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:
[_] 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 (S) 240.14a-11(c) or (S) 240.14a-12
Danaher Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
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
/s/ Patrick W. Allender
PATRICK W. ALLENDER
Secretary
April 5, 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 11, 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.
1
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%
--------
(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.
2
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. Ehrlich 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 Officer 2001 2005
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 and
publicly traded securities.
A. Emmet Stephenson, Jr. (a) 56 Chairman of StarTek, Inc. for more 1986 2005
than five years; President of
Stephenson and Co., a private
investment firm in Denver, Colorado
for more than five years.
3
CURRENT DIRECTORS WHOSE TERM WILL CONTINUE AFTER THIS MEETING
Director Term
Name Age Principal Occupation Since Expires
---- --- -------------------- ----- -------
Steven M. Rales (b,d,e).. 51 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 and publicly traded securities.
Alan G. Spoon (a)........ 50 Managing General Partner of Polaris 1999 2004
Venture 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, a 1990 2003
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
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.
4
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
---- --- -------- -----
Steven M. Rales....... 51 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
5
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 and
publicly traded securities.
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
and publicly traded securities.
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 since 1996.
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.
6
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
Annual Compensation Compensation Awards
- ----------------------------------- -------------------
(a) (e) (f) (g) (h)
Name and (c) (d) Other Restricted Securities All Other
Principal (b) Salary Bonus Annual Stock Underlying Compensation(1)
Position Year ($) ($) Compensation Awards Options ($)
-------- ---- ------- --------- ($) ($) (#) ---------------
H. Lawrence Culp, Jr.... 2001 577,500 630,000 -- -- -- 57,726
President and CEO 2000 480,000 830,000 -- -- 1,000,000 25,000
1999 315,000 340,000 -- -- 20,000 14,000
George M. Sherman....... 2001 225,000 216,000 -- -- -- 62,000
Former President 2000 675,000 1,691,000 -- -- -- 80,000
and CEO (2) 1999 675,000 1,550,000 -- -- -- 69,000
Patrick W. Allender..... 2001 375,375 285,000 -- -- -- 55,636
Executive Vice President 2000 370,000 525,000 -- -- 300,000 45,000
and CFO 1999 352,500 441,000 -- -- 22,000 29,000
Steven E. Simms......... 2001 385,577 270,000 -- -- -- 33,332
Executive Vice President 2000 378,000 400,000 -- -- 500,000 26,000
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 -- -- -- -- -- --
--------
(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.
7
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
Exercise Realized Exercisable/ FY-End($) Exercisable/
Name # $(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
--------
(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.
8
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 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.
9
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 award
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
10
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 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
11
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.
[CHART]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Among Danaher Corporation, S&P 500 Index and S&P Manufacturing Index
Danaher
12/31/96 100.0
12/31/97 135.7
12/31/98 233.8
12/31/99 207.9
12/31/00 295.3
12/31/01 261.0
S&P 500
12/31/96 100.0
12/31/97 133.4
12/31/98 171.5
12/31/99 207.5
12/31/00 188.6
12/31/01 166.3
S&P
Manufacturing
12/31/96 100.0
12/31/97 137.7
12/31/98 168.9
12/31/99 189.2
12/31/00 211.1
12/31/01 224.2
12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, from time to time, has been involved in transactions with
Equity Group Holdings LLC 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. The Company also shares technology project expenses
($73,000 in 2001) with the firm of Polaris Venture Partners, of which Mr.
Spoon, a Director, is Managing General Partner. The amount of such fees for
2001 was in each case 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.
PROPOSAL 2.
AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK
At the Company's Annual Meeting of Shareholders held on May 1, 2001, the
Company's Shareholders 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
Shareholders would not have been in the best interests of the Shareholders 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 Shareholder approval, a
resolution proposing that an amendment to Paragraph I of Article FOURTH of the
Company's Certificate of Incorporation be presented to the Shareholders 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.
13
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 Shareholders 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.
14
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
/s/ Patrick W. Allender
PATRICK W. ALLENDER
Secretary
Dated: April 5, 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.
15
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.
16
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 5, 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
-------------------------------
-------------------------------
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