UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Danaher Corporation
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(Name of Registrant as Specified In Its Charter)
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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)(4) and 0-11.
(1) Title of each class 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
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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Notes:
DANAHER CORPORATION
2099 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 7, 2002
To the Shareholders:
Notice is hereby given that the 2002 Annual Meeting of Shareholders of
Danaher Corporation, a Delaware corporation (the "Company"), will be held at the
Mayflower Hotel, 1127 Connecticut Avenue, N.W., Washington, D.C. 20037, on May
7, 2002 at 3:00 p.m., local time, for the following purposes:
1. To elect three Directors to hold office for a term of
three years and until their successors are elected and
qualified.
2. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
Common Stock of the Company to a total of five hundred million
(500,000,000) shares, $.01 par value per share.
3. To consider and act upon such other business as may
properly come before the meeting.
The Board of Directors has fixed the close of business on March 25,
2002 as the record date for determination of shareholders entitled to notice of
and to vote at the meeting and any adjournment thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card as promptly as possible in the enclosed stamped
envelope, the postage on which will be valid if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
PATRICK W. ALLENDER
Secretary
April --, 2002
EVERY SHAREHOLDER'S VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND MAIL THE
ENCLOSED PROXY CARD AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU PLAN TO
ATTEND THE DANAHER CORPORATION ANNUAL MEETING. [ ]
PROXY STATEMENT
DANAHER CORPORATION
2099 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
(202) 828-0850
2002 ANNUAL MEETING OF SHAREHOLDERS
MAY 7, 2002
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Danaher Corporation, a Delaware corporation (the
"Company"), of proxies for use at the 2002 Annual Meeting of Shareholders
("Annual Meeting") to be held at the Mayflower Hotel, 1127 Connecticut Avenue,
N.W., Washington, D.C. 20037 on May 7, 2002 at 3:00 p.m., local time, and at any
and all adjournments thereof. The Company's principal address is 2099
Pennsylvania Avenue, N.W., Washington, D.C. 20006. The date of mailing of this
Proxy Statement is on or about April 12, 2002. The purpose of the meeting is to
elect three directors of the Company; to approve an amendment to the Company's
Certificate of Incorporation to increase the total number of authorized shares
of Common Stock to five hundred million; and to transact such other business as
may properly come before the meeting.
OUTSTANDING STOCK AND VOTING RIGHTS
In accordance with the By-laws of the Company, the Board of Directors
has fixed the close of business on March 25, 2002 as the record date for
determining the shareholders entitled to notice of, and to vote at, the Annual
Meeting. Only shareholders of record on that date will be entitled to vote. A
shareholder who submits a proxy on the accompanying form has the power to revoke
it by notice of revocation directed to the proxy holders of the Company at any
time before it is voted. A subsequently dated proxy, when filed with the
Secretary of the Company, will also constitute revocation. Proxies will be voted
as specified on the proxy card and, in the absence of specific instructions,
will be voted for the proposals described in this Proxy Statement and in the
discretion of the proxy holders on any other matter which properly comes before
the meeting. A shareholder who has given a proxy may nevertheless attend the
meeting and revoke the proxy by voting in person. The Board of Directors has
selected Steven M. Rales and Mitchell P. Rales to act as proxies with full power
of substitution.
Solicitation of proxies may be made by mail, personal interview,
telephone and telegraph by officers and other management employees of the
Company, who will receive no additional compensation for their services. The
total expense of the solicitation will be borne by the Company and may include
reimbursement paid to brokerage firms and others for their expenses in
forwarding material regarding the Annual Meeting to beneficial owners.
The only outstanding securities of the Company entitled to vote at the
Annual Meeting are shares of Common Stock. As of the close of business on March
25, 2002, the record date for determining the shareholders of the Company
entitled to vote at the Annual Meeting, 150,909,505 shares of the Common Stock
of the Company, $.01 par value ("Company Common Stock"), were issued and
outstanding. Each outstanding share of Company Common Stock entitles the holder
to one vote on all matters brought before the Annual Meeting. The quorum
necessary to conduct business at the Annual Meeting consists of a majority of
the outstanding shares of Company Common Stock as of the record date.
The election of directors nominated will require a plurality of the
votes cast in person or by proxy at the Annual Meeting by holders of shares of
the Company's Common Stock. In the election of directors, each stockholder is
entitled to cast one vote for each director to be elected; cumulative voting is
not permitted. Approval of the amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock to a
total of five hundred million shares, requires the affirmative vote of the
holders of a majority of the shares of the Company's Common Stock entitled to
vote at the Annual Meeting.
Abstentions and "broker non-votes" are counted as present in
determining whether the quorum requirement is satisfied. For purpose of the
election of directors, abstentions and broker non-votes are not considered to be
votes cast and do not affect the plurality vote required for elections of
directors. Abstentions and broker non-votes on Proposal 2 have the effect of a
vote against this proposal.
BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK BY
DIRECTORS, OFFICERS AND PRINCIPAL SHAREHOLDERS
As of March 25, 2002, the beneficial ownership of Company Common Stock
by directors and the nominees for director, by each of the executive officers
named in the Summary Compensation Table, by any principal shareholders
beneficially owning more than five percent of the Company's Common Stock and by
all present executive officers and directors of the Company as a group, was as
follows:
Number of Shares Percent
Name Beneficially Owned** Of Class
--------------------------------------------------------------- --------
Mortimer M. Caplin 159,874 (7) *
H. Lawrence Culp, Jr. 312,938 (3) *
Donald J. Ehrlich 64,000 (5) *
Walter G. Lohr, Jr. 172,000 (6) *
Mitchell P. Rales 33,307,050 (1) 22.0%
Steven M. Rales 35,325,019 (1) 23.3%
Alan G. Spoon 8,000 (11) *
A. Emmet Stephenson, Jr. 192,120 (2) *
Patrick W. Allender 758,532 (4) *
Philip W. Knisely 2,500 *
Steven E. Simms 275,597 (8) *
AXA Financial, Inc. 9,781,225 (12) 6.5%
FMR Corp. 9,525,856 (9) 6.3%
Massachusetts Financial Services Co. 10,739,298 (13) 7.1%
All executive officers and
directors as a group
(includes 20 persons) 39,741,908 (1)(10) 26.0%
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(1) The aggregate holdings for Steven and Mitchell Rales include (i) all of the
31,314,888 shares of Company Common Stock owned by Equity Group Holdings
LLC, Equity Group Holdings II LLC, and Equity Group Holdings III LLC, of
which Steven Rales and Mitchell Rales are the only members, and (ii)
4,010,131 and 1,992,162 shares of Company Common Stock owned directly or
through the Danaher 401(k) Plan by Steven Rales and Mitchell Rales,
respectively. Steven and Mitchell Rales each disclaim beneficial ownership
of those shares of Company Common Stock that are owned directly or through
the Danaher 401(k) Plan by the other. Combined, Steven and Mitchell Rales
beneficially own 37,317,181 shares, or 24.6% of common shares outstanding.
Their business address, and that of Equity Group Holdings LLC, Equity Group
Holdings II LLC, and Equity Group Holdings III LLC, is 2099 Pennsylvania,
N.W., Washington, D.C. 20006.
(2) Includes shares of Company Common Stock held in the name of Stephenson
Ventures, a limited partnership of which the sole general partner is A.
Emmet Stephenson, Jr. Mr. Stephenson has the option to acquire 20,000
shares of Company stock.
(3) Mr. Culp has the option to acquire 312,000 shares of Company Common Stock.
(4) Mr. Allender has the option to acquire 513,800 shares of Company Common
Stock. Includes shares held by family members and a family limited
partnership of which Mr. Allender disclaims beneficial ownership.
(5) Mr. Ehrlich has the option to acquire 20,000 shares of Company Common
Stock.
(6) Mr. Lohr has the option to acquire 20,000 shares of Company Common Stock.
(7) Mr. Caplin has the option to acquire 16,000 shares of Company Common Stock.
(8) Mr. Simms has the option to acquire 272,000 shares of Company Common Stock.
(9) FMR Corp.'s address is 82 Devonshire Street, Boston, MA 02109.
(10) Includes 1,461,770 shares underlying options exercisable within 60 days as
of March 25, 2002.
(11) Mr. Spoon has the option to acquire 6,000 shares of Company Common Stock.
(12) AXA Financial, Inc.'s address is 1290 Avenue of the Americas, New York, NY
10104.
(13) Massachusetts Financial Services Co.'s address is 500 Boylston Street,
Boston, MA 02116.
* Represents less than 1% of the outstanding Company Common Stock.
** Only options exercisable within 60 days and shares underlying such
options are included in the table.
Apart from Steven M. Rales, Mitchell P. Rales, AXA Financial, Inc., FMR Corp.
and Massachusetts Financial Services Co., the Company knows of no other person
that beneficially owns more than 5% of its Common Stock.
PROPOSAL 1.
ELECTION OF DIRECTORS OF THE COMPANY
The Company's Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes with the number of directors in
each class to be as equal as possible. The Board has fixed the number of
directors of the Company at eight. At the 2002 Annual Meeting of Shareholders,
shareholders will elect three directors to serve until the 2005 Annual Meeting
of Shareholders and until their successors are duly elected and qualified. The
Board of Directors has nominated Messrs. H. Lawrence Culp, Jr., Mitchell P.
Rales and A. Emmet Stephenson, Jr. to serve as directors in the class whose term
expires in 2005. Messrs. Steven M. Rales and Alan G. Spoon will continue to
serve as directors in the class whose term expires in 2004. Messrs. Mortimer M.
Caplin, Donald J. Ehrich and Walter G. Lohr, Jr. will continue to serve as
directors in the class whose term expires in 2003.
The names of the nominees and the directors continuing in office,
their principal occupations, the years in which they became directors and the
years in which their terms expire are set forth below. In the event a nominee
shall decline or be unable to serve, the proxies will be voted in the discretion
of the proxy holders. The Company knows of no reason that this will occur.
NOMINEES FOR ELECTION AT THIS YEAR'S ANNUAL MEETING
TO SERVE IN THE CLASS WHOSE TERM EXPIRES IN 2005
Director Term
Name Age Principal Occupation Since Expires
----------------------------------------------------------------------------------------------------------------
H. Lawrence Culp, Jr. (d,e) 39 President and Chief Executive 2001 2005
Officer of the Company since
2001; during the past five years,
he has served in general manage-
ment positions within the Company,
including Chief Operating Officer.
Mitchell P. Rales (b,d,e) 45 Chairman of the Executive Committee 1983 2005
of the Company since 1990; during
the past five years, he has been a
principal in a number of private
business entities with interests in
manufacturing companies, media
operations and publicly traded
securities; Director of Imo Industries,
Inc.
A. Emmet Stephenson,Jr. (a) 56 Chairman of StarTek, Inc. for more 1986 2005
than five years; President of
Stephenson and Co., a private invest-
ment firm in Denver, Colorado for more
than five years.
CURRENT DIRECTORS WHOSE TERM WILL CONTINUE AFTER THIS MEETING
Director Term
Name Age Principal Occupation Since Expires
----------------------------------------------------------------------------------------------------------------
Steven M. Rales (b,d,e) 50 Chairman of the Board of the 1983 2004
Company since 1984; during the past
five years, he has been a principal in
a number of private business entities
with interests in manufacturing
companies, media operations and
publicly traded securities; Director of
Imo Industries, Inc.
Alan G. Spoon (a) 50 General Partner of Polaris Venture 1999 2004
Partners; Director of American
Management Systems, Inc., Human
Genome Sciences, Inc. and
Ticketmaster Online-City Search, Inc.
Mortimer M.Caplin (a,c) 85 Senior Member of Caplin & Drysdale, 1990 2003
a law firm in Washington, D.C., for
over five years; Director of Fairchild
Corporation and Presidential Realty
Corporation.
Donald J. Ehrlich (a,c) 64 Former President, Chairman and Chief 1985 2003
Executive Officer of Wabash National
Corp.; Director of Indiana Secondary
Market for Educational Loans, Inc. and
Lafayette Community Bank
Walter G. Lohr, Jr. (c,e) 58 Partner of Hogan & Hartson, a law firm 1983 2003
a law firm in Baltimore, Maryland for
over five years.
----------
(a) Member of the Compensation and Organization Committee of the Board of
Directors.
(b) Mitchell P. Rales and Steven M. Rales are brothers.
(c) Member of the Audit Committee of the Board of Directors.
(d) Member of the Executive Committee of the Board of Directors.
(e) Member of the Finance Committee of the Board of Directors.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors had a total of eleven meetings during 2001. All
directors attended at least 75% of the meetings of the Board of Directors and of
the Committees of the Board of Directors on which they served during 2001.
The Executive Committee acts on behalf of the Board of Directors of the
Company between meetings of the Board of Directors. The Executive Committee,
comprised of Messrs. H. Lawrence Culp, Jr., Steven M. Rales and Mitchell P.
Rales, met three times in 2001.
The Audit Committee reviews the financial statements of the Company to
confirm that they reflect fairly the financial condition of the Company and to
appraise the soundness, adequacy and application of accounting and operating
controls. The Audit Committee recommends independent auditors to the Board of
Directors, reviews the scope of the audit function of the independent auditors
and reviews audit reports rendered by the independent auditors. The members of
the Audit Committee are independent as defined in the New York Stock Exchange's
listing standards. The Audit Committee met seven times during 2001.
The Compensation and Organization Committee reviews the Company's
compensation philosophy and programs, and exercises authority with respect to
the payment of direct salaries and incentive compensation to Company officers.
The Compensation Committee is also responsible for the oversight of the stock
option plans of the Company. The Compensation and Organization Committee met one
time in 2001.
The Finance Committee was formed in December 1999 to oversee the
financial affairs and policies of the Company including matters relating to the
Company's capital structure and the policies and practices relating to the
Company's retirement and pension plans. The Finance Committee met one time in
2001.
The Company has no Nominating Committee of its Board of Directors.
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
Executive Officers of the Company are:
Officer
Name Age Position Since
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Steven M. Rales 50 Chairman of the Board 1984
Mitchell P. Rales 45 Chairman of the Executive
Committee 1984
H. Lawrence Culp, Jr. 39 Chief Executive Officer,
President and Director 1995
Patrick W. Allender 55 Executive Vice President,
Chief Financial Officer
and Secretary 1987
Philip W. Knisely 47 Executive Vice President 2000
Steven E. Simms 46 Executive Vice President 1996
William J. Butler 46 Vice President and Group
Executive 1999
Thomas S. Gross 47 Vice President and Group
Executive 1999
Jeffrey A. Svoboda 50 Vice President and Group
Executive 2001
Daniel L. Comas 38 Vice President-Corporate
Development 1996
James H. Ditkoff 55 Vice President-Finance
and Tax 1991
W. Bruce Graham 47 Vice President-Danaher
Business System 2000
Dennis A. Longo 45 Vice President-Human
Resources 1997
Christopher C. McMahon 39 Vice President-Controller 1999
Daniel A. Pryor 34 Vice President- Strategic
Development 2000
Steven M. Rales has served as Chairman of the Board since January 1984.
In addition, during the past five years, he has been a principal in a number of
private business entities with interests in manufacturing companies, media
operations and publicly traded securities. He is also a director of Imo
Industries, Inc.
Mitchell P. Rales has served as a director of the Company since January
1984. In addition, during the past five years, he has been a principal in a
number of private business entities with interests in manufacturing companies,
media operations and publicly traded securities. He is also a director of Imo
Industries, Inc.
H. Lawrence Culp, Jr. was appointed President and Chief Executive
Officer in 2001 and Chief Operating Officer in 2000. He has served in general
management positions within the Company for more than the past five years.
Patrick W. Allender has served as Chief Financial Officer of the
Company since March 1987 and was appointed Executive Vice President in 1999.
Philip W. Knisely was appointed Executive Vice President in 2000. He
had previously served Colfax Corporation (a diversified industrial manufacturing
company) as President and Chief Executive Officer. Colfax Corporation is
majority-owned by Steven and Mitchell Rales.
Steven E. Simms was appointed Executive Vice President in 1999. He
joined the Company in 1996 as Vice President and Group Executive and had
previously served Black & Decker, most recently as President - Worldwide
Accessories Business.
William J. Butler was appointed Vice President and Group Executive in
1999. He has served in general management positions within the Company for more
than the past five years.
Thomas S. Gross was appointed Vice President and Group Executive in
1999. He had previously served Xycom Automation Inc. (a provider of automation
hardware and software) as President. Prior to joining Xycom in 1998, he served
Allen-Bradley/Rockwell Automation (a provider of industrial control and
automation products) in various management positions for more than five years.
Jeffrey A. Svoboda was appointed Vice President and Group Executive in
2001. He had previously served Fortune Brands Corporation in various management
positions with their Moen Incorporated business unit.
Daniel L. Comas was appointed Vice President-Corporate Development in
1996. He has served the Company in an executive capacity in the corporate
development area for more than the past five years.
James H. Ditkoff has served as Vice President-Finance and Tax since
January 1991.
W. Bruce Graham was appointed Vice President-Danaher Business Systems
(DBS) in 2000. He previously served in general management positions within the
Company's Hand Tool Group for more than the past five years.
Dennis A. Longo was appointed Vice President-Human Resources in 1997.
He has served the Company as a human resources executive for more than the past
five years.
Christopher C. McMahon was appointed Vice President-Controller in 1999.
He has served in financial management positions within the Company for more than
the past five years.
Daniel A. Pryor was appointed Vice President-Strategic Development in
2000. He has served in general management positions within the Company for more
than the past five years.
COMPENSATION OF DIRECTORS
AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
compensation for the last three completed fiscal years of the Chief Executive
Officer and the executive officers of the Company who, in addition to the Chief
Executive Officer, received the highest compensation during 2001.
SUMMARY COMPENSATION TABLE
===================================================================================================================================
LONG TERM
COMPENSATION
ANNUAL COMPENSATION
----------------------------
AWARDS
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(a) (b) (c) (d) (e) (f) (g) (h)
Other Restricted Securities
Name and Annual Stock Underlying All Other
Principal Salary Bonus Compensation Awards Options Compensation(1)
Position Year ($) ($) ($) ($) (#) ($)
-----------------------------------------------------------------------------------------------------------------------------------
2001 577,500 630,000 - - - 57,726
H. Lawrence Culp, Jr. 2000 480,000 830,000 - - 1,000,000 25,000
President and CEO 1999 315,000 340,000 - - 20,000 14,000
-----------------------------------------------------------------------------------------------------------------------------------
George M. Sherman 2001 225,000 216,000 - - - 62,000
Former President and 2000 675,000 1,691,000 - - - 80,000
CEO (2) 1999 675,000 1,550,000 - - - 69,000
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Patrick W. Allender 2001 375,375 285,000 - - - 55,636
Executive Vice 2000 370,000 525,000 - - 300,000 45,000
President and CFO 1999 352,500 441,000 - - 22,000 29,000
-----------------------------------------------------------------------------------------------------------------------------------
2001 385,577 270,000 - - - 33,332
Steven E. Simms 2000 378,000 400,000 - - 500,000 26,000
Executive Vice President 1999 324,000 340,000 - - 20,000 17,000
-----------------------------------------------------------------------------------------------------------------------------------
Philip W. Knisely 2001 347,019 175,000 - - - 13,665
Executive Vice President 2000 191,000 350,000 - - 500,000 11,000
1999 - - - - - -
===================================================================================================================================
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(1) Includes contributions to the Company's 401(k) and executive retirement
plans and financial consulting fees for all individuals.
(2) Mr. Sherman retired as the Company's President and Chief Executive Officer
as of May 1, 2001.
Grants in Last Fiscal Year
There were no stock options granted during 2001 to any of the officers listed on
the Summary Compensation Table.
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
The following table sets forth certain information concerning the number of
unexercised options and the value of unexercised in-the-money options at the end
of 2001 for the executive officers whose compensation is reported in the Summary
Compensation Table. Value is considered to be, in the case of unexercised
options, the difference between the exercise price and the closing price on the
New York Stock Exchange on December 31, 2001.
-----------------------------------------------------------------------------------------------------------------------------
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options at FY-End (#) In-the-Money Options at
Name Exercise Realized Exercisable/ FY-End($) Exercisable/
# $(2) Unexercisable Unexercisable
-----------------------------------------------------------------------------------------------------------------------------
H. Lawrence Culp, Jr. __ __ 142,000 1,182,000 6,316,000 20,012,000
-----------------------------------------------------------------------------------------------------------------------------
George M. Sherman __ __ 1,200,000 -0- 45,822,000 -0-
-----------------------------------------------------------------------------------------------------------------------------
Patrick W. Allender (1) 45,000 2,376,000 313,800 513,200 14,747,000 11,539,000
-----------------------------------------------------------------------------------------------------------------------------
Philip W. Knisely __ __ - 0 - 500,000 - 0 - 6,124,000
-----------------------------------------------------------------------------------------------------------------------------
Steven E. Simms 120,000 5,540,000 102,000 682,000 4,016,000 13,170,000
-----------------------------------------------------------------------------------------------------------------------------
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(1) Mr. Allender's unexercised options include options to acquire 250,000
shares held by family limited partnerships.
(2) Value realized is calculated as the fair market value of the Company Common
Stock as reflected by the closing price on the New York Stock Exchange on
the date of exercise, less the per share exercise price, multiplied by the
number of shares issued upon exercise of the option.
COMPENSATION OF DIRECTORS
Directors who are not officers of the Company receive meeting attendance fees of
$1,000 per meeting ($500 for telephonic meetings), together with quarterly fees
of $6,250. A grant of an option to acquire 2,000 shares of Company Common Stock
at $45.85 (fair market value at date of grant) per share was made to each of
these directors in September, 2001.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
In July 2000, the Company appointed H. Lawrence Culp, Jr. Chief Operating
Officer, and in October 2000, the Company and Mr. Culp executed an employment
agreement. The major provisions of the agreement are: (i) the term of the
employment agreement continues until July 18, 2003, unless sooner terminated or
extended. The agreement provides for automatic, annual extensions unless a
notice of termination is provided by the Company or Mr. Culp; (ii) annual base
salary for the first year of the agreement is $600,000, plus a target bonus of
100% of base salary; (iii) an interest-free loan in the amount of $500,000 that
is forgiven ratably through July 18, 2003; (iv) reimbursement for taxes incurred
as a result of the terms of the $500,000 loan; (v) a non-competition provision
that extends for three years after Mr. Culp's termination of employment; and
(vi) continuation of salary and bonus payments for 24 months upon a termination
of employment without cause or in the event of a change in control of the
Company. Mr. Culp was appointed President and Chief Executive Officer in May
2001.
COMPENSATION AND ORGANIZATION COMMITTEE
Messrs. Steven M. Rales, Mitchell P. Rales and H. Lawrence Culp, Jr. receive a
salary set by the Compensation and Organization Committee of the Board of
Directors and also serve as directors. However, they do not participate in
deliberations regarding their own compensation. The members of the Compensation
and Organization Committee are A. Emmet Stephenson, Jr., Mortimer M. Caplin,
Alan G. Spoon and Donald J. Ehrlich.
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The report is not deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission (the "SEC") or subject to the SEC's proxy
rules or to the liabilities of Section 18 of the Securities Exchange Act of the
1934 (the "1934 Act"), and the report shall not be deemed to be incorporated by
reference into any prior or subsequent filing by the Corporation under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
Total executive officer compensation is comprised of three principal components:
annual salary, annual incentive compensation, and grants of options to purchase
Company Common Stock. The Committee endeavors to establish total compensation
packages for each executive officer equal to the value of that executive's
services determined by both what other companies have or might pay the executive
for his services and his relationship to other executive positions within the
Company, as negotiated at the date of hire. This base is then adjusted annually
based on the Committee's assessment of individual performance.
A fundamental element of the Company's compensation policy is that a substantial
portion of each executive's compensation be directly related to the success of
the Company. This is accomplished in two ways. First, the annual incentive
compensation program requires that the Company, or the Company's businesses for
which the executive is directly responsible, achieve certain minimum targets in
earnings level (earnings per share which has a majority weighting), working
capital management (working capital turnover) and economic value added. If
performance for the year is below minimum targeted levels (generally
approximately three-quarters of the earnings target must be achieved and working
capital management must exceed target levels), there would be no payment. If the
minimum targets are met or exceeded, each executive receives a formula-based
payout taking into account the Company's performance and his or her personal
contribution thereto.
Second, executives and other key employees who, in the opinion of the Committee,
contribute to the growth, development and financial success of the Company are
eligible to be awarded options to purchase Company Common Stock. These grants
are made at the fair market value on the date of grant normally with vesting
over a five year period. In addition to the factors discussed above, the amount
of options granted is impacted both by the level of the employee within the
Company's management and the amount of options previously granted to the
employee. Thus, the compensation value of this element is directly related to
the performance of the Company as measured by its returns to shareholders over
at least a five year period.
The Committee evaluated each executive's annual incentive compensation awards
for 2001. The Committee assessed their performance in light of the targets
referenced above and awarded to executives (other than the operating level Group
Executives) total incentive compensation payments of $1,895,000 for 2001. For
the years 1998-2002, the Committee has established a maximum bonus payment of up
to $2,500,000 per executive. The Company's shareholders approved the performance
goals for these periods, which are applicable to all of the Company's executive
officers (other than the operating level Group Executives) at the 1998 Annual
Meeting.
The Committee has considered the impact of provisions of the federal income tax
laws that in certain circumstances disallow compensation deductions in excess of
$1 million for any year with respect to the executive officers named in proxy
statements of publicly traded companies. The Securities and Exchange Commission
requires compensation committees of public companies to state their compensation
policies relative to this $1 million deduction limit.
In addition, the Committee has designed the program for awarding 1998-2002
incentive compensation to executive officers (other than the operating level
Group Executives) so that such bonuses will comply with an exception to the $1
million deduction limit for performance-based compensation. Accordingly, the
full amount of any such bonus payments for 1998-2002 should be deductible. One
of the requirements of this exception is that shareholders approve certain
material terms under which the bonus is to be paid. In this regard, the
Company's shareholders approved the material terms used for calculating the
1998-2002 bonus awards for the Company's executive officers, other than Group
Executives, at the 1998 Annual Meeting.
COMPENSATION AND ORGANIZATION COMMITTEE OF THE BOARD OF DIRECTORS
A. Emmet Stephenson, Jr.
Mortimer M. Caplin
Donald J. Ehrlich
Alan G. Spoon
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The report is not deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission (the "SEC") or subject to the SEC's proxy
rules or to the liabilities of Section 18 of the Securities Exchange Act of the
1934 (the "1934 Act"), and the report shall not be deemed to be incorporated by
reference into any prior or subsequent filing by the Corporation under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
The Audit Committee (the "Committee") comprises three independent directors and
operates under a written charter. The Committee recommends to the Board of
Directors the selection of the Company's independent auditors. Arthur Andersen
LLP ("Arthur Andersen") was engaged as the Company's independent auditors for
the fiscal year ended December 31, 2001, and has been the Company's independent
auditors for more than the past five years.
Although in the past the Company has typically submitted the appointment of
independent auditors for Shareholder approval, in view of the highly publicized
events involving Arthur Andersen, the Board does not believe it is appropriate
to seek Shareholder approval at this time. The Audit Committee and the Board
will, however, continue to monitor the Company's engagement of Arthur Andersen
and other developments relating to that firm and will consider the possibility
that a change of independent auditors may be appropriate.
In fulfilling its responsibilities, the Committee has reviewed and discussed the
audited consolidated financial statements of the Company for the fiscal year
ended December 31, 2001 with the Company's management and Arthur Andersen.
The Committee has discussed with Arthur Andersen the matters required to be
discussed by Statement on Auditing Standards No. 61, "Communication with Audit
Committees." In addition, the Committee has received the written disclosures and
the letter from Arthur Andersen required by Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees" and has
discussed with Arthur Andersen its independence from the Company and its
management.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited consolidated financial
statements for the Company for the fiscal year ended December 31, 2001 be
included in the Annual Report on Form 10-K for the year ended December 31, 2001
for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Walter G. Lohr, Jr.
Mortimer M. Caplin
Donald J. Ehrlich
STOCK PERFORMANCE CHART
As part of proxy statement disclosure requirements mandated by the Securities
and Exchange Commission, the Company is required to provide a five-year
comparison of the cumulative total shareholder return on its Common Stock with
that of a broad equity market index and either a published industry index or a
Company constructed peer group index. This graph is not deemed to be "soliciting
material" or to be "filed" with the SEC or subject to the SEC's proxy rules or
to the liabilities of Section 18 of the 1934 Act, and the graph shall not be
deemed to be incorporated by reference into any prior or subsequent filing by
the Corporation under the Securities Act of 1933 or the 1934 Act.
The following chart compares the yearly percentage change in the cumulative
total shareholder return in the Company's Common Stock during the five years
ended December 31, 2001 with the cumulative total return on the S & P 500 Index
(the equity index) and the S&P Manufacturing Index (the peer index). The
comparison assumes $100 was invested on December 31, 1996 in the Company's
Common Stock and in each of the above indices with reinvestment of dividends.
Danaher S&P 500 S&P Manufacturing
Corporation Index Index
12-31-1996 100.0 100.0 100.0
12-31-1997 135.7 133.4 137.7
12-31-1998 233.8 171.5 168.9
12-31-1999 207.9 207.5 189.2
12-31-2000 295.3 188.6 211.1
12-31-2001 261.0 166.3 224.2
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 3, 2000, the Company purchased the motion control businesses of Warner
Electric Company. These businesses were purchased from an entity that was
controlled by Steven M. Rales and Mitchell P. Rales, the Company's Chairman of
the Board and Chairman of the Executive Committee, respectively. The transaction
was unanimously recommended by an independent committee of the Company's Board
of Directors, who received an opinion from an independent financial advisor as
to the fairness of the transaction. Total consideration was approximately $147
million.
The Company, from time to time, has been involved in transactions with Equity
Group Holdings LLP and its affiliates. The Company has received legal services
from the firm of Caplin & Drysdale, of which Mr. Caplin, a Director, is a
principal, and from the firm of Hogan & Hartson, of which Mr. Lohr, a Director,
is a partner, and from the firm of Polaris Venture Partners, of which Mr. Spoon,
a Director, is a general partner. The amount of such fees for 2001 was less than
five-percent of each firm's gross revenues. These transactions, which are
conducted on an arms length basis, are not material, either individually or in
the aggregate. The Company has provided H. Lawrence Culp, Jr. with a $500,000
loan, as discussed in the "Employment Contracts and Termination of Employment"
section of this proxy statement.
PROPOSAL 2.
AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK
At the Company's Annual Meeting of Stockholders held on May 1, 2001, the
Company's Stockholders approved an amendment to the Company's Certificate of
Incorporation (the "2001 Charter Amendment"). The 2001 Charter Amendment
provided for (1) an increase in the authorized number of shares of the Company's
common stock, par value $.01 per share (the "Common Stock") from three hundred
million (300,000,000) shares to five hundred million (500,000,000) shares, and
(2) an increase in the authorized number of shares of the Company's preferred
stock, without par value (the "Preferred Stock") from fifteen million
(15,000,000) shares to one hundred million (100,000,000) shares. These actions
were to become effective upon the filing of the 2001 Charter Amendment. The
Board of Directors subsequently determined that, because of the amount of the
filing fee that would be required to be paid under Delaware law with respect to
the increase in the Preferred Stock and other factors, the filing of the
Amendment in the form approved by the Company's Stockholders would not have been
in the best interests of the Stockholders at that time. As a result, prior to
the filing of the 2001 Charter Amendment, the Board of Directors decided to
abandon the filing of the 2001 Charter Amendment pursuant to Section 242(c) of
the Delaware General Corporation Law and determined to submit to the
Stockholders at the 2002 Annual Meeting a revised, proposed amendment to the
Company's Certificate of Incorporation, as described below. The revised
amendment eliminates the previously proposed increase in authorized Preferred
Stock.
The Board of Directors has adopted, subject to Stockholder approval, a
resolution proposing that an amendment to Paragraph I of Article FOURTH of the
Company's Certificate of Incorporation be presented to the Stockholders at the
2002 Annual Meeting for their approval. Such amendment would increase the number
of authorized shares of capital stock of the Company to a total of five hundred
and fifteen million (515,000,000) shares, consisting of five hundred million
(500,000,000) shares of Common Stock and fifteen million (15,000,000) shares of
Preferred Stock (the "2002 Charter Amendment"). The capital stock of the
Company, prior to the approval of the amendment, consists of three hundred and
fifteen million (315,000,000) shares, consisting of three hundred million
(300,000,000) shares of Common Stock, $.01 par value per share, and fifteen
million (15,000,000) shares of Preferred Stock, without par value. As of the
close of business on March 25, 2002, there were 164,923,000 shares of validly
issued Common Stock, including 150,910,000 shares of Common Stock outstanding
and 14,013,000 shares of Common Stock held by the Company in treasury. As of the
close of business on March 25, 2002, none of the shares of Preferred Stock have
been issued.
The additional shares of Common Stock to be authorized will, when issued, have
the same rights as the outstanding shares of Common Stock. Holders of Common
Stock have no preemptive rights.
The Board of Directors believes that it is in the Company's best interest to
have additional shares of Common Stock authorized to meet the Company's future
business needs as they arise. In particular, a portion of the shares of Common
Stock that would become available for issuance if the proposal were adopted
could be used by the Company in connection with the following possible future
events: (1) a split of the outstanding Common Stock; (2) stock option exercises;
(3) share-for-share acquisitions; or (4) conversion of outstanding and future
debt securities into Common Stock. If the 2002 Charter Amendment is approved and
filed, the additional shares of Common Stock may be issued at the discretion of
the Board of Directors at such times, in such amounts and upon such terms as the
Board of Directors may determine, without further approval of the Stockholders
of the Company unless, in any instance, such approval is expressly required by
regulatory agencies or otherwise. The Company's management and the Board of
Directors have no present arrangement, agreements, understandings or plans for
the additional shares proposed to be authorized.
The increase in the authorized number of shares of Common Stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change in control of the Company. Shares of authorized and unissued
Common Stock could (within the limits imposed by applicable law) be issued in
one or more transactions which would make a change in control of the Company
more difficult, and thus less likely. The Board of Directors is not aware of any
attempt to effect a takeover of the Company and has not presented this proposal
with the intention that the increase in the authorized shares of Common Stock be
used as a type of anti-takeover device.
The text of the proposed amendment is set forth in Exhibit A hereto. If the
proposal is adopted, it will become effective upon filing of a Certificate of
Amendment to the Company's Certificate of Incorporation. In accordance with
Section 242 (c) of the Delaware General Corporation Law, notwithstanding
Stockholder approval of the 2002 Charter Amendment, at any time prior to the
effectiveness of the filing of the 2002 Charter Amendment with the Delaware
Secretary of State, the Board of Directors may abandon the 2002 Charter
Amendment without further action by the Stockholders.
The affirmative vote of a majority of the outstanding shares entitled to vote at
the 2002 Annual Meeting is required for approval of the 2002 Charter Amendment.
Abstentions and broker non-votes on Proposal 2 have the effect of a vote against
this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING PROPOSAL, AND SIGNED
PROXIES WHICH ARE RETURNED WILL BE SO VOTED UNLESS A CONTRARY VOTE IS DESIGNATED
ON THE PROXY CARD.
OTHER MATTERS
The management of the Company is not aware of any other business that may come
before the meeting. However, if additional matters properly come before the
meeting, proxies will be voted at the discretion of the proxy holders.
FEES PAID TO INDEPENDENT AUDITORS
Audit Fees: The aggregate fees billed for professional services rendered by
Arthur Andersen LLP, the Company's independent auditors, in connection with the
audit and review of the 2001 financial statements, including quarterly reviews,
was $482,500.
Financial Information Systems Design and Implementation Fees: The aggregate fees
billed for professional services rendered in connection with financial
information systems design and implementation by Arthur Andersen LLP in 2001 was
$367,000.
All Other Fees: The aggregate of all other fees billed for professional services
during 2001 by Arthur Andersen LLP was $1,583,000. This includes $771,000 of
audit-related fees, which are primarily fees for statutory audits of foreign
subsidiaries, benefit plan audits and assurance services related to SEC
registration statements.
The Audit Committee has considered whether the services rendered by the
independent auditors with respect to the foregoing fees are compatible with
maintaining their independence and has concluded that such services do not
impair their independence.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2003 Annual Meeting of
Shareholders of the Company must be received by the Company at its principal
executive offices, Danaher Corporation, 2099 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006, no later than December 14, 2002 for inclusion in the
Proxy Statement and Proxy relating to the 2003 Annual Meeting of Shareholders.
Shareholder proposals submitted other than pursuant to Rule 14(a)-8 under the
Securities Exchange Act are considered untimely if received after February 27,
2003.
BY ORDER OF THE BOARD OF DIRECTORS
PATRICK W. ALLENDER
Secretary
Dated: April --, 2002
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2001 MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING TO THE COMPANY.
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF DANAHER CORPORATION
Pursuant to Section 242 of the General
Corporation Laws of the State of Delaware
Danaher Corporation, a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Corporation,
resolutions were adopted setting forth a proposed amendment to Paragraph I of
Article FOURTH of the Certificate of Incorporation of the Corporation, declaring
said amendment to be advisable and calling a meeting of the Stockholders of the
Corporation for consideration thereof. The amendment is as follows:
FOURTH: I. The total number of shares of stock which the Corporation shall
have authority to issue is 515,000,000 shares of which 500,000,000 shares,
$.01 par value per share, shall be of a class designated "Common Stock" and
of which 15,000,000 shares, without par value, shall be designated
"Preferred Stock".
SECOND: That thereafter, at the 2002 Annual Meeting of the Corporation, the
necessary number of shares, as required by statutes, were voted in favor of the
amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
DANAHER CORPORATION
PROXY FOR 2002
ANNUAL MEETING OF SHAREHOLDERS -- MAY 7, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DANAHER CORPORATION
The undersigned acknowledges receipt of the Proxy Statement and Notice, dated
April , 2002, of the Annual Meeting of Shareholders and hereby appoints
Steven M. Rales and Mitchell P. Rales, and each of them, with full power of
substitution, the attorneys, agents and proxies of the undersigned, to act for
and in the name of the undersigned and to vote all the shares of Common Stock
of the undersigned which the undersigned is entitled to vote at the Annual
Meeting of Shareholders of Danaher Corporation (the "Company") to be held May
7, 2002, and at any adjournment or adjournments thereof, for the following
matters:
Proxies will be voted in the manner directed herein by the undersigned. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, AND 3 PLEASE
SIGN AND DATE ON THE REVERSE SIDE.
1. Election of directors
Nominee Messrs. H. Lawrence Culp, Jr., Mitchell P. Rales, and A. Emmet
Stephenson, Jr. to serve as directors with a term expiring in 2005.
[_] FOR all nominees
[_] WITHHOLD AUTHORITY for all nominees
To withhold authority to vote for an individual nominee, write that nominee's
name on the line below.
--------------------------------------------------------------------------------
2 . Amend the Company's Certificate Of Incorporation
[_] FOR [_] AGAINST [_] ABSTAIN
3. IN THEIR DISCRETION on any other matter which may properly come before the
meeting, including any adjournment thereof.
Dated: , 2002
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Signature of Shareholder(s)
Please sign, date and promptly
return this proxy in the enclosed
envelope. No postage is required if
mailed in the United States. Please
sign exactly as your name appears in
the space on the left. If stock is
registered in more than one name,
each holder should sign. When
signing as an attorney,
administrator, executor, guardian or
trustee, please add your title as
such. If executed by a corporation,
the proxy must be signed by a duly
authorized officer, and his title
should appear next to his signature.
PLEASE MARK YOUR CHOICE LIKE THIS [_] IN BLUE OR BLACK INK