. The election
of directors requires a plurality vote, the approval of the adoption of the
Third Amended and Restated 1996 Stock Option Plan for Non-Officer Key Employees
of IDEX Corporation requires a majority vote, and the ratification of the
appointment of Deloitte & Touche LLP as auditors of the Company for 2003
requires a majority vote, of the shares of Common Stock of the Company present
in person or represented by proxy at the meeting. Directions to withhold
authority will have no effect on the election of directors, because directors
are elected by a plurality of votes cast. Abstentions will be treated as shares
voted against approval of the Third Amended and Restated 1996 Stock Option Plan
for Non-Officer Key Employees of IDEX Corporation and against ratification of
the appointment of Deloitte & Touche LLP as auditors of the Company for 2003.
Broker non-votes with respect to a particular proposal will have no effect on
such proposal because they are not considered as present and entitled to vote
with respect to that matter.
The Company requests that you mark the accompanying proxy card to indicate
your votes, sign and date it, and return it to the Company in the enclosed
envelope. If your completed proxy card is received prior to or at the meeting,
your shares will be voted in accordance with your voting instructions. If you
sign and return your proxy card but do not give voting instructions, your shares
will be voted FOR the election of the Company's nominee as a director, FOR the
approval of the adoption of the Third Amended and Restated 1996 Stock Option
Plan for Non-Officer Key Employees of IDEX Corporation and FOR the ratification
of the appointment of Deloitte & Touche LLP as auditors of the Company for 2003,
and in the discretion of the proxy holders as to any other business which may
properly come before the meeting. Any proxy solicited hereby may be revoked by
the person or persons giving it at any time before it has been exercised at the
Annual Meeting by giving notice of revocation to the Company in writing at the
meeting. The Company requests that all such written notices of revocation to the
Company be addressed to Frank J. Notaro, Vice President-General Counsel and
Secretary, IDEX Corporation, 630 Dundee Road, Suite 400, Northbrook, IL 60062.
2
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation, as amended, provides
for a three-class Board, with one class being elected each year for a term of
three years. The Board of Directors currently consists of seven members, two of
whom are Class II directors whose terms will expire at this year's Annual
Meeting, three of whom are Class III directors whose terms will expire at the
Annual Meeting to be held in 2004, and two of whom are Class I directors whose
terms will expire at the Annual Meeting to be held in 2005. Mr. Luers will
retire consistent with the Company's mandatory retirement policy for members of
the Board, and so he will cease to be a member of the Board on the date of the
Annual Meeting at the end of his current term. As a result of his departure, the
Board of Directors will be reduced to and consist of six (6) members.
The Company's Board of Directors has nominated one person for election as a
Class II director to serve for a three-year term expiring at the Annual Meeting
to be held in 2006 or upon the election and qualification of his successor. The
nominee of the Board of Directors is Michael T. Tokarz, who is currently serving
as a director of the Company. The nominee and the directors serving in Class I
and Class III whose terms expire in future years and who will continue to serve
after the Annual Meeting are listed below with brief statements setting forth
their present principal occupations and other information, including
directorships in other public companies.
If for any reason the nominee for a Class II directorship is unavailable to
serve, proxies solicited hereby may be voted for a substitute. The Board,
however, expects the nominee to be available.
3
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE NOMINEE IN CLASS II IDENTIFIED BELOW.
NOMINEE FOR DIRECTORSHIP
CLASS II: NOMINEE FOR THREE-YEAR TERM
MICHAEL T. TOKARZ Director since 1987
Member Age 53
The Tokarz Group L.L.C.
Mr. Tokarz has been a director of the Company since its organization in
September 1987. He has been a member of The Tokarz Group L.L.C. since February
1, 2002. From prior to 1998 until January 31, 2002, Mr. Tokarz was a member of
Kohlberg Kravis Roberts & Co., L.L.C., a limited liability company which acts as
the general partner of Kohlberg Kravis Roberts & Co., L.P. Mr. Tokarz has been a
general partner of KKR Associates, L.P. since prior to 1998. Mr. Tokarz is a
director of Evenflo Company, Inc., Kamaz A.O., Spalding Holdings Corporation and
Walter Industries, Inc. Mr. Tokarz is a member of the Compensation Committee and
the Executive Committee of the Board of Directors.
OTHER INCUMBENT DIRECTORS
CLASS I: THREE-YEAR TERM EXPIRES IN 2005
BRADLEY J. BELL Director since 2001
Senior Vice President and Chief Financial Officer Age 50
Rohm and Haas Company
Mr. Bell has been a director of the Company since June 11, 2001. Mr. Bell
has been Senior Vice President and Chief Financial Officer of Rohm and Haas
Company since prior to 1998. Mr. Bell is Chairman of the Audit Committee.
GREGORY B. KENNY Director since 2002
President and Chief Executive Officer Age 50
General Cable Corporation
Mr. Kenny has been a director of the Company since February 1, 2002. Mr.
Kenny has been President and Chief Executive Officer of General Cable
Corporation since August 2001. From 1999 until August 2001, Mr. Kenny served as
President and Chief Operating Officer of General Cable Corporation, and from
1997 until 1999, Mr. Kenny served as Executive Vice President and Chief
Operating Officer of General Cable Corporation. Mr. Kenny is a director of
General Cable Corporation. Mr. Kenny is Chairman of the Compensation Committee.
4
CLASS III: THREE-YEAR TERM EXPIRES IN 2004
PAUL E. RAETHER Director since 1988
Member Age 56
Kohlberg Kravis Roberts & Co., L.L.C.
Mr. Raether has been a director of the Company since January 22, 1988.
Since prior to 1998, he has been a member of Kohlberg Kravis Roberts & Co.,
L.L.C., a limited liability company which acts as the general partner of
Kohlberg Kravis Roberts & Co., L.P. Mr. Raether has been a general partner of
KKR Associates, L.P. since prior to 1998. Mr. Raether is a director of KSL
Recreation Corporation and Shoppers Drug Mart Corporation. Mr. Raether is a
member of the Nominating and Governance Committee of the Board of Directors.
NEIL A. SPRINGER Director since 1990
Managing Director Age 64
Springer & Associates, L.L.C.
Mr. Springer has been a director of the Company since February 27, 1990. He
has been Managing Director of Springer & Associates, L.L.C. since prior to 1998.
Mr. Springer is a director of CUNA Mutual Insurance Group, U.S. Freightways
Corporation and Walter Industries, Inc. Mr. Springer is the Chairman of the
Nominating and Governance Committee and a member of the Audit Committee and
Executive Committee of the Board of Directors.
DENNIS K. WILLIAMS Director since 2000
Chairman of the Board, Age 57
President and Chief Executive Officer
IDEX Corporation
Mr. Williams was appointed Chairman of the Board, President and Chief
Executive Officer and a director of the Company by the Board of Directors on May
1, 2000. From April 1998 to April 2000, he served as President and Chief
Executive Officer of GE Power Systems Industrial Products. From January 1996
until May 1999, Mr. Williams was President and Chief Executive Officer of GE's
Nuovo Pignone business. Mr. Williams is Chairman of the Executive Committee and
a member of the Pension and Retirement Committee of the Board of Directors. Mr.
Williams is a director of Washington Group International, Inc.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has the ultimate authority for the management of the
Company's business. The Board selects the Company's executive officers,
delegates responsibilities for the conduct of the Company's operations to those
officers, and monitors their performance. During 2002, the Board of Directors
held nine meetings.
Important functions of the Board of Directors are performed by committees
comprised of members of the Board. Subject to applicable provisions of the
Company's By-Laws, the Board as a whole appoints the members of each committee
each year at its first meeting following the annual shareholders' meeting. The
Board may, at any time, appoint or remove committee members or change the
authority or responsibility delegated to any committee. There are five regularly
constituted committees of the Board of Directors: the Executive Committee, the
Audit Committee, the Compensation Committee, the Nominating and Governance
Committee and Pension and Retirement Committee.
The Executive Committee is empowered to exercise the authority of the Board
of Directors in the management of the Company between meetings of the Board of
Directors, except that the Executive Committee may not fill vacancies on the
Board, amend the Company's By-Laws or exercise certain other powers reserved to
the Board or delegated to other Board committees. During 2002, the Executive
Committee held one meeting.
The Audit Committee appoints the firm of independent public accountants to
audit the Company's financial statements each fiscal year, reviews the
independence of the independent auditors, reviews and
5
approves the nature and extent of audit and non-audit services to be performed
by the independent auditors, reviews the interim and audited financial
statements with management and the independent auditors, and consults with
management and the independent auditors on the Company's system of internal
control. During 2002, the Audit Committee held eight meetings.
The Compensation Committee makes recommendations to the Board of Directors
with respect to the compensation to be paid and benefits to be provided to
directors, officers and employees of the Company. During 2002, the Compensation
Committee held four meetings.
The Nominating and Corporate Governance Committee identifies individuals
qualified to become Board members and selects or recommends that the Board
select the director nominees for the annual meeting of shareholders. The
Committee also develops and recommends to the Board the Corporate Governance
Guidelines applicable to the Company. The Nominating and Governance Committee
was formed in November 2002 and did not hold any meetings in 2002.
The Pension and Retirement Committee makes recommendations to the Board of
Directors with respect to the adoption or amendment of the Company's pension and
retirement plans and reports to the Board with respect to the operation of such
plans. During 2002, the Pension and Retirement Committee held seven meetings.
During 2002, each member of the Board of Directors attended more than 75%
of the aggregate number of meetings of the Board of Directors and of committees
of the Board of which he was a member.
CERTAIN INTERESTS
In 2001, the Company made a $180,000 loan to Mr. Williams to pay
withholding taxes on the 2001 vesting of his restricted stock award. This loan
is interest free. As of January 31, 2003, $163,152 remained outstanding under
this loan. To the extent not otherwise repaid by Mr. Williams, such loan shall
be repaid by application of (i) increases in base salary (adjusted for taxes)
over 2001 base salary, and (ii) bonus payments not required to be deferred into
the Company's deferred compensation plan under the terms of the restricted stock
award.
In 2002, the Company paid a $300,000 fee to Kohlberg Kravis Roberts & Co.,
L.L.C. for consulting and investment advisory services. The Company will pay
$100,000 to Kohlberg Kravis Roberts & Co., L.L.C. for similar services in 2003,
after which time no further fees will be paid. Mr. Raether is a member of
Kohlberg Kravis Roberts & Co., L.L.C.
On October 2, 2002, the Company acquired all the assets of Wrightech
Corporation. In connection with the acquisition, Mr. Dahlke joined the Company
as Vice President-Group Executive of the Pump Products Group. Mr. Dahlke was a
minority shareholder of Wrightech Corporation and received $407,424 in
connection with this transaction.
COMPENSATION OF DIRECTORS
Non-management directors of the Company receive an annual fee for their
services of $30,000. Under the Amended and Restated IDEX Corporation Directors
Deferred Compensation Plan, directors are permitted to defer their compensation
into an interest-bearing account or into a deferred compensation units account
as of the date that such compensation would otherwise be payable. The deferred
compensation credited to the interest-bearing account is adjusted on a quarterly
basis with hypothetical earnings for the quarter equal to rates on U.S.
government securities with 10-year maturities as of December 1 of the calendar
year preceding the year for which the earnings were credited, plus 200 basis
points. Amounts credited to the interest-bearing account are compounded at least
annually. The deferred compensation credited to the deferred compensation units
account is converted into a number of Common Stock-equivalent units ("Deferred
Compensation Units") by dividing the deferred compensation by the fair market
value of the Company's Common Stock on the deferral date. In addition, the value
of the dividends payable on shares of Common Stock are credited to the deferred
compensation units account and converted into Deferred Compensation Units based
on the
6
number of Deferred Compensation Units on the dividend record date, and the fair
market value of Common Stock on the dividend payment date.
Outside directors receive non-qualified stock options pursuant to the
Amended and Restated IDEX Corporation Stock Option Plan for Outside Directors.
Outside directors are those individuals who are not (i) full-time employees of
the Company or its subsidiaries or (ii) partners or full-time employees of
either Kohlberg Kravis Roberts & Co., L.L.C. or KKR Associates, L.P. Under the
plan, nonqualified stock options may be granted to outside directors to purchase
in the aggregate up to 337,500 shares of Common Stock. If any option expires or
is cancelled without having been fully exercised, the shares covered thereby may
be subject to the grant of new options. For so long as the plan remains
effective, except for each person who immediately prior to becoming an outside
director was either (i) a full-time employee of the Company or any of its
subsidiaries or (ii) a partner or full-time employee of either Kohlberg Kravis
Roberts & Co., L.L.C. or KKR Associates, L.P., any person who becomes an outside
director after April 19, 2000 will receive an option to purchase 6,750 shares of
Common Stock. On the first regularly scheduled meeting of the Board of Directors
held in January of each year, each outside director will receive an option to
purchase 4,500 shares of Common Stock. The exercise price is specified in each
option, and is equal to the fair market value of a share of Common Stock on the
date the option is granted, as determined under the plan. Prior to the amendment
of the plan in January 2000, the fair market value was based on the average
closing price per share of Common Stock on the New York Stock Exchange during
the 30-day period immediately preceding the date the option was granted. Under
the current terms of the plan, the fair market value is based on the closing
price per share of the Common Stock on the trading day preceding the date the
option is granted. In the year ended December 31, 2002, each of Messrs. Bell,
Luers and Springer received an option to purchase 4,500 shares of Common Stock
at an exercise price of $34.10 and Mr. Kenny received an option to purchase
6,750 shares of Common Stock at an exercise price of $34.00. On January 29,
2003, each of Messrs. Bell, Kenny, Luers and Springer received an option to
purchase 4,500 shares of Common Stock at an exercise price of $28.32. Upon
exercise of any option, the purchase price of Common Stock may be paid either in
cash, in shares of Common Stock having an aggregate fair market value on the
date of exercise equal to the exercise price, or by delivery of an irrevocable
commitment to use the proceeds from the sale of stock acquired from exercise of
the option.
7
SECURITY OWNERSHIP
The following table furnishes information as of February 20, 2003, except
as otherwise noted, with respect to the shares of Common Stock beneficially
owned by (i) each director and nominee for director, (ii) each officer named in
the Summary Compensation Table, (iii) directors, nominees and executive officers
of the Company as a group, and (iv) any person who is known by the Company to be
a beneficial owner of more than five percent of the outstanding shares of Common
Stock of the Company. Except as indicated by the notes to the following table,
the holders listed below have sole voting power and investment power over the
shares beneficially held by them. Under the Securities and Exchange Commission
rules, the number of shares shown as beneficially owned includes shares of
common stock subject to options that currently are exercisable or will be
exercisable within 60 days of February 20, 2003. Shares of common stock subject
to options that are currently exercisable within 60 days of February 20, 2003
are considered to be outstanding for the purpose of determining the percentage
of the shares held by a holder, but not for the purpose of computing the
percentage held by others. An * indicates ownership of less than one percent of
the outstanding Common Stock.
NUMBER OF
SHARES
NAME AND ADDRESS OF BENEFICIALLY
BENEFICIAL OWNER OWNED PERCENT OF CLASS
------------------- ------------ ----------------
Directors and Nominees
(Other than Executive Officers):
Bradley J. Bell............................ 2,000 *
Gregory B. Kenny........................... 0 --
Paul E. Raether(1)......................... 1,852,822 5.7
Neil A. Springer(2)........................ 45,000 *
Michael T. Tokarz(3)....................... 151,516 *
Executive Officers:
Dennis K. Williams(4)(5)................... 278,150 *
Wayne P. Sayatovic(6)...................... 355,575 1.1
Harley B. Kaplan(7)........................ 4,500 *
David T. Windmuller(7)..................... 74,777 *
John L. McMurray(7)........................ 61,278 *
Directors, Nominees and All.................. 3,145,213 9.5
Executive Officers as a Group
(17 persons)(1)(3)(8)
Other Principal Beneficial Owners:
KKR Associates, L.P.(1)(3)................. 1,852,822 5.7
9 West 57th Street
New York, NY 10018
Paul E. Raether
Michael T. Tokarz
Ariel Capital Management, Inc.(9).......... 5,449,208 16.8
307 North Michigan Avenue, Suite 500
Chicago, IL 60601
Mario J. Gabelli(10)....................... 2,552,924 7.9
GAMCO Investors, Inc.
Gabelli & Company, Inc.
One Corporate Center
Rye, NY 10580
Neuberger Berman, Inc.(11)................. 2,339,105 7.2
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158
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(1) KKR Associates, L.P. is a limited partnership of which, as of February 20,
2003, Mr. Raether (who is a director of the Company) and Messrs. Henry R.
Kravis, George R. Roberts, Edward A. Gilhuly, Perry Golkin, James H.
Greene, Jr., Michael W. Michelson and Scott M. Stuart were general
partners. Such persons may be deemed to share beneficial ownership of the
shares shown as beneficially owned by KKR
8
Associates, L.P. All of the foregoing persons except Mr. Raether disclaim
beneficial ownership of any shares of the Company listed above as
beneficially owned by KKR Associates, L.P. Mr. Raether disclaims beneficial
ownership of any shares of the Company listed above as beneficially owned
by KKR Associates, L.P. except for 315,475 shares held by KKR Associates,
L.P. which have been allocated to the account of Mr. Raether or to a family
trust of which his wife is trustee. Mr. Kravis and Mr. Roberts are no
longer members of our board of directors; however, both were directors of
the Company within the past three years.
(2) Includes 40,500 shares under option which are eligible for exercise under
the Amended and Restated IDEX Corporation Stock Option Plan for Outside
Directors.
(3) Includes 106,516 shares held by KKR Associates, L.P. which have been
allocated to the account of Mr. Tokarz.
(4) Includes 191,000 shares which are eligible for exercise under the Stock
Plan for Officers.
(5) Mr. Williams was awarded 350,000 shares of restricted stock on April 13,
2000. Under the terms of the award, seventy thousand of the shares vest on
April 30 in each of years 2001 through 2005. In connection with the
vesting of shares on April 30, 2001 and April 30, 2002, Mr. Williams
surrendered 22,715 and 30,135 shares, respectively, to satisfy withholding
taxes.
(6) Includes 45,000 shares which are owned directly by Mr. Sayatovic's wife,
6,750 shares which are owned by Mrs. Sayatovic as custodian for her
children, and 156,750 shares which are eligible for exercise under the
Stock Plan for Officers.
(7) Includes 4,400, 72,975 and 60,575 shares which are eligible for exercise
under the Stock Plan for Non-Officer Key Employees and the Stock Plan for
Officers, for Messrs. Kaplan, Windmuller and McMurray, respectively.
(8) Includes 40,500 shares under option which are eligible for exercise under
the Amended and Restated IDEX Corporation Stock Option Plan for Outside
Directors, 618,250 shares under option which are eligible for exercise
under the Stock Plan for Officers, and 60,450 shares under option which
are eligible for exercise under the Stock Plan for Non-Officer Key
Employees.
(9) Based on information in Schedule 13G, as of December 31, 2002, filed by
Ariel Capital Management, Inc. with respect to common stock owned by Ariel
Capital Management, Inc. and certain other entities which Ariel Capital
Management, Inc. directly or indirectly controls or for which Ariel
Capital Management, Inc. is an investment advisor on a discretionary
basis. The Company has not attempted to verify any of the foregoing
information, which is based solely upon the information contained in the
Schedule 13G.
(10) Based on information in Schedule 13D, as amended on August 22, 2002, filed
by Mario J. Gabelli, GAMCO Investors, Inc. ("GAMCO") and Gabelli Funds,
LLC ("Gabelli Funds"), with respect to common stock owned by GAMCO,
Gabelli Funds and certain other entities which Mr. Gabelli directly or
indirectly controls and for which he acts as chief investment officer. The
Company has not attempted to independently verify any of the foregoing
information, which is based solely upon the information contained in the
Schedule 13D, as amended.
(11) Based on information in Schedule 13G, as of December 31, 2002, filed by
Neuberger Berman, Inc. and Neuberger Berman, LLC with respect to common
stock beneficially owned by Neuberger Berman, LLC, Neuberger Berman
Management, Inc. and certain other entities which Neuberger Berman, Inc.
directly or indirectly controls or for which Neuberger Berman, Inc. is an
investment advisor. The Company has not attempted to verify any of the
foregoing information, which is based solely upon the information
contained in the Schedule 13G.
9
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The total compensation paid to the Company's Chief Executive Officer and
the Company's four highest compensated executive officers other than the Chief
Executive Officer for services rendered to the Company in 2002, 2001 and 2000 is
summarized as follows:
LONG-TERM COMPENSATION
ANNUAL COMPENSATION(1) -----------------------------------
------------------------------- SHARES
OTHER RESTRICTED UNDERLYING LONG-TERM
ANNUAL STOCK OPTIONS INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMP.(2) AWARDS(3) GRANTED PAYOUTS COMPENSATION(4)
--------------------------- ---- -------- -------- --------- ---------- ---------- --------- ---------------
Dennis K. Williams............... 2002 $710,000 $562,300 $277,883 0 85,000 0 $11,227
Chairman of the Board,
President 2001 685,000 387,600 189,990 0 85,000 0 5,461
and Chief Executive Officer 2000 433,333 476,600 206,964 $9,493,750 350,000 0 0
Wayne P. Sayatovic............... 2002 251,500 113,100 0 0 24,000 0 4,100
Senior Vice
President -- Finance 2001 243,000 64,800 0 0 24,000 0 3,830
and Chief Financial Officer 2000 231,500 165,600 0 0 24,000 0 3,830
Harley B. Kaplan................. 2002 227,282 195,000 0 0 22,000 0 4,100
Vice President -- Group
Executive
David T. Windmuller.............. 2002 238,000 109,300 0 0 18,000 0 4,100
Vice President -- Group 2001 229,000 65,300 0 0 18,000 0 3,830
Executive 2000 219,000 156,600 0 0 18,000 0 3,830
John L. McMurray................. 2002 224,500 83,500 0 0 18,000 0 4,100
Vice President -- Operational 2001 214,000 62,600 0 0 17,000 0 3,830
Excellence 2000 194,000 133,500 0 0 15,000 0 3,830
---------------
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) For Mr. Williams, $262,966, $177,612 and $203,793 of the amount shown for
2002, 2001 and 2000, respectively, represents the incremental cost for Mr.
Williams' personal use of the Company's aircraft. For all other individuals,
the value of perquisites provided did not exceed the lesser of $50,000 or
10% of base salary plus bonus.
(3) Mr. Williams was awarded 350,000 shares of restricted stock on April 13,
2000. Seventy thousand of the shares vested on each of April 30, 2001 and
April 30, 2002, and seventy thousand shares will vest on April 30 in each of
years 2003 through 2005. At December 31, 2002, the 210,000 shares of
non-vested restricted stock had a value of $6,867,000 based on the closing
price of our common stock at year-end. The shares are eligible for the
Company's dividend on its common stock.
(4) For Mr. Williams in 2002 and 2001, amount represents $7,127 and $1,631,
respectively, in imputed interest on a $180,000 loan made by the Company to
pay withholding taxes on the 2001 vesting of his restricted stock award, and
$4,100 and $3,830, respectively, of Company matching contributions to his
Savings Plan individual account. In all other cases, amount represents
Company matching contributions to Savings Plan individual accounts.
10
OPTION GRANTS IN 2002
The following tables set forth certain information with respect to options
granted in 2002 to the Company's Chief Executive Officer and the Company's four
highest compensated officers other than the Chief Executive Officer.
INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SHARES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED APPRECIATION FOR OPTION
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION -----------------------
NAME GRANTED IN FISCAL YEAR PRICE DATE 5% 10%
---- ---------- -------------- -------- ---------- -- ---
Dennis K. Williams........................ 85,000 10.1 $37.95 03/26/12 $2,029,342 $5,143,099
Wayne P. Sayatovic........................ 24,000 2.8 37.95 03/26/12 572,991 1,452,169
Harley B. Kaplan.......................... 22,000 2.6 37.95 03/26/12 525,242 1,331,155
David T. Windmuller....................... 18,000 2.1 37.95 03/26/12 429,743 1,089,127
John L. McMurray.......................... 18,000 2.1 37.95 03/26/12 429,743 1,089,127
OPTION EXERCISES AND YEAR-END VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED,
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Dennis K. Williams.................. 0 $ 0 157,000 363,000 $ 852,750 $1,459,750
Wayne P. Sayatovic.................. 33,750 838,384 132,750 72,000 1,127,226 223,800
Harley B. Kaplan.................... 0 0 0 22,000 0 0
David T. Windmuller................. 6,525 115,022 54,976 54,000 301,406 167,850
John L. McMurray.................... 0 0 45,535 48,640 300,895 146,675
---------------
(1) Calculated using closing stock price on December 31, 2002 of $32.70.
PENSION AND RETIREMENT PLANS
Certain employees of the Company, including the executive officers and
certain hourly employees, are covered under the IDEX Corporation Retirement Plan
(the "Retirement Plan"). The Company and the other sponsoring subsidiaries are
required to make an annual contribution to the Retirement Plan in such amounts
as are actuarially required to fund the benefits of the participants. The
Retirement Plan is an ongoing "career average" plan that provides a level of
benefit based on a participant's compensation for a year, historically with
periodic updates to average compensation over a fixed five-year period. Under
the Retirement Plan, participants are entitled to receive an annual benefit on
retirement equal to the sum of the benefit earned through 1995 using the
five-year average compensation of a participant through 1995, plus the benefit
earned under the current formula for each year of employment after 1995. For
each year of participation through 1995, a participant earns a benefit equal to
1.25% of the first $16,800 of such average compensation through 1995, and 1.65%
of such compensation in excess of $16,800. Beginning January 1, 1996, the
benefit earned equals the sum of 1.6% of the first $16,800 of each year's total
compensation, and 2.0% for such compensation in excess of $16,800 for each full
year of service credited after 1995. As required by law, compensation counted
for purposes of determining this benefit is limited. For all participants in the
Retirement Plan, the normal form of retirement benefit is payable in the form of
a life annuity with five years of payments guaranteed. Other optional forms of
payment are available.
As of December 31, 2002, the total accrued monthly benefit under the
Retirement Plan for Messrs. Williams, Sayatovic, Kaplan, Windmuller and McMurray
was $883, $4,821, $328, $3,830 and $2,652, respectively. Assuming projected
earnings in 2003 of $3,901,800, $374,600, $460,000, $356,800 and $316,000 for
Messrs. Williams, Sayatovic, Kaplan, Windmuller and McMurray, respectively, and
assuming (except in the case of Mr. Williams whose restricted stock award will
have fully vested in 2005) that such earnings remain level until each person
reaches age 65, the projected monthly benefit for Messrs. Williams, Sayatovic,
11
Kaplan, Windmuller and McMurray under the Retirement Plan would be $3,833,
$7,498, $5,680, $10,330 and $6,892, respectively, upon retirement at age 65.
Pursuant to the Company's Supplemental Executive Retirement Plan (the
"SERP"), employees of the Company are entitled to retirement benefits to
compensate for any reduction in benefits under the Retirement Plan arising from
the maximum benefit limitations under Sections 401 and 415 of the Internal
Revenue Code of 1986, as amended (the "Code"). Based on the above assumptions,
the projected monthly benefit at age 65 for Messrs. Williams, Sayatovic, Kaplan,
Windmuller and McMurray under the SERP would be $40,572, $9,812, $7,172, $7,101
and $3,809, respectively.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr. Williams. The
employment agreement provides for an initial term of five years and successive
twelve-month periods thereafter. Mr. Williams' annual base salary for 2003 is
$740,000, subject to annual review and adjustment. In addition to his annual
base salary, Mr. Williams is eligible to receive an annual cash bonus. Annual
bonuses are paid to Mr. Williams under the Executive Incentive Bonus Plan. If
Mr. Williams' employment is terminated by the Company other than for cause, he
will receive continuing salary payments and fringe benefits for 24 months plus a
bonus payment equal to the sum of 240% of his base salary and a pro-rated
portion of 120% of his base salary (based on the portion of the year he was
employed). If Mr. Williams' employment is terminated because of disability, he
will receive continuing salary payments and fringe benefits for a period of 18
months plus a bonus payment equal to the sum of 180% of his base salary and a
pro-rated portion of 120% of his base salary (based on the portion of the year
he was employed). If Mr. Williams dies before the continuing payments described
above are complete, such payments will continue to Mr. Williams' wife if she
survives him or, if she does not survive him, to his estate. Additionally, if
Mr. Williams should die during the term of the agreement, Mr. Williams' wife or
estate will receive continuing salary payments and fringe benefits for a period
of 18 months plus a bonus payment equal to the sum of 180% of his base salary
and a pro-rated portion of 120% of his base salary (based on the portion of the
year he was employed). In connection with Mr. Williams' employment agreement,
the Company awarded Mr. Williams 350,000 shares of restricted IDEX Common Stock.
Seventy thousand shares of the restricted stock vested on each of April 30, 2001
and April 30, 2002, and an additional 70,000 shares vest on April 30 in each of
years 2003 through 2005 if Mr. Williams remains as Chairman of the Board,
President and Chief Executive Officer of the Company. All shares of the
restricted stock will vest in the event Mr. Williams is terminated by the
Company other than for cause or if Mr. Williams terminates his employment
because the Company has taken certain actions with respect to his employment.
The agreement provides for payment of the 20% golden parachute excise tax,
increased for taxes due on the payment, in the event that the Internal Revenue
Service determines any such taxes to be payable due to a change in control.
The Company has entered into an employment agreement with Mr. Sayatovic.
The agreement provides for an initial term of three years and successive
12-month periods thereafter. Mr. Sayatovic's annual base salary for 2003 is
$261,500, subject to annual review and adjustment. If Mr. Sayatovic's employment
is terminated by the Company, he will be entitled to receive continuing salary
payments and fringe benefits for 24 months. If Mr. Sayatovic dies before
payments are complete, such payments will continue to Mr. Sayatovic's wife if
she survives him or, if she does not survive him, to his estate. Mr. Sayatovic
will receive a bonus of not less than his target amount for the entire year in
the event he becomes disabled or dies, or if his employment is terminated by the
Company. The agreement provides for reimbursement of all medical,
hospitalization, dental and similar benefits and expenses for Mr. Sayatovic, his
wife and dependents during the term of his employment with the Company and for
the longer of his life or his wife's life. Reimbursements for medical expenses
for Mr. Sayatovic will be reduced until he attains age 59 to the extent
reimbursement is available from other programs sponsored by subsequent
employers. The agreement provides for payment of the 20% golden parachute excise
tax, increased for taxes due on the payment, in the event that the Internal
Revenue Service determines any such taxes to be payable due to a change in
control. The agreement also provides for the payment of pension benefits equal
to the amount Mr. Sayatovic is entitled to receive under the SERP as currently
in effect, to the extent not paid by the SERP.
12
The Company has entered into agreements with each of Messrs. Williams,
Sayatovic, Windmuller and McMurray providing for three years' compensation and
fringe benefits in the event they are actually or constructively terminated
without cause within two years following a change of control.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of the Company reviews
and approves base salary, annual management incentive compensation, and
long-term incentive awards for all corporate officers and certain other key
executives, with the objective of attracting and retaining individuals of the
necessary quality and stature to operate the business. The Committee considers
individual contributions, performance against strategic goals and directions,
and industry-wide pay practices in determining the levels of base compensation
for key executives.
Annual management incentive compensation is paid to corporate officers
other than Mr. Williams and certain other key executives under the Management
Incentive Compensation Plan. The Management Incentive Compensation Plan provides
for payment of annual bonuses based upon performance of the business units of
the Company and individual performance of the employee. Individual target bonus
percentages are based on base salaries and levels of responsibility. Actual
awards are set as a percentage of target based on meeting qualitative and
quantitative performance criteria set each year in connection with the annual
planning process, and adjusted by an individual personal performance multiplier.
Actual payouts under the plan to corporate officers since the Company was formed
in 1988 have ranged from 41% of target to 170% of target. The Committee believes
that this plan is properly leveraged relative to performance of the Company and
its business units.
Long-term incentive awards are granted to corporate officers and certain
other key employees under the Company's 2001 Stock Plan for Officers and the
Amended and Restated 1996 Stock Plan for Non-Officer Key Employees. The awards
take the form of stock options which are tied directly to the market value of
the Company's Common Stock.
The Committee believes that both the annual bonus plan and the long-term
incentive plan align the interests of management with the shareholders and focus
the attention of management on the long-term success of the Company. A
significant portion of the executives' compensation is at risk, based on the
financial performance of the Company and the value of the Company's stock in the
marketplace.
The Committee sets compensation of the Company's Chief Executive Officer
annually based on Company performance, his performance, and prevailing market
conditions, and such compensation is then approved by the Board of Directors.
Dennis K. Williams has a personal stake in the Company through his ownership of
297,150 shares of Common Stock of the Company (inclusive of 210,000 shares of
non-vested restricted stock), and his irrevocable election to defer into Common
Stock-equivalent units all bonus payments to be made to him until such deferrals
total $2,000,000. He also has options to acquire an additional 520,000 shares of
Common Stock. With this sizeable ownership position, a very large percentage of
Mr. Williams' personal net worth is tied directly to the Company's performance.
Annual bonuses are paid to Mr. Williams based upon the attainment of
operating income performance goals pursuant to the terms of the Executive
Incentive Bonus Plan. The maximum bonus payable to Mr. Williams under the
Executive Incentive Bonus Plan is 2% of the Company's operating income. Mr.
Williams' actual bonus for 2002 was $562,300.
Section 162(m) of the Internal Revenue Code limits to $1 million in a
taxable year the deduction publicly held companies may claim for compensation
paid to executive officers, unless such compensation is performance-based and
meets certain requirements. The Executive Incentive Bonus Plan and the 2001
Stock Plan for Officers satisfy the requirements for performance-based
compensation under Code Section 162(m).
Gregory B. Kenny, Chairman
William H. Luers
Michael T. Tokarz
13
AUDIT COMMITTEE REPORT
For the year ended December 31, 2002, the Audit Committee has reviewed and
discussed the audited financial statements with management and the independent
auditors, Deloitte & Touche LLP. The Committee discussed with the independent
auditors the matters required to be discussed by the Statement of Auditing
Standards No. 61, and reviewed the results of the independent auditors'
examination of the financial statements.
The Committee also reviewed the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1,
discussed with the auditors the auditors' independence, and satisfied itself as
to the auditors' independence.
Based on the above reviews and discussions, the Audit Committee recommends
to the Board of Directors that the financial statements be included or
incorporated by reference in the Annual Report on Form 10-K for the year ended
December 31, 2002, for filing with the Commission.
The Board of Directors has determined that the members of the Audit
Committee are independent as defined in the regulations.
The Committee is governed by a charter, which was published in the
Company's 2001 Proxy Statement and which is being reviewed as to adequacy
against the requirements of the Sarbanes-Oxley Act as it is being implemented
from time to time by the Securities and Exchange Commission.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings made by the Company under those
statutes, in whole or in part, this report shall not be deemed to be
incorporated by reference into any such filings, nor will this report be
incorporated by reference into any future filings made by the Company under
those statutes.
Bradley J. Bell, Chairman
William H. Luers
Neil A. Springer
AUDIT FEES
The aggregate fees billed to the Company for the fiscal year ended December
31, 2002, by the Company's principal accounting firm, Deloitte & Touche LLP, are
as follows:
Audit Services $1,025,000
Audit Related Services 205,000
Tax Services 836,000
All Other Services 220,000(1)
---------------
(1) The Audit Committee has determined that the provision of these services is
not incompatible with maintaining the principal accountant's independence.
14
COMMON STOCK PERFORMANCE GRAPH
The following table compares total shareholder returns over the last five
years to the Standard & Poor's (the "S&P") 500 Index, the S&P 600 Small Cap
Industrial Machinery Index and the Russell 2000 Index assuming the value of the
investment in IDEX Common Stock and each index was $100 on December 31, 1997.
Total return values for IDEX Common Stock, the S&P 500 Index, S&P 600 Small Cap
Industrial Machinery Index and the Russell 2000 Index were calculated on
cumulative total return values assuming reinvestment of dividends. The
shareholder return shown on the graph below is not necessarily indicative of
future performance.
[Performance Graph]
-------------------------------------------------------------------------------------
12/97 12/98 12/99 12/00 12/01 12/02
-------------------------------------------------------------------------------------
IDEX CORPORATION $100.00 $ 71.50 $ 90.62 $100.64 $106.74 $102.92
S&P 500 INDEX 100.00 128.57 155.62 141.44 124.63 97.12
S&P 600 SMALL CAP
INDUSTRIAL 100.00 95.56 109.06 105.51 112.96 108.14
RUSSELL 2000 INDEX 100.00 97.50 118.40 114.82 117.75 93.63
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than 10% of the Company's
Common Stock to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and greater than 10% shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms that they file. Based
solely on its review of the copies of such forms received by it, or written
representations from certain reporting persons, the Company believes that all
filing requirements applicable to its officers, directors and greater than 10%
shareholders were met during the year ended December 31, 2002.
15
PROPOSAL 2 - APPROVAL OF THE THIRD AMENDED AND RESTATED
1996 STOCK OPTION PLAN FOR NON-OFFICER KEY EMPLOYEES
OF IDEX CORPORATION
The Board is submitting for shareholder approval the Third Amended and
Restated 1996 Stock Option Plan for Non-Officer Key Employees of IDEX
Corporation (the "Plan"), approved and adopted by the Board on January 29, 2003.
PURPOSES OF THE PLAN
The principal purposes of the Plan are:
- To further the growth, development and financial success of the Company
by providing additional incentives to certain of its non-officer key
employees who have or will be given responsibility for the management or
administration of the Company's business affairs, by assisting them to
become owners of the Company's Common Stock and to benefit directly from
the Company's growth, development and financial success.
- To enable the Company to retain the services of the type of professional,
technical and managerial employees considered essential to the long-range
success of the Company by providing them an opportunity to become owners
of the Company's Common Stock under options.
SUMMARY OF THE PLAN
The principal features of the Plan are summarized below, but the summary is
qualified in its entirety by reference to the Plan itself, which is included as
Appendix A.
Shares Available to be Issued under the Plan. Under the Plan, an aggregate
of 3,200,000 shares of Common Stock may be issued upon the exercise of options.
Options to purchase no more than 50,000 shares of Common Stock may be granted to
any one individual during any calendar year. The shares of Common Stock
available under the Plan upon exercise of stock options may be either previously
authorized and unissued shares or treasury shares. The Plan provides for
appropriate adjustments in the number and kind of shares subject to the Plan and
to outstanding grants thereunder in the event of a stock split, stock dividend
and certain other types of transactions, including restructurings. If any
portion of an option expires or is canceled without having been fully exercised
under the Plan, the shares which were subject to the unexercised portion of such
option will continue to be available for issuance under the Plan.
Administration. The Plan is administered by the Company's Compensation
Committee or a subcommittee thereof (which we refer to as the "Committee"). The
Committee shall consist solely of members of the Board who are both
"non-employee" directors as defined in Rule 16b-3 of the Securities Exchange Act
of 1934 and "outside directors" for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended. The Committee is authorized to determine,
consistent with the Plan, the individuals eligible to participate in the Plan,
the number, exercise price and other terms and conditions of each award to
employees who are eligible under the Plan. The Committee is also authorized to
adopt, amend and rescind rules relating to the administration of the Plan.
Eligibility; Awards under the Plan. Key employees, other than officers,
are eligible to receive options under the Plan. Upon the recommendation of the
chief executive officer of the Company, the Committee is authorized to determine
which employees are key employees and to select from among the key employees the
individuals to whom options are to be granted and to determine the number of
shares to be subject thereto and the terms and conditions thereof, consistent
with the Plan. As of January 31, 2003, the Committee has designated
approximately 400 individuals as "key employees" for purposes of the Plan. Each
grant of stock options is required to be set forth in a separate agreement with
the person receiving the award and indicates the terms and conditions of the
grant, including the date on which the options first become exercisable and the
date on which the options expire. Stock options granted under the Plan are
nonqualified stock options for purposes of the Internal Revenue Code. The
Committee may establish the exercise price for options granted under the Plan,
provided that the exercise price for options may not be less than 100% of fair
market value of
16
Common Stock on the grant date. The Committee may also establish the term of
options granted under the Plan, not to exceed ten years. Unless the Committee
determines otherwise, no option may be exercised during the one year period
after it was granted.
Payment for Shares. The exercise price for all options and the tax
required to be withheld upon exercise may be paid in full in cash at the time of
exercise or may, with the approval of the Committee, be paid in whole or in part
in Common Stock owned by the optionee or issuable to the optionee upon exercise
of an option and having a fair market value on the date of exercise equal to the
aggregate exercise price of the shares to be purchased plus the tax required to
be withheld, or pursuant to a recourse promissory note or a cashless exercise
procedure. However, in no event will an optionee be allowed to exercise an
option with a promissory note or loan from the Company if it is prohibited by
law. The Committee may also authorize a combination of these forms of
consideration.
Amendment and Termination. The Plan may be amended, modified, suspended or
terminated by the Committee, in its discretion at any time. However, the Plan
may not be amended without shareholder approval if such approval is required by
law, New York Stock Exchange rules or if such amendment would (1) expand the
class of individuals eligible for options granted under the Plan, (2) increase
the number of shares authorized for issuance under the Plan, other than
adjustments to reflect certain corporate events, such as stock splits, stock
dividends as described above, (3) increase the limit on the number of shares
which may be subject to options granted to any one individual in a calendar
year, other than for adjustments specifically permitted in the Plan as a result
of corporate events described above, (4) create new forms of equity based awards
for grant under the Plan, (5) extend the term of the Plan beyond January 29,
2013, or (6) amend the provisions of the Plan that otherwise require shareholder
approval. Amendments of the Plan will not, without the consent of the
participant, affect such person's rights under an award previously granted,
unless necessary to cause the Plan or the option to comply with applicable law,
stock exchange rules or accounting rules. No options may be granted under the
Plan after January 29, 2013.
Change in Control. In the event of a dissolution or liquidation of the
Company, or a merger or consolidation of the Company with or into another
corporation, or the acquisition by another corporation or person of 51% or more
of the Company's voting stock or assets, the Committee may provide that
outstanding options shall terminate and the Committee may provide in the
applicable option agreements that each optionee shall, immediately prior to such
dissolution, liquidation, acquisition, merger or consolidation, be entitled to
exercise all of his or her outstanding options.
Miscellaneous. In consideration of the granting of a stock option, each
key employee must agree in the agreement establishing the award to continue
employment with the Company. The option agreements generally provide that
options may continue to be exercisable for a period of time following the
optionee's termination, retirement, death or disability. Options granted under
the Plan may not be assigned or transferred by the optionee, except for transfer
to beneficiaries designated in accordance with the individual agreements
embodying the awards.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The current federal income tax consequences of the Plan are summarized in
the following discussion. This discussion addresses only the general tax
principles applicable to the Plan, and is intended for general information only.
Alternative minimum tax and other federal taxes, as well as foreign, state and
local income taxes are not discussed, and may vary depending on individual
circumstances and from locality to locality.
The options granted under the Plan do not satisfy the requirements of
Section 422 of the Code and thus are nonqualified stock options for purposes of
the Code. As a result, for federal income tax purposes, the recipient of options
granted under the Plan will not have taxable income upon the grant of the
option, nor will the Company then be entitled to any deduction. Generally, upon
exercise of the options, the optionee will realize ordinary income, and the
Company will be entitled to a deduction, in an amount equal to the difference
between the option exercise price and the fair market value of the stock at the
date of exercise.
17
Under Code Section 162(m) of the Code, in general, income tax deductions of
publicly-traded companies may be limited to the extent total compensation
(including base salary, annual bonus, and income from stock option exercises)
for certain executive officers exceeds $1 million in any one taxable year.
However, under Code Section 162(m), the deduction limit does not apply to
certain "performance-based" compensation established by an independent
compensation committee which conforms to certain restrictive conditions stated
under the Code and related regulations. The Plan has been structured with the
intent that options granted under the Plan may meet the requirements for
"performance-based" compensation under Code Section 162(m).
REASONS FOR AMENDMENT AND RESTATEMENT OF THE PLAN
The Plan amends and restates the Second Amended and Restated 1996 Stock
Option Plan for Non-Officer Key Employees of IDEX Corporation (the "Old Plan").
The Old Plan was adopted without the approval of the Company's shareholders. The
Old Plan provided that 2,200,000 shares of Common Stock were authorized for
issuance. As of December 31, 2002, 348,396 shares remained available for future
awards under the Old Plan. In addition, as of December 31, 2002, unexercised
options covering 1,506,340 shares were outstanding under the Old Plan, of which
467,094 were exercisable. The Company amended and restated the Old Plan for
several reasons. One reason was to increase the number of shares of Common Stock
that were authorized for issuance to 3,200,000 as the Board of Directors
determined that it was advisable to continue to provide stock-based incentive
compensation to the Company's non-officer key employees, thereby continuing to
align the interests of such individuals with those of the shareholders, and that
awards under the Plan are an effective means of providing such compensation.
Another reason was to amend the Old Plan so that options granted under the Plan
would satisfy the criteria for "performance based" compensation under Section
162(m) of the Code. The Old Plan would have expired on September 24, 2006, and
the Board of Directors wanted to extend the term of the Plan. Also, the Old Plan
specifically allowed for repricing of options as well as amendment without
shareholder approval unless required by law. The Plan eliminates the ability for
options to be repriced without shareholder approval, as well as requires
shareholder approval of material amendments which are described in the summary
of the Plan above. Although the Company is not required by current laws,
regulations or rules to obtain the approval of the shareholders to amend and
restate the Old Plan or to adopt the Plan, the Board of Directors has determined
that it is advisable to obtain shareholder approval for several reasons (1) in
order to allow grants of options under the Plan to qualify as performance based
under Section 162(m) of the Code, (2) as a matter of good corporate governance
and (3) finally, in light of recently proposed New York Stock Exchange rules,
which would require shareholder approval to adopt or make material revisions to
plans such as the Plan.
18
OTHER INFORMATION
The number of additional grants that may be made under the Plan cannot be
determined. The following table lists the number of grants that have been made
to the groups identified below under the Plan for fiscal year 2002:
NEW PLAN BENEFITS
THIRD AMENDED AND RESTATED 1996 STOCK OPTION PLAN
FOR NON-OFFICER KEY EMPLOYEES OF IDEX CORPORATION
-------------------------------------------------
NAME AND POSITION DOLLAR VALUE($) NUMBER OF UNITS
----------------- --------------- ---------------
Dennis K. Williams.......................................... -- --
Chairman of the Board, President and Chief Executive
Officer
Wayne P. Sayatovic.......................................... -- --
Senior Vice President -- Finance and Chief Financial
Officer
Harley B. Kaplan............................................ -- --
Vice President -- Group Executive
David T. Windmuller......................................... -- --
Vice President -- Group Executive
John L. McMurray............................................ -- --
Vice President -- Operational Excellence
Executive Group (11 persons)................................ -- --
Non-Executive Director Group (6 persons).................... -- --
Non-Executive Officer Employee Group (362 persons).......... $20,835,176 570,690
The closing price of the Company's Common Stock on February 20, 2003 was
$27.75 per share.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets forth certain information with respect to the
Company's equity compensation plans as of December 31, 2002:
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES WEIGHTED-AVERAGE NUMBER OF SECURITIES
TO BE ISSUED UPON EXERCISE PRICE OF REMAINING AVAILABLE FOR
EXERCISE OF OUTSTANDING FUTURE ISSUANCE UNDER
OUTSTANDING OPTIONS, OPTIONS, WARRANTS EQUITY COMPENSATION
PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS PLANS (1)
------------- -------------------- ----------------- -----------------------
Equity compensation plans approved by the
Company's shareholders................. 1,617,200 $29.09 909,874(2)(3)
Equity compensation plans not approved by
the Company's shareholders(4).......... 1,712,362 29.84 646,466(5)
--------- ------ ---------
Total............................... 3,329,562 $29.48 1,556,340
========= ====== =========
---------------
(1) Excludes securities to be issued upon the exercise of outstanding options,
warrants and rights.
(2) Includes 70,098 shares reserved for future issuance in connection with
deferred compensation units under the Amended and Restated IDEX Corporation
Directors Deferred Compensation Plan, 40,306 of which have been allocated to
certain directors in connection with their election to defer certain fees.
(3) Includes 42,406 shares reserved for future issuance in connection with
deferred compensation units under the 1996 Officers Deferred Compensation
Plan which are payable under the 1996 Stock Plan for Officers of IDEX
Corporation, all of which have been allocated to certain officers in
connection with their election to defer certain compensation.
(4) Includes securities available for issuance under the Second Amended and
Restated 1996 Stock Option Plan for Non-Officer Key Employees, the material
terms of which are described above.
(5) Includes 298,070 shares reserved for future issuance in connection with
deferred compensation units under the 1996 Deferred Compensation Plan for
Non-Officer Presidents, 3,363 of which have been
19
allocated to certain presidents in connection with their election to defer
certain compensation. Under the 1996 Deferred Compensation Plan for
Non-Officer Presidents, presidents who are not officers are permitted to
defer a portion of their compensation into an interest-bearing account or
into a deferred compensation units account as of the date that such
compensation would otherwise be payable. The deferred compensation credited
to the interest-bearing account is adjusted on a quarterly basis with
hypothetical earnings for the quarter equal to rates on U.S. government
securities with 10-year maturities as of December 1 of the calendar year
preceding the year for which the earnings were credited, plus 200 basis
points. Amounts credited to the interest-bearing account are compounded at
least annually. The deferred compensation credited to the deferred
compensation units account is converted into a number of Common
Stock-equivalent units ("Deferred Compensation Units") by dividing the
deferred compensation by the fair market value of the Company's Common Stock
on the deferral date. In addition, the value of the dividends payable on
shares of Common Stock are credited to the deferred compensation units
account and converted into Deferred Compensation Units based on the number
of Deferred Compensation Units on the dividend record date, and the fair
market value of Common Stock on the dividend payment date. Deferred
compensation is paid on the January 1 following the number of years for
which deferral was elected (5 or 10), retirement, death or termination of
employment. Deferred Compensation Units are distributed in the form of our
Common Stock.
REQUIRED VOTE FOR APPROVAL AND RECOMMENDATION OF THE BOARD OF DIRECTORS
In order to preserve full deductibility of income recognized by optionees
upon exercise of options granted under the Plan by qualifying such options as
"performance based" under Section 162(m) of the Code, the Company is requesting
that shareholders approve the Plan. The affirmative vote of a majority of the
shares present in person or by proxy at the Annual Meeting, and entitled to
vote, is required to approve the Plan.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE ADOPTION OF THE THIRD AMENDED AND RESTATED 1996 STOCK OPTION
PLAN FOR NON-OFFICER KEY EMPLOYEES OF IDEX CORPORATION.
PROPOSAL 3 -- APPROVAL OF AUDITORS
The Audit Committee has appointed Deloitte & Touche LLP as the Company's
independent auditors for 2003. Representatives of Deloitte & Touche LLP will
attend the Annual Meeting of Shareholders and will have the opportunity to make
a statement if they desire to do so. They will also be available to respond to
appropriate questions.
The Company's Board of Directors Recommends a Vote FOR the ratification of
the appointment of Deloitte & Touche LLP as the Company's Independent Auditors
for 2003.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2004 ANNUAL MEETING
A shareholder desiring to submit a proposal for inclusion in the Company's
Proxy Statement for the 2004 Annual Meeting must deliver the proposal so that it
is received by the Company no later than November 4, 2003. The Company requests
that all such proposals be addressed to Frank J. Notaro, Vice President-General
Counsel and Secretary, IDEX Corporation, 630 Dundee Road, Suite 400, Northbrook,
Illinois 60062, and mailed by certified mail, return receipt requested. In
addition, the Company's By-Laws require that notice of shareholder nominations
for directors and related information be received by the Secretary of the
Company not later than 60 days before the anniversary of the 2003 Annual Meeting
which, for the 2004 Annual Meeting, will be January 25, 2004.
20
OTHER BUSINESS
The Board of Directors does not know of any business to be brought before
the Annual Meeting other than the matters described in the Notice of Annual
Meeting. However, if any other matters are properly presented for action, it is
the intention of each person named in the accompanying proxy to vote said proxy
in accordance with his judgment on such matters.
By Order of the Board of Directors,
/s/ Frank J. Notaro
FRANK J. NOTARO
Vice President-General Counsel
and Secretary
March 5, 2003
Northbrook, Illinois
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2002, INCLUDING THE FINANCIAL STATEMENT SCHEDULES, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED BY SHAREHOLDERS WITHOUT
CHARGE BY SENDING A WRITTEN REQUEST THEREFOR TO WAYNE P. SAYATOVIC, SENIOR VICE
PRESIDENT-FINANCE AND CHIEF FINANCIAL OFFICER, IDEX CORPORATION, 630 DUNDEE
ROAD, SUITE 400, NORTHBROOK, ILLINOIS 60062.
21
THIRD AMENDED AND RESTATED
1996 STOCK OPTION PLAN
FOR NON-OFFICER KEY EMPLOYEES
OF
IDEX CORPORATION
IDEX Corporation, a Delaware corporation (the "Company"), by resolution of
its Board of Directors, (1) originally approved the form of the 1996 Stock
Option Plan for Non-Officer Key Employees of IDEX Corporation (the "Original
Plan") on January 23, 1996, (2) subsequently approved amendments to the Original
Plan by adoption of the First Amended and Restated 1996 Stock Option Plan for
Non-Officer Key Employees of IDEX Corporation on March 27, 2001, and the Second
Amended and Restated 1996 Stock Option Plan for Non-Officer Key Employees of
IDEX Corporation on March 26, 2002 (the "Amended Plan"), and (3) by adoption of
the Third Amended and Restated 1996 Stock Option Plan for Non-Officer Key
Employees of IDEX Corporation (the "Plan") approved amendments to the Amended
Plan on January 29, 2003. The purposes of this Plan are as follows:
(1) To further the growth, development and financial success of the Company
by providing additional incentives to certain of its non-officer key Employees
who have been or will be given responsibility for the management or
administration of the Company's business affairs, by assisting them to become
owners of the Company's Common Stock and thus to benefit directly from its
growth, development and financial success.
(2) To enable the Company to obtain and retain the services of the type of
professional, technical and managerial employees considered essential to the
long-range success of the Company by providing and offering them an opportunity
to become owners of the Company's Common Stock under options.
ARTICLE I
Definitions
Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates to the contrary.
The singular shall include the plural, where the context so indicates.
Section 1.1 -- Board
"Board" shall mean the Board of Directors of the Company.
Section 1.2 -- Change in Control
"Change in Control" shall mean the occurrence of (a) any transaction or
series of transactions which within a 12-month period constitute a change of
management or control where (i) at least 51 percent of the then outstanding
shares of Common Stock are (for cash, property (including, without limitation,
stock in any corporation), or indebtedness, or any combination thereof) redeemed
by the Company or purchased by any person(s), firm(s) or entity(ies), or
exchanged for shares in any other corporation whether or not affiliated with the
Company, or any combination of such redemption, purchase or exchange, or (ii) at
least 51 percent of the Company's assets are purchased by any person(s), firm(s)
or entity(ies) whether or not affiliated with the Company for cash, property
(including, without limitation, stock in any corporation) or indebtedness or any
combination thereof, or (iii) the Company is merged or consolidated with another
corporation regardless of whether the Company is the survivor (except any such
transaction solely for the purpose of changing the Company's domicile or which
does not change the ultimate beneficial ownership of the equity interests in the
Company), or (b) any substantial equivalent of any such redemption, purchase,
exchange, change, transaction or series of transactions, acquisition, merger or
consolidation constituting such a change of management or control. For purposes
hereof, the term "control" shall have the meaning ascribed thereto under the
Exchange Act and the regulations thereunder, and the term "management" shall
mean the chief executive officer of the Company. For purposes of clause (a)(ii)
above or as appropriate for purposes of clause (b) above, the
22
Company shall be deemed to include on a consolidated basis all subsidiaries and
other affiliated corporations or other entities with the same effect as if they
were divisions.
Section 1.3 -- Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.4 -- Committee
"Committee" shall mean the committee of the Board, appointed to administer
the Plan as provided in Section 6.1.
Section 1.5 -- Common Stock
"Common Stock" shall mean the common stock, par value $.01 per share, of
the Company.
Section 1.6 -- Company
"Company" shall mean IDEX Corporation.
Section 1.7 -- Director
"Director" shall mean a member of the Board.
Section 1.8 -- Employee
"Employee" shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company, or of any corporation which is then a Parent Corporation
or a Subsidiary, whether such employee is so employed at the time this Plan is
adopted or becomes so employed subsequent to the adoption of this Plan.
Section 1.9 -- Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.10 -- Fair Market Value
"Fair Market Value" of the Common Stock shall mean as of a given date: (i)
if Common Stock is traded on an exchange then the closing price of a share of
Common Stock as reported in the Wall Street Journal for the first trading date
immediately prior to such date during which a sale occurred; or (ii) if Common
Stock is not traded on an exchange but is quoted on NASDAQ or a successor or
other quotation system, (x) the last sales price (if the Common Stock is then
listed as a National Market Issue under the NASD National Market System) or (y)
the mean between the closing representative bid and asked prices (in all other
cases) for the Common Stock on the date immediately prior to such date on which
sales prices or bid and asked prices, as applicable, are reported by NASDAQ or
such successor quotation system; or (iii) if such Common Stock is not publicly
traded on an exchange and not quoted on NASDAQ or a successor quotation system,
the mean between the closing bid and asked prices for the Common Stock on the
day previous to such date, as determined in good faith by the Committee; or (iv)
if the Common Stock is not publicly traded, the fair market value established by
the Committee acting in good faith.
Section 1.11 -- Officer
"Officer" shall mean an officer of the company, as defined in Rule 16a-1(f)
under the Exchange Act, as such Rule may be amended in the future.
23
Section 1.12 -- Option
"Option" shall mean an option to purchase Common Stock of the Company,
granted under the Plan.
Section 1.13 -- Optionee
"Optionee" shall mean an Employee to whom an Option is granted under the
Plan.
Section 1.14 -- Parent Corporation
"Parent Corporation" shall mean any corporation in an unbroken chain of
corporations ending with the Company if each of the corporations other than the
Company then owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
Section 1.15 -- Plan
"Plan" shall mean this Third Amended and Restated 1996 Stock Option Plan
for Non-Officer Key Employees of IDEX Corporation.
Section 1.16 -- Retirement
"Retirement" shall mean termination of employment with the Company upon
reaching retirement age, or earlier, at the election of the Employee, in
accordance with the Company's policy on retirement.
Section 1.17 -- Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.18 -- Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.19 -- Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
Section 1.20 -- Termination of Employment
"Termination of Employment" shall mean the time (which, in the absence of
any other determination by the Committee, shall be deemed to be the last day
actually worked by the Optionee) when the employee-employer relationship between
the Optionee and the Company, a Parent Corporation or a Subsidiary is terminated
for any reason, with or without cause, including, but not by way of limitation,
a termination by resignation, discharge, death or Retirement, but excluding
terminations where there is a simultaneous reemployment by the Company, a Parent
Corporation or a Subsidiary. The Committee, in its absolute discretion, shall
determine the effect of all other matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment.
24
ARTICLE II
General Conditions
Section 2.1 -- Shares Subject to Plan
The shares of stock subject to Options shall be shares of the Common Stock.
The aggregate number of such shares which may be issued upon exercise of Options
shall not exceed 3,200,000 shares and furthermore, the maximum number of shares
of Common Stock which may be subject to Options granted under the Plan to any
individual in any calendar year shall not exceed 50,000, and the method of
counting such shares shall conform to any requirements applicable to
performance-based compensation under Section 162(m) of the Code. The shares of
Common Stock issuable upon exercise of such Options may be either previously
authorized and unissued shares or treasury shares.
Section 2.2 -- Unexercised Options
If any Option expires or is cancelled without having been fully exercised,
the number of shares subject to such Option but as to which such Option was not
exercised prior to its expiration or cancellation may again be optioned
hereunder, subject to the limitations of Section 2.1.
Section 2.3 -- Changes in Company's Shares
In the event that the outstanding shares of Common Stock of the Company are
hereafter changed into or exchanged for a different number or kind of shares or
other securities of the Company, or of another corporation, by reason of
reorganization, merger, consolidation recapitalization, reclassification, stock
split-up, reverse stock split, stock dividend, combination of shares or any
similar event, appropriate adjustments shall be made by the Committee in the
number and kind of shares for the purchase of which Options may be granted,
including adjustments of the limitations in Section 2.1 on the maximum number
and kind of shares which may be issued on exercise of Options or that may be
granted as Options to any one individual in any calendar year. In the event of
an adjustment contemplated by this Section 2.3 in any outstanding Options, the
Committee shall make an appropriate and equitable adjustment to the end that
after such event the Optionee's proportionate interest shall be maintained as
before the occurrence of such event. Such adjustment in any outstanding Options
shall be made without change in the total price applicable to the Option or the
unexercised portion of the Option (except for any change in the aggregate price
resulting from rounding-off of share quantities or prices) and with any
necessary corresponding adjustment in the Option price per share. In the event
of a "spin-off" or other substantial distribution of assets of the Company which
has a material diminutive effect upon Fair Market Value, the Committee may in
its discretion make an appropriate and equitable adjustment to the Option
exercise price to reflect such diminution. Any such adjustment made by the
Committee shall be final and binding upon all Optionees, the Company and all
other interested persons.
Notwithstanding the foregoing, in the event of such a reorganization,
merger, consolidation, recapitalization, reclassification, stock split-up,
reverse stock split, stock dividend or combination, or other adjustment or event
which results in shares of Common Stock being exchanged for or converted into
cash, securities or other property, the Company will have the right to terminate
this Plan as of the date of the exchange or conversion, in which case all
Options under this Plan shall become the right to receive such cash, securities
or other property, net of any applicable exercise price.
Section 2.4 -- Conditions to Issuance of Stock Certificates
The Company shall not be required to issue or deliver any certificate or
certificates for shares of Common Stock purchased upon the exercise of any
Option, or portion thereof, prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock exchanges on which
the Common Stock is then listed; and
25
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable; and
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of all
amounts which it is required to withhold under federal, state or local law in
connection with the exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of
the Option as the Committee may establish from time to time for reasons of
administrative convenience.
Section 2.5 -- Merger, Consolidation, Acquisition, Liquidation or Dissolution
Notwithstanding any other provision of the Plan, in its absolute
discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide by the terms of any Option that such Option cannot be
exercised after a Change in Control or the liquidation or dissolution of the
Company (collectively, "Control Events"); and if the Committee so provides, it
may, in its absolute discretion, on such terms and conditions as it deems
appropriate, also provide, either by the terms of any Option or by a resolution
adopted prior to the occurrence of such Control Event, that, for some period of
time beginning prior to and ending as of (and including) the time of such event,
such Option shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in Section 4.3(a), Section 4.3(b) or
any installment provisions of any Option.
Section 2.6 -- Rights as Shareholders
The holders of Options shall not be, nor have any of the rights or
privileges of, shareholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.
Section 2.7 -- Transfer Restrictions
The Committee, in its absolute discretion, may impose such restrictions on
the transferability of the shares purchasable upon the exercise of an Option as
it deems appropriate. Any such restriction shall be set forth in the respective
Stock Option Agreement and may be referred to on the certificates evidencing
such shares.
Section 2.8 -- No Right to Continued Employment
Nothing in this Plan or in any Stock Option Agreement shall confer upon any
Optionee any right to continue in the employ of the Company, any Parent
Corporation or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company, its Parent Corporations and its Subsidiaries, which are
hereby expressly reserved, to discharge any Optionee at any time for any reason
whatsoever, with or without cause.
ARTICLE III
Granting of Options
Section 3.1 -- Eligibility
Any key Employee, other than an Officer, shall be eligible to be granted
Options under the Plan, as provided in Section 3.2.
26
Section 3.2 -- Granting of Options
(a) Upon the recommendation of the chief executive officer of the Company,
the Committee shall from time to time, in its absolute discretion:
(i) Determine which Employees are key Employees and select from among
the key Employees (including those to whom Options have been previously
granted under the Plan) such of them as in its opinion should be granted
Options; and
(ii) Determine the number of shares to be subject to such Options
granted to such selected key Employees; and
(iii) Determine the terms and conditions of such Options, consistent
with the Plan.
(b) Upon the selection of an Employee to be granted an Option, the
Committee shall instruct the Secretary to issue such Option and may impose such
conditions on the grant of such Option as it deems appropriate.
ARTICLE IV
Terms of Options
Section 4.1 -- Option Agreement
Each Option shall be evidenced by a written Stock Option Agreement, which
shall be executed by the Optionee and an authorized Officer of the Company and
which shall contain such terms and conditions as the Committee shall determine,
not inconsistent with the Plan.
Section 4.2 -- Option Price
The price per share of the shares subject to each Option shall be set by
the Committee; provided, however, that the price per share shall not be less
than 100% of the Fair Market Value as of the date such Option is granted.
Section 4.3 -- Commencement of Exercisability
(a) Except as the Committee may otherwise provide, no Option may be
exercised in whole or in part during the first year after such Option is
granted.
(b) Subject to the provisions of Sections 4.3(a) and 4.3(c), Options shall
become exercisable at such times and in such installments (which may be
cumulative) as the Committee shall provide in the terms of each individual
Option; provided, however, that by a resolution adopted after an Option is
granted the Committee may, on such terms and conditions as it may determine to
be appropriate and subject to Sections 4.3(a) and 4.3(c), accelerate the time at
which such Option or any portion thereof may be exercised.
(c) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable; provided, however, that in the
event of a Termination of Employment resulting from the Optionee's death,
disability or Retirement, all Options shall become exercisable, effective
immediately upon the occurrence of such event.
Section 4.4 -- Expiration of Options
(a) No Option may be exercised to any extent by anyone after, and every
Option shall expire no later than, the expiration of ten years from the date the
Option was granted.
(b) Subject to the provisions of Section 4.4(a), the Committee shall
provide, in the terms of each individual Option, when such Option expires and
becomes unexercisable.
27
Section 4.5 -- Consideration
In consideration of the granting of an Option, the Optionee shall agree, in
the written Stock Option Agreement, to remain in the employ of the Company, a
Parent Corporation or a Subsidiary, with such duties and responsibilities as the
Company shall from time to time prescribe.
ARTICLE V
Exercise of Options
Section 5.1 -- Person Eligible to Exercise
During the lifetime of the Optionee, only such Optionee may exercise an
Option (or any portion thereof) granted to such Optionee. After the death of the
Optionee, any exercisable portion of an Option may, prior to the time when such
portion becomes unexercisable under the Plan or the applicable Stock Option
Agreement, be exercised by such Optionee's Beneficiary. "Beneficiary" shall mean
any one or more persons, corporations, trusts, estates, or any combination
thereof, last designated by an Optionee in accordance with the applicable Stock
Option Agreement.
Section 5.2 -- Partial Exercise
At any time and from time to time prior to the time when any exercisable
Option or exercisable portion thereof becomes unexercisable under the Plan or
the applicable Stock Option Agreement, such Option or portion thereof may be
exercised in whole or in part; provided, however, that the Company shall not be
required to issue fractional shares and the Committee may, by the terms of the
Option, require any partial exercise to be with respect to a specified minimum
number of shares.
Section 5.3 -- Manner of Exercise
An exercisable Option, or any exercisable portion thereof, may be exercised
solely by delivery to the Secretary or the Secretary's office of all of the
following prior to the time when such Option or such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement:
(a) Notice in writing signed by the Optionee or other person then entitled
to exercise such Option or portion, stating that such Option or portion is
exercised, such notice complying with all applicable rules established by the
Committee;
(b) Full payment (in cash or by check) for the shares with respect to which
such Option or portion thereof is exercised, including payment to the Company
(or other employer corporation) of all amounts which it is required to withhold
under federal, state or local law in connection with the exercise of the Option.
However, in the discretion of the Committee, payment may be made, in whole or in
part, through (i) the delivery of shares of Common Stock owned by the Optionee
for at least six months, duly endorsed for transfer to the Company with a Fair
Market Value on the date of delivery equal to that portion of the aggregate
exercise price of the Option or exercised portion thereof plus the amount of the
minimum applicable withholding tax for which such payment is permitted by the
Committee; (ii) the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise
equal to that portion of the aggregate exercise price of the Option or exercise
portion thereof, plus the amount of the minimum applicable withholding tax, for
which such payment is permitted by the Committee; (iii) the delivery of a full
recourse promissory note bearing interest (at no less than such rate as shall
then preclude the imputation of interest under the Code) and payable upon such
terms as may be prescribed by the Committee; (iv) to the extent permitted by
law, a "cashless exercise procedure" satisfactory to the Committee which permits
the Optionee to deliver an exercise notice to a broker-dealer, who then sells
Option shares, delivers the proceeds of the sale, less commission, to the
Company, which delivers such proceeds, less the exercise price and the minimum
required withholding taxes, to the Optionee, or (v) any combination of the
consideration provided in the foregoing subparagraphs (i), (ii), (iii) and (iv).
In the case of a promissory note, the Committee may also prescribe the form of
such note and the security (if any) to be given for such
28
note. Notwithstanding the foregoing, the Option may not be exercised by delivery
of a promissory note or by a loan from the Company where such loan or other
extension of credit is prohibited by law;
(c) Such representations and documents as the Committee, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share certificates
and issuing stop-transfer orders to transfer agents and registrars; and
(d) In the event that the Option or portion thereof shall be exercised
pursuant to Section 5.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the Option
or portion thereof.
ARTICLE VI
Administration
Section 6.1 -- Committee
The Compensation Committee (or another committee or a subcommittee of the
Board assuming the functions of the Committee under the Plan) shall administer
the Plan. The Committee shall consist of two or more Directors, appointed by and
holding office at the pleasure of the Board, each of whom must be both a
"non-employee director" as defined by Rule 16b-3 of the Exchange Act and an
"outside director" for purposes of Section 162(m) of the Code. The failure of
the constitution of the Committee to comply with the foregoing requirements
shall not adversely affect the validity of any shares issued upon exercise of
Options under the Plan. Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time. Vacancies
in the Committee shall be filled by the Board.
Section 6.2 -- Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general administration
of the Plan in accordance with its provisions. The Committee shall have the
power to interpret the Plan and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. In its absolute discretion, the Board
may at any time and from time to time exercise any and all rights and duties of
the Committee under this Plan except with respect to matters which under Section
162(m) of the Code, or any regulations or rules issued thereunder, are required
to be determined in the sole discretion of the Committee.
Section 6.3 -- Majority Rule
The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.
Section 6.4 -- Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for their services
as members as may be determined by the Board. All expenses and liabilities
incurred by members of the Committee in connection with the administration of
the Plan shall be borne by the Company. The Committee may employ attorneys,
consultants, accounts, appraisers, brokers or other persons. The Committee, the
Company and its Officers and Directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon all Optionees, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
the Options, and all members of the Committee shall be fully protected by the
Company in respect to any such action, determination or interpretation.
29
ARTICLE VII
Other Provisions
Section 7.1 -- Options Not Transferable
No Option or interest or right therein or part thereof shall be liable for
the debts, contracts or engagements of the Optionee or the Optionee's successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that nothing in this Section 7.1 shall
prevent transfers to a Beneficiary.
Section 7.2 -- Amendment, Suspension or Termination of the Plan
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Committee.
Neither the amendment, suspension nor termination of the Plan shall, without the
consent of the holder of an Option, impair any rights or obligations under any
Option theretofore granted, except that an amendment may be made to cause the
Plan or any Option to comply with applicable law, stock exchange rules or
accounting rules. In addition, no such amendment shall be made without the
approval of the Company's shareholders to the extent such approval is required
by law, applicable stock exchange rules or if such amendment would:
(a) expand the classes of persons to whom Options may be made under Section
3.1 of this Plan;
(b) increase the number of shares of Common Stock authorized for grant
under Section 2.1 of this Plan, other than as provided by Section 2.3;
(c) increase the number of shares which may be granted under Options to any
one individual under Section 2.1 of this Plan, other than as provided by Section
2.3;
(d) allow the creation of additional types of equity based awards;
(e) permit decreasing the option price on any outstanding Option;
(f) extend the term of the Plan beyond January 29, 2013; or
(g) change any of the provisions of this Section 7.2.
Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules as
well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval. No Option may be
granted during any period of suspension nor after termination of the Plan, and
in no event may any Option be granted under this Plan after January 29, 2013.
Section 7.3 -- Effect of Plan Upon Other Option and Compensation Plans
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company, any Parent Corporation or any Subsidiary (a) to establish any other
forms of incentives or compensation for employees of the Company, any Parent
Corporation or any Subsidiary or (b) to grant or assume options otherwise than
under this Plan in connection with any proper corporate purpose, including, but
not by way of limitation, the grant or assumption of options in connection with
the acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, firm or association.
30
Section 7.4 -- Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
Section 7.5 -- Conformity to Securities Laws
The Plan is intended to conform to the extent necessary with all provisions
of the Securities Act, the Exchange Act and the Code and any and all regulations
and rules promulgated by the Securities and Exchange Commission and Internal
Revenue Service thereunder. Notwithstanding anything herein to the contrary, the
Plan shall be administered, and Options shall be granted and may be exercised,
only in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, the Plan and Options granted hereunder shall
be deemed amended to the extent necessary to conform to such laws, rules and
regulations.
Section 7.6 -- Governing Law
This Plan and any agreements hereunder shall be administered, interpreted
and enforced in accordance with the laws of the State of Illinois (without
reference to the choice of law provisions of Illinois law).
* * * *
I hereby certify that the foregoing Plan was duly approved by the Board of
Directors of IDEX Corporation effective January 29, 2003
Executed on this 29th day of January, 2003.
/s/ Frank J. Notaro
FRANK J. NOTARO
Secretary
31
IDEX CORPORATION
630 DUNDEE ROAD
NORTHBROOK, ILLINOIS 60062
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints BRADLEY J. BELL, DENNIS K. WILLIAMS and
FRANK J. NOTARO, and each of them, as Proxies with full power of substitution,
and hereby authorize(s) them to represent and to vote, as designated below, all
the shares of common stock of IDEX Corporation held of record by the undersigned
on February 20, 2003, at the Annual Meeting of shareholders to be held on March
25, 2003, or at any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
P R O X Y
DETACH HERE
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(Continued from the other side)
(1) Election of Director -- Class II. Nominee: Michael T. Tokarz
[ ] FOR [ ] WITHHOLD
(2) Approval of the Third Amended and Restated 1996 Stock Option Plan for
Non-Officer Key Employees of IDEX Corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Approval of Deloitte & Touche LLP as auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
DATED: , 2003
------------------------------------
SIGNATURE
------------------------------------
SIGNATURE IF HELD JOINTLY
PLEASE SIGN EXACTLY AS NAME APPEARS
ABOVE. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN
SIGNED AS ATTORNEY, AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
DETACH HERE
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