DEF 14A 1 d346897ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

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  Definitive Proxy Statement
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DANAHER CORPORATION

 

 

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DANAHER CORPORATION

2200 Pennsylvania Avenue, N.W., Suite 800W

Washington, D.C. 20037-1701

March 31, 2017

 

     NOTICE OF 2017 ANNUAL MEETING OF SHAREHOLDERS
When:    May 9, 2017 at 3:00 p.m., local time.
Where:    Park Hyatt Washington, 1201 24th Street, NW, Washington, D.C.
Items of Business:   

1.      To elect the twelve directors named in the attached proxy statement to hold office until the 2018 annual meeting of shareholders and until their successors are elected and qualified.

 

2.      To ratify the selection of Ernst & Young LLP as Danaher’s independent registered public accounting firm for the year ending December 31, 2017.

 

3.      To approve certain amendments to Danaher’s 2007 Stock Incentive Plan and the material terms of the performance goals under the Plan.

 

4.      To approve certain amendments to Danaher’s 2007 Executive Incentive Compensation Plan and the material terms of the performance goals under the Plan.

 

5.      To approve on an advisory basis the Company’s named executive officer compensation.

 

6.      To hold an advisory vote relating to the frequency of future shareholder advisory votes on the Company’s named executive officer compensation.

 

7.      To act upon a shareholder proposal requesting that Danaher adopt and report on goals to reduce greenhouse gas emissions.

 

8.      To consider and act upon such other business as may properly come before the meeting or at any postponement or adjournment thereof.

Who Can Vote:    Shareholders of Danaher Common Stock at the close of business on March 13, 2017. YOUR VOTE IS IMPORTANT. PLEASE SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
Attending the Meeting:    Shareholders who wish to attend the meeting in person should review the instructions set forth in the attached proxy statement under “General Information About the Annual Meeting – Attending the Meeting.”
Date of Mailing:    The date of mailing of this Proxy Statement is on or about March 31, 2017.

By order of the Board of Directors,

JAMES F. O’REILLY

Vice President, Associate General Counsel and Secretary

 

Review Your Proxy Statement and Vote in One of Four Ways:

 

LOGO  

VIA THE INTERNET

Visit the website listed on your proxy card or voting instruction form

  LOGO  

BY MAIL

Sign, date and return your proxy card or voting instruction form in the enclosed envelope

LOGO  

BY TELEPHONE

Call the telephone number on your proxy card or voting instruction form

  LOGO  

BY MOBILE DEVICE

Scan the QR code included with your proxy card or voting instruction form

 

Please refer to the enclosed proxy materials or the information forwarded by your bank, broker, trustee or other intermediary to see which voting methods are available to you.


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2017 ANNUAL MEETING OF SHAREHOLDERS

PROXY STATEMENT TABLE OF CONTENTS

 

     Page  
PROPOSAL 3 – APPROVAL OF AMENDMENTS TO THE DANAHER CORPORATION 2007 STOCK INCENTIVE PLAN AND MATERIAL TERMS OF THE PLAN’S PERFORMANCE GOALS      53  
PROPOSAL 4 – APPROVAL OF AMENDMENTS TO THE DANAHER CORPORATION 2007 EXECUTIVE INCENTIVE COMPENSATION PLAN AND MATERIAL TERMS OF THE PLAN’S PERFORMANCE GOALS      62  
PROPOSAL 5 – ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION      64  
PROPOSAL 6 – ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES RELATING TO THE COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION      65  
PROPOSAL 7 – SHAREHOLDER PROPOSAL REQUESTING THAT DANAHER ADOPT AND REPORT ON GOALS FOR REDUCING GREENHOUSE GAS EMISSIONS      66  
GENERAL INFORMATION ABOUT THE ANNUAL MEETING      68  
OTHER INFORMATION      72  
 

 

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on May 9, 2017. This Proxy Statement and the accompanying Annual Report are available free of charge at: http://investors.danaher.com/annual-report-and-proxy.


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PROXY STATEMENT SUMMARY

To assist you in reviewing the proposals to be acted upon at our 2017 Annual Meeting, below is summary information regarding the meeting, each proposal to be voted upon at the meeting and Danaher Corporation’s (“Danaher” or the “Company”) business performance, corporate governance and executive compensation. The following description is only a summary. For more information about these topics, please review Danaher’s Annual Report on Form 10-K for the year ended December 31, 2016 and the complete Proxy Statement.

 

2017 Annual Meeting of Shareholders

DATE AND TIME: May 9, 2017, 3:00 p.m. local time

PLACE: Park Hyatt Washington, 1201 24th Street, NW, Washington, D.C.

RECORD DATE: March 13, 2017

Voting Matters

 

    PROPOSAL   DESCRIPTION   BOARD
RECOMMENDATION
   
 

Proposal 1: Election of

directors (page 1)

  We are asking our shareholders to elect each of the twelve directors identified below to serve until the 2018 Annual Meeting of shareholders.  

ü

FOR

each nominee

 
 

Proposal 2: Ratification of the

appointment of the

independent registered

public accounting firm

(page 19)

  We are asking our shareholders to ratify our Audit Committee’s selection of Ernst & Young LLP (“E&Y”) to act as the independent registered public accounting firm for Danaher for 2017. Although our shareholders are not required to approve the selection of E&Y, our Board believes that it is advisable to give our shareholders an opportunity to ratify this selection.  

ü

FOR

 
  Proposal 3: Approval of certain amendments to Danaher’s 2007 Stock Incentive Plan and the material terms of the performance goals under the plan (page 53)   We are asking our shareholders to approve certain amendments to Danaher’s 2007 Stock Incentive Plan and the material terms of the performance goals under the plan so that we can continue to use the plan to grant compensation awards, on a basis that is tax-deductible under Section 162(m) (“Section 162(m)”) of the Internal Revenue Code (the “Code”) as appropriate, to attract, retain and reward employees and directors and closely align their interests with those of the Company’s shareholders.  

ü

FOR

 
  Proposal 4: Approval of certain amendments to Danaher’s 2007 Executive Incentive Compensation Plan and the material terms of the performance goals under the plan (page 62)   We are asking our shareholders to approve certain amendments to Danaher’s 2007 Executive Incentive Compensation Plan and the material terms of the performance goals under the plan so that we can continue to use the plan to grant incentive compensation, on a basis that is tax-deductible under Section 162(m) as appropriate, to attract, retain and reward executive officers and closely align their interests with those of the Company’s shareholders.  

ü

FOR

 
   

Proposal 5: Advisory vote to

approve named executive

officer compensation

(page 64)

  We are asking our shareholders to cast a non-binding, advisory vote on the compensation of the executive officers named in the Summary Compensation Table (the “named executive officers”). In evaluating this year’s “say on pay” proposal, we recommend that you review our Compensation Discussion and Analysis, which explains how and why the Compensation Committee of our Board arrived at its executive compensation actions and decisions for 2016.  

ü

FOR

 

   

 

 

      DANAHER  2017 PROXY STATEMENT      i
 


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    PROPOSAL   DESCRIPTION    BOARD
RECOMMENDATION
   
  Proposal 6: Advisory vote relating to frequency of future advisory votes on named executive officer compensation (page 65)   We are asking our shareholders to cast a non-binding, advisory vote on the frequency of future shareholder advisory votes on the Company’s named executive officer compensation. The voting choices are every one, two or three years, or abstain.   

ü

FOR

Every ONE Year

 
 

Proposal 7: Shareholder

Proposal (page 66)

  You are being asked to consider a shareholder proposal requesting that Danaher adopt and report on goals to reduce greenhouse gas emissions.   

O

AGAINST

 

Please see the sections titled “General Information About the Meeting” and “Other Information” beginning on page 68 for important information about the proxy materials, voting, the Annual Meeting, Company documents, communications and the deadlines to submit shareholder proposals and director nominations for next year’s annual meeting of shareholders.

Business Highlights

2016 Performance

2016 was a transformative year for Danaher as we:

 

    successfully completed the spin-off (“Separation”) of Fortive Corporation (“Fortive”), consisting of our former Test & Measurement segment, Industrial Technologies segment (excluding the product identification businesses) and retail/commercial petroleum business;  

 

    consummated our $4.0 billion acquisition of Cepheid, a leading global molecular diagnostics company; and  

 

    continued the integration of our 2015, $13.6 billion acquisition of Pall Corporation, a leading global provider of filtration, separation and purification solutions.  

Following the Separation, Danaher is better positioned to sharpen its strategic focus and concentrate its investment capital on its science and technology-oriented businesses, as illustrated by the recent acquisition of Cepheid. Cepheid is a highly complementary addition to Danaher’s Diagnostics segment, significantly expands Danaher’s recurring revenue base and provides a strong foundation for Danaher to grow in the molecular diagnostics segment both organically and through future acquisitions.

Even as we invested in Danaher’s future growth, we continued to deliver strong operational and financial performance despite tepid growth or declines in certain of the end-markets we serve. Specifically, during 2016, Danaher:

 

    deployed over $4.9 billion across eight strategic acquisitions (including the strategically critical acquisition of Cepheid);  

 

    returned over $400 million to shareholders through cash dividends; and  

 

    continued to grow our business on a year-over-year basis:  

 

DANAHER 2015-2016 YEAR-OVER-YEAR GROWTH FROM CONTINUING OPERATIONS

 

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ii     DANAHER  2017 PROXY STATEMENT       
  


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Long-Term Performance

We believe a long-term performance period most accurately compares relative performance within our peer group, because over shorter periods performance comparisons may be skewed by the easier performance baselines of peer companies that have experienced periods of underperformance in the past.

 

Danaher has not experienced a sustained period of underperformance over the last twenty years, and we believe the consistency of our performance over the last twenty years is unmatched within our peer group. Danaher ranks number one in its peer group over the past twenty years based on compounded average annual shareholder return, and is the only company in its peer group whose total shareholder return (“TSR”) outperformed the S&P 500 Index:

   LOGO

 

    over every rolling 3-year period from 1997-2016; and  

 

    by more than 600 basis points over every rolling 3-year period from 2007-2016.  

Danaher’s compounded, average annual shareholder return has outperformed the S&P 500 Index over each of the last two-, three, five-, ten-, fifteen- and twenty-year periods:

 

 

      LOGO

      LOGO

 

      DANAHER  2017 PROXY STATEMENT      iii
 


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Corporate Governance Highlights

Our Board of Directors recognizes that Danaher’s success over the long-term requires a robust framework of corporate governance that serves the best interests of all our shareholders. Below are highlights of our corporate governance framework.

 

  Board refreshment remains a key area of focus for us, as evidenced by the fact that 25% of our directors have less than three years’ tenure, including two directors with less than one year of tenure.

  Our Amended and Restated By-Laws (“Bylaws”) provide for proxy access by shareholders.

  Our Chairman and CEO positions are separate.

  Our Board has established a Lead Independent Director position.

  All of our directors are elected annually.

  In uncontested elections, our directors must be elected by a majority of the votes cast, and an incumbent director who fails to receive such a majority automatically tenders his or her resignation.

  Our shareholders have the right to act by written consent.

 

  Shareholders owning 25% or more of our outstanding shares may call a special meeting of shareholders.

  We have never had a shareholder rights plan.

  We have no supermajority voting requirements in our Certificate of Incorporation or Bylaws.

  All members of our Audit, Compensation and Nominating and Governance Committees are independent as defined by the New York Stock Exchange listing standards and applicable Securities and Exchange Commission (“SEC”) rules.

  Danaher (including its subsidiaries during the period we have owned them) has made no political contributions since at least 2012 and has no intention of contributing any Danaher funds or assets for political purposes, and we disclose our political expenditures policy on our public website.

 

 

Below is an overview of each of the director nominees you are being asked to elect at the 2017 Annual Meeting.

 

    NAME  

DIRECTOR

SINCE

  PRIMARY OCCUPATION   COMMITTEE
MEMBERSHIPS
   OTHER
BOARDS
   
  Donald J. Ehrlich*   1985   Former President and CEO, Schwab Corp.  

A, C (Chair);

Lead
Independent
Director

   0  
  Linda Hefner Filler*   2005   President of Retail Products and Chief Merchandising Officer, Walgreen Co.   N (Chair)    0  
  Thomas P. Joyce, Jr.   2014  

President and Chief Executive Officer,

Danaher Corporation

  F, E    0  
  Robert J. Hugin*   2016   Executive Chairman of the Board of Directors, Celgene Corporation   C    2  
  Teri List-Stoll*   2011   Executive Vice President and Chief Financial Officer, Gap Inc.   A    1  
  Walter G. Lohr, Jr.*   1983   Retired partner, Hogan Lovells   C, F, N    0  
  Mitchell P. Rales   1983   Chairman of the Executive Committee, Danaher Corporation  

F (Chair),

E (Chair)

   2  
  Steven M. Rales   1983   Chairman of the Board, Danaher Corporation   F, E    1  
  John T. Schwieters*   2003   Principal, Perseus Realty, LLC   A (Chair), N    0  
  Alan G. Spoon*   1999   Partner Emeritus, Polaris Partners   C    4  
  Raymond C. Stevens, Ph.D.*   2017   Provost Professor of Biological Sciences and Chemistry, and Director of The Bridge Institute, at the University of Southern California      0  
  Elias A. Zerhouni, M.D.*   2009  

President, Global Research & Development, Sanofi S.A.

  N    0  
            
  * Independent director
  A Audit Committee
  C Compensation Committee
E Executive Committee
F Finance Committee
N Nominating & Governance Committee
 

 

 

iv     DANAHER  2017 PROXY STATEMENT       
  


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Executive Compensation Highlights

Overview of Executive Compensation Program

As discussed in detail under “Compensation Discussion and Analysis,” with the goal of building long-term value for our shareholders, we have developed an executive compensation program designed to:

 

    attract and retain executives with the leadership skills, attributes and experience necessary to succeed in an enterprise with Danaher’s size, diversity and global footprint;  

 

    motivate executives to demonstrate exceptional personal performance and perform consistently at or above the levels that we expect, over the long-term and through a range of economic cycles; and  

 

    link compensation to the achievement of corporate goals that we believe best correlate with the creation of long-term shareholder value.  

To achieve these objectives our compensation program combines annual and long-term components, cash and equity, and fixed and variable elements, with a bias toward long-term equity awards tied closely to shareholder returns and subject to significant vesting and/or holding periods. Our executive compensation program rewards our executive officers when they build long-term shareholder value, achieve annual business goals and maintain long-term careers with Danaher.

Compensation Governance

Our Compensation Committee also recognizes that the success of our executive compensation program over the long-term requires a robust framework of compensation governance. As a result, the Committee regularly reviews external executive compensation practices and trends and incorporates best practices into our executive compensation program:

 

           WHAT WE DO           WHAT WE DON’T DO    
    LOGO      Five-year vesting requirement for equity awards (or in the case of PSUs, three-year vesting and a further two-year holding period)      LOGO      No tax gross-up provisions (except as applicable to management employees generally such as relocation policy)  
    LOGO      Incentive compensation programs feature multiple, different performance measures aligned with business strategy      LOGO      No dividend/dividend equivalents paid on unvested equity awards  
    LOGO      Rigorous clawback policy that is triggered even in the absence of wrongdoing      LOGO      No “single trigger” change of control benefits  
    LOGO      Minimum vesting requirements for equity awards per the Company’s stock plan      LOGO      No active defined benefit pension program since 2003  
    LOGO      Stock ownership requirements for all executive officers      LOGO      No hedging of Danaher securities permitted  
    LOGO      Limited perquisites and the presence of a cap on CEO/CFO personal aircraft usage      LOGO      No long-term incentive compensation is denominated or paid in cash  
    LOGO      Independent compensation consultant that performs no other services for the Company      LOGO      No above-market returns on deferred compensation plans  
            

 

      DANAHER  2017 PROXY STATEMENT      v
 


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Named Executive Officers 2016 Compensation

The following table sets forth the 2016 compensation of our named executive officers. Please see pages 37-39 for information regarding 2015 and 2014 compensation, as well as footnotes.

 

    

NAME AND

PRINCIPAL

POSITION

  SALARY     BONUS     STOCK
AWARDS
    OPTION
AWARDS
   

NON-EQUITY
INCENTIVE

PLAN
COMPENSATION

   

CHANGE IN

PENSION
VALUE AND
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS

    ALL OTHER
COMPENSATION
    TOTAL       
 

Thomas P. Joyce, Jr.,

President and CEO

  $ 1,100,000       0     $ 4,095,424     $ 3,762,923     $ 3,500,000     $ 11,867     $ 498,587     $ 12,968,801    
 

Daniel L. Comas,

Executive Vice

President and CFO

  $ 862,357       0     $ 1,830,931     $ 1,682,232     $ 1,666,505     $ 9,196     $ 271,662     $ 6,322,883    
 

William K. Daniel II,

Executive Vice President

  $ 730,144       0     $ 1,589,854     $ 1,460,842     $ 1,337,989       0     $ 110,968     $ 5,229,797    
 

Brian W. Ellis,

Senior Vice President –

General Counsel

  $ 500,000     $ 325,000     $ 981,721     $ 885,558     $ 643,000       0     $ 372,075     $ 3,707,354    
 

Angela S. Lalor,

Senior Vice President –

Human Resources

  $ 603,986     $ 300,000     $ 867,250     $ 796,901     $ 1,013,851       0     $ 91,318     $ 3,673,306    
 

James A. Lico,

Former Executive Vice

President

  $ 422,717       0     $ 2,167,938     $ 1,992,280     $ 715,063     $ 10,907     $ 173,670     $ 5,482,575    
                   

 

 

 

 

 

 

 

 

 

 

 

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PROPOSAL 1 — ELECTION OF DIRECTORS OF DANAHER

 

The Board has fixed the number of directors at twelve and our entire Board is elected annually. We are seeking your support for the election of the twelve candidates that the Board has nominated to serve on the Board of Directors (each of whom currently serves as a director of the Company), to serve until the 2018 Annual Meeting of shareholders and until his or her successor is duly elected and qualified. We believe these nominees have qualifications consistent with our position as a large, global and diversified science and technology company. We also believe these nominees have the experience and perspective to guide Danaher as we expand our business in high-growth geographies and high-growth market segments,

identify, consummate and integrate appropriate acquisitions, develop innovative and differentiated new products and services, adjust to rapidly changing technologies, business cycles and competition and address the demands of an increasingly regulated environment.

Proxies cannot be voted for a greater number of persons than the twelve nominees named in this Proxy Statement. In the event a nominee declines or is unable to serve, the proxies may be voted in the discretion of the proxy holders for a substitute nominee designated by the Board, or the Board may reduce the number of directors to be elected. We know of no reason why this will occur.

 

 

2017 Director Nominees

 

   

DONALD J. EHRLICH

 

    

LINDA HEFNER FILLER

 

    
   

AGE 79      DIRECTOR SINCE: 1985

 

    

AGE 56      DIRECTOR SINCE: 2005

 

    
   

Mr. Ehrlich served as President and Chief Executive Officer of Schwab Corp., a manufacturer of fire-protective safes, files, cabinets and vault doors, from January 2003 until his retirement in July 2008, and has also served on the boards of private and non-profit organizations.

 

Mr. Ehrlich also founded and served as the chairman and chief executive officer of an NYSE-listed publicly-traded manufacturing company, and has founded and served as CEO of two privately held manufacturing companies. As an entrepreneur and business leader who began his career on the factory floor, has been awarded over fifteen patents and worked his way to leadership of an NYSE-listed publicly-traded company, Mr. Ehrlich has a broad understanding of the strategic challenges and opportunities facing a publicly-traded company such as Danaher. He also has a broad, functional skill-set in the areas of engineering, finance, capital allocation and executive compensation.

    

Ms. Hefner Filler has served as President of Retail Products and Chief Merchandising Officer of Walgreen Co., a national drugstore chain, since January 2015. From March 2013 until June 2014, Ms. Hefner Filler served as President, North America of Claire’s Stores, Inc., a specialty retailer; from May 2007 to June 2012, as Executive Vice President of Wal-Mart Stores Inc., an operator of retail stores and warehouse clubs, and from April 2009 to June 2012 also as Chief Merchandising Officer for Sam’s Club, a division of Wal-Mart; and from May 2004 through December 2006, as Executive Vice President—Global Strategy for Kraft Foods Inc., a food and beverage company.

 

Ms. Hefner Filler has served in senior management roles with leading retail and consumer goods companies, with general management responsibilities and responsibilities in the areas of marketing, branding and merchandising. Understanding and responding to the needs of our customers is fundamental to Danaher’s business strategy, and Ms. Hefner Filler’s keen marketing and branding insights have been a valuable resource to Danaher’s Board. Her prior leadership experiences with large public companies have given her valuable perspective for matters of global portfolio strategy and capital allocation as well as global business practices.

 

    

 

      DANAHER  2017 PROXY STATEMENT      1
 


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  Proposal 1 — Election of Directors of Danaher

 

 

   

ROBERT J. HUGIN

 

    

THOMAS P. JOYCE, JR.

 

    
    AGE 62      DIRECTOR SINCE: 2016     

AGE 56      DIRECTOR SINCE: 2014

 

    
   

Mr. Hugin has served as Executive Chairman of the board of directors of Celgene Corp., a global biopharmaceutical company, since March 2016. Since joining Celgene in 1999, he has served in a series of progressively more responsible leadership positions including serving as Chairman of the Board from 2011 to March 2016 and as Chief Executive Officer from June 2010 until March 2016. Prior to joining Celgene, Mr. Hugin served as a Managing Director at J.P. Morgan & Co. Inc., which he joined in 1985. From 1976 to 1983, Mr. Hugin served as a United States Marine Corps infantry officer. Mr. Hugin is also a director of The Medicines Company. Mr. Hugin was originally proposed to the Nominating and Governance Committee for election as a director by a third party recruiting firm.

 

Mr. Hugin’s extensive biopharmaceutical leadership experience gives him unique insights into the strategic opportunities and challenges facing companies that serve the medical and life sciences industries, which are key areas of focus for Danaher. Mr. Hugin has also served as Chairman of the board of directors of the Pharmaceutical Research and Manufacturers of America (PhRMA) and is a member of the board of trustees of Princeton University, through which he has gained valuable knowledge of regulatory, legal and legislative issues affecting the industries we serve.

 

     Mr. Joyce has served as Danaher’s President and Chief Executive Officer since September 2014. Mr. Joyce joined Danaher in 1989 and served in leadership positions in a variety of different functions and businesses before his promotion to President and Chief Executive Officer. His broad operating and functional experience and in-depth knowledge of Danaher’s businesses and of the Danaher Business System are particularly valuable to the Board given the complex, diverse nature of Danaher’s portfolio.     
   

TERI LIST-STOLL

 

    

WALTER G. LOHR, JR.

 

    
   

AGE 54      DIRECTOR SINCE: 2011

 

     AGE 73      DIRECTOR SINCE: 1983     
   

Ms. List-Stoll has served as Executive Vice President and Chief Financial Officer of Gap Inc., a global clothing retailer, since January 2017. Prior to joining Gap, she served as Executive Vice President and Chief Financial Officer of Dick’s Sporting Goods, Inc., a sporting goods retailer, from August 2015 to August 2016, and with Kraft Foods Group, Inc., a food and beverage company, as Advisor from March 2015 to May 2015, as Executive Vice President and Chief Financial Officer from December 2013 to February 2015 and as Senior Vice President of Finance from September 2013 to December 2013. From 1994 to September 2013, Ms. List-Stoll served in a series of progressively more responsible positions in the accounting and finance organization of The Procter & Gamble Company, a consumer goods company, most recently as Senior Vice President and Treasurer. Prior to joining Procter & Gamble, Ms. List-Stoll was employed by the accounting firm of Deloitte & Touche for almost ten years. Ms. List-Stoll is a member of the board of directors of Microsoft Corporation.

 

Ms. List-Stoll’s experience dealing with complex finance and accounting matters for Gap, Dick’s, Kraft and Procter & Gamble have given her an appreciation for and understanding of the similarly complex finance and accounting matters that Danaher faces. In addition, through her leadership roles with large, global companies she has insight into the business practices that are critical to the success of a large, growing public company such as Danaher.

 

    

Mr. Lohr was a partner of Hogan Lovells, a global law firm, for over five years until retiring in June 2012 and has also served on the boards of private and non-profit organizations.

 

Prior to his tenure at Hogan Lovells, Mr. Lohr served as assistant attorney general for the State of Maryland. He has extensive experience advising companies in a broad range of transactional matters, including mergers and acquisitions, contests for corporate control and securities offerings. His extensive knowledge of the legal strategies, issues and dynamics that pertain to mergers and acquisitions and capital raising has been a critical resource for Danaher given the importance of its acquisition program.

    

 

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Proposal 1 — Election of Directors of Danaher  

 

 

   

MITCHELL P. RALES

 

    

STEVEN M. RALES

 

    
   

AGE 60      DIRECTOR SINCE: 1983

 

     AGE 65      DIRECTOR SINCE: 1983     
   

Mr. Rales is a co-founder of Danaher and has served as Chairman of the Executive Committee of Danaher since 1984. He was also President of the Company from 1984 to 1990. Mr. Rales is also a member of the board of directors of each of Colfax Corporation and Fortive Corporation, and is a brother of Steven M. Rales.

 

The strategic vision and leadership of Mr. Rales and his brother, Steven Rales, helped create the Danaher Business System and have guided Danaher down a path of consistent, profitable growth that continues today. In addition, as a result of his substantial ownership stake in Danaher, he is well-positioned to understand, articulate and advocate for the rights and interests of the Company’s shareholders.

 

    

Mr. Rales is a co-founder of Danaher and has served as Danaher’s Chairman of the Board since 1984. He was also CEO of the Company from 1984 to 1990. Mr. Rales is also a member of the board of directors of Fortive Corporation, and is a brother of Mitchell P. Rales.

 

The strategic vision and leadership of Mr. Rales and his brother, Mitchell Rales, helped create the Danaher Business System and have guided Danaher down a path of consistent, profitable growth that continues today. In addition, as a result of his substantial ownership stake in Danaher, he is well-positioned to understand, articulate and advocate for the rights and interests of the Company’s shareholders.

 

    
   

JOHN T. SCHWIETERS

 

    

ALAN G. SPOON

 

    
   

AGE 77      DIRECTOR SINCE: 2003

 

     AGE 66      DIRECTOR SINCE: 1999     
   

Mr. Schwieters has served as Principal of Perseus Realty, LLC, a real estate investment and development firm, since July 2013. He also served as a Senior Executive of Perseus, LLC, a merchant bank and private equity fund management company, from May 2012 to June 2016 and as Senior Advisor from March 2009 to May 2012. Within the past five years Mr. Schwieters has served as a director of Smithfield Foods, Inc. and Choice Hotels International, Inc.

 

In addition to his roles with Perseus, Mr. Schwieters led the Mid-Atlantic region of one of the world’s largest accounting firms after previously leading that firm’s tax practice in the Mid-Atlantic region, and has served on the boards and chaired the audit committees of several NYSE-listed public companies. He brings to Danaher extensive knowledge and experience in the areas of public accounting, tax accounting and finance, which are areas of critical importance to Danaher as a large, global and complex public company.

 

    

Mr. Spoon has served as Partner Emeritus of Polaris Partners, a company that invests in private technology and life science firms, since January 2015. Mr. Spoon has been a partner at Polaris since May 2000, and served as Managing General Partner from 2000 to 2010. Mr. Spoon is also a member of the board of directors of each of Fortive Corporation, IAC/InterActiveCorp., Match Group, Inc. and Cable One, Inc.

 

In addition to his leadership role at Polaris Partners, Mr. Spoon previously served as president, chief operating officer and chief financial officer of one of the country’s largest, publicly-traded education and media companies, and has served on the boards of numerous public and private companies. His public company leadership experience gives him insight into business strategy, leadership and executive compensation and his public company and private equity experience give him insight into technology and life science trends, acquisition strategy and financing, each of which represents an area of key strategic opportunity for the Company.

 

    

 

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  Proposal 1 — Election of Directors of Danaher

 

 

   

RAYMOND C. STEVENS, PH.D.

 

    

ELIAS A. ZERHOUNI, M.D.

 

    
   

AGE 53      DIRECTOR SINCE: 2017

 

     AGE 65      DIRECTOR SINCE: 2009     
   

Professor Stevens has served as Provost Professor of Biological Sciences and Chemistry, and Director of The Bridge Institute, at the University of Southern California, a private research university, since July 2014. From 1999 until July 2014, he served as Professor of Molecular Biology and Chemistry with The Scripps Research Institute, a non-profit research organization. Professor Stevens is also Founding Director of the iHuman Institute at ShanghaiTech University, and has launched multiple biotechnology companies focused on drug discovery. Professor Stevens was originally proposed to the Nominating and Governance Committee for election as a director by one of the Company’s management directors.

 

Professor Stevens is considered among the world’s most influential biomedical scientists in molecular research. A pioneer in human cellular behavior research, he has been involved in the creation of therapeutic molecules that led to breakthrough drugs aimed at curing influenza, childhood diseases, neuromuscular disorders and diabetes. Professor Stevens’ insights in the area of molecular research, as well as his experience bringing industry and academia together to advance drug development, are highly beneficial to Danaher given our strategic focus on the development of research tools used to understand the causes of disease, identify new therapies and test new drugs and vaccines.

 

    

Dr. Zerhouni has served as President, Global Research & Development, for Sanofi S.A., a global pharmaceutical company, since January 2011. From 2008 until 2011, he provided advisory and consulting services to various non-profit and other organizations as Chairman and President of Zerhouni Holdings. From 2002 to 2008, Dr. Zerhouni served as director of the National Institutes of Health, and from 1996 to 2002, he served as Chair of the Russell H. Morgan Department of Radiology and Radiological Sciences, Vice Dean for Research and Executive Vice Dean of the Johns Hopkins School of Medicine.

 

Dr. Zerhouni, a physician, scientist and world-renowned leader in radiology research, is widely viewed as one of the leading authorities in the United States on emerging trends and issues in medicine and medical care. These insights, as well as his deep, technical knowledge of the research and clinical applications of medical technologies, are of considerable importance given Danaher’s strategic focus in the medical technologies markets. Dr. Zerhouni’s government experience also gives him a strong understanding of how government agencies work, and his experience growing up in North Africa, together with the global nature of the issues he faced at NIH and his role at France-based Sanofi, give him a global perspective that is valuable to Danaher.

 

    

The Board of Directors recommends a vote FOR each of the foregoing nominees.

 

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Board Selection and Refreshment

Director Selection. The Board and its Nominating and Governance Committee believe that it is important that our directors demonstrate:

 

  personal and professional integrity and character;

 

  prominence and reputation in his or her profession;

 

  skills, knowledge and expertise (including business or other relevant experience) that in aggregate are useful and appropriate in overseeing and providing strategic direction with respect to Danaher’s business and serving the long-term interests of Danaher’s shareholders;

 

  the capacity and desire to represent the interests of the shareholders as a whole; and

 

  availability to devote sufficient time to the affairs of Danaher.

The Nominating and Governance Committee is responsible for recommending to the Board a slate of nominees for election at each annual meeting of shareholders. Nominees may be suggested by directors, members of management, shareholders or, in some cases, by a third-party search firm. The Committee considers a wide range of factors when assessing potential director nominees. This includes consideration of the current composition of the Board, any perceived need for one or more particular areas of expertise, the balance of management and independent directors, the need for committee-specific expertise, the evaluations of other prospective nominees and the qualifications of each potential nominee relative to the attributes, skills and experience described above. The Board does not have a formal or informal policy with respect to diversity but believes that the Board, taken as a whole, should embody a diverse set of skills, knowledge, experiences and backgrounds appropriate in light of the Company’s needs, and in this regard also subjectively takes into consideration the diversity (with respect to race, gender and national origin) of the Board when considering director nominees. The Board does not make any particular weighting of diversity or any other characteristic in evaluating nominees and directors.

A shareholder who wishes to recommend a prospective nominee for the Board should notify the Nominating and Governance Committee in writing using the procedures described below under “Other Information – Communications with the Board of Directors” with whatever supporting material the shareholder considers appropriate. If a prospective nominee has been identified other than in connection with a director search process initiated by the Committee, the Committee makes an initial determination as to whether to conduct a full evaluation of the candidate. The Committee’s determination of whether to conduct a full evaluation is based primarily on the Committee’s view as to whether a new or additional Board member is necessary or appropriate at such time, the likelihood that the prospective nominee can satisfy the evaluation factors described above and any other factors as the Committee may deem appropriate. The Committee takes into account whatever information is provided to the Committee with the recommendation of the prospective candidate and any additional inquiries the Committee may in its discretion conduct or have conducted with respect to such prospective nominee.

The graph below illustrates the diverse set of skills, knowledge, experiences and backgrounds represented on our Board:

 

SCIENCE, TECHNOLOGY & HEALTHCARE        

                           5             
                                   

GOVERNMENT        

       1                                 
                                   

PUBLIC COMPANY CEO AND/OR PRESIDENT        

                                6        
                                   

FINANCE AND ACCOUNTING        

                      4                  
                                   

MANUFACTURING        

                      4                  
                                   

INTERNATIONAL        

            2                            
                                   

M&A / STRATEGIC DEVELOPMENT        

                                6        
                                   

BRANDING AND MARKETING        

       1                                 
                                   

LEGAL        

       1                                 

Board Refreshment

As part of its process for identifying and evaluating directors and director nominees and ensuring an appropriate range of backgrounds and expertise, our Board actively considers Board refreshment. Supported by the Nominating and Governance Committee, the Board

 

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  Proposal 1 — Election of Directors of Danaher

 

 

seeks to thoughtfully balance the knowledge and experience that comes from longer-term Board service with the fresh ideas, energy and new domain expertise that can come from adding new directors. As evidence of this focus on refreshment, 25% of our directors have less than three years’ tenure, including two directors with less than one year of tenure.

Proxy Access

Our Bylaws permit a shareholder, or a group of up to twenty shareholders, owning three percent or more of the Company’s outstanding shares of Common Stock continuously for at least three years to nominate and include in the Company’s annual meeting proxy materials a number of director nominees up to the greater of (1) two, or (2) twenty percent of the Board, provided that the shareholder(s) and nominee(s) satisfy the requirements specified in the Bylaws.

Majority Voting Standard

Our Bylaws provide for majority voting in uncontested director elections, and our Board has adopted a director resignation policy. Under the policy, our Board will not appoint or nominate for election to the Board any person who has not tendered in advance an irrevocable resignation effective in such circumstances where the individual does not receive a majority of the votes cast in an uncontested election and such resignation is accepted by the Board. If an incumbent director is not elected by a majority of the votes cast in an uncontested election, our Nominating and Governance Committee will submit for prompt consideration by the Board a recommendation whether to accept or reject the director’s resignation. The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation.

At any meeting of shareholders for which the Secretary of the Company receives a notice that a shareholder has nominated a person for election to the Board of Directors in compliance with the Company’s Bylaws and such nomination has not been withdrawn on or before the tenth day before the Company first mails its notice of meeting to the Company’s shareholders, the directors will be elected by a plurality of the votes cast (which means that the nominees who receive the most affirmative votes would be elected to serve as directors).

 

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CORPORATE GOVERNANCE

 

 

Corporate Governance Overview

Our Board of Directors recognizes that Danaher’s success over the long-term requires a robust framework of corporate governance that serves the best interests of all our shareholders. Below are highlights of our corporate governance framework, and additional details follow in the sections below.

 

 

  Board refreshment remains a key area of focus for us, as evidenced by the fact that 25% of our directors have less than three years’ tenure, including two directors with less than one year of tenure.

 

  Our Amended and Restated By-Laws (“Bylaws”) provide for proxy access by shareholders.

 

  Our Chairman and CEO positions are separate.

 

  Our Board has established a Lead Independent Director position.

 

  All of our directors are elected annually.

 

  In uncontested elections, our directors must be elected by a majority of the votes cast, and an incumbent director who fails to receive such a majority automatically tenders his or her resignation

   

 

  Our shareholders have the right to act by written consent.

 

  Shareholders owning 25% or more of our outstanding shares may call a special meeting of shareholders.

 

  We have never had a shareholder rights plan.

 

  We have no supermajority voting requirements in our Certificate of Incorporation or Bylaws.

 

  All members of our Audit, Compensation and Nominating and Governance Committees are independent as defined by the New York Stock Exchange listing standards and applicable SEC rules.

 

  Danaher (including its subsidiaries during the period we have owned them) has made no political contributions since at least 2012 and has no intention of contributing any Danaher funds or assets for political purposes, and we disclose our political expenditures policy on our public website.

 

 

Board Leadership Structure and Risk Oversight

Board Leadership Structure

The Board has separated the positions of Chairman and CEO because it believes that, at this time, this structure best enables the Board to ensure that Danaher’s business and affairs are managed effectively and in the best interests of shareholders. This is particularly the case in light of the fact that the Company’s Chairman is Steven Rales, a co-founder of the Company who owns approximately 6.2 percent of the Company’s outstanding shares, served as CEO of the company from 1984 to 1990 and continues to serve as an executive officer of the company. As a result of his substantial ownership stake in the Company, the Board believes that Mr. Rales is uniquely able to understand, articulate and advocate for the rights and interests of the Company’s shareholders. Moreover, Mr. Rales uses his management experience with the Company and Board tenure to help ensure that the non-management directors have a keen understanding of the Company’s business as well as the strategic and other risks and opportunities that the Company faces. This enables the Board to more effectively provide insight and direction to, and exercise oversight of, the Company’s President and CEO and the rest of the management team responsible for the Company’s day-to-day business (including with respect to oversight of risk management).

Because Mr. Rales is not independent within the meaning of the NYSE listing standards, our Corporate Governance Guidelines require the appointment of a “Lead Independent Director” and Mr. Ehrlich has been appointed as our Lead Independent Director. As the Lead Independent Director, Mr. Ehrlich:

 

    presides at all meetings of the Board at which the Chairman of the Board and the Chair of the Executive Committee are not present, including the executive sessions of non-management directors;

 

    has the authority to call meetings of the independent directors;

 

    acts as a liaison as necessary between the independent directors and the management directors; and

 

    advises with respect to the Board’s agenda.

 

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  Corporate Governance

 

 

Risk Oversight

The Board’s role in risk oversight at the Company is consistent with the Company’s leadership structure, with management having day-to-day responsibility for assessing and managing the Company’s risk exposure and the Board and its committees overseeing those efforts, with particular emphasis on the most significant risks facing the Company. Each committee reports to the full Board on a regular basis, including as appropriate with respect to the committee’s risk oversight activities. On an annual basis, the Company’s Risk Committee (consisting of members of senior management) inventories, assesses and prioritizes the most significant risks facing the Company as well as related mitigation efforts and provides a report to the Board. With respect to the manner in which the Board’s risk oversight function impacts the Board’s leadership structure, as described above our Board believes that Mr. Rales’ management experience and tenure help the Board to more effectively exercise its risk oversight function.

 

BOARD/COMMITTEE    PRIMARY AREAS OF RISK OVERSIGHT
Full Board   

Risks associated with Danaher’s strategic plan, acquisition and capital allocation program, capital structure, liquidity, organizational structure and other significant risks, and overall risk assessment and risk management policies.

 

Audit Committee   

Major financial risk exposures, significant legal, compliance, reputational and cyber security risks and overall risk assessment and risk management policies.

 

Compensation Committee

 

   Risks associated with compensation policies and practices, including incentive compensation.

Nominating and Governance Committee

 

   Risks related to corporate governance, effectiveness of Board and committee oversight and review of director candidates, conflicts of interest and director independence.

Succession Planning

With the support of our Nominating and Governance Committee, our Board maintains and annually reviews both a long-term succession plan and emergency succession plan for the CEO position. The Board holds a formal talent review and succession planning session annually, which includes a review of potential successors for the CEO position and other executive positions, as well as current development needs for potential successors.

Board of Directors and Committees of the Board

 

 

General

The Board met seven times during 2016. All directors attended at least 75% of the aggregate of the total number of meetings of the Board and of all committees of the Board on which they served (during the period they so served) during 2016. Danaher typically schedules a Board meeting in conjunction with each annual meeting of shareholders and as a general matter expects that the members of the Board will attend the annual meeting. All of the ten directors serving at the time attended the Company’s annual meeting in May 2016.

The membership of each of the Board’s committees as of March 13, 2017 is set forth to the right. While each of the Committees is authorized to delegate its powers to sub-committees, none of the Committee did do so during 2016. The Audit, Compensation and Nominating and Governance Committees report to the Board on their actions and recommendations at each regularly scheduled Board meeting.

 

NAME OF DIRECTOR   AUDIT     COMPENSATION    

NOMINATING AND

GOVERNANCE

    EXECUTIVE     FINANCE  

Donald J. Ehrlich

    X       Chair                          

Linda Hefner Filler

                    Chair                  

Robert J. Hugin

            X                          

Thomas P. Joyce, Jr.

                            X       X  

Walter G. Lohr, Jr.

            X       X               X  

Teri List-Stoll

    X                                  

Mitchell P. Rales

                            Chair       Chair  

Steven M. Rales

                            X       X  

John T. Schwieters

    Chair               X                  

Raymond C. Stevens, Ph.D.

                                       

Alan G. Spoon

            X                          

Elias A. Zerhouni, M.D.

                    X                  
 

 

Audit Committee

The Audit Committee met ten times during 2016. The Audit Committee prepares a report as required by the SEC to be included in this Proxy Statement and assists the Board in overseeing:

 

  the quality and integrity of Danaher’s financial statements;

 

  the effectiveness of Danaher’s internal control over financial reporting;

 

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  the qualifications, independence and performance of Danaher’s independent auditors;

 

  the performance of Danaher’s internal audit function;

 

  Danaher’s compliance with legal and regulatory requirements;

 

  the risks described above under “-Risk Oversight”; and

 

  the Company’s swaps and derivatives transactions and related policies and procedures.

The Board has determined that each of the members of the Audit Committee is independent for purposes of Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (“Securities Exchange Act”) and the NYSE listing standards, qualifies as an audit committee financial expert as that term is defined in Item 407(d)(5) of Regulation S-K under the Securities Exchange Act and is financially literate within the meaning of the NYSE listing standards. The Committee typically meets in executive session, without the presence of management, at its regularly scheduled meetings.

Compensation Committee

The Compensation Committee met nine times during 2016. The Compensation Committee discharges the Board’s responsibilities relating to compensation of our executive officers, including evaluating the performance of, and approving the compensation paid to, our executive officers. The Committee also:

 

  reviews and discusses with Company management the Compensation Discussion and Analysis and recommends to the Board the inclusion of the Compensation Discussion and Analysis in the annual meeting proxy statement;

 

  reviews and makes recommendations to the Board with respect to the adoption, amendment and termination of all executive incentive compensation plans and all equity compensation plans, and exercises all authority of the Board (and all responsibilities assigned by such plans to the Committee) with respect to the administration of such plans;

 

  monitors compliance by directors and executive officers with the Company’s stock ownership requirements;

 

  assists the Board in overseeing the risks described above under “-Risk Oversight”;

 

  prepares a report as required by the SEC to be included in the annual meeting proxy statement; and

 

  considers factors relating to independence and conflicts of interests in connection with the compensation consultants that provide advice to the Committee.

Each member of the Compensation Committee is an “outside director” for purposes of Section 162(m), a “non-employee director” for purposes of Rule 16b-3 under the Securities Exchange Act and, based on the determination of the Board, independent under the NYSE listing standards and under Rule 10C-1 under the Securities Exchange Act.

Management Role in Supporting the Compensation Committee

Our Senior Vice President-Human Resources, Vice President-Compensation and Secretary generally attend, and from time-to-time our CEO attends, the Compensation Committee meetings. In particular, our CEO:

 

  provides background regarding the interrelationship between our business objectives and executive compensation matters and advises on the alignment of incentive plan performance measures with our overall strategy;

 

  participates in the Committee’s discussions regarding the performance and compensation of the other executive officers and provides recommendations to the Committee regarding all significant elements of compensation paid to such officers, their annual, personal performance objectives and his evaluation of their performance (the Committee gives considerable weight to our CEO’s evaluation of and recommendations with respect to the other executive officers because of his direct knowledge of each such officer’s performance and contributions); and

 

  provides feedback regarding the companies that he believes Danaher competes with in the marketplace and for executive talent.

Our human resources and legal departments also assist the Committee Chair in scheduling and setting the agendas for the Committee’s meetings, prepare meeting materials and provide the Committee with data relating to executive compensation as requested by the Committee. The Committee typically meets in executive session, without the presence of management, at its regularly scheduled meetings.

Independent Compensation Consultant Role in Supporting the Compensation Committee

Under the terms of its charter, the Committee has the authority to engage the services of outside advisors and experts to assist the Committee. The Committee has engaged Frederic W. Cook & Co., Inc. (“FW Cook”) as the Committee’s independent compensation

 

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  Corporate Governance

 

 

consultant since 2008. The Committee engages FW Cook because it is considered one of the premier independent compensation consulting firms in the country and has never provided any services to the Company other than the compensation-related services provided to or at the direction of the Compensation Committee and the Nominating and Governance Committee. FW Cook takes its direction solely from the Committee (and with respect to matters relating to the non-management director compensation program, the Nominating and Governance Committee). FW Cook’s primary responsibilities in 2016 were to:

 

  provide advice and data in connection with the structuring of the executive compensation and equity compensation programs of both Danaher and Fortive and the compensation levels for the Company’s and Fortive’s executive officers and directors compared to their respective peers;

 

  assess the Company’s executive compensation program in the context of compensation governance best practices;

 

  update the Committee regarding legislative and regulatory initiatives and other trends in the area of executive compensation;

 

  provide data regarding the share dilution and compensation costs attributable to the Company’s equity compensation program; and

 

  advise regarding the Company’s executive compensation public disclosures.

The Committee does not place any material limitations on the scope of the feedback provided by FW Cook. In the course of discharging its responsibilities, FW Cook may from time to time and with the Committee’s consent, request from management information regarding compensation amounts and practices, the interrelationship between our business objectives and executive compensation matters, the nature of the Company’s executive officer responsibilities and other business information. The Committee has considered whether the compensation consultant work performed for or at the direction of the Compensation Committee and the Nominating and Governance Committee raises any conflict of interest, taking into account the factors listed in Securities Exchange Act Rule 10C-1(b)(4), and has concluded that such work does not create any conflict of interest.

Nominating and Governance Committee

The Nominating and Governance Committee met five times in 2016. The Nominating and Governance Committee:

 

    assists the Board in identifying individuals qualified to become Board members;

 

    proposes to the Board a slate of directors for election by Danaher’s shareholders at each annual meeting;

 

    makes recommendations to the Board regarding the membership of the Board’s committees;

 

    makes recommendations to the Board regarding matters of corporate governance;

 

    oversees the operation of Danaher’s Corporate Governance Guidelines and facilitates the annual review of the performance of the Board and its committees;

 

    assists the Board in CEO succession planning;

 

    assists the Board in overseeing the risks described above under “-Risk Oversight”

 

    reviews and makes recommendations to the Board regarding non-management director compensation; and

 

    administers Danaher’s Related Person Transactions Policy.

The Board has determined that all of the members of the Nominating and Governance Committee are independent within the meaning of the NYSE listing standards.

Finance Committee

The Finance Committee did not meet in 2016. The Finance Committee approves business acquisitions, investments and divestitures up to the levels of authority delegated to it by the Board.

Executive Committee

The Executive Committee met five times in 2016. The Executive Committee exercises between meetings of the Board such powers and authority in the management of the business and affairs of the Company as are specifically delegated to it by the Board from time to time.

Corporate Governance Guidelines, Committee Charters and Standards of Conduct

As part of its ongoing commitment to good corporate governance, our Board of Directors has codified its corporate governance practices into a set of Corporate Governance Guidelines and has also adopted written charters for each of the committees of the Board. Danaher has also adopted a code of business conduct and ethics for directors, officers (including our principal executive officer,

 

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principal financial officer and principal accounting officer) and employees, known as the Standards of Conduct. The Corporate Governance Guidelines, charters of each of the Audit, Compensation and Nominating and Governance Committees and Standards of Conduct are available in the “Investors – Corporate Governance” section of our website at http://www.danaher.com.

Corporate Social Responsibility

Corporate social responsibility is deeply ingrained in our culture and work, and has been for decades. We are a science and technology innovator committed to solving customers’ most complex challenges, and improving quality of life around the world. We are also placing a greater emphasis on complementing our external performance with internal initiatives that help ensure supportive, diverse and inclusive work environments worldwide—places where our associates can be themselves, engage deeply with their work and seize opportunities to realize their own potential through professional development. More information about Danaher’s corporate social responsibility efforts is included in our 2016/2017 Corporate Social Responsibility Report available in the “Investors – Corporate Governance” section of our website at http://www.danaher.com.

 

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DIRECTOR COMPENSATION

Director Compensation Program

Director Compensation Philosophy

We use a combination of cash and equity-based compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, the Board and the Nominating and Governance Committee are guided by the following principles:

 

  compensation should fairly pay directors for work required in a company of our size and scope, and differentiate among directors where appropriate to reflect different levels of work and responsibilities;

 

  a significant portion of the total compensation should be paid in stock-based awards to align directors’ interests with the long-term interests of our shareholders; and

 

  the structure of the compensation program should be simple and transparent.

Process for Setting Director Compensation

The Nominating and Governance Committee is responsible for reviewing and making recommendations to the Board regarding non-management director compensation (although the Board makes the final determination regarding the amounts and type of non-management director compensation). Since 2011, the Committee has engaged FW Cook, the Board’s independent compensation consultant, to prepare regular reports on market non-management director compensation practices and evaluate our program in light of the results of such reports. The Committee anticipates reviewing, and seeking advice from FW Cook regarding, the Company’s non-management director compensation at least every other year or more often as needed.

In addition, included in the proposed 2007 Stock Incentive Plan amendments set forth in Proposal 3 is a limit on the cash and equity compensation that may be paid to a non-management director each year. Under the proposed terms, an annual limit of $800,000 per calendar year applies to the sum of all cash and equity-based awards (calculated based on the grant date fair value of such awards for financial reporting purposes) granted to each non-management director for services as a member of the Board (plus an additional limit of $500,000 per calendar year with respect to any non-executive Board chair or vice chair). Please see “Proposal 3—Approval of Amendments to the Danaher Corporation 2007 Stock Incentive Plan and Material Terms of the Plan’s Performance Goals” for more information regarding this and other terms of the proposed amendments.

Director Compensation Structure

Effective as of January 1, 2017, each non-management director receives:

 

  An annual cash retainer of $115,000, paid in four, equal installments following each quarter of service.

 

  If a director attends more than twenty (20) Board and Board committee meetings in aggregate during a calendar year, a cash meeting fee of $2,000 for each Board and committee meeting attended during such year in excess of such threshold, paid in aggregate following completion of such year.

 

  An annual equity award with a target award value of $165,000, divided equally between options and RSUs. The options are fully vested as of the grant date. The RSUs vest upon the earlier of (1) the first anniversary of the grant date, or (2) the date of, and immediately prior to, the next annual meeting of Danaher’s shareholders following the grant date, but the underlying shares are not issued until the earlier of the director’s death or the first day of the seventh month following the director’s retirement from the Board.

 

  Reimbursement for Danaher-related out-of-pocket expenses, including travel expenses.

In addition, the lead independent director receives an annual cash retainer of $30,000, the chair of the Audit Committee receives an annual cash retainer of $25,000, the chair of the Compensation Committee receives an annual cash retainer of $20,000 and the chair of the Nominating and Governance Committee receives an annual cash retainer of $15,000, in each case paid in four, equal installments following each quarter of service.

Directors’ Deferred Compensation Plan

Each non-management director can elect to defer all or part of the cash director fees that he or she receives with respect to a particular year under the Non-Employee Directors’ Deferred Compensation Plan, which is a sub-plan under the 2007 Stock Incentive Plan. Amounts deferred under the plan are converted into a particular number of phantom shares of Danaher Common Stock, calculated based on the closing price of Danaher’s Common Stock on the date that such quarterly fees would otherwise have been paid. A director may elect to have his or her plan balance distributed upon cessation of Board service, or one, two, three, four or five years after cessation of Board service. All distributions from the plan are in the form of shares of Danaher Common Stock.

 

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Director Compensation  

 

 

Director Stock Ownership Requirements

Our Board has adopted stock ownership requirements for non-management directors. Under the requirements, each non-management director (within five years of his or her initial election or appointment) is required to beneficially own Danaher shares with a market value of at least five times his or her annual cash retainer (excluding the additional cash retainers paid to the committee chairs and the Lead Independent Director). Once a director has acquired a number of shares that satisfies such ownership multiple, such number of shares then becomes such director’s minimum ownership requirement (even if his or her retainer increases or the fair market value of such shares subsequently declines). Under the policy, beneficial ownership includes RSUs held by the director, shares in which the director or his or her spouse or child has a direct or indirect interest and phantom shares of Danaher Common Stock in the Non-Employee Directors’ Deferred Compensation Plan, but does not include shares subject to unexercised stock options or pledged shares. Each Danaher director is in compliance with the policy.

Anti-Pledging/Hedging Policy

In 2013 Danaher’s Board adopted a policy that prohibits any director or executive officer from pledging as security under any obligation any shares of Danaher Common Stock that he or she directly or indirectly owns and controls. The Board exempted from the policy shares of Danaher Common Stock that were already pledged as of the time the policy was adopted, but pledged shares of Danaher Common Stock do not count toward stock ownership requirements and the pledging of any additional shares is prohibited. Certain shares of Common Stock owned by Messrs. Steven and Mitchell Rales were exempted from the policy because such shares have been pledged for decades, to secure lines of credit that reduce the need to sell shares for liquidity purposes. Messrs. Steven and Mitchell Rales acquired these shares in cash purchase transactions between 1983 and 1988, and did not receive them as compensation or purchase them from Danaher. Notwithstanding that these shares are exempted from Danaher’s policy, as part of its risk oversight function the Audit Committee of Danaher’s Board regularly reviews these share pledges to assess whether such pledging poses an undue risk to the Company. The Committee has concluded that the existing pledge arrangements do not pose an undue risk to the Company, based in particular on its consideration of the following factors:

 

  the degree of overcollateralization (i.e., the amount by which the market value of the shares pledged as collateral exceeds the amount of secured indebtedness), which the Committee believes is a key factor in assessing the degree of risk posed by the pledging arrangements;

 

  the number of shares and percentage of total outstanding shares pledged; and

 

  the 15% reduction since 2013 in the number of shares pledged by Messrs. Steven Rales and Mitchell Rales.

Danaher policy also prohibits Danaher directors and employees (including executive officers) from engaging in any transactions involving a derivative of a Danaher security, including hedging transactions.

Director Summary Compensation Table

The table below summarizes the compensation paid by Danaher to the non-management directors for the year ended December 31, 2016. Each of Steven Rales, Mitchell Rales and Thomas P. Joyce, Jr. serves as a director and executive officer of Danaher but does not receive any additional compensation for services provided as a director. Neither Steven Rales nor Mitchell Rales is a named executive officer. Details regarding the 2016 executive compensation provided to each of Steven Rales and Mitchell Rales is set forth under “Director Independence and Related Person Transactions.”

 

NAME    FEES EARNED OR
PAID IN CASH ($)
     STOCK AWARDS
($)(1)
     OPTION AWARDS
($)(1)
     TOTAL ($)  

Donald J. Ehrlich(2)

   $ 163,000      $ 76,970      $ 67,068      $ 307,038  

Linda Hefner Filler(2)(3)

     0      $ 201,970      $ 67,068      $ 269,038  

Robert J. Hugin(2)(4)

   $ 51,978      $ 76,970      $ 67,068      $ 196,016  

Teri List-Stoll(2)(3)

     0      $ 186,970      $ 67,068      $ 254,038  

Walter G. Lohr, Jr.(2)

   $ 110,000      $ 76,970      $ 67,068      $ 254,038  

John T. Schwieters(2)

   $ 139,000      $ 76,970      $ 67,068      $ 283,038  

Alan G. Spoon(2)(3)

     0      $ 186,970      $ 67,068      $ 254,038  

Raymond C. Stevens, Ph.D.(5)

     0        0        0        0  

Elias A. Zerhouni, M.D. (2)(3)

     0      $ 186,970      $ 67,068      $ 254,038  

 

(1)

The amounts reflected in these columns represent the aggregate grant date fair value of the applicable award computed in accordance with FASB ASC Topic 718. With respect to stock awards, the grant date fair value under FASB ASC Topic 718 is calculated based on the number of shares of

 

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  Common Stock underlying the award, times the closing price of the Danaher Common Stock on the date of grant. With respect to stock options, the grant date fair value under FASB ASC Topic 718 has been calculated using the Black-Scholes option pricing model, based on the following assumptions (and assuming no forfeitures): an 8.0 year option life, a risk-free interest rate of 1.48%; a stock price volatility rate of 24.84%; and a dividend yield of 0.67% per share.

 

(2) The table below sets forth as to each non-management director the aggregate number of unvested RSUs and aggregate number of stock options outstanding as of December 31, 2016 (other than for Professor Stevens, who was not appointed to Danaher’s Board until February 2017). All of the stock options set forth in the table below are fully vested. The RSUs set forth in the table below vest in accordance with the terms described above. As discussed in further detail in “Compensation Discussion and Analysis—Treatment of Equity-Based Compensation Upon Fortive Separation,” the share amounts set forth below reflect adjustments as applicable pursuant to the anti-dilution provisions of the 2007 Plan to account for the Fortive Separation and preserve the intrinsic value of each award.

 

NAME OF DIRECTOR    AGGREGATE NUMBER OF DANAHER
STOCK OPTIONS OWNED AS OF DECEMBER 31, 2016
    

AGGREGATE NUMBER OF UNVESTED

DANAHER RSUS OWNED AS OF DECEMBER 31, 2016

 

Donald J. Ehrlich

     64,478        970  

Linda Hefner Filler

     64,478        970  

Robert J. Hugin

     2,930        970  

Teri List-Stoll

     17,380        970  

Walter G. Lohr, Jr.

     64,478        970  

John T. Schwieters

     64,478        970  

Alan G. Spoon

     53,900        970  

Elias A. Zerhouni, M.D.

     32,744        970  

 

(3) Each of Mss. Hefner Filler and List-Stoll, Mr. Spoon and Dr. Zerhouni deferred 100% of his or her 2016 cash director fees into phantom shares of Danaher Common Stock under the Non-Employee Directors’ Deferred Compensation Plan and pursuant to such deferrals received a total of 1,492 shares, 1,313 shares, 1,313 shares and 1,313 shares, respectively. Since these phantom shares are accounted for under FASB ASC Topic 718, they are reported under the “Stock Awards” column in the table above.

 

(4) Mr. Hugin was appointed to the Board in July 2016.

 

(5) Professor Stevens was appointed to the Board in February 2017.

 

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DIRECTOR INDEPENDENCE AND RELATED PERSON TRANSACTIONS

Director Independence

At least a majority of the Board must qualify as independent within the meaning of the listing standards of the NYSE. The Board has affirmatively determined that Mss. Hefner Filler and List-Stoll, Messrs. Ehrlich, Hugin, Lohr, Schwieters and Spoon, Professor Stevens and Dr. Zerhouni are independent within the meaning of the listing standards of the NYSE. The Board concluded that none of the independent directors possesses any of the bright-line relationships set forth in the listing standards of the NYSE that prevent independence, or except as discussed below, any other relationship with Danaher other than Board membership.

In making its determination with respect to the independence of the directors identified above as independent, the Board considered that in 2016, the Company and its subsidiaries sold products and/or services to and purchased products and/or services from organizations with whom Danaher directors are employed. In each case, the amount of sales and the amount purchases in 2016 were less than 0.4% of the annual revenues of such other organization and of Danaher’s 2016 revenues and the transactions were conducted in the ordinary course of business, on commercial terms and on an arms’-length basis.

Danaher’s non-management directors (all of whom are, as noted above, independent within the meaning of the listing standards of the NYSE) meet in executive session following the Board’s regularly-scheduled meetings. The sessions are chaired by the Lead Independent Director.

Certain Relationships and Related Transactions

Policy

Under Danaher’s written Related Person Transactions Policy, the Nominating and Governance Committee of the Board is required to review and if appropriate approve all related person transactions, prior to consummation whenever practicable. If advance approval of a related person transaction is not practicable under the circumstances or if Danaher management becomes aware of a related person transaction that has not been previously approved or ratified, the transaction is submitted to the Committee at the Committee’s next meeting. The Committee is required to review and consider all relevant information available to it about each related person transaction, and a transaction is considered approved or ratified under the policy if the Committee authorizes it according to the terms of the policy after full disclosure of the related person’s interests in the transaction. Related person transactions of an ongoing nature are reviewed annually by the Committee. The definition of “related person transactions” for purposes of the policy covers the transactions that are required to be disclosed under Item 404(a) of Regulation S-K under the Securities Exchange Act.

Relationships and Transactions

Based on a Schedule 13G/A filed by FMR LLC with the SEC on February 11, 2016, as of December 31, 2015, FMR LLC and certain of its affiliates beneficially owned more than 5% of Danaher’s Common Stock. Certain affiliates of FMR LLC provide services to us in connection with the administration of our stock plans (including the Non-Employee Directors’ Deferred Compensation Plan), the Danaher Corporation & Subsidiaries Savings Plan (the “401(k) Plan”), the Danaher Corporation & Subsidiaries Retirement and Savings Plan (collectively with the 401(k) Plan, the “Savings Plans”) and EDIP. We paid these entities an aggregate of approximately $285,000 for these services for 2016. In addition, Fidelity Management Trust Company serves as trustee and custodian of the Danaher stock and certain other accounts included in our Savings Plans and receives fees from plan participants for these services, and FMR LLC and its affiliates also receive investment management fees from each Fidelity mutual fund offered under the Savings Plans based on a percentage of the plan assets invested in such mutual fund. Based on a Schedule 13G/A filed by FMR LLC with the SEC on February 14, 2017, as of December 31, 2016, FMR LLC and its affiliates no longer beneficially own more than 5% of Danaher’s Common Stock.

For their service as executive officers, each of Steven Rales and Mitchell Rales received a salary of $419,000 and 401(k) Plan contributions of $18,830 during 2016 and is entitled to participate in all of the benefits made generally available to salaried employees as well as all perquisites made generally available to Danaher’s executive officers. The Rales’ do not receive cash incentive compensation or equity awards. In 2016, Danaher provided tax and accounting services to the Rales’ at a cost of approximately $240,000 in the form of one full-time employee (plus health and welfare benefits for the employee), allowed the Rales’ to make personal use of designated Danaher office space at a cost of approximately $440,000 and provided Mr. Steven Rales with a personal car and parking at a cost of $3,708. The incremental cost to the Company of the perquisites set forth above is based on the Company’s out-of-pocket costs with respect to such fees. Separately, in 2016, Steven Rales and Mitchell Rales paid Danaher approximately $70,000 for providing benefits for, and as reimbursement for paying a portion of the salaries of, two persons who provide services to the Rales’.

Steven Rales and Mitchell Rales collectively own more than 10% of the equity of Colfax Corporation, a publicly traded manufacturing and engineering company that provides gas- and fluid-handling and fabrication technology products and services. Certain of our subsidiaries sell products and services to, and/or purchase products and services from, Colfax from time to time in the ordinary course of business and on an arms’-length basis. In 2016, our subsidiaries sold approximately $610,000 of products to, and purchased approximately $25,000 of products

 

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from, Colfax, which in each case is less than 0.02% of Colfax’s, and of Danaher’s, revenues for 2016. Our subsidiaries intend to sell products to and purchase products from Colfax in the future in the ordinary course of their businesses and on an arms’-length basis.

On July 2, 2016, we completed the Separation. Following the Separation, Danaher and Fortive operate as separate publicly-traded companies and neither entity has any ownership interest in the other. However, Steven Rales and Mitchell Rales collectively own more than 10% of the equity of Fortive. In connection with the Separation, Danaher and Fortive entered into various agreements to effect the Separation and provide a framework for their relationship after the Separation, including a transition services agreement, an employee matters agreement, a tax matters agreement, an intellectual property matters agreement and a license agreement with respect to the Danaher Business System, or DBS (a proprietary set of business processes and methodologies we use that are designed to continuously improve business performance). These agreements provide for the allocation between Danaher and Fortive of assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after Fortive’s separation from Danaher and govern certain relationships between Danaher and Fortive after the Separation. In addition, following the Separation certain of our subsidiaries sell products and services to, and/or purchase products and services from, Fortive from time to time in the ordinary course of business and on an arms’-length basis. Following the Separation in 2016, Danaher billed approximately $13 million for transition services provided to Fortive and paid approximately $75,000 for transition services received from Fortive; and our subsidiaries sold approximately $10 million of products and services to, and purchased approximately $11 million of products and services from, Fortive, which in each case is less than 0.3% of Fortive’s, and of Danaher’s, revenues for 2016. Our subsidiaries intend to sell products to and purchase products from Fortive in the future in the ordinary course of their businesses and on an arms’-length basis.

FJ900, Inc. (“FJ900”), an indirect, wholly-owned subsidiary of Danaher, is party to an airplane management agreement with Joust Capital II, LLC (“Joust II”) and a substantially identical agreement with Joust Capital III, LLC (“Joust III” and together with Joust II, the “Joust entities”). Joust II is owned by Mitchell Rales and Joust III is owned by Steven Rales. Under the management agreements, FJ900 performs management services for the respective aircraft owned by each of the Joust entities in like manner to the management services provided by FJ900 for Danaher’s aircraft. The management services provided by FJ900 include the provision of aircraft management, pilot services, maintenance, record-keeping and other aviation services. FJ900 receives no compensation for its services under the agreements. Having FJ900 perform management services for all of these aircraft enables Danaher and the Joust entities to share certain fixed expenses relating to the use, maintenance, storage, operation and supervision of their respective aircraft and utilize joint purchasing or joint bargaining arrangements where appropriate, allowing each party to benefit from efficiencies of scale and cost savings. We believe that this cost-sharing arrangement results in lower costs to Danaher than if we incurred these fixed costs on a stand-alone basis. Under the agreement, FJ900 prorates all shared expenses annually among the Joust entities and Danaher based on each party’s flight hours logged for the year. The Joust entities pre-pay FJ900 on a quarterly basis for their estimated, prorated portion of such shared expenses, and the amounts are trued up at the end of the year. With respect to the year ended December 31, 2016, the Joust entities paid FJ900 approximately $2.7 million for the Joust entities’ share of the fixed airplane management expenses shared with Danaher. Each Joust entity pays directly all expenses attributable to its aircraft that are not shared. Under the management agreements, each party is also required to maintain a prescribed amount of comprehensive aviation liability insurance and name the other party and its affiliates as additional named insureds, while the Joust entities must also maintain all-risk hull insurance for their aircraft. If either party suffers any losses in connection with the arrangements set forth in the management agreement, and such losses are due to the fault, negligence, breach or strict liability of the other party, the sole recourse of the party incurring the loss against the other party is to the available insurance proceeds. Each management agreement may be terminated by any party upon 30 days’ notice.

In addition, Danaher is party to substantially identical airplane interchange agreements with each of the Joust entities with respect to each respective aircraft owned by Danaher and by each of the Joust entities. Under each interchange agreement, the Joust entity has agreed to lease its aircraft to Danaher and Danaher has agreed to lease the respective Danaher aircraft to the Joust entity, in each case on a non-exclusive basis. Neither party is charged for its use of the other party’s aircraft, the intent being that over the life of the contract each party’s usage of the other party’s aircraft will be generally equal. With respect to the year ended December 31, 2016, the incremental value of the use of the Joust aircraft by Danaher, net of the incremental value of the use of the Danaher aircraft by the Joust entities, was approximately $50,000. The owner of each aircraft, as operator of the aircraft, is responsible for providing a flight crew for all flights operated under the interchange agreement. Each owner/operator is required to maintain standard insurance, including all-risk hull insurance and a prescribed amount of comprehensive aviation liability insurance, and to name the other party and its affiliates as additional named insureds. With respect to any losses suffered by the party using the owner/operator’s plane, the using party’s recourse against the owner/operator is limited to the amount of available insurance proceeds. To the extent the using party and/or any third party suffers losses in connection with the using party’s use of the owner/operator’s aircraft, and recovers from the owner/operator an amount in excess of the available insurance proceeds, the using party will indemnify the owner/operator for all such excess amounts. The interchange agreements may be terminated by either party upon 10 days’ notice.

Mr. Joyce’s brother, Robert Joyce, served in a variety of general management positions with Danaher from 1993 until the July 2016 spin-off of Fortive, his employer. For 2016, Robert Joyce received total cash compensation from Danaher of approximately $220,000, participated in Danaher’s equity compensation program and received benefits comparable to those received by persons in similar management positions within Danaher.

 

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BENEFICIAL OWNERSHIP OF DANAHER COMMON STOCK BY

DIRECTORS, OFFICERS AND PRINCIPAL SHAREHOLDERS

The following table sets forth as of March 13, 2017 (unless otherwise indicated) the number of shares and percentage of Danaher Common Stock beneficially owned by (1) each person who owns of record or is known to Danaher to beneficially own more than five percent of Danaher’s Common Stock, (2) each of Danaher’s directors and named executive officers, and (3) all executive officers and directors of Danaher as a group.

 

NAME  

NUMBER OF SHARES

BENEFICIALLY OWNED (1)

   

PERCENT

OF CLASS (1)

    NOTES
Donald J. Ehrlich     172,700       *     Includes options to acquire 53,900 shares, 2,000 shares owned by Mr. Ehrlich’s spouse and 32,000 other shares owned indirectly. Mr. Ehrlich disclaims beneficial ownership of the shares held by his spouse.
Linda Hefner Filler     86,415       *     Includes options to acquire 64,478 shares and 1,600 phantom shares attributable to Ms. Hefner Filler’s account under the Non-Employee Directors’ Deferred Compensation Plan.
Robert J. Hugin     4,546       *     Includes options to acquire 2,930 shares.
Thomas P. Joyce, Jr.     595,861       *     Includes options to acquire 436,004 shares, 2,774 shares attributable to Mr. Joyce’s 401(k) account and 139,100 shares attributable to Mr. Joyce’s EDIP account.
Teri List-Stoll     19,577       *     Includes options to acquire 17,380 shares and 2,197 phantom shares attributable to Ms. List-Stoll’s account under the Non-Employee Directors’ Deferred Compensation Plan.
Walter G. Lohr, Jr.     542,346       *     Includes options to acquire 53,900 shares, 40,446 shares held by a charitable foundation of which Mr. Lohr is president and 448,000 other shares held indirectly. Mr. Lohr disclaims beneficial ownership of the shares held by the charitable foundation.
Mitchell P. Rales     38,060,340       5.5   Includes 34,000,000 shares owned by limited liability companies of which Mr. Rales is the sole member, 137,958 shares attributable to Mr. Rales’ 401(k) Plan account and 2,408,673 other shares owned indirectly. The shares held by the limited liability companies are pledged to secure lines of credit with certain banks and each of these entities and Mr. Rales is in compliance with these lines of credit. The business address of Mitchell Rales, and of each of the limited liability companies, is 2200 Pennsylvania Avenue, N.W., Suite 800W, Washington, D.C. 20037-1701.
Steven M. Rales     43,144,517       6.2   Includes 34,000,000 shares owned by limited liability companies of which Mr. Rales is the sole member, 12,777 shares attributable to Mr. Rales’ 401(k) Plan account and 117,000 shares owned by a charitable foundation of which Mr. Rales is a director. Mr. Rales disclaims beneficial ownership of those shares held by the charitable foundation. The shares held by the limited liability companies are pledged to secure lines of credit with certain banks and each of these entities and Mr. Rales is in compliance with these lines of credit. The business address of Steven Rales, and of each of the limited liability companies, is 2200 Pennsylvania Avenue, N.W., Suite 800W, Washington, D.C. 20037-1701.
John T. Schwieters     72,853       *     Includes options to acquire 53,900 shares.
Alan G. Spoon     99,246       *     Includes options to acquire 53,900 shares.
Raymond C. Stevens, Ph.D.     0           N/A
Elias A. Zerhouni, M.D.     40,244       *     Includes options to acquire 32,744 shares and 7,500 shares held indirectly.

 

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  Beneficial Ownership of Danaher Common Stock by Directors, Officers and Principal Shareholders

 

 

NAME  

NUMBER OF SHARES

BENEFICIALLY OWNED (1)

   

PERCENT

OF CLASS (1)

    NOTES
Daniel L. Comas     569,142       *     Includes options to acquire 430,178 shares, 6,700 shares attributable to Mr. Comas’ 401(k) account, 42,441 shares attributable to Mr. Comas’ EDIP account, 3,443 shares held by Mr. Comas’ spouse and 38,804 shares held by a trust as to which Mr. Comas’ spouse is trustee. Mr. Comas disclaims beneficial ownership of the shares held by his spouse and by the trust.
William K. Daniel II     519,304       *     Includes options to acquire 432,477 shares and 28,856 shares attributable to Mr. Daniel’s EDIP account.
Brian W. Ellis     8,580       *     Includes options to acquire 4,675 shares and 3,905 shares attributable to Mr. Ellis’ EDIP account.
Angela S. Lalor     119,253       *     Includes options to acquire 79,520 shares, 16,050 shares underlying RSUs and 23,683 shares attributable to Ms. Lalor’s EDIP account.
James A. Lico     0           N/A
T. Rowe Price Associates, Inc.     58,324,801       8.4   Derived from a Schedule 13G filed February 7, 2017 by T. Rowe Price Associates, Inc. (“Price Associates”), which sets forth Price Associates’ beneficial ownership as of December 31, 2016. According to the Schedule 13G, Price Associates has sole voting power over 19,099,001 shares and sole dispositive power over 58,324,801 shares. These shares are owned by various individual and institutional investors for which Price Associates serves as an investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. The address of Price Associates is 100 E. Pratt Street, Baltimore, Maryland 21202.
The Vanguard Group     39,437,616       5.7   Derived from a Schedule 13G filed February 9, 2017 by The Vanguard Group, which sets forth their respective beneficial ownership as of December 31, 2016. According to the Schedule 13G, The Vanguard Group has sole voting power over 963,834 shares, shared voting power over 125,859 shares, sole dispositive power over 38,355,069 shares and shared dispositive power over 1,082,547 shares. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.
BlackRock, Inc.     37,409,625       5.4   Derived from a Schedule 13G filed January 30, 2017 by BlackRock, Inc., which sets forth their respective beneficial ownership as of December 31, 2016. According to the Schedule 13G, BlackRock, Inc. has sole voting power over 30,892,636 shares and sole dispositive power over 37,409,625 shares. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.
All current executive officers and directors as a group (20 persons)     84,658,397       12.2   Includes options to acquire 2,197,759 shares, 160,222 shares attributable to executive officers’ 401(k) accounts, 334,021 shares attributable to executive officers’ EDIP accounts and 3,797 phantom shares attributable to directors’ accounts under the Non-Employee Directors’ Deferred Compensation Plan.

 

(1) Except as otherwise indicated and subject to community property laws where applicable, each person or entity included in the table above has sole voting and investment power with respect to the shares beneficially owned by that person or entity. For purposes of the table, the number of shares of Danaher Common Stock attributable to each executive officer’s Executive Deferred Incentive Program (“EDIP”) account is equal to (1) the person’s outstanding EDIP balance as of March 13, 2017 (to the extent such balance is vested or will become vested within 60 days of March 13, 2017), divided by (2) the closing price of Danaher Common Stock as reported on the NYSE on March 13, 2017; the number of shares attributable to each executive officer’s 401(k) Plan account is equal to (a) the officer’s balance, as of March 13, 2017, in the Danaher stock fund included in the executive officer’s 401(k) Plan account, divided by (b) the closing price of Danaher Common Stock as reported on the NYSE on March 13, 2017; and the number of shares attributable to the Non-Employee Directors’ Deferred Compensation Plan is based on the number of shares that could be issued to directors pursuant to such plan within 60 days of March 13, 2017. The table also includes shares that may be acquired upon exercise of options that are exercisable within 60 days of March 13, 2017 or upon vesting of RSUs and PSUs that vest within 60 days of March 13, 2017.

 

* Represents less than 1% of the outstanding Danaher Common Stock.

 

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PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee on behalf of Danaher has selected Ernst & Young LLP, an international accounting firm of independent certified public accountants, to act as the independent registered public accounting firm for Danaher and its consolidated subsidiaries for the year ending December 31, 2017. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. Although shareholder approval of the selection of Ernst & Young LLP is not required by law, Danaher’s Board believes that it is advisable to give shareholders an opportunity to ratify this selection. If this proposal is not approved by Danaher’s shareholders at the 2017 Annual Meeting, the Audit Committee will reconsider its selection of Ernst & Young LLP. Even if the selection of Ernst & Young LLP is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of Danaher and its shareholders.

The Board of Directors recommends that shareholders vote FOR ratification of the selection of Ernst & Young LLP to serve as the independent registered public accounting firm for Danaher for 2017.

Audit Fees and All Other Fees

The following table sets forth the fees for audit, audit-related, tax and other services rendered by Ernst & Young LLP to Danaher for 2016 and 2015.

 

    TWELVE MONTHS ENDED
DECEMBER 31, 2016
    TWELVE MONTHS ENDED
DECEMBER 31, 2015
 
Audit Fees. Fees for the audit of annual financial statements and internal control over financial reporting, reviews of quarterly financial statements, statutory audits required internationally, audit of captive insurance company, consents, review of documents filed with the SEC, audits and audit-related services in connection with the separation of Fortive Corporation from Danaher, including associated filings with the SEC, and other services normally provided by the auditor in connection with statutory and regulatory filings or engagements.   $ 21,273,000     $ 25,970,000  
Audit-Related Fees. Fees for assurance and related services reasonably related to the performance of the audit or review of financial statements and internal control over financial reporting that are not reported under “Audit Fees” above, including audits of entities not otherwise required in connection with statutory or regulatory filings and employee benefit plan audits.   $ 566,190     $ 1,174,800  
Tax Fees. Aggregate fees for professional services rendered by Ernst & Young LLP for tax compliance, tax advice and tax planning. (1)   $ 6,726,823     $ 8,576,916  
All Other Fees. Aggregate fees for products and services provided by Ernst & Young LLP, other than the services reported under “Audit Fees,” “Audit-Related Fees” or “Tax Fees” above.   $ 0     $ 0  

 

(1) The nature of the services comprising the fees disclosed under “Tax Fees” is as follows:

 

    TWELVE MONTHS ENDED
DECEMBER 31, 2016
    TWELVE MONTHS ENDED
DECEMBER 31, 2015
 
Tax Compliance. Includes tax compliance fees charged by Ernst & Young LLP for tax return review and preparation services and assistance related to tax audits by regulatory authorities.   $ 2,653,973     $ 3,949,794  
Tax Consulting. Includes tax consulting services rendered by Ernst & Young LLP, including assistance related to tax planning.   $ 4,072,850     $ 4,627,122  

The Audit Committee has considered whether the services rendered by the independent registered public accounting firm with respect to the fees described above are compatible with maintaining such firm’s independence and has concluded that such services do not impair their independence.

 

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  Proposal 2 — Ratification of Independent Registered Public Accounting Firm

 

 

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Under its charter, the Audit Committee must pre-approve all auditing services and permitted non-audit services to be performed for Danaher by the independent registered public accounting firm. Each year, the Committee approves the independent registered public accounting firm’s retention to audit Danaher’s financial statements and internal controls over financial reporting before the filing of the preceding year’s annual report on Form 10-K. On a regular basis, the Committee evaluates other known potential engagements of the independent registered public accounting firm and approves or rejects each engagement, taking into account whether the services are permissible under applicable law and the possible impact of each non-audit service on the independent registered public accounting firm’s independence from management. The Committee may delegate to a subcommittee of one or more members the authority to grant preapprovals of audit and permitted non-audit services, and the decisions of such subcommittee to grant preapprovals must be presented to the full Committee at its next scheduled meeting. The Committee has not made any such delegation as of the date of this Proxy Statement.

 

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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

This report 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 Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference into any prior or subsequent filing by Danaher under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Danaher specifically incorporates this report by reference therein.

The Audit Committee assists the Board in overseeing the quality and integrity of Danaher’s financial statements, the effectiveness of Danaher’s internal control over financial reporting, the qualifications, independence and performance of Danaher’s independent auditors, the performance of Danaher’s internal audit function, Danaher’s compliance with legal and regulatory requirements, Danaher’s major financial risk exposures, significant legal, compliance, reputational and cyber security risks and overall risk assessment and risk management policies, and Danaher’s swaps and derivatives transactions and related policies and procedures.

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit Danaher’s financial statements. The Audit Committee has appointed Ernst & Young LLP as Danaher’s independent registered public accounting firm for 2017. Ernst & Young has been retained as Danaher’s independent registered public accounting firm continuously since 2002. The Audit Committee is responsible for the audit fee negotiations associated with Danaher’s retention of Ernst & Young. In conjunction with the mandated rotation of Ernst & Young’s lead engagement partner, the Audit Committee and its chair are directly involved in the selection of Ernst & Young’s new lead engagement partner. Danaher’s Board of Directors and Audit Committee believe they have undertaken appropriate steps with respect to oversight of Ernst & Young’s independence and that the continued retention of Ernst & Young to serve as Danaher’s independent registered public accounting firm is in the best interests of Danaher and its shareholders.

In fulfilling its responsibilities, the Audit Committee has reviewed and discussed with Danaher’s management and Ernst & Young Danaher’s audited consolidated financial statements and internal control over financial reporting.

The Audit Committee has discussed with Ernst & Young the matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees,” as adopted by the Public Company Accounting Oversight Board (PCAOB). In addition, the Audit Committee has received the written disclosures and the letter from Ernst & Young required by the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young its independence.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements for Danaher for the fiscal year ended December 31, 2016 be included in Danaher’s Annual Report on Form 10-K for the year ended December 31, 2016 for filing with the SEC.

Audit Committee of the Board of Directors

John T. Schwieters (Chair)

Donald J. Ehrlich

Teri List-Stoll

 

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COMPENSATION DISCUSSION AND ANALYSIS

The following section discusses and analyzes the compensation provided to each of the executive officers set forth in the Summary Compensation Table below, also referred to as the named executive officers.

Executive Summary

Introduction

With the goal of building long-term value for our shareholders, we have developed an executive compensation program designed to:

 

  attract and retain executives with the leadership skills, attributes and experience necessary to succeed in an enterprise with Danaher’s size, diversity and global footprint;

 

  motivate executives to demonstrate exceptional personal performance and perform consistently at or above the levels that we expect, over the long-term and through a range of economic cycles; and

 

  link compensation to the achievement of corporate goals that we believe best correlate with the creation of long-term shareholder value.

To achieve these objectives our compensation program combines annual and long-term components, cash and equity, and fixed and variable elements, with a bias toward long-term equity awards tied closely to shareholder returns and subject to significant vesting and/or holding periods. Our executive compensation program rewards our executive officers when they build long-term shareholder value, achieve annual business goals and maintain long-term careers with Danaher.

We provide our shareholders the opportunity to cast an annual advisory vote with respect to our named executive officer compensation as disclosed in our annual proxy statement (the “say on pay proposal”). At our annual meeting of shareholders in May 2016, 98% of the votes cast on the say on pay proposal were voted in favor of the proposal. The Committee believes this result affirms shareholders’ support of the Company’s named executive officer compensation and did not make changes to the Company’s executive compensation program as a result of such vote.

2016 Performance

2016 was a transformative year for Danaher as we:

 

  successfully completed the Separation of Fortive;

 

  consummated our $4.0 billion acquisition of Cepheid, a leading global molecular diagnostics company; and

 

  continued the integration of our 2015, $13.6 billion acquisition of Pall Corporation, a leading global provider of filtration, separation and purification solutions.

Following the Separation, Danaher is better positioned to sharpen its strategic focus and concentrate its investment capital on its science and technology-oriented businesses, as illustrated by the recent acquisition of Cepheid. Cepheid is a highly complementary addition to Danaher’s Diagnostics segment, significantly expands Danaher’s recurring revenue base and provides a strong foundation for Danaher to grow in the molecular diagnostics segment both organically and through future acquisitions.

Even as we invested in Danaher’s future growth, we continued to deliver strong operational and financial performance despite tepid growth or declines in certain of the end-markets we serve. Specifically, during 2016, Danaher:

 

  deployed over $4.9 billion across eight strategic acquisitions (including the strategically critical acquisition of Cepheid);

 

  returned over $400 million to shareholders through cash dividends; and

 

  continued to grow our business on a year-over-year basis:

 

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Compensation Discussion and Analysis  

 

 

Long-Term Performance

 

We believe a long-term performance period most accurately compares relative performance within our peer group, because over shorter periods performance comparisons may be skewed by the easier performance baselines of peer companies that have experienced periods of underperformance in the past.

 

Danaher has not experienced a sustained period of underperformance over the last twenty years, and we believe the consistency of our performance over the last twenty years is unmatched within our peer group. Danaher ranks number one in its peer group over the past twenty years based on compounded average annual shareholder return, and is the only company in its peer group whose TSR outperformed the S&P 500 Index:

   LOGO

 

  over every rolling 3-year period from 1997-2016; and

 

  by more than 600 basis points over every rolling 3-year period from 2007-2016.

Danaher’s compounded, average annual shareholder return has outperformed the S&P 500 Index over each of the last two-, three, five-, ten-, fifteen- and twenty-year periods:

 

 

LOGO

LOGO

 

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  Compensation Discussion and Analysis

 

 

2016 Executive Compensation

The chart below summarizes key information with respect to each pay element represented in Danaher’s 2016 executive compensation program:

 

PAY ELEMENT   PRIMARY OBJECTIVES  

FORM OF

COMPENSATION

  PERFORMANCE
REQUIREMENT
 

KEY FACTORS CONSIDERED BY
COMMITTEE

IN DETERMINING 2016
COMPENSATION

 

YEAR-OVER-YEAR
CHANGE IN
AMOUNT
REPORTED IN
SUMMARY
COMPENSATION
TABLE

(2016 VS. 2015)(1)

   
Long-Term Incentive Compensation (Equity)  

•  Attract, retain and motivate skilled executives and encourage loyalty to Danaher

 

•  Align the interests of management and shareholders by ensuring that realized compensation is:

 

¡     in the case of stock options, commensurate with long-term changes in share price;

 

¡      in the case of PSUs, tied to (1) long-term changes in share price at all performance levels, and (2) attainment of TSR-based performance goals; and

 

¡      in the case of RSUs, tied to (1) long-term changes in share price at all performance levels, and (2) attainment of financial performance goals.

  Stock options (50%)  

5-year, time-based vesting schedule

 

Options only increase in value if

Danaher

stock price increases

 

  This element represented the most significant component of compensation for each named executive officer for 2016. Because this element of compensation best supports our retention and motivation objectives and aligns the interests of our executives and shareholders by tying earned pay to changes in our stock price over time, we believe it is the most effective of the four elements in accomplishing the objectives set forth above.  

+21% (CEO)

 

+5 - 23% (other NEOs)

    Performance stock units (PSUs) (25%)  

3-year relative TSR performance (plus additional 2-year holding period)

 

   
      Restricted stock units (RSUs) (25%)  

5-year, time-based vesting schedule, plus performance-based vesting criteria based on Adjusted EPS growth vs. target

 

     

 

(1) Only includes NEOs who were executive officers for all of 2015-2016.

 

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PAY ELEMENT   PRIMARY OBJECTIVES  

FORM OF

COMPENSATION

  PERFORMANCE
REQUIREMENT
 

KEY FACTORS CONSIDERED
BY COMMITTEE

IN DETERMINING 2016
COMPENSATION

 

YEAR-OVER-YEAR
CHANGE IN
AMOUNT
REPORTED IN
SUMMARY
COMPENSATION
TABLE

(2016 VS. 2015)(1)

Annual Cash Incentive Compensation  

•  Motivate executives to achieve near-term operational and financial goals that support our long-term business objectives

•  Attract, retain and motivate skilled executives

•  Allow for meaningful pay differentiation tied to performance of individuals and groups

  Cash   Company Financial Performance (60%)   LOGO   Adjusted EPS (80%)   This element represented the second-most significant element of compensation for each named executive officer for 2016 (other than Mr. Ellis, who was a new hire in 2016). We believe its focus on near-term performance and the cash nature of the award complement the longer-term, equity-based compensation elements of our program.  

+35% (CEO)

 

+19 - 24% (other NEOs)

          Free Cash Flow-to-Adjusted Net Income Ratio (20%)    
      Personal Performance (40%)    
Fixed Annual Compensation (Salary and Fixed Bonus (if applicable))  

•  Provide sufficient fixed compensation to (1) allow a reasonable standard of living relative to peers, and (2) mitigate incentive to pursue inappropriate risk-taking to maximize variable pay

  Cash   N/A   In 2016, we sought to pay sufficient base salary to avoid competitive disadvantage in the marketplace for skilled executives while simultaneously managing our fixed cost structure at a sustainable level. We also periodically use fixed cash bonuses for recruitment purposes to competitively attract and compensate high-performing executives.  

+10% (CEO)

 

+3 - 7% (other NEOs)

Other Compensation  

•  Make our total executive compensation plan competitive

 

•  Improve cost-effectiveness by delivering perceived value that is higher than our actual costs

 

Employee benefit plans;

perquisites; severance

benefits

  N/A   We believe these elements of compensation make our total executive compensation plan competitive and are generally commensurate with the benefits offered by our peers. We believe the perquisites we offer are cost-effective in that the perceived value of these items is higher than our actual cost and help to maximize the amount of time that the executives spend on Danaher business.  

+8% (CEO)

 

- 4 - +9% (other NEOs)

 

(1) Only includes NEOs who were executive officers for all of 2015-2016.

 

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  Compensation Discussion and Analysis

 

 

Compensation Governance

The Committee recognizes that the success of our executive compensation program over the long-term requires a robust framework of compensation governance. As a result, the Committee regularly reviews external executive compensation practices and trends and incorporates best practices into our executive compensation program:

 

    WHAT WE DO       WHAT WE DON’T DO
LOGO   Five-year vesting requirement for equity awards (or in the case of PSUs, three-year vesting and a further two-year holding period)   LOGO   No tax gross-up provisions (except as applicable to management employees generally such as relocation policy)
LOGO   Incentive compensation programs feature multiple, different performance measures aligned with business strategy   LOGO   No dividend/dividend equivalents paid on unvested equity awards
LOGO   Rigorous clawback policy that is triggered even in the absence of wrongdoing   LOGO   No “single trigger” change of control benefits
LOGO   Minimum vesting requirements for equity awards per the Company’s stock plan   LOGO   No active defined benefit pension program since 2003
LOGO   Stock ownership requirements for all executive officers   LOGO   No hedging of Danaher securities permitted
LOGO   Limited perquisites and the presence of a cap on CEO/CFO personal aircraft usage   LOGO   No long-term incentive compensation is denominated or paid in cash
LOGO   Independent compensation consultant that performs no other services for the Company   LOGO   No above-market returns on deferred compensation plans

Risk Considerations

Risk-taking is a necessary part of growing a business, and prudent risk management is necessary to deliver long-term, sustainable shareholder value. The Committee believes that the Company’s executive compensation program supports the objectives described above without encouraging inappropriate or excessive risk-taking. In reaching this conclusion, the Committee considered in particular the following risk-mitigation attributes of our compensation program.

 

ATTRIBUTE   KEY RISK MITIGATING EFFECT
Emphasis on long-term, equity-based compensation  

Discourages risk-taking that produces short-term results at the expense of building long-term shareholder value

 

Helps ensure executives realize their compensation over time horizon consistent with achieving long-term shareholder value

Five-year vesting requirement for equity awards (or in the case of PSUs, three-year vesting and a further two-year holding period)  
Rigorous clawback policy that is triggered even in the absence of wrongdoing  
Incentive compensation programs feature multiple, different performance measures aligned with business strategy   Mitigates incentive to over-perform with respect to any particular metric at the expense of other metrics
Cap on annual cash incentive compensation plan payments and on number of shares that a participant may earn under equity awards   Mitigates incentive to over-perform with respect to any particular performance period at the expense of future periods
Compensation Committee’s ability to exercise negative discretion to reduce annual cash incentive compensation payments and/or performance-based equity award payouts  
Stock ownership requirements for all executive officers   Aligns executives’ economic interests with the long-term interests of our shareholders
No hedging of Danaher securities permitted  
Independent compensation consultant   Helps ensure advice will not be influenced by conflicts of interest

 

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Compensation Discussion and Analysis  

 

 

Analysis of 2016 Named Executive Officer Compensation

Overview

In determining the appropriate mix and amount of compensation elements for each named executive officer for 2016, the Committee considered the factors referred to under “–Named Executive Officer Compensation Framework” (without assigning any particular weight to any factor), exercised its judgment and adopted the compensation elements described above under “Summary – 2016 Executive Compensation.” The graphics below illustrate, for the CEO and separately for the other NEOs (excluding Mr. Lico) in aggregate, the percentage of 2016 compensation that each element of compensation accounted for (based on the amounts reported in the 2016 Summary Compensation Table):

 

LOGO    LOGO

Long-Term Incentive Awards

Target Award Values

In February 2016, the Committee subjectively determined the target dollar value of equity compensation to be delivered to each named executive officer in 2016, taking into account each of the following factors (none of which was assigned a particular weight by the Committee):

 

  the relative complexity and importance of the officer’s position, as well as the officer’s performance record and potential to contribute to future Company performance and assume additional leadership responsibility;

 

  the risk/reward ratio of the award amount compared to the length of the related vesting and holding provisions; and

 

  the amount of equity compensation necessary to provide sufficient retention incentives in light of (1) compensation levels within the Company’s peer group, and (2) the officer’s historical compensation. With the exception of our President and CEO, who was promoted to that position in September 2014, the 2016 equity compensation awards for Danaher’s named executive officers tended to be larger than the equity compensation awarded by Danaher’s peers to officers in comparable positions based on recent, publicly available data, because:

 

  ¡    the competitive demand for our executives, particularly in light of our 2014 leadership transition, requires that we make greater efforts to retain our executives;

 

  ¡    the vesting and holding periods applicable to our awards have been longer than typical for our peer group;

 

  ¡    for high-level executives the Committee seeks to have equity-based compensation constitute a significant percentage of total compensation; and

 

  ¡    unlike many of our peers, we do not provide a defined benefit pension plan for our executives, and therefore our long-term incentive awards represent a particularly important capital accumulation opportunity.

In increasing Mr. Joyce’s 2016 equity compensation by approximately 21% compared to 2015, the Committee considered in particular the following factors pertaining to his performance record and anticipated future contributions. Mr. Joyce’s 2015 equity compensation level reflected the rate implemented when Mr. Joyce was appointed CEO in September 2014, which the Committee deemed an appropriate level for a new CEO. In light of the Company’s strong financial performance over Mr. Joyce’s first full year as CEO and his leadership in sharpening the Company’s strategic focus with the 2015 acquisition of Pall and the spin-off of Fortive, the Committee determined that it was appropriate to increase Mr. Joyce’s equity compensation level and overall pay level relative to peer company CEOs, subject to time-based and performance-based vesting criteria that link the ultimate, realized value of such awards to the Company’s performance over the next several years.

 

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Equity Award Mix

With respect to each of the named executive officer 2016 equity awards, one-half of the award was delivered as stock options, one-quarter as RSUs and one-quarter as PSUs. The Committee believes that the combination of stock options, RSUs and PSUs effectively balances the goals of incentivizing and rewarding shareholder value creation while supporting our talent retention objectives:

 

  Stock options and PSUs inherently incentivize shareholder value creation, since option holders realize no value unless our stock price rises after the option grant date and the value of PSUs is tied directly to the Company’s relative TSR performance.

 

  Our stock options and RSUs vest over five years and our PSUs are subject to three-year vesting and a further two-year holding period, which periods are longer than typical for our peer group, promote stability and encourage officers to take a long-term view of our performance.

 

  The Committee weighted stock options most heavily because it believes our stock option award program in particular has contributed significantly to our strong performance record, which in turn has generally made our stock option awards valuable over the long-term and highly effective in recruiting, motivating and retaining skilled officers.

 

  While RSUs and PSUs offer more modest upside potential than stock options, during periods of stock market declines or modest growth they are more likely to support our talent retention objectives.

 

PSU and RSU Performance Criteria

In designing the performance criteria applicable to the executive officer PSUs, the Committee established threshold, target and maximum performance levels and established a payout percentage curve that relates each level of performance to a payout expressed as a percentage of the target PSUs:

PERFORMANCE LEVEL (RELATIVE

TSR RANK WITHIN S&P 500 INDEX)

   PAYOUT
PERCENTAGE
 

Below 35th percentile

     0

35th percentile

     50

55th percentile

     100

75th percentile or above

     200
 

 

The payout percentages for performance between threshold and target, or between target and maximum, respectively, are determined by linear interpolation. Notwithstanding the above, if the Company’s absolute TSR performance for the period is negative no more than a maximum of 100% of the target PSUs will vest (regardless of how strong the Company’s performance is on a relative basis), and if the Company’s absolute TSR performance for the period is positive a minimum of 25% of the target PSUs will vest. The Committee chose the S&P 500 Index as the relative TSR comparator group because it consists of a broad and stable group of companies that represents investors’ alternative capital investment opportunities, reinforcing the linkage between our executive compensation program and the long-term interests of our shareholders. Any PSUs that vest following the three-year performance period are subject to an additional two-year holding period and are paid out in shares of Company Common Stock following the fifth anniversary of the commencement of the performance period. Vesting is contingent on continued employment throughout the three-year performance period and until the Committee certifies satisfaction of the performance criteria, except that in the event of death during the performance period the executive receives a prorated portion of the target award based on the percentage of the performance period during which he or she was employed, and in the event of retirement during the performance period the executive receives a prorated portion of the shares actually earned based on the Company’s performance over the performance period. Any dividends paid on the Company’s Common Stock during the performance period are credited to PSU accounts, but are only paid out (in cash) to the extent the underlying PSUs vest based on performance and are not paid until the shares underlying the vested PSUs are issued.

The Committee applies an Adjusted EPS performance metric to executive RSU grants to link realization of the award to the Company’s operational performance and because the Committee believes that Adjusted EPS growth correlates strongly with shareholder returns. The Committee views the RSU performance criteria as ancillary in importance to the time-based vesting requirement, however, given that RSUs are a key retention tool.

Annual Incentive Awards

The diagram below illustrates the 2016 annual incentive award opportunities for the Company’s named executive officers, each element of which is further described below.

 

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Compensation Discussion and Analysis  

 

 

Target Bonus Percentage and Personal Payout Percentage

In March 2016, the Committee established for each named executive officer the target bonus percentage and personal performance objectives described below, including quantitative and qualitative objectives and objectives based on financial and non-financial measures. In determining the personal performance objectives, the Committee did not assign a particular weighting to any of the objectives but set the quantitative objectives at levels that, while achievable, would in the Committee’s opinion require personal performance appreciably above the executive’s prior year performance level.

 

EXECUTIVE OFFICER    TARGET
BONUS
PERCENTAGE
   ANNUAL PERSONAL PERFORMANCE OBJECTIVES
Thomas P. Joyce, Jr.    200%    Mr. Joyce’s 2016 performance objectives consisted of the degree of year-over-year improvement in Danaher’s core revenue growth, core operating margin and free cash flow, particularly as related to Pall’s DBS integration; and qualitative goals relating to the success of the Separation, the Company’s capital allocation strategy, the Company’s innovation model, the strengthening of the talent required to support the Company’s growth and progress on associate engagement and the development of the Company’s shared purpose.
Daniel L. Comas    125%    Mr. Comas’ 2016 performance objectives consisted of Danaher’s overall 2016 financial performance in terms of core revenue growth, operating profit margin expansion and free cash flow; and qualitative goals relating to the success of the Separation, enhancing the strength of the finance organization and the quality and volume of the Company’s acquisition and portfolio optimization performance.
William K. Daniel II    125%    Mr. Daniel’s 2016 performance objectives consisted of the degree of year-over-year improvement in core revenue growth, operating profit margin improvement and working capital turnover improvement for his business units; return-on-invested-capital performance achieved with respect to acquisitions by his business units; quantitative goals for his business units relating to human resources-related metrics, on-time delivery and manufacturing quality; and qualitative goals relating to capital deployment, talent acquisition and development in his business units and the development of strategic initiatives for his business units.
Brian W. Ellis    100%    Mr. Ellis’ 2016 performance objectives consisted of qualitative goals relating to the success of his new leader immersion process, the strategies and operating priorities of the legal department, talent acquisition and development in the legal department, the effective handling of legal matters and the comprehensive integration of new acquisitions into the Company’s legal, compliance and regulatory structure.
Angela S. Lalor    110%    Ms. Lalor’s 2016 performance objectives consisted of qualitative goals relating to the success of the Separation, improvements in the Company’s talent acquisition and development processes, improvements in the Company’s associate engagement program and the implementation of an HRIS system for the Company.
James A. Lico    125%    Mr. Lico’s 2016 performance objectives consisted of the degree of year-over-year improvement in sales, operating income, working capital turns and return-on-invested capital for the Fortive businesses; and qualitative goals relating to the success of the Separation, improvements in Fortive’s capital deployment and related processes and the strengthening of Fortive’s high-growth market organizational structure.

Determining Target Bonus Percentage. In determining the target bonus percentage for each officer, the Committee considered the amount of annual cash incentive compensation awarded to the officer in prior years, the relative complexity and importance of the officer’s position and the amount of annual cash incentive compensation that peer companies would offer such officer. With respect to Mr. Joyce in particular, although the Committee did not target the performance-based portion of his annual cash compensation at any particular percentage of his annual cash compensation, the Committee set his base salary at a level lower, and his target annual bonus opportunity at a level higher, than typical among the Company’s peer companies to ensure that his annual cash compensation is highly performance-based.

Determining Personal Payout Percentage. Following the end of 2016, the Committee used its judgment and determined for each officer a Personal Payout Percentage between 0% and 200%. Without assigning any particular weight to any individual factor, the Committee took into account the size of the Company Payout Percentage for the year, the amount of annual cash incentive compensation awarded to the executive in prior years, the executive’s execution against his or her personal performance objectives for the year, the executive’s overall performance for the year and the amount of annual cash incentive compensation that peer companies typically pay to executives serving in comparable roles. The Company awarded Mr. Joyce a Personal Payout Percentage of 1.86% for 2016, based primarily on his leadership with respect to the Company’s financial performance and the successful consummation of the Separation and acquisition of Cepheid.

 

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  Compensation Discussion and Analysis

 

 

Company Payout Percentage

The Company Payout Percentage is based on the Company’s 2016 performance against the Adjusted EPS and Free Cash Flow Ratio metrics further described below (the “Metrics”):

 

  ¡    The Committee weights Adjusted EPS (defined on page 51) most heavily in the formula because it believes Adjusted EPS correlates strongly with shareholder returns, particularly since Adjusted EPS is calculated in a manner that focuses on gains and charges the Committee believes are most directly related to Company operating performance during the period. For 2016, the Adjusted EPS target was expressed as a year-over-year percentage growth rate rather than as a targeted dollar amount (given the challenge of estimating Fortive’s relative contribution to Danaher’s 2016 earnings) and the Fortive business was excluded from the calculation of Adjusted EPS as a “discontinued operation” to allow for a comparable-basis year-over-year comparison. The Committee set the Adjusted EPS target at a 12.3% year-over-year increase. However, following the Separation the Committee was able to better discern Fortive’s relative contribution to Danaher’s 2016 earnings. Using this data, the Committee recalculated targeted 2016 earnings performance on a basis that excluded Fortive and because Danaher’s remaining businesses had a higher expected 2016 earnings growth rate than Fortive, the Committee exercised negative discretion to increase the 2016 Adjusted EPS target to 14.0% and reduce the related payout percentage.

 

  ¡    The Committee also uses Free Cash Flow Ratio (defined on page 51) to help validate the quality of the Company’s earnings.

 

  ¡    Because the Separation significantly affected the calculation of the Company’s return-on-invested capital (ROIC), the Committee determined to eliminate the ROIC-based metric from the calculation for 2016 and instead weighted Adjusted EPS 80% and Free Cash Flow Ratio 20%. For 2017, the Committee has restored an ROIC-based metric to the performance formula and returned to its prior 70%, 20% and 10% weightings for each of the Adjusted EPS, Free Cash Flow Ratio and ROIC-based metrics, respectively.

For each of the Metrics the Committee established threshold, target and maximum levels of Company performance, as well as a payout percentage curve that relates each level of performance to a payout based on a percentage of target bonus. The payout percentage is 0% for below-threshold performance and ranges from 50% for threshold performance to 150% (for Free Cash Flow Ratio) or 200% (for Adjusted EPS) for performance that equals or exceeds the maximum. Under all Metrics, target performance yields a payout percentage of 100%. The payout percentages for performance between threshold and target, or between target and maximum, respectively, are determined by linear interpolation. In determining the target performance level and payout percentage curve for the Metrics, the Committee considered historical performance data for the Company and its peer group, analyst consensus earnings estimates for the Company’s peer group, the Company’s annual budget and macroeconomic/end-market trends. For each Metric, the Committee set the performance target at a level it believes is reasonably achievable while requiring what it believes would be outstanding performance to achieve the maximum payout level.

Following the end of 2016, the Company Payout Percentage was calculated as follows:

 

2016 PERFORMANCE/PAYOUT MATRIX
METRIC   

TARGET
PERFORMANCE

LEVEL

  

ACTUAL

PERFORMANCE

LEVEL

  

PAYOUT %

(BEFORE

WEIGHTING)

   METRIC WEIGHTING   

WEIGHTED

PAYOUT %

Adjusted EPS    14.0% year-over-year increase    20.1% year-over-year increase    154.4%    80%    123.5%
Free Cash Flow Ratio    103%    99.4%    88.3%    20%    17.7%
Company Payout Percentage    141%

Composite Payout Percentage

The Company Payout Percentage and Personal Payout Percentage were calculated for each officer, weighted accordingly and added to yield the officer’s Composite Payout Percentage. The Composite Payout Percentage was multiplied by the officer’s target bonus amount to yield the officer’s award amount for the year. The 2016 annual cash incentive compensation awards for each of the named executive officers are set forth in the Summary Compensation Table.

 

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Compensation Discussion and Analysis  

 

 

Base Salaries

The Committee reviews base salaries for executive officers in February of each year and in connection with promotions. In February 2016, the Committee subjectively determined 2016 base salaries for the named executive officers, as set forth in the Summary Compensation Table. Without giving specific weight to any particular factor, the Committee used the prior year’s base salary as the initial basis of consideration and then considered the individual factors described under “— Named Executive Officer Compensation Framework,” focusing on the relative complexity and importance of the executive’s role within Danaher, the market value of the executive’s role and the executive’s performance in the prior year. Given that base salary is one of the elements in the formula for determining annual cash incentive compensation, the Committee also considered how changes in base salary would impact annual cash incentive compensation.

Other Compensation

Severance Benefits. We have entered into Proprietary Interest Agreements with each of our named executive officers that include post-employment restrictive covenant obligations and (except for Ms. Lalor and Mr. Ellis) provide for severance payments under certain circumstances. Mr. Joyce’s agreement also provides for additional cash payments and the pro rata acceleration of the time-based vesting applicable to his outstanding equity awards if the Company terminates his employment without cause. Danaher’s Senior Leader Severance Pay Plan, which each of the named executive officers participates in, also provides for severance payments under certain circumstances. We believe the post-employment restrictive covenant obligations included in these agreements are critical in protecting our proprietary assets, and that the severance payments payable upon a termination without cause are generally commensurate with the severance rights our peers offer executives in comparable roles.

EDIP. Each named executive officer participates in the Amended and Restated Danaher Corporation & Subsidiaries Executive Deferred Incentive Program, or EDIP. The EDIP is a shareholder-approved, non-qualified, unfunded deferred compensation program available to selected members of our management; for a summary of the plan, please see “Summary of Employment Agreements and Plans — Executive Deferred Incentive Program.” We use the EDIP to tax-effectively contribute amounts to executives’ retirement accounts and give our executives an opportunity to defer taxes on cash compensation and realize tax-deferred, market-based notional investment growth on their deferrals. The amount we contribute annually to the executives’ EDIP accounts is set at a level that we believe is competitive with comparable plans offered by other companies in our industry. EDIP participants do not fully vest in such amounts contributed by Danaher until they have participated in the program for 15 years or have reached age 55 with at least five years of service with Danaher.

Other Benefits and Perquisites. All of our executives are eligible to participate in our employee benefit plans, including our group medical, dental, vision, disability, accidental death and dismemberment, life insurance, flexible spending and 401(k) plans. These plans are generally available to all U.S. salaried employees and do not discriminate in favor of executive officers. In addition, the Committee makes certain perquisites available to the named executive officers; please see the footnotes to the Summary Compensation Table for additional details. The Committee has also adopted a policy prohibiting any tax reimbursement or gross-up provisions in our executive compensation program (except under a policy applicable to management employees generally such as a relocation policy).

Named Executive Officer Compensation Framework

Danaher’s compensation program is grounded on the principle that each executive officer must consistently demonstrate exceptional personal performance in order to remain an executive officer of Danaher. Within the framework of this principle and the other objectives discussed above, the Committee exercises its judgment in making executive compensation decisions. The factors that generally shape particular executive compensation decisions (none of which are assigned any particular weight by the Committee) are the following:

 

  The relative complexity and importance of the executive’s position within Danaher. To ensure that the most senior executives are held most accountable for long-term operating results and changes in shareholder value, the Committee believes that both the amount and “at-risk” nature of compensation should increase with the relative complexity and significance of an executive’s position.

 

  The executive’s record of performance, long-term leadership potential and tenure.

 

  Danaher’s performance. Our cash incentive compensation varies annually to reflect near-term changes in operating and financial results. Our long-term compensation is closely aligned with long-term shareholder value creation, both by tying the ultimate value of the awards to long-term shareholder returns and because of the length of time executives are required to hold the awards before realizing their value.

 

 

Our assessment of pay levels and practices in the competitive marketplace. The Committee considers market practice in determining pay levels and compensation design to ensure that our costs are sustainable relative to peers and compensation is appropriately positioned to attract and retain talented executives. We have a history of successfully applying the Danaher Business

 

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System, or DBS, to deliver strong operating performance and create shareholder value, and we devote significant resources to training our executives in DBS. In addition, given our expectations regarding future growth, our Board and Committee have engaged a corps of named executive officers whom we believe are capable of leading a significantly larger company. As a result of these factors, we believe that our officers are particularly valued by other companies with greater resources, which creates a high degree of retention risk.

The philosophy and goals of our compensation program have remained consistent over time, although the Committee considers the factors above within the context of the then-prevailing economic environment and may adjust the terms and/or amounts of compensation accordingly so that they continue to support our objectives.

For a description of the role of the Company’s executive officers and the Committee’s independent compensation consultant in the executive compensation process, please see “Corporate Governance – Board of Directors and Committees of the Board – Compensation Committee.”

Peer Group Compensation Analysis

The Committee does not target a specific competitive position versus the market or peer companies in determining the compensation of our executives because in light of the Company’s diverse mix of businesses, strict targeting of a specified compensation posture would not appropriately reflect the unique nature of our business portfolio or the degree of difficulty in leading the Company and key functions. However, the Committee believes it is important to clearly understand the relevant market for executive talent to inform its decision-making and ensure that our executive compensation program supports our recruitment and retention needs and is fair and efficient. As a result, the Committee has worked with FW Cook to develop a peer group for purposes of assessing competitive compensation practices, and periodically reviews compensation data for the peer group derived from publicly filed proxy statements.

EXECUTIVE COMPENSATION PEER GROUP PRIOR TO OCTOBER 2016

Prior to October 2016, the Company’s peer group consisted of the companies set forth below, which is the same as the Company’s 2015 peer group:

 

3M Company    Dover Corp.    Medtronic Inc.
Abbott Laboratories    Eaton Corp.    Parker-Hannifin Corporation
Baxter International, Inc.    E. I. Du Pont De Nemours and Company    Rockwell Automation Inc.
Becton Dickinson & Co.    Emerson Electric Co.    Stryker Corporation
Boston Scientific Corporation3    Honeywell International Inc.    Thermo Fisher Scientific Inc.
United Technologies Corp.    Illinois Tool Works, Inc.     

The Committee selected companies for inclusion in this peer group based on (1) the extent to which they compete with us in one or more lines of business, for executive talent and for investors, and (2) comparability of revenues, market capitalization, net income, total assets and number of employees. The table below sets forth for this peer group and Danaher information regarding revenue, net income and total assets (based on the most recently reported four quarters for each company as of April 30, 2015), market capitalization (as of April 30, 2015) and employee headcount (based on each company’s most recent fiscal year end as of April 30, 2015), in each case derived from the Standard & Poor’s Compustat database.

 

     ($ IN MILLIONS)        
     REVENUE     MARKET
CAPITALIZATION
   

NET INCOME (BEFORE

UNUSUAL OR INFREQUENTLY
OCCURRING ITEMS AND

DISCONTINUED OPERATIONS)

    TOTAL ASSETS     EMPLOYEES AT
END OF LAST
FISCAL YEAR
 

75th percentile

   $ 24,106     $ 70,047     $ 3,065     $ 41,857       89,800  

Median

   $ 16,905     $ 37,384     $ 1,820     $ 28,293       57,447  

25th percentile

   $ 9,749     $ 29,496     $ 1,079     $ 16,472       30,619  

Danaher

   $ 20,124     $ 57,932     $ 2,588     $ 36,072       71,000  

Danaher percentile rank

     60     66     68     67     65

The peer group compensation data that the Committee reviewed prior to October 2016 in connection with its executive compensation decisions estimated the 25th, median and 75th percentile positions among our peers with respect to base salary, annual cash incentive compensation (target and actual), total annual cash compensation (target and actual), long-term incentive compensation, total direct

 

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compensation (target and actual), all other compensation, annual change in pension value and above-market interest on non-qualified deferred compensation, and actual total compensation, in each case with respect to each respective named executive officer position.

EXECUTIVE COMPENSATION PEER GROUP AS OF OCTOBER 2016

The Committee periodically reviews the companies included in the peer group to ensure that the peer group remains appropriate. In 2016, the Committee evaluated the existing peer group with the assistance of FW Cook and concluded that, in light of the evolution of the Company’s business portfolio as a result of the Separation and acquisitions, it was necessary to change the composition of the peer group. Using the same criteria described above with respect to the prior peer group, effective as of October 2016 the Committee revised the Company’s peer group to consist of the following companies (the “peer companies”):

 

3M Company    Dover Corp.    Stryker Corporation
Abbott Laboratories    Ecolab Inc.    Thermo Fisher Scientific Inc.
Baxter International, Inc.    E. I. Du Pont De Nemours and Company    United Technologies Corp.
Becton Dickinson & Co.    Honeywell International Inc.    Zimmer Biomet Holdings
Boston Scientific Corporation    Medtronic Inc.     

The Committee believes that the new peer group remains comparable to Danaher with respect to the financial metrics noted above and better reflects Danaher’s portfolio of businesses following the Separation. The Committee selected companies for inclusion in this peer group based on (1) the extent to which they compete with us in one or more lines of business, for executive talent and for investors, and (2) comparability of revenues, market capitalization, net income, total assets and number of employees. The table below sets forth for this peer group and Danaher information regarding revenue, net income and total assets (based on the most recently reported four quarters for each company as of September 30, 2016), market capitalization (as of September 30, 2016) and employee headcount (based on each company’s most recent fiscal year end as of September 30, 2016), in each case derived from the Standard & Poor’s Capital IQ database.

 

    ($ IN MILLIONS)        
    REVENUE     MARKET
CAPITALIZATION
   

NET INCOME (BEFORE

UNUSUAL OR INFREQUENTLY
OCCURRING ITEMS AND

DISCONTINUED OPERATIONS)

    TOTAL ASSETS     EMPLOYEES AT
END OF LAST
FISCAL YEAR
 

75th percentile

  $ 27,930     $ 82,775     $ 4,128     $ 46,628       85,585  

Median

  $ 15,593     $ 50,589     $ 1,829     $ 30,544       51,464  

25th percentile

  $ 10,312     $ 30,607     $ 979     $ 18,831       32,036  

Danaher

  $ 16,836     $ 55,149     $ 2,515     $ 41,298       60,000  

Danaher percentile rank

    52     53     64     66     64

The peer group compensation data that the Committee reviewed during and after October 2016 in connection with its executive compensation decisions estimated the 25th, median and 75th percentile positions among our peers with respect to base salary, annual cash incentive compensation (target and actual), total annual cash compensation (target and actual), long-term incentive compensation, total direct compensation (target and actual), all other compensation, annual change in pension value and above-market interest on non-qualified deferred compensation, and actual total compensation, in each case with respect to each respective named executive officer position.

Long-Term Incentive Compensation Grant Practices

General

The Committee grants equity awards under Danaher’s 2007 Stock Incentive Plan (the “Plan” or the “2007 Plan”), which is described in “Proposal 3 – Approval of Amendments to the Danaher Corporation 2007 Stock Incentive Plan and Material Terms of the Plan’s Performance Goals”. Executive equity awards are approved at regularly scheduled Committee meetings (typically scheduled in advance of the calendar year in which they occur), at the time of an executive hire or promotion or upon identification of a specific retention concern. The grant date of equity awards approved by the Committee is either the date of Committee approval or a date subsequent to the approval date as specified by the Committee. The timing of equity awards has not been coordinated with the release of material non-public information. The Committee’s general practice is to approve annual equity awards to executives at the Committee’s regularly scheduled meeting in February, when the Committee reviews the performance of the executive officers and typically determines the other components of executive compensation.

 

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PSUs and RSUs

The target dollar value attributable to PSUs and RSUs is translated into a target number of PSUs and RSUs, respectively, using an average closing price over a twenty trading day period ending on the grant date (the “Averaging Period”), to avoid the potential volatility impact of using a single-day closing price.

Stock Options

The target dollar value attributable to stock options is translated into a number of stock options using the Averaging Period and based on a specified option value (the target dollar value used by the Committee for awarding options is different than the option value reported in the Summary Compensation Table because the Committee does not use the same Black Scholes methodology to value options for purposes of converting the target dollar value into the number of awarded options). The exercise price for stock option awards granted under the 2007 Plan equals the closing price of Danaher’s Common Stock on the date of grant.

Stock Ownership-Related Policies

Stock Ownership Requirements

To further align management and shareholder interests and discourage inappropriate or excessive risk-taking, our stock ownership policy requires each executive officer to obtain a substantial equity stake in Danaher within five years of his or her appointment to an executive position. Our CEO is required to own shares with a market value of at least five times his base salary. The requirement for Executive Vice Presidents is three times base salary and for Senior Vice Presidents, two times base salary. Once an executive officer has acquired a number of Company shares that satisfies the ownership multiple then applicable to him or her, such number of shares then becomes his or her minimum ownership requirement (even if the officer’s salary increases or the fair market value of such shares subsequently changes) until he or she is promoted to a higher level. Under the policy, beneficial ownership includes shares in which the officer or his or her spouse or child has a direct or indirect interest, notional shares of Danaher stock in the EDIP plan, shares held in a 401(k) plan, unvested RSUs and PSUs (based on target number of shares until vested and then based on the actual number of vested shares), but does not include shares subject to unexercised stock options. Each named executive officer serving as an executive officer as of December 31, 2016 was in compliance with the stock ownership requirements as of such date.

Pledging Policy

Danaher’s Board has adopted a policy that prohibits any director or executive officer from pledging as security under any obligation any shares of Danaher Common Stock that he or she directly or indirectly owns and controls (other than shares already pledged as of February 21, 2013), and provides that pledged shares of Danaher Common Stock do not count toward Danaher’s stock ownership requirements. No named executive officer has pledged any shares of Danaher Common Stock.

Hedging Policy

Danaher policy prohibits Danaher employees (including the named executive officers) and directors from engaging in any transactions involving a derivative of a Danaher security, including hedging transactions.

Recoupment Policy

To further discourage inappropriate or excessive risk-taking, the Committee has adopted a recoupment (or clawback) policy applicable to Danaher’s executive officers, other individuals who serve on the Danaher Leadership Team (which consists primarily of Company corporate officers) and certain other employees (the “covered persons”). Under the policy, in the event of a material restatement of Danaher’s consolidated financial statements (other than any restatement required pursuant to a change in applicable accounting rules), Danaher’s Board may, to the extent permitted by law and to the extent it determines that it is in Danaher’s best interests to do so, in addition to all other remedies available to Danaher require reimbursement or payment to Danaher of:

 

  the portion of any annual incentive compensation payment awarded to any covered person within the three year period prior to the date such material restatement is first publicly disclosed that would not have been awarded had the consolidated financial statements that are the subject of such restatement been correctly stated (except that the Board has the right to require reimbursement of the entire amount of any such annual incentive compensation payment from any covered person whose fraud or other intentional misconduct in the Board’s judgment alone or with others caused such restatement); and

 

  all gains from equity awards granted on or after March 15, 2009 realized by any covered person during the twelve-month period immediately following the original filing of the consolidated financial statements that are the subject of such restatement, if the covered person’s fraud or other intentional misconduct in the Board’s judgment alone or with others caused such restatement.

 

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In addition, the stock plans in which Danaher’s executive officers participate contain a provision for recovering awards upon certain circumstances. Under the terms of the Company’s 2007 Plan and the 1998 Stock Option Plan (“1998 Plan”), an associate is prohibited from exercising outstanding equity awards after such time he or she is terminated for gross misconduct. In addition, under the terms of the EDIP, if the administrator determines that termination of an employee’s participation in the EDIP resulted from the employee’s gross misconduct, the administrator may determine that the employee’s vesting percentage is zero with respect to all balances that were contributed by Danaher.

Regulatory Considerations

Section 162(m) generally disallows a tax deduction to public corporations for compensation in excess of $1 million paid for any fiscal year to a company’s CEO or to any of the company’s other three most highly compensated executive officers (other than the CFO). The statute generally exempts qualifying performance-based compensation from the deduction limit if certain conditions are met. We review the tax impact of our executive compensation on the Company as well as on the executive officers. In addition, we review the impact of our compensation programs against other considerations, such as accounting impact, shareholder alignment, market competitiveness, effectiveness and perceived value to employees. Because many different factors influence a well-rounded, comprehensive and effective executive compensation program, some of the compensation we provide to our executive officers might not be deductible under Section 162(m).

Treatment of Equity-Based Compensation Upon Fortive Separation

In connection with the Fortive Separation and pursuant to the anti-dilution provisions of the 2007 Plan and EDIP, as applicable, the Company made certain adjustments to the share reserves and limits set forth under such plans, as well as the exercise price and the number of shares underlying the stock-based compensation awards held by our directors, executive officers and other employees, with the intention of preserving the intrinsic value of the awards prior to the Separation. Accordingly, the number of shares underlying each stock-based award outstanding as of the date of the Separation was multiplied by a factor of 1.32 and the related exercise price for stock options was divided by a factor of 1.32 which resulted in no increase in the intrinsic value of awards outstanding and no additional compensation expense. All disclosures in this Proxy Statement reflect such adjustments. The stock-based compensation awards continue to vest over their original vesting period. Stock-based compensation awards that were held by employees who transferred to Fortive in connection with the Separation were canceled and replaced by awards issued by Fortive.

 

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COMPENSATION COMMITTEE REPORT

This report 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 Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference into any prior or subsequent filing by Danaher under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Danaher specifically incorporates this report by reference therein.

The Compensation Committee of Danaher Corporation’s Board has reviewed and discussed with management the Compensation Discussion and Analysis set forth above and, based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation Committee of the Board of Directors

Donald J. Ehrlich (Chair)

Robert J. Hugin

Walter G. Lohr, Jr.

Alan G. Spoon

 

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COMPENSATION TABLES

2016 Summary Compensation Table

The following table sets forth the 2016 compensation of our President and Chief Executive Officer, Executive Vice President and Chief Financial Officer, our three other most highly compensated executive officers who were serving as executive officers as of December 31, 2016 and one highly compensated former executive officer who was no longer serving as an executive officer as of December 31, 2016, also known as our “named executive officers.” Mr. Joyce was appointed President and Chief Executive Officer in September 2014; Mr. Ellis joined Danaher as Senior Vice President-General Counsel in January 2016; and Mr. Lico left Danaher in July 2016 to become CEO of Fortive in connection with the Separation.

 

NAME AND

PRINCIPAL POSITION

  YEAR    

SALARY

($)(1)

    BONUS ($)    

STOCK
AWARDS

($)(2)

    OPTION AWARDS
($)(2)
   

NON-EQUITY
INCENTIVE
PLAN
COMPENSATION

($)(1)

   

CHANGE IN
PENSION VALUE
AND
NONQUALIFIED

DEFERRED
COMPENSATION
EARNINGS

($)(3)

   

ALL OTHER
COMPENSATION

($)(4)

    TOTAL ($)  

Thomas P. Joyce,

President

and CEO

    2016     $ 1,100,000       0     $ 4,095,424     $ 3,762,923     $ 3,500,000     $ 11,867     $ 498,587  (5)    $ 12,968,801  
    2015     $ 1,000,000       0     $ 3,473,408     $ 3,048,142     $ 2,600,000     $ 4,392     $ 469,606     $ 10,595,548  
    2014     $ 847,585       0     $ 2,801,483     $ 2,125,707     $ 1,900,000     $ 4,867     $ 726,634     $ 8,406,276  

Daniel L. Comas,

Executive Vice

President and CFO

    2016     $ 862,357       0     $ 1,830,931     $ 1,682,232     $ 1,666,505     $ 9,196     $ 271,662  (6)    $ 6,322,883  
    2015     $ 821,400       0     $ 1,786,736     $ 1,567,665     $ 1,402,541     $ 2,773     $ 265,398     $ 5,846,513  
    2014     $ 782,250       0     $ 4,380,064     $ 3,155,480     $ 1,306,400     $ 3,048     $ 209,487     $ 9,836,729  

William K. Daniel II,

Executive Vice

President

    2016     $ 730,144       0     $ 1,589,854     $ 1,460,842     $ 1,337,989       0     $ 110,968     $ 5,229,797  
    2015     $ 682,500       0     $ 1,538,272     $ 1,350,063     $ 1,076,644       0     $ 106,580     $ 4,754,059  
    2014     $ 650,000       0     $ 3,819,676     $ 2,749,225     $ 1,001,000       0     $ 80,301     $ 8,300,202  

Brian W. Ellis,

Senior Vice President-

General Counsel

    2016     $ 500,000     $ 325,000  (7)    $ 981,721     $ 885,558     $ 643,000       0     $ 372,075  (8)    $ 3,707,354  

Angela S. Lalor,

Senior Vice

President-Human Resources

    2016     $ 603,986     $ 300,000  (7)    $ 867,250     $ 796,901     $ 1,013,851       0     $ 91,318     $ 3,673,306  
    2015     $ 575,300     $ 300,000  (7)    $ 794,576     $ 560,024     $ 823,945       0     $ 99,240     $ 3,153,085  
    2014     $ 550,000     $ 300,000  (7)    $ 1,782,951     $ 998,029     $ 801,000       0     $ 79,626     $ 4,511,606  

James A. Lico,

Former Executive Vice

President

    2016     $ 422,717       0     $ 2,167,938     $ 1,992,280     $ 715,063  (9)    $ 10,907     $ 173,670     $ 5,482,575  
    2015     $ 701,200       0     $ 1,588,304     $ 1,393,534     $ 1,123,673     $ 2,937     $ 167,668     $ 4,977,316  
    2014     $ 661,500       0     $ 2,904,906     $ 2,108,025     $ 1,022,100     $ 3,212     $ 133,876     $ 6,833,619  
(1) The following table sets forth the amount, if any, of salary and/or non-equity incentive compensation that each named executive officer deferred into the EDIP with respect to each of the years reported above:

 

NAME OF OFFICER      AMOUNT OF SALARY DEFERRED INTO EDIP ($)                   

AMOUNT OF NON-EQUITY

INCENTIVE COMPENSATION DEFERRED
INTO EDIP ($)

 
         2016            2015            2014              2016        2015        2014  

Thomas P. Joyce, Jr.

     $ 274,135        $ 200,000        $ 204,203                $ 875,000        $ 520,000        $ 475,000  

Daniel L. Comas

       -          -          -                  -          -          -  

William K. Daniel II

     $ 109,274        $ 102,375        $ 94,975                  -          -          -  

Brian W. Ellis

       -          N/A          N/A                $ 200,000          N/A          N/A  

Angela S. Lalor

       -          -          -                $ 506,926        $ 411,973        $ 400,500  

James A. Lico

       -          -          -                  -        $ 100,000        $ 100,000  

 

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(2) The amounts reflected in these columns represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for equity grants made in the applicable year:

 

    With respect to stock options, the grant date fair value under FASB ASC Topic 718 has been calculated using the Black-Scholes option pricing model, based on the following assumptions (and assuming no forfeitures):

 

NAME OF OFFICER    DATE OF
GRANT
  

RISK-FREE

INTEREST
RATE

   STOCK PRICE
VOLATILITY RATE
   DIVIDEND
YIELD
   OPTION
LIFE

Joyce, Comas, Daniel, Ellis, Lalor, Lico

  

February 24, 2016

       1.60 %        24.70 %        0.62 %    8.0 years

Joyce, Comas, Daniel, Lico

  

February 24, 2015

       1.86 %        23.40 %        0.62 %    8.0 years

Lalor

  

February 24, 2015

       1.55 %        23.20 %        0.62 %    5.5 years

Joyce

  

September 9, 2014

       2.29 %        24.80 %        0.52 %    8.0 years

Comas, Daniel, Lico

  

May 15, 2014

       2.20 %        21.80 %        0.53 %    8.0 years

Lalor

  

May 15, 2014

       1.68 %        21.70 %        0.53 %    5.5 years

Joyce, Comas, Daniel, Lico

  

February 24, 2014

       2.38 %        22.80 %        0.53 %    8.0 years

Lalor

  

February 24, 2014

       1.73 %        22.60 %        0.53 %    5.5 years

 

    Beginning in 2015, one-quarter of each executive officer’s annual equity award is granted in the form of restricted stock units and one-quarter is granted in the form of performance stock units that vest based on the Company’s TSR ranking relative to the S&P 500 Index over a three-year performance period (the balance of the annual equity award is granted in stock options). With respect to restricted stock units, the grant date fair value under FASB ASC Topic 718 is calculated based on the number of shares of Common Stock underlying the RSU, times the closing price of the Common Stock on the date of grant. With respect to performance stock units, the grant date fair value under FASB ASC Topic 718 has been calculated based on the probable outcome of the applicable performance conditions and a Monte Carlo simulation valuation model modified to reflect an illiquidity discount (as a result of the mandatory two-year post-vesting holding period), using the following significant assumptions (since the performance criteria applicable to the performance stock units is considered a “market condition,” footnote disclosure of the award’s potential maximum value is not required):

 

ASSUMPTION      2016          2015
     MONTE
CARLO
SIMULATION
     ILLIQUIDITY
DISCOUNT
         MONTE
CARLO
SIMULATION
     ILLIQUIDITY
DISCOUNT

Danaher’s expected volatility

         17.16 %          20.67 %                    17.09 %          21.55 %

Average volatility of peer group

         25.02 %          N/A                    23.46 %          N/A

Risk free interest rate

         0.88 %          0.75 %                    0.91 %          0.60 %

Dividend yield

         0 %          0.62 %                    0 %          0.37 %

 

(3) For each named executive officer, the amount set forth in this column represents the aggregate change in the actuarial present value of the officer’s accumulated benefit under the Cash Balance Plan of the Danaher Corporation & Subsidiaries Pension Plan between the December 31, 2015 plan measurement date and the December 31, 2016 plan measurement date. The material assumptions used in quantifying the present value of the accumulated benefit at each of December 31, 2015 and December 31, 2016 are as follows: an interest crediting rate (applied from the plan measurement date until normal retirement age) of 3.42% for the plan measurement date of December 31, 2015 and 3.85% for the plan measurement date of December 31, 2016; a retirement age of 65, which is normal retirement age under the Cash Balance Plan; payment of the accrued obligations in a lump sum upon retirement; and the discount rates as set forth in Note 10 to Danaher’s consolidated financial statements included in Danaher’s Annual Report on Form 10-K for the year ended December 31, 2016. We do not provide any above-market or preferential earnings on compensation that is deferred.

 

38     DANAHER  2017 PROXY STATEMENT       
  


Table of Contents

Compensation Tables  

 

 

 

(4) The following table sets forth the 401(k) and EDIP contributions the Company made to each named executive officer for 2016, which amounts are included in “All Other Compensation”:

 

NAME      2016 COMPANY 401(K) CONTRIBUTIONS ($)        2016 COMPANY EDIP CONTRIBUTIONS ($)  

Thomas P. Joyce, Jr.

     $ 18,830        $ 300,000  

Daniel L. Comas

     $ 18,830        $ 184,815  

William K. Daniel II

     $ 18,830        $ 92,138  

Brian W. Ellis

     $ 5,300        $ 55,200  

Angela S. Lalor

     $ 18,830        $ 72,488  

James A. Lico

     $ 15,900        $ 157,770  

 

(5) Includes an aggregate of $179,757 in perquisites consisting of the following: $125,000 relating to personal use of the Company’s aircraft, $30,314 relating to tax preparation and professional services, plus amounts related to tickets to entertainment events, parking expenses and an annual physical exam. The incremental cost to the Company of the personal aircraft use is calculated by multiplying the total number of personal flight hours times the average direct variable operating costs (including costs related to fuel, on-board catering, maintenance expenses related to operation of the plane during the year, landing and parking fees, navigation fees, related ground transportation, crew accommodations and meals and supplies) per flight hour for the particular aircraft for the year, net of any applicable employee reimbursement. Since the aircraft are used primarily for business travel, we do not include in the calculation the fixed costs that do not change based on usage, such as crew salaries, aircraft insurance premiums, hangar lease payments, the lease or acquisition cost of the aircraft, exterior paint and other maintenance, inspection and capital improvement costs intended to cover a multiple-year period. Mr. Joyce’s annual perquisite allowance for personal use of the Company aircraft is limited to $125,000 annually and Mr. Joyce is required to reimburse the Company for any personal use of the aircraft in a particular year in excess of $125,000. The incremental cost to the Company of tax preparation and professional services is calculated based on the out-of-pocket costs with respect to such services.

 

(6) Includes an aggregate of $68,017 in perquisites consisting of $50,000 relating to personal use of Danaher’s aircraft, plus amounts relating to tickets to entertainment events, parking expenses, tax preparation and professional services and an annual physical exam. The incremental cost to the Company of the personal aircraft use is calculated in the same manner as set forth in Footnote 5 above. Mr. Comas’ annual perquisite allowance for personal use of the Company aircraft is limited to $50,000 annually and Mr. Comas is required to reimburse the Company for any personal use of the aircraft in a particular year in excess of $50,000.

 

(7) For a description of these bonus payments, please see “Summary of Employment Agreements and Plans – Employment Agreements.”

 

(8) Includes an aggregate of $311,575 in perquisites consisting of $292,956 in relocation costs, plus amounts relating to tickets to entertainment events and parking expenses. In connection with Mr. Ellis’ 2016 hiring as the Company’s Senior Vice President-General Counsel, the Company provided him with relocation assistance under the relocation program that the Company makes available to management employees generally. The incremental cost to the Company of the relocation assistance is calculated based on the Company’s out-of-pocket costs, which included costs relating to the sale of his former residence and purchase of a new residence, temporary housing, house-hunting trips and moving expenses as well as reimbursement in the amount of $94,381 for the income taxes incurred by Mr. Ellis with respect to such relocation perquisites.

 

(9) The amount represents the portion of Mr. Lico’s non-equity incentive plan compensation for 2016 attributable to his 2016 service with Danaher prior to the Separation. This compensation was paid to Mr. Lico by Fortive.

Grants of Plan-Based Awards for Fiscal 2016

The following table sets forth certain information regarding grants of plan-based awards to each of our named executive officers in 2016. As discussed in further detail in “Compensation Discussion and Analysis—Treatment of Equity-Based Compensation Upon Fortive Separation,” all of the share amounts and option exercise prices set forth below reflect adjustments pursuant to the anti-dilution provisions of the 2007 Plan and EDIP, as applicable, to account for the Fortive Separation and preserve the intrinsic value of each award. For comparability purposes the awards granted to Mr. Lico reflect the same adjustments, but all of his awards were converted into awards for shares of Fortive common stock in connection with the Fortive Separation.

 

      DANAHER  2017 PROXY STATEMENT      39
 


Table of Contents

  Compensation Tables

 

 

 

             

COMMITTEE
APPROVAL
DATE

   

ESTIMATED POSSIBLE PAYOUTS

UNDER NON-EQUITY
INCENTIVE PLAN AWARDS(1)

    ESTIMATED FUTURE
PAYOUTS UNDER EQUITY
INCENTIVE PLAN AWARDS (2)
   

ALL OTHER
OPTION
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS
(#)(2)

   

EXERCISE
OR BASE
PRICE  OF
OPTION
AWARDS
($/
SHARE)

   

GRANT DATE

FAIR VALUE

OF STOCK

AND OPTION
AWARDS

($)(3)

 
NAME       GRANT DATE       THRESHOLD
($)
   

TARGET

($)

    MAXIMUM
($)
    THRESHOLD
(#)
    TARGET
(#)
    MAXIMUM
(#)
       

Thomas P. Joyce, Jr.

  Annual cash incentive compensation     3/18/2016       3/18/2016     $ 1,100,000     $ 2,200,000     $ 10,000,000       -       -       -       -       -       -  
  Stock options(4)     2/24/2016       2/23/2016       -       -       -       -       -       -       198,676     $ 65.95     $ 3,762,923  
  Restricted stock units(5)     2/24/2016       2/23/2016       -       -       -       -       32,787       -       -       -     $ 2,123,286  
  Performance stock units(6)     2/24/2016       2/23/2016       -       -       -       8,197       32,787       65,574       -       -     $ 1,972,138  

Daniel L. Comas

  Annual cash incentive compensation     3/18/2016       3/18/2016     $ 538,973     $ 1,077,946     $ 10,000,000       -       -       -       -       -       -  
  Stock options(4)     2/24/2016       2/23/2016       -       -       -       -       -       -       88,819     $ 65.95     $ 1,682,232  
  Restricted stock units(5)     2/24/2016       2/23/2016       -       -       -       -       14,658       -       -       -     $ 949,252  
  Performance stock units(6)     2/24/2016       2/23/2016       -       -       -       3,665       14,658       29,316       -       -     $ 881,679  

William K. Daniel II

  Annual cash incentive compensation     3/18/2016       3/18/2016     $ 456,340     $ 912,680     $ 10,000,000       -       -       -       -       -       -  
  Stock options(4)     2/24/2016       2/23/2016       -       -       -       -       -       -       77,130     $ 65.95     $ 1,460,842  
  Restricted stock units(5)     2/24/2016       2/23/2016       -       -       -       -       12,728       -       -       -     $ 824,265  
  Performance stock units(6)     2/24/2016       2/23/2016       -       -       -       3,182       12,728       25,456       -       -     $ 765,589  

Brian W. Ellis

  Annual cash incentive compensation     3/18/2016       3/18/2016     $ 250,000     $ 500,000     $ 10,000,000       -       -       -       -       -       -  
  Stock options(7)     2/24/2016       2/23/2016       -       -       -       -       -       -       23,378     $ 65.95     $ 442,779  
  Stock options(8)     2/24/2016       2/23/2016       -       -       -       -       -       -       23,378     $ 65.95     $ 442,779  
  Restricted stock units(9)     2/24/2016       2/23/2016       -       -       -       -       7,718       -       -       -     $ 499,818  
  Restricted stock units(10)     2/24/2016       2/23/2016       -       -       -       -       3,858       -       -       -     $ 249,844  
  Performance stock units(6)     2/24/2016       2/23/2016       -       -       -       965       3,858       7,716       -       -     $ 232,059  

Angela S. Lalor

  Annual cash incentive compensation     3/18/2016       3/18/2016     $ 332,193     $ 664,385     $ 10,000,000       -       -       -       -       -       -  
  Stock options(7)     2/24/2016       2/23/2016       -       -       -       -       -       -       42,075     $ 65.95     $ 796,901  
  Restricted stock units(10)     2/24/2016       2/23/2016       -       -       -       -       6,943       -       -       -     $ 449,629  
  Performance stock units(6)     2/24/2016       2/23/2016       -       -       -       1,736       6,943       13,886       -       -     $ 417,621  

James A. Lico

 

Annual cash incentive

compensation

    3/18/2016       3/18/2016     $ 531,250     $ 1,062,500     $ 10,000,000       -       -       -       -       -       -  
  Stock options(4)     2/24/2016       2/23/2016       -       -       -       -       -       -       105,189     $ 65.95     $ 1,992,280  
  Restricted stock units(5)     2/24/2016       2/23/2016       -       -       -       -       17,356       -       -       -     $ 1,123,975  
  Performance stock units(6)     2/24/2016       2/23/2016       -       -       -       4,339       17,356       34,712       -       -     $ 1,043,963  

 

(1) These columns relate to 2016 cash award opportunities under Danaher’s 2007 Executive Incentive Compensation Plan. Please see “Proposal 4—Approval of Amendments to the Danaher Corporation 2007 Executive Incentive Compensation Plan and Material Terms of the Plan’s Performance Goals” for a description of such plan. The amounts actually paid pursuant to these 2016 award opportunities are set forth in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.

 

(2) These columns relate to awards granted under the 2007 Stock Incentive Plan, the terms of which apply to all of the equity awards described in this table. Please see “Proposal 3—Approval of Amendments to the Danaher Corporation 2007 Stock Incentive Plan and Material Terms of the Plan’s Performance Goals” for a description of such plan.

 

40     DANAHER  2017 PROXY STATEMENT       
  


Table of Contents

Compensation Tables  

 

 

 

(3) Reflects the grant date fair value calculated in accordance with FASB ASC Topic 718. For the assumptions used in determining the grant date fair value under FASB ASC Topic 718, please see Footnote 2 to the Summary Compensation Table.

 

(4) For a description of the vesting terms of the award, please see Footnote 3 to the Outstanding Equity Awards at 2016 Fiscal Year-End Table.

 

(5) For a description of the vesting terms of the award, please see Footnote 6 to the Outstanding Equity Awards at 2016 Fiscal Year-End Table.

 

(6) For a description of the vesting terms of the award, please see Footnote 5 to the Outstanding Equity Awards at 2016 Fiscal Year-End Table.

 

(7) For a description of the vesting terms of the award, please see Footnote 4 to the Outstanding Equity Awards at 2016 Fiscal Year-End Table.

 

(8) For a description of the vesting terms of the award, please see Footnote 9 to the Outstanding Equity Awards at 2016 Fiscal Year-End Table.

 

(9) For a description of the vesting terms of the award, please see Footnote 11 to the Outstanding Equity Awards at 2016 Fiscal Year-End Table.

 

(10) For a description of the vesting terms of the award, please see Footnote 10 to the Outstanding Equity Awards at 2016 Fiscal Year-End Table.

Outstanding Equity Awards at 2016 Fiscal Year-End

The following table summarizes outstanding equity awards for each named executive officer as of December 31, 2016. All of the awards set forth in the table below are governed by the terms and conditions of the 2007 Plan. As discussed in further detail in “Compensation Discussion and Analysis—Treatment of Equity-Based Compensation Upon Fortive Separation,” all of the share amounts and option exercise prices set forth below reflect adjustments pursuant to the anti-dilution provisions of the 2007 Plan to account for the Fortive Separation and preserve the intrinsic value of each award. Mr. Lico did not have any outstanding equity awards as of December 31, 2016, as all of his equity awards were converted into awards for shares of Fortive common stock in connection with the Fortive Separation.

 

          OPTION AWARDS     STOCK AWARDS  
NAME   GRANT DATE     NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE
    NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE(1)
   

OPTION
EXERCISE
PRICE

($)

    OPTION
EXPIRATION
DATE
   

NUMBER OF
SHARES OR
UNITS OF

STOCK THAT
HAVE NOT
VESTED
(#)(1)

   

MARKET VALUE
OF SHARES OR
UNITS OF STOCK
THAT HAVE

NOT VESTED

($)(2)

   

EQUITY
INCENTIVE

PLAN AWARDS:
NUMBER OF
UNEARNED
SHARES, UNITS
OR OTHER
RIGHTS THAT
HAVE NOT
VESTED (#)(1)

    EQUITY INCENTIVE
PLAN AWARDS:
MARKET OR PAYOUT
VALUE OF
UNEARNED SHARES,
UNITS OR OTHER
RIGHTS THAT HAVE
NOT VESTED ($)(2)
 

Thomas P. Joyce, Jr.

    2/24/2016       -       198,676 (3)    $ 65.95       2/24/2026       -       -       -       -  
    2/24/2015       -       164,111 (3)    $ 65.83       2/24/2025       -       -       -       -  
    9/9/2014       -       50,419 (3)    $ 57.91       9/9/2024       -       -       -       -  
    2/24/2014       -       70,544 (3)    $ 57.90       2/24/2024       -       -       -       -  
    7/30/2013       33,171       66,345 (4)    $ 50.80       7/30/2023       -       -       -       -  
    2/21/2013       -       87,444 (3)    $ 46.13       2/21/2023       -       -       -       -  
    2/23/2012       47,312       47,312 (3)    $ 40.45       2/23/2022       -       -       -       -  
    2/23/2011       102,372       -     $ 37.51       2/23/2021       -       -       -       -  
    2/23/2010       125,989       -     $ 28.23       2/23/2020       -       -       -       -  
    2/24/2009       160,184       -     $ 19.89       2/24/2019       -       -       -       -  
    2/20/2008       72,251       -     $ 28.55       2/20/2018       -       -       -       -  
    2/24/2016       -       -       -       -       -       -       32,787 (5)    $ 2,552,140  
    2/24/2016       -       -       -       -       -       -       32,787 (6)    $ 2,552,140  
    2/24/2015       -       -       -       -       -       -       54,162 (5)    $ 4,215,970  
    2/24/2015       -       -       -       -       27,081 (7)    $ 2,107,985       -       -  
    9/9/2014       -       -       -       -       20,166 (7)    $ 1,569,721       -       -  
    2/24/2014       -       -       -       -       28,218 (7)    $ 2,196,489       -       -  
    7/30/2013       -       -       -       -       39,806 (8)    $ 3,098,499       -       -  
    2/21/2013       -       -       -       -       34,982 (7)    $ 2,722,999       -       -  
      2/23/2012       -       -       -       -       18,926 (7)    $ 1,473,200       -       -  

 

      DANAHER  2017 PROXY STATEMENT      41
 


Table of Contents

  Compensation Tables

 

 

          OPTION AWARDS     STOCK AWARDS  
NAME   GRANT DATE     NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE
    NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE(1)
   

OPTION
EXERCISE
PRICE

($)

    OPTION
EXPIRATION
DATE
   

NUMBER OF
SHARES OR
UNITS OF

STOCK THAT
HAVE NOT
VESTED
(#)(1)

   

MARKET VALUE
OF SHARES OR
UNITS OF STOCK
THAT HAVE

NOT VESTED

($)(2)

   

EQUITY
INCENTIVE

PLAN AWARDS:
NUMBER OF
UNEARNED
SHARES, UNITS
OR OTHER
RIGHTS THAT
HAVE NOT
VESTED (#)(1)

    EQUITY INCENTIVE
PLAN AWARDS:
MARKET OR PAYOUT
VALUE OF
UNEARNED SHARES,
UNITS OR OTHER
RIGHTS THAT HAVE
NOT VESTED ($)(2)
 

Daniel L. Comas

    2/24/2016         88,819 (3)    $ 65.95       2/24/2026       -       -       -       -  
    2/24/2015       -       84,402 (3)    $ 65.83       2/24/2025       -       -       -       -  
    5/15/2014       -       112,078 (4)    $ 56.70       5/15/2024       -       -       -       -  
    2/24/2014       -       79,364 (3)    $ 57.90       2/24/2024       -       -       -       -  
    2/21/2013       -       98,379 (3)    $ 46.13       2/21/2023       -       -       -       -  
    2/23/2012       55,193       55,193 (3)    $ 40.45       2/23/2022       -       -       -       -  
    2/23/2011       119,430       -     $ 37.51       2/23/2021       -       -       -       -  
    2/23/2010       125,989       -     $ 28.23       2/23/2020       -       -       -       -  
    2/24/2009       90,184       -     $ 19.89       2/24/2019       -       -       -       -  
    2/24/2016       -       -       -       -       -       -       14,658 (5)    $ 1,140,979  
    2/24/2016       -       -       -       -       -       -       14,658 (6)    $ 1,140,979  
    2/24/2015       -       -       -       -       -       -       27,862 (5)    $ 2,168,778  
    2/24/2015       -       -       -       -       13,931 (7)    $ 1,084,389       -       -  
    5/15/2014       -       -       -       -       44,833 (8)    $ 3,489,801       -       -  
    2/24/2014       -       -       -       -       31,749 (7)    $ 2,471,342       -       -  
    2/21/2013       -       -       -       -       39,352 (7)    $ 3,063,160       -       -  
      2/23/2012       -       -       -       -       22,080 (7)    $ 1,718,707       -       -  
William K. Daniel II     2/24/2016         77,130 (3)    $ 65.95       2/24/2026       -       -       -       -  
    2/24/2015       -       72,687 (3)    $ 65.83       2/24/2025       -       -       -       -  
    5/15/2014       -       100,878 (4)    $ 56.70       5/15/2024       -       -       -       -  
    2/24/2014       -       66,141 (3)    $ 57.90       2/24/2024       -       -       -       -  
    2/21/2013       -       68,323 (3)    $ 46.13       2/21/2023       -       -       -       -  
    2/23/2012       39,424       39,425 (3)    $ 40.45       2/23/2022       -       -       -       -  
    2/23/2011       85,315       -     $ 37.51       2/23/2021       -       -       -       -  
    2/23/2010       103,086       -     $ 28.23       2/23/2020       -       -       -       -  
    2/24/2009       131,066       -     $ 19.89       2/24/2019       -       -       -       -  
    2/24/2016       -       -       -       -       -       -       12,728 (5)    $ 990,748  
    2/24/2016       -       -       -       -       -       -       12,728 (6)    $ 990,748  
    2/24/2015       -       -       -       -       -       -       23,988 (5)    $ 1,867,226  
    2/24/2015       -       -       -       -       11,994 (7)    $ 933,613       -       -  
    5/15/2014       -       -       -       -       40,351 (8)    $ 3,140,922       -       -  
    2/24/2014       -       -       -       -       26,460 (7)    $ 2,059,646       -       -  
    2/21/2013       -       -       -       -       27,326 (7)    $ 2,127,056       -       -  
      2/23/2012       -       -       -       -       15,772 (7)    $ 1,227,692       -       -  

Brian W. Ellis

    2/24/2016       -       23,378 (4)    $ 65.95       2/24/2026       -       -       -       -  
    2/24/2016       -       23,378 (9)    $ 65.95       2/24/2026       -       -       -       -  
    2/24/2016       -       -       -       -       -       -       7,718 (10)    $ 600,769  
    2/24/2016       -       -       -       -       -       -       3,858 (11)    $ 300,307  
      2/24/2016       -       -       -       -       -       -       3,858 (5)    $ 300,307  

 

42     DANAHER  2017 PROXY STATEMENT       
  


Table of Contents

Compensation Tables  

 

 

          OPTION AWARDS     STOCK AWARDS  
NAME   GRANT DATE     NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE
    NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE(1)
   

OPTION
EXERCISE
PRICE

($)

    OPTION
EXPIRATION
DATE
   

NUMBER OF
SHARES OR
UNITS OF

STOCK THAT
HAVE NOT
VESTED
(#)(1)

   

MARKET VALUE
OF SHARES OR
UNITS OF STOCK
THAT HAVE

NOT VESTED