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 4, 2002
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of Shareholders of
IDEX Corporation which will be held on Tuesday, March 26, 2002, 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 2001 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 26, 2002
---------------------------------
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of IDEX Corporation (the "Company") will
be held on Tuesday, March 26, 2002, 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 two directors for a term of three years.
2. To vote on the recommendation of the Board of Directors that Deloitte &
Touche LLP be appointed auditors of the Company for 2002.
3. To transact such other business as may properly come before the meeting.
The Board of Directors fixed the close of business on February 21, 2002, 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 4, 2002
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 26,
2002, 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 4, 2002.
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 21, 2002, 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 30,824,699 shares of the
Company's Common Stock was outstanding at the close of business on February 21,
2002. 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, and the approval of the appointment of
Deloitte & Touche LLP as auditors of the Company for 2002 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 appointment of Deloitte & Touche LLP as auditors of the Company
for 2002. 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 each of the Company's nominees as directors,
FOR the appointment of Deloitte & Touche LLP as auditors of the Company for
2002, 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. In 2001 and early 2002, vacancies were filled by the Board of
Directors by the appointment of Bradley J. Bell effective June 11, 2001, and
Gregory B. Kenny effective February 1, 2002. As such, the Board of Directors
currently consists of ten members, four of whom are Class I directors whose
terms will expire at this year's Annual Meeting, three of whom are Class II
directors whose terms will expire at the Annual Meeting to be held in 2003, and
three of whom are Class III directors whose terms will expire at the Annual
Meeting to be held in 2004. Mr. Kravis has informed the Company that he does not
plan to stand for re-election, and Mr. Heath will retire consistent with the
Company's mandatory retirement policy for members of the Board, and so they will
cease to be members of the Board on the date of the Annual Meeting at the end of
their current term. Additionally, Mr. Roberts has informed the Company that he
will resign from the Board on the date of the Annual Meeting. As a result of
such departures, the Board of Directors will be reduced to and consist of seven
(7) members.
The Company's Board of Directors has nominated two persons for election as
Class I directors to serve for a three-year term expiring at the Annual Meeting
to be held in 2005 or upon the election and qualification of their successors.
The two nominees of the Board of Directors are Bradley J. Bell and Gregory B.
Kenny, each of whom is currently serving as a director of the Company. The
nominees and the directors serving in Class II 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 any of the nominees for a Class I directorship is
unavailable to serve, proxies solicited hereby may be voted for a substitute.
The Board, however, expects all of the nominees to be available.
3
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE TWO NOMINEES IN CLASS I IDENTIFIED BELOW.
NOMINEES FOR DIRECTORSHIPS
CLASS I: NOMINEES FOR THREE-YEAR TERM
BRADLEY J. BELL Director since 2001
Senior Vice President and CFO Age 49
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 CFO of Rohm and Haas Company since April
1997. From prior to 1997 until April 1997, Mr. Bell served as Vice President and
Treasurer of Whirlpool Corporation.
GREGORY B. KENNY Director since 2002
President and Chief Executive Officer Age 49
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.
OTHER INCUMBENT DIRECTORS
CLASS II: THREE-YEAR TERM EXPIRES IN 2003
WILLIAM H. LUERS Director since 1989
Chairman, President and Chief Executive Officer Age 72
United Nations Association
Mr. Luers has been a director of the Company since June 2, 1989. Since
February 1, 1999, Mr. Luers has been Chairman, President and Chief Executive
Officer of the United Nations Association of the United States of America. From
prior to 1997 until January 31, 1999, Mr. Luers was President of The
Metropolitan Museum of Art in New York, New York. Mr. Luers is a director of AOL
Latin America and Wickes, Inc. Mr. Luers is the Chairman of the Compensation
Committee and a member of the Audit Committee of the Board of Directors.
4
MICHAEL T. TOKARZ Director since 1987
Member Age 52
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 1997 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., and a general
partner of KKR Associates, L.P. 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 Executive Committee of the Board of Directors.
CLASS III: THREE-YEAR TERM EXPIRES IN 2004
PAUL E. RAETHER Director since 1988
Member Age 55
Kohlberg Kravis Roberts & Co., L.L.C.
Mr. Raether has been a director of the Company since January 22, 1988.
Since prior to 1997, 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 1997. Mr. Raether is a director of KSL
Recreation Corporation and Shoppers Drug Mart Corporation.
NEIL A. SPRINGER Director since 1990
Managing Director Age 63
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 1997.
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
Audit Committee and a member of the Compensation Committee and Executive
Committee of the Board of Directors.
DENNIS K. WILLIAMS Director since 2000
Chairman of the Board, Age 56
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.
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 2001, the Board of Directors
held seven 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 four regularly
constituted committees of the Board of Directors: the
5
Executive Committee, the Audit Committee, the Compensation Committee and the
Pension and Retirement Committee. The Company does not have a nominating
committee or any regularly constituted committee performing the functions of
such a 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 2001, the Executive
Committee held two meetings.
The Audit Committee recommends to the Board of Directors the firm of
independent public accountants to audit the Company's financial statements each
fiscal year, reviews with the independent auditors the general scope of this
service, reviews the nature and extent of the non-audit services to be performed
by the independent auditors, and consults with management on the activities of
the Company's independent auditors and the Company's system of internal control.
During 2001, the Audit Committee held two 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 2001, the Compensation
Committee held five meetings.
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 2001, the Pension and Retirement Committee held four meetings.
During 2001, 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, except for Mr. Kravis and Mr. Roberts.
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 March 1, 2002, $176,440.62 remained outstanding under
this loan.
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 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
6
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, 2001,
each of Messrs. Heath, Luers and Springer received an option to purchase 4,500
shares of Common Stock at an exercise price of $31.56, and Mr. Bell received an
option to purchase 6,750 shares of Common Stock at an exercise price of $33.13.
On January 29, 2002, each of Messrs. Bell, Heath, Luers and Springer received an
option to purchase 4,500 shares of Common Stock at an exercise price of $34.10.
On February 1, 2002, Mr. Kenny received an option to purchase 6,750 shares of
Common Stock at an exercise price of $34.00. 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 December 31, 2001, 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. 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):
Richard E. Heath(1)(2)..................... 44,853 *
William H. Luers(2)........................ 27,450 *
Neil A. Springer(2)........................ 31,500 *
Michael T. Tokarz(3)....................... 45,000 *
Bradley J. Bell............................ 2,000 *
Executive Officers:
Dennis K. Williams(4)...................... 117,285 *
Wayne P. Sayatovic(5)...................... 376,575 1.2
David T. Windmuller(6)..................... 46,862 *
John L. McMurray(6)........................ 32,746 *
Rodney L. Usher(6)......................... 63,114 *
Directors, Nominees and All.................. 1,132,600 3.6
Executive Officers as a Group
(19 persons excluding shares
owned by KKR Associates)(3)(7)
Other Principal Beneficial Owners:
KKR Associates, L.P.(3).................... 8,753,592 27.9
9 West 57th Street
New York, NY 10018
Henry R. Kravis
Paul E. Raether
George R. Robert
Michael T. Tokarz
Ariel Capital Management, Inc.(8).......... 4,469,430 14.2
307 North Michigan Avenue, Suite 500
Chicago, IL 60601
Mario J. Gabelli(9)........................ 3,012,832 9.6
GAMCO Investors, Inc.
Gabelli & Company, Inc.
One Corporate Center
Rye, NY 10580
Neuberger Berman, Inc.(10)................. 1,614,779 5.1
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158
---------------
(1) Includes 4,275 shares which are owned by various family trusts as to which
Mr. Heath is a co-trustee of each trust and 4,578 shares which are owned
by Mr. Heath's wife.
8
(2) Includes 36,000, 27,000 and 31,500 shares under option which are eligible
for exercise under the Amended and Restated IDEX Corporation Stock Option
Plan for Outside Directors for Messrs. Heath, Luers and Springer,
respectively.
(3) Shares of Common Stock shown as owned by KKR Associates, L.P. are owned of
record by two partnerships, KKR Associates, L.P. and IDEX Associates, L.P.
IDEX Associates, L.P. is a limited partnership of which KKR Associates,
L.P. is the sole general partner and possesses sole voting and investment
power. KKR Associates, L.P. is a limited partnership of which as of
December 31, 2001, Messrs. Kravis, Roberts, Raether and Tokarz (each of
whom is a director of the Company) and Messrs. 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 Associates,
L.P. All of the foregoing persons disclaim beneficial ownership of any
shares of the Company listed above as beneficially owned by KKR
Associates, L.P.
(4) Includes 70,000 shares which are eligible for exercise under the Stock
Plan for Officers.
(5) 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 142,500 shares which are eligible for exercise under the
Stock Plan for Officers.
(6) Includes 45,060, 32,055 and 46,200 shares which are eligible for exercise
under the Stock Plan for Non-Officer Key Employees and the Stock Plan for
Officers, for Messrs. Windmuller, McMurray and Usher, respectively.
(7) Includes 94,500 shares under option which are eligible for exercise under
the Amended and Restated IDEX Corporation Stock Option Plan for Outside
Directors, 448,230 shares under option which are eligible for exercise
under the Stock Plan for Officers, and 92,235 shares under option which
are eligible for exercise under the Stock Plan for Non-Officer Key
Employees.
(8) Based on information in Schedule 13G 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.
(9) Based on information in Schedule 13D, as amended, 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.
(10) Based on information in Schedule 13G 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 2001, 2000 and 1999 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 GRANTED PAYOUTS COMPENSATION(3)
--------------------------- ---- -------- -------- -------- ---------- ---------- --------- ---------------
Dennis K. Williams............. 2001 $685,000 $387,600 0 0 85,000 0 $5,461
Chairman of the Board,
President.................. 2000 433,333 476,600 0 $9,493,750 350,000 0 0
and Chief Executive Officer
Wayne P. Sayatovic............. 2001 243,000 64,800 0 0 24,000 0 3,830
Senior Vice
President -- Finance....... 2000 231,500 165,600 0 0 24,000 0 3,830
and Chief Financial
Officer.................... 1999 220,000 128,700 0 0 24,000 0 3,640
David T. Windmuller............ 2001 229,000 65,300 0 0 18,000 0 3,830
Vice President -- Group...... 2000 219,000 156,600 0 0 18,000 0 3,830
Executive.................... 1999 210,000 117,200 0 0 18,000 0 3,640
John L. McMurray............... 2001 214,000 62,600 0 0 17,000 0 3,830
Vice
President -- Operational... 2000 194,000 133,500 0 0 15,000 0 3,830
Excellence................... 1999 180,000 114,900 0 0 15,000 0 3,640
Rodney L. Usher................ 2001 227,000 53,800 0 0 20,000 0 3,830
Vice President -- Group...... 2000 208,000 118,500 0 0 15,000 0 3,830
Executive.................... 1999 195,000 102,800 0 0 15,000 0 3,640
---------------
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) The value of perquisites provided to these individuals did not exceed the
lesser of $50,000 or 10% of base salary plus bonus.
(3) For Mr. Williams in 2001, amount represents $1,631 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 $3,830 of Company matching
contributions to his Savings Plan individual account. In all other cases,
amount represents Company matching contributions to Savings Plan individual
accounts.
OPTION GRANTS IN 2001
The following tables set forth certain information with respect to options
granted in 2001 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 10.9 $28.45 03/27/11 $1,522,880 $3,860,319
Wayne P. Sayatovic........................ 24,000 3.1 28.45 03/27/11 429,990 1,089,972
David T. Windmuller....................... 18,000 2.3 28.45 03/27/11 322,492 817,479
John L. McMurray.......................... 17,000 2.2 28.45 03/27/11 304,576 772,064
Rodney L. Usher........................... 20,000 2.6 28.45 03/27/11 358,325 908,310
10
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 70,000 365,000 $ 516,250 $2,579,250
Wayne P. Sayatovic.................. 0 0 142,500 72,000 1,923,389 456,000
David T. Windmuller................. 7,200 141,249 45,060 52,440 389,206 326,400
John L. McMurray.................... 5,850 123,500 32,055 44,120 278,822 287,500
Rodney L. Usher..................... 10,800 222,599 46,200 50,000 400,660 310,810
---------------
(1) Calculated using closing stock price on December 31, 2001 of $34.50.
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, 2001, the total accrued monthly benefit under the
Retirement Plan for Messrs. Williams, Sayatovic, Windmuller, McMurray and Usher
was $555, $4,493, $3,502, $2,305 and $4,559, respectively. Assuming projected
earnings in 2002 of $1,097,600, $316,300, $303,300, $287,100 and $289,800 for
Messrs. Williams, Sayatovic, Windmuller, McMurray and Usher respectively, and
that such earnings remain level until each person reaches age 65, the projected
monthly benefit for Messrs. Williams, Sayatovic, Windmuller, McMurray and Usher
under the Retirement Plan would be $3,102, $7,039, $9,289, $6,193 and $6,966,
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,
Windmuller, McMurray and Usher under the SERP would be $20,512, $9,477, $6,375,
$3,883 and $4,689, 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 2002 is
$710,000, 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
11
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 April 30, 2001, and an
additional 70,000 shares vest on each of the four subsequent anniversaries of
such date if Mr. Williams remains as Chairman of the Board, President and Chief
Executive Officer of the Company. All shares of the restricted stock would 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 2002 is
$251,500, 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.
The Company has entered into agreements with each of Messrs. Sayatovic,
Windmuller, McMurray and Usher providing for two years' compensation and fringe
benefits in the event they are actually or constructively terminated without
cause prior to April 30, 2002. Additionally, the Company has entered into
agreements with each of Messrs. Williams, Sayatovic, Windmuller, McMurray and
Usher 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.
12
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 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 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 it is then approved by the Board of Directors. Dennis K.
Williams has a personal stake in the Company through his ownership of 327,285
shares of Common Stock of the Company, 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
435,000 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 2001 was $387,600.
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 satisfies the
requirements for performance-based compensation under Code Section 162(m).
William H. Luers, Chairman
Neil A. Springer
13
AUDIT COMMITTEE REPORT
For the year ended December 31, 2001, 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, 2001, 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.
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.
Neil A. Springer, Chairman
Bradley J. Bell
William H. Luers
14
AUDIT FEES
The aggregate fees billed to the Company for the fiscal year ended December
31, 2001, by the Company's principal accounting firm, Deloitte & Touche LLP, are
as follows:
Audit Fees $728,000
Financial Information Systems
Design and Implementation Fees None
All Other Fees $694,000(1)(2)
---------------
(1) Includes fees for tax and management consulting assignments and other
non-audit services.
(2) The Audit Committee has considered whether the provision of these services
is compatible with maintaining the principal accountant's independence.
15
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
Manufacturing-Diversified Industrials Index and the Russell 2000 Index assuming
the value of the investment in IDEX Common Stock and each index was $100 on
December 31, 1996. Total return values for IDEX Common Stock, the S&P 500 Index,
S&P Manufacturing-Diversified Industrials 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]
--------------------------------------------------------------------------------
12/96 12/97 12/98 12/99 12/00 12/01
--------------------------------------------------------------------------------
IDEX CORPORATION $100.00 $133.35 $95.35 $120.84 $134.20 $142.34
S&P 500 INDEX 100.00 133.35 171.45 207.52 188.61 166.20
MANU-DIVERSIFIED
INDUSTRIALS 100.00 119.08 138.02 169.67 201.98 198.95
RUSSELL 2000 INDEX 100.00 122.36 119.30 144.87 140.49 144.08
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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, 2001.
16
PROPOSAL 2 -- APPROVAL OF AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
recommended the selection of Deloitte & Touche LLP as the Company's independent
auditors for 2002. 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 Approval of
Deloitte & Touche LLP as the Company's Independent Auditors for 2002.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2003 ANNUAL MEETING
A shareholder desiring to submit a proposal for inclusion in the Company's
Proxy Statement for the 2003 Annual Meeting must deliver the proposal so that it
is received by the Company no later than November 3, 2002. 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 2002 Annual Meeting
which, for the 2003 Annual Meeting, will be January 25, 2003.
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 4, 2002
Northbrook, Illinois
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2001, 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.
17
IDEX CORPORATION
630 DUNDEE ROAD
NORTHBROOK, ILLINOIS 60062
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints DENNIS K. WILLIAMS, FRANK J. NOTARO and
MICHAEL T. TOKARZ, 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 21, 2002, at the Annual Meeting of shareholders to be held on March
26, 2002, 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
--------------------------------------------------------------------------------
(Continued from the other side)
(1) Election of Directors -- Class I. Nominees: Bradley J. Bell, Gregory B.
Kenny
[ ] FOR, except nominee(s) written below: [ ] WITHHOLD
--------------------------------------------------------------------------------
(2) Approval of Deloitte & Touche LLP as auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) 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 AND 3.
DATED: , 2002
------------------------------------
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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