DEF 14A 1 d104944ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

  Filed by the Registrant    ☒                                   Filed by a party other than the Registrant    ☐

  Check the appropriate box:

 

  ☐           Preliminary Proxy Statement
  ☐   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  ☒   Definitive Proxy Statement
  ☐   Definitive Additional Materials
  ☐   Soliciting Material Pursuant to §240.14a-12

 

IDEX Corporation

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if Other Than The Registrant)

 

  Payment of Filing Fee (Check the appropriate box):
  ☒            

No fee required.

  ☐    

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

  (1)    

Title of each class of securities to which transaction applies:

   

 

  (2)  

Aggregate number of securities to which transaction applies:

   

 

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

   

 

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Proposed maximum aggregate value of transaction:

   

 

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Total fee paid:

   

 

  ☐   Fee paid previously with preliminary materials.
  ☐   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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LOGO

3100 Sanders Road, Suite 301

Northbrook, IL 60062

March 23, 2021

Dear Stockholders,

You are cordially invited to attend the Annual Meeting of Stockholders of IDEX Corporation (the Company) in a virtual format only via the Internet, which will be held on Wednesday, May 12, 2021, at 9:00 a.m. Central Time. In order to attend the Annual Meeting, vote during the Annual Meeting and submit questions, stockholders must go to http://www.virtualshareholdermeeting.com/IEX2021 and enter the 16-digit control number found in their proxy materials.

The meeting will be held virtually due to the continuing public health impact of the COVID-19 pandemic and to support the health and well-being of IDEX management and stockholders. The following pages contain our notice of annual meeting and proxy statement. Please review this material for information concerning the business to be conducted at the 2021 Annual Meeting, including the nominees for election of directors named in this proxy statement.

We will provide access to our proxy materials and 2020 Annual Report on the Internet and are mailing paper copies only to those stockholders who have requested them. For further details, please refer to the section entitled Summary beginning on page 1 of the proxy statement.

Whether or not you plan to attend the 2021 Annual Meeting, it is important that your shares be represented. Please vote via telephone, the Internet or proxy card. If you own shares through a bank, broker or other nominee, please execute your vote by following the instructions provided by such nominee.

On behalf of the Board of Directors, I would like to express our appreciation for your continued interest in the Company.

Sincerely,

LOGO

WILLIAM M. COOK

Chairman of the Board


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LOGO

NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

 

Date and Time  

Wednesday, May 12, 2021, at 9:00 a.m. Central Time

 

Place  

Go to http://www.virtualshareholdermeeting.com/IEX2021 and enter the 16-digit control number found in your proxy materials

 

Agenda  

1.  Election of the three members of the IDEX Board of Directors named in this proxy, each for a term of three years

 

 

2.  Advisory vote to approve named executive officer compensation

 

 

3.  Ratification of the appointment of Deloitte & Touche LLP as our independent registered accounting firm for 2021

 

 

4.  To transact such other business as may properly come before the 2021 Annual Meeting or any adjournment or postponement thereof

 

Voting Recommendations  

The Company’s Board of Directors recommends that you vote:

 

 

1.  “FOR” all the director nominees

 

 

2.  “FOR” the approval of the compensation of our named executive officers

 

 

3.  “FOR” the ratification of the appointment of Deloitte & Touche LLP

 

Proxy Voting  

Your vote is important. You can vote your shares by Internet, by telephone, or by mail. Instructions for each of these methods and the control number that you will need are provided on the proxy card. If your shares are held in “street name” in a stock brokerage account, or by a bank or other nominee, you must provide your broker with instructions on how to vote your shares in order for your shares to be voted on important matters presented at the 2021 Annual Meeting.

 

March 23, 2021  

By Order of the Board of Directors,

 

LOGO

 

 

DENISE R. CADE

Senior Vice President, General Counsel and

Corporate Secretary

 

 

Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual Meeting

The Proxy Statement and 2020 Annual Report are available online at:

http://phx.corporate-ir.net/phoenix.zhtml?c=83305&p=irol-reportsAnnual

 

 


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TABLE OF CONTENTS

 

     Page

SUMMARY

     1  

PROPOSAL 1 — ELECTION OF DIRECTORS

     5  

2021 Director Nominees

     8  

Other Incumbent Directors

     10  

CORPORATE GOVERNANCE

     15  

Framework for Corporate Governance

     15  

Corporate Governance Guidelines and Code of Business Conduct and Ethics

     15  

Director Independence

     15  

Director Nominations

     15  

Board Refreshment and Retirement Policy

     16  

Board Leadership Structure

     16  

Board’s Role in Risk Oversight

     17  

Board and Committee Assessment Process

     18  

Board’s Engagement with Management

     18  

Board’s Role in Talent Development, Strategic Planning and DEI

     18  

Director Onboarding and Education

     18  

Investor Outreach

     19  

Corporate Social Responsibility

     19  

Communications with Our Board

     19  

Recent Amendments to our Bylaws

     19  

BOARD COMMITTEES

     20  

Audit Committee

     20  

Compensation Committee

     21  

Nominating and Corporate Governance Committee

     22  

COMPENSATION OF DIRECTORS

     24  

Equity Grants

     24  

Directors Deferred Compensation Plan

     25  

Stock Ownership Guideline

     25  

2020 Director Compensation

     26  

Directors’ Outstanding Equity Awards at 2020 Fiscal Year End

     27  

SECURITY OWNERSHIP

     28  

EXECUTIVE COMPENSATION

     30  

Compensation Discussion and Analysis

     30  

2020 Executive Compensation Program

     35  

Setting Executive Compensation

     41  

Other Compensation Components

     43  

Other Executive Compensation Matters

     44  

Risk Assessment

     46  

Compensation Committee Report

     46  

2020 Summary Compensation Table

     47  

Narrative to 2020 Summary Compensation Table

     49  

2020 Grants of Plan-Based Awards

     50  

Narrative to 2020 Grants of Plan-Based Awards Table

     50  

Outstanding Equity Awards at 2020 Fiscal Year End

     52  

2020 Option Exercises and Stock Vested

     53  

Pension Benefits at 2020 Fiscal Year End

     54  

Nonqualified Deferred Compensation at 2020 Fiscal Year End

     55  

Narrative to Nonqualified Deferred Compensation at 2020 Fiscal Year End Table

     55  

Potential Payments upon Termination or Change in Control

     56  

CEO and Median Employee Pay Ratio

     60  

PROPOSAL 2 — ADVISORY VOTE ON EXECUTIVE COMPENSATION

     61  

AUDIT COMMITTEE REPORT

     62  

PRINCIPAL ACCOUNTANT FEES AND SERVICES

     63  

Pre-Approval Policies and Procedures

     63  

PROPOSAL 3 — APPROVAL OF AUDITORS

     64  

STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2022 ANNUAL MEETING OF STOCKHOLDERS

     65  

OTHER BUSINESS

     65  

 

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LOGO

SUMMARY

IDEX Corporation (the Company or IDEX) has prepared this proxy statement (Proxy Statement) in connection with the solicitation by the Company’s Board of Directors (the Board) of proxies for the Annual Meeting of Stockholders to be held virtually on Wednesday, May 12, 2021, at 9:00 a.m. Central Time (the Annual Meeting). In order to attend the Annual Meeting, vote during the Annual Meeting and submit questions, stockholders must go to http://www.virtualshareholdermeeting.com/IEX2021 and enter the 16-digit control number found in their proxy materials. The meeting webcast will begin promptly at 9:00 a.m., Central Time, on May 12, 2021. We encourage you to access the webcast prior to the scheduled start time of the Annual Meeting. If you encounter any difficulties accessing the virtual Annual Meeting, please call the technical support number that will be posted on the virtual shareholder meeting log in page. The Company commenced distribution of, or otherwise made available, this Proxy Statement and the accompanying materials on March 23, 2021.

Who is entitled to vote at the Annual Meeting?

You are entitled to vote if you owned shares of IDEX’s common stock, par value $0.01 per share (Common Stock) as of the close of business on March 15, 2021, the record date of the Annual Meeting. On the record date, a total of 75,920,203 shares of Common Stock were outstanding. Each share of Common Stock entitles its holder of record to one vote on each matter upon which votes are taken at the Annual Meeting. There is no cumulative voting. No other securities are entitled to be voted at the Annual Meeting.

How do I vote?

Even if you plan to attend the Annual Meeting virtually, we encourage you to vote as soon as possible, using one of the methods listed below.

 

 

By Internet

 

 

 

By Telephone

 

 

 

By Mail

 

 

 

Virtually

 

www.proxyvote.com

Open until 11:59 p.m. Eastern Time the day before the meeting date.

Have your proxy card in hand when you access the website and follow the instructions.

 

1-800-690-6903

Open until 11:59 p.m. Eastern Time the day before the meeting date.

Have your proxy card in hand when you call and follow the instructions.

 

Mark, sign and date

your proxy card and

return it in the postage-paid envelope or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717

 

In order to vote during the Annual Meeting you must go to http://www.virtualshareholder
meeting.com/IEX2021 and enter the 16-digit control number found in your proxy materials. If you decide to attend the Annual Meeting, you will be able to vote using the link above, even if you

have previously voted

by Internet, telephone or mail.



 

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If you vote by telephone or over the Internet, you should not mail your proxy card. If your completed proxy card or telephone or Internet voting instructions are received prior to the Annual Meeting, your shares will be voted in accordance with your voting instructions.

If your shares are held in “street name” (that is, they are held in the name of a broker, financial institution or other nominee), you will receive instructions with your materials that you must follow in order to have your shares voted.

Please review your voting instruction form to determine whether you will be able to vote by telephone or over the Internet.

Will I be able to ask questions at the Annual Meeting?

We are committed to ensuring that stockholders will be afforded the same rights and opportunities to participate as they would at an in-person meeting. Our directors and members of our management team will join the virtual meeting and be available for questions, and we are committed to answering all relevant questions we receive during the meeting. Stockholders may submit questions during the meeting through the virtual meeting platform at http://www.virtualshareholdermeeting.com/IEX2021 and enter the 16-digit control number found in their proxy materials. We will address as many questions during the meeting as time permits, but if there are any questions that cannot be addressed due to time constraints or for any other reason, we will post answers to such questions on our website following the meeting. If we receive substantially similar questions, we may group them together and provide a single response to avoid repetition. Only questions that are relevant to the purpose of the Annual Meeting or our business will be answered.

What is a quorum for the Annual Meeting?

A quorum of stockholders is necessary to take action at the Annual Meeting. A majority of outstanding shares of Common Stock entitled to vote at the meeting present at the Annual Meeting or represented by proxy will constitute a quorum. The Company will appoint election inspectors to determine whether or not a quorum is present, and to tabulate votes cast by proxy or virtually at the Annual Meeting. Under certain circumstances, a broker or other nominee may have discretionary authority to vote shares of Common Stock if instructions have not been received from the beneficial owner or other person entitled to vote.

The election inspectors will treat abstentions and broker non-votes (which occur when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because such broker or other nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner) as present for purposes of determining the presence of a quorum for the transaction of business at the Annual Meeting.



 

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What are the voting requirements?

 

Proposal   Vote Required   Effect of Broker
Non-Votes
  Effect of Abstentions
       

Election of Directors

 

A nominee for director will be elected if the votes cast for such nominee exceed the votes cast against such nominee

  No effect   No effect
       

Advisory Vote on Executive

Compensation

  The affirmative vote of a majority of shares present at the Annual Meeting or represented by proxy and entitled to vote on the matter   No effect   “Against”
       
Ratification of Auditors   The affirmative vote of a majority of shares present at the Annual Meeting or represented by proxy and entitled to vote on the matter  

Brokers have discretion to vote

  “Against”

What happens if a nominee does not receive a majority vote in an uncontested election?

The Company’s Corporate Governance Guidelines provide for a majority vote with respect to the election of directors. Any nominee who receives a greater number of against votes than affirmative votes in an uncontested election is required to submit an offer of resignation for consideration by the Nominating and Corporate Governance Committee of the Board within 90 days from the date of election.

The Nominating and Corporate Governance Committee must then consider all of the relevant facts and circumstances and recommend to the Board the action to be taken with respect to the offer of resignation.

How does the Board recommend that I vote?

The Board recommends that you vote:

1. FOR the election of each of the Company’s nominees named in this proxy as directors.

2. FOR the approval of the compensation of the Company’s named executive officers.

3. FOR the ratification of the appointment of auditors.

What happens if I do not specify a choice for a matter when returning my proxy card?

If you sign and return your proxy card but do not give voting instructions, your shares will be voted as recommended by the Board, and in the discretion of the proxy holders as to any other business which may properly come before the Annual Meeting.



 

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What can I do if I change my mind after I vote my shares?

You can revoke a proxy prior to the completion of voting at the Annual Meeting by:

 

1.

Mailing a new proxy card with a later date.

2.

Casting a new vote on the Internet or by telephone.

3.

Sending a written notice of revocation addressed to Corporate Secretary, IDEX Corporation, 3100 Sanders Road, Suite 301, Northbrook, IL 60062.

4.

Voting virtually at the Annual Meeting at http://www.virtualshareholdermeeting.com/IEX2021 and enter the 16-digit control number found in your proxy materials.

If your shares are held in “street name,” please contact your broker, financial institution or other nominee and comply with such nominee’s procedures if you want to change or revoke your previous voting instructions.

Who will solicit the proxies and who will pay the cost of this proxy solicitation?

The Company will bear the costs of preparing and mailing this Proxy Statement and other costs of the proxy solicitation made by the Board. Certain of the Company’s officers and employees may solicit the submission of proxies authorizing the voting of shares in accordance with the Board’s recommendations, but no additional remuneration will be paid by the Company for the solicitation of those proxies. Any such solicitations may be made by personal interview, telephone, email or facsimile transmission.

The Company has made arrangements with brokerage firms and other record holders of its Common Stock to forward proxy solicitation materials to the beneficial owners of such Common Stock. The Company will reimburse those brokerage firms and others for their reasonable out-of-pocket expenses in connection with this work.

In addition, the Company has engaged Morrow Sodali LLC, 470 West Avenue, Stamford, Connecticut, to assist in proxy solicitation and collection at a cost of $6,500, plus out-of-pocket expenses.

Why did I receive a “Notice of Internet Availability of Proxy Materials” but no proxy materials?

As permitted under rules of the Securities and Exchange Commission (SEC), we are making our proxy materials available to stockholders electronically via the Internet. We believe electronic delivery expedites receipt of our proxy materials by stockholders, while lowering the costs and reducing the environmental impact of the Annual Meeting.

If you receive a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials by mail unless you specifically request it. Instead, the Notice of Internet Availability will provide instructions as to how you may review the proxy materials and submit your voting instructions over the Internet.

If you receive the Notice of Internet Availability by mail and would like to receive a printed copy of the proxy materials, you should follow the instructions in the notice for requesting a printed copy. In addition, the proxy card contains instructions for electing to receive proxy materials over the Internet or by mail in future years.



 

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PROPOSALS TO BE VOTED ON AT THE 2021 ANNUAL MEETING

PROPOSAL 1 — ELECTION OF DIRECTORS

The Company’s Restated Certificate of Incorporation, as amended, provides for a three-class Board of Directors, with one class being elected each year for a term of three years. The Board currently consists of eleven members, four of whom are Class II directors whose terms will expire at this year’s Annual Meeting, three of whom are Class III directors whose terms will expire at the Annual Meeting to be held in 2022, and four of whom are Class I directors whose terms will expire at the Annual Meeting to be held in 2023.

Cynthia J. Warner, a Class II director since 2013, is retiring from the Board immediately following this year’s Annual Meeting and will not stand for reelection at the Annual Meeting. Accordingly, the size of the Board will be reduced to ten members following the Annual Meeting. The Company is grateful to Ms. Warner for her invaluable insights and contributions during her Board service, including her leadership as Chair of the Nominating and Corporate Governance Committee.

 

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Overview of IDEX Board of Directors

Our directors have a proven record of success, exhibit high integrity, are loyal to the Company and committed to its success and have knowledge of corporate governance and practices. Ten out of our 11 current directors are independent, the average tenure of our directors is 5.7 years, and the average age of our directors is 59.6 years old. The matrix below illustrates the diverse set of skills, knowledge, experiences, backgrounds and personal attributes represented on our Board.

 

    

CLASS I DIRECTORS

 

CLASS II DIRECTORS

 

CLASS III DIRECTORS

Experience, Skill or Attribute

 

Ashleman  

 

Beck  

 

Christenson  

 

Helmkamp  

 

Buthman  

 

Cook  

 

Gunter  

 

Warner  

 

Mrozek  

 

Parry  

 

Satterthwaite  

Leadership, Strategy and Operations:

Deep senior leadership experience with the following:

Decentralized/diversified business

 

x

 

x

 

x

                     

x

 

x

   

Scale

         

x

 

x

 

x

 

x

 

x

 

x

 

x

     

x

International/global manufacturing

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

     

x

 

x

M&A

 

x

 

x

 

x

 

x

 

x

 

x

     

x

 

x

 

x

   

Customer-focused organic growth

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

Technology/innovation

 

x

         

x

         

x

         

x

   

Current or former CEO and/or President

 

x

 

x

 

x

 

x

     

x

     

x

         

x

Other public company board experience

 

x

 

x

 

x

     

x

 

x

     

x

 

x

 

x

   

ESG/corporate social responsibility experience

     

x

         

x

         

x

         

x

Financial:

High level of financial literacy

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

“Audit Committee Financial Expert”

 

x

 

x

 

x

 

x

 

x

 

x

     

x

 

x

       

Board Tenure:

Years

 

.3

 

3.2

 

1.9

 

5.5

 

4.11

 

12.11

 

.2

 

8.1

 

10.8

 

8.3

 

9.11

Demographic Information:

Gender

Male

 

x

 

x

 

x

     

x

 

x

         

x

 

x

 

x

Female

             

x

         

x

 

x

           

Age (Years Old)

 

54

 

55

 

61

 

55

 

60

 

67

 

48

 

62

 

67

 

67

 

60

Nationality

American

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

 

x

British

                                     

x

   

Race/Ethnicity

Hispanic or Latino

                                           

White

 

x

 

x

 

x

 

x

 

x

 

x

     

x

 

x

 

x

 

x

Asian

                                           

Black or African American

                         

x

               

Native Hawaiian or Other Pacific Islander

                                           

American Indian or Alaska Native

                                           

Two or more races

                                           

Openly LGBTQ

                                           

 

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The Board has nominated three individuals for election as Class II directors to serve for a three-year term expiring at the Annual Meeting to be held in 2024, or upon the election and qualification of their successors. The nominees of the Board are William M. Cook, Mark A. Buthman and Lakecia N. Gunter, each of whom is currently serving as a director of the Company. Ms. Gunter was recommended by a third-party search firm the Nominating and Corporate Governance Committee retained at the expense of the Company.

The nominees and the other incumbent directors are listed below, with brief statements setting forth their present principal occupations and other information, including any directorships in other public companies, and their particular experiences, qualifications, attributes and skills that led to the conclusion they should serve as directors. If for any reason any of the nominees are unavailable to serve, proxies solicited hereby may be voted for a substitute. The Board, however, expects the nominees to be available.

 

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Our Board of Directors recommends that you vote

FOR the election of each of the 2021 Class II director nominees

 

  

 

            

 

2021 DIRECTOR NOMINEES

 

LOGO

Mr. Cook was appointed Non-Executive Chairman of the Board of the Company in December 2020. Prior to that since April 2015, Mr. Cook served as Lead Director of the Company. He served as Executive Chairman of the Board of Donaldson Company, Inc. from 2015 to 2016. Mr. Cook retired as the Chairman, President and Chief Executive Officer of Donaldson in April 2015, having served since 2005; and was President and Chief Executive Officer from 2004 to 2005.

Mr. Cook’s strong business, financial and organizational leadership skills and his relevant global experience in leading technology industries led to the conclusion that he should serve on the Board of Directors. Throughout his 35-year career at Donaldson, a technology-driven global company that designs and manufactures innovative filtration systems and their replacement parts, Mr. Cook served in several senior executive positions in the U.S. and Europe, including as Chief Financial Officer and Senior Vice President, International.

William M. Cook Age: 67 Director since April 2008 Independent Committees: Audit

Mr. Cook received a bachelor of science degree in business management and a master of business administration degree from Virginia Polytechnic Institute and State University.

Mr. Cook is non-executive chairman of the board of Neenah, Inc. and a director of Axalta Coating Systems, Ltd.

 

 

 

LOGO

Mr. Buthman retired from Kimberly-Clark Corporation, a leading global manufacturer of consumer packaged goods and personal care products, in 2015, where he was Executive Vice President and Chief Financial Officer from January 2003 to April 2015. During his 33-year career at Kimberly-Clark, Mr. Buthman held a wide range of leadership roles, led or participated in more than 50 acquisition transactions totaling more than $10 billion in value and was part of an executive team that created more than $20 billion in shareholder value during his tenure as Chief Financial Officer.

Mark A. Buthman Age: 60 Director since April 2016 Independent Committees: Audit (Chair)

Mr. Buthman’s experience as a chief financial officer of a Fortune 150 company with significant international operations and as a public company director led to the conclusion that he should serve on the Board of Directors. Mr. Buthman, who has been a disciplined financial leader with a track record of allocating capital in shareholder-friendly ways, provides insights that are extremely valuable to our Board of Directors and management.

Mr. Buthman received a bachelor of business administration degree in finance from the University of Iowa.

Mr. Buthman is a director of West Pharmaceutical Services, Inc.

 

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LOGO

Ms. Gunter has served since May 2020 as Vice President and General Manager of IoT Global and Strategic Engagement at Microsoft Corporation, a leading global developer, manufacturer and licensor of consumer electronics. From April 2018 to May 2020, Ms. Gunter was Vice President of the Programmable Solutions Group and General Manager of Ecosystem Development and Operations at Intel Corporation, a leading global designer, manufacturer and marketer of computer products and technologies. Prior to that since October 2008, Ms. Gunter served in several leadership roles at Intel, including Chief of Staff and Technical Assistant to the CEO. Prior to joining Intel, Ms. Gunter held several positions at the Department of Defense from 2004 to 2008.

Lakecia N. Gunter Age: 48 Director since January 2021 Independent Committees: Compensation

Ms. Gunter’s deep technology and digital innovation experience and her extensive strategic and commercial leadership experience gained at two Fortune 50 companies led to the conclusion that she should serve on the Board of Directors. Ms. Gunter has successfully developed and executed strategic initiatives to create new business models and to accelerate the growth and increase the profitability of multiple technology solutions. Ms. Gunter architected the operating model to transform Intel from a PC-centric company to a data-centric company, which transformation led to a greater than 50% increase in revenues within 18 months.

Ms. Gunter received a bachelor of science degree in computer engineering from the University of South Florida and a master of science degree in electrical engineering from the Georgia Institute of Technology.

 

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OTHER INCUMBENT DIRECTORS

Class III: Three-Year Term Expires in 2022

 

LOGO

Mr. Mrozek served as Vice Chairman and Chief Financial Officer of The ServiceMaster Company, a residential and commercial service company, until his retirement in March 2008.

Mr. Mrozek’s strategic and operating leadership skills, his extensive experience and expertise in the business services industry and his financial reporting expertise led to the conclusion that he should serve on the Board of Directors. Through over 20 years of executive experience in various senior positions in general management, operations and finance at ServiceMaster, including more than eight years as President and Chief Operating Officer of ServiceMaster or one of its largest segments, Mr. Mrozek developed extensive knowledge of the business services industry and gained valuable financial expertise and experience in mergers and acquisitions.

Ernest J. Mrozek Age: 67 Director since July 2010 Independent Committees: Audit

Prior to joining ServiceMaster in 1987, Mr. Mrozek spent 12 years in public accounting with Arthur Andersen & Co. Mr. Mrozek has also acquired substantial experience in corporate governance as a director on the boards of several public and private companies.

Mr. Mrozek received a bachelor of science degree in accountancy with honors from the University of Illinois and is a certified public accountant, on inactive status.

Mr. Mrozek formerly served as a director of Advanced Disposal Services, Inc. and G&K Services Inc.

 

 

 

 

LOGO

Mr. Satterthwaite has served since March 2021 as Vice Chairman of Cummins, Inc., a global power leader that designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products. Prior to that since October 2019, he was President and Chief Operating Officer of Cummins. From April 2015 through October 2019, Mr. Satterthwaite served as President of Cummins Distribution Business, a unit of Cummins. Prior to that, Mr. Satterthwaite served as President of Cummins Power Generation from June 2008 to April 2015.

Livingston L. Satterthwaite Age: 60 Director since April 2011 Independent Committees: Compensation (Chair) Nominating and Corporate Governance

Mr. Satterthwaite’s business leadership and sales skills, international experience and extensive experience in industrial manufacturing led to the conclusion that he should serve on the Board of Directors. Since joining Cummins in 1988, Mr. Satterthwaite has held various positions at Cummins Power Generation and other divisions of Cummins, including 14 years in managerial and sales positions in the United Kingdom and Singapore.

 

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Prior to joining Cummins, Mr. Satterthwaite spent four years at Schlumberger Limited, an oil field services provider, as a general field engineer.

Mr. Satterthwaite received a bachelor of science degree in civil engineering from Cornell University and a master of business administration degree from Stanford University.

 

 

 

 

LOGO

Mr. Parry served as Vice Chairman of Illinois Tool Works Inc. (ITW) from 2010 until his retirement in April 2017. From prior to 2009 until 2010, Mr. Parry was Executive Vice President of ITW with responsibility for the Polymers and Fluids Group.

Mr. Parry’s strategic and operating leadership skills and global commercial perspective gained from over 30 years of international business leadership experience, his significant acquisition experience and his extensive expertise in the industrial products manufacturing industry led to the conclusion that he should serve on the Board of Directors. During 18 years of executive and management experience in various senior management positions at ITW, a multinational manufacturer of a diversified range of industrial products and equipment, Mr. Parry successfully grew the operations and profitability of multiple business units and helped ITW complete numerous acquisitions.

David C. Parry Age: 67 Director since December 2012 Independent Committees: Compensation Nominating and Corporate Governance

Prior to joining ITW in 1994, Mr. Parry spent 17 years in various executive and management positions at Imperial Chemical Industries, which at the time was one of the largest chemical producers in the world.

Mr. Parry received a bachelor of science degree in chemistry, a master of science degree in chemistry and a Ph.D. in polymer chemistry from Victoria University of Manchester, Manchester, England.

Mr. Parry previously served as a director of Celanese Corporation.

 

 

 

Class I: Three-Year Term Expires in 2023

 

LOGO

Ms. Helmkamp has served as President and Chief Executive Officer of Cartus Corporation, the relocation services subsidiary of Realogy Holdings Corp., the largest full-service residential real estate services company in the United States, since June 2018. Previously, Ms. Helmkamp served as Chief Executive Officer of Lenox Corporation from November 2016 to June 2018. Prior to Lenox Corporation, Ms. Helmkamp served as Chief Executive Officer of SVP Worldwide from 2010 through 2014, and as Senior Vice President, North America Product for Whirlpool Corporation from 2008 to 2010.

Katrina L. Helmkamp Age: 55 Director since November 2015 Independent Committees: Compensation Nominating and Corporate Governance (Chair)

Ms. Helmkamp’s operating leadership skills and her experience across multiple markets and technologies led to the conclusion that she should serve on the Board of Directors. During her time at

 

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SVP Worldwide and Whirlpool Corporation, Ms. Helmkamp was responsible for managing the operations and profitability of global businesses that derived a substantial portion of their revenues from outside of the United States.

In addition, Ms. Helmkamp successfully oversaw numerous new product development and technology initiatives, including the launch of new products and service categories with improved margins and quality. Ms. Helmkamp also has significant mergers and acquisitions experience, both in identifying and evaluating potential targets, as well as leading post-acquisition integration activities.

Ms. Helmkamp received a bachelor of science degree in industrial engineering and a master of business administration degree from Northwestern University.

 

 

 

 

LOGO

Mr. Beck is the co-founder and Chief Executive Officer of B-Square Precision, LLC, a private company engaged in the acquisition and management of companies that manufacture high-precision tools, dies, molds and components. Previously, Mr. Beck served as President and Chief Executive Officer of JELD-WEN Holding, Inc. JELD-WEN, one of the world’s largest door and window manufacturers, from November 2015 to February 2018, and was a director of JELD-WEN from May 2016 to February 2018. Prior to JELD-WEN, Mr. Beck served as an Executive Vice President at Danaher Corporation, leading Danaher’s water quality and dental programs, beginning in April 2014. Previously, he spent 18 years with Corning Incorporated in a series of management positions with increasing responsibility, culminating in his appointment as Executive Vice President overseeing Corning’s environmental technologies and life science units in July 2012. He also served on the board of directors of Dow-Corning Corporation from 2010 to 2014.

Mark A. Beck Age: 55 Director since January 2018 Independent Committees: Audit

Mr. Beck’s experience as a chief executive officer of a public company with significant international operations and his track record of innovation and successfully integrating acquired businesses led to the conclusion that he should serve on the Board of Directors.

Mr. Beck received a bachelor of arts degree in business management from Pacific University and a master of business administration degree from Harvard University.

Mr. Beck is chairman of the board of Owens & Minor, Inc.

 

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LOGO

Mr. Christenson has served since April 2014 as Chief Executive Officer and Chairman of the Board of Directors of Altra Industrial Motion Corp. Altra, a leading global designer, producer and marketer of a wide range of electromechanical power transmission motion control products. From January 2009 to April 2014, Mr. Christenson served as President and Chief Executive Officer of Altra. Prior to that, Mr. Christenson served as President and Chief Operating Officer of Altra from January 2005 to December 2008. From 2001 to 2005, Mr. Christenson was President of Kaydon Bearings, a manufacturer of custom-engineered bearings and a division of Kaydon Corporation. Prior to joining Kaydon, Mr. Christenson held several management positions at TB Wood’s Incorporated and several positions at the Torrington Company, a division of Ingersoll Rand.

Carl R. Christenson Age: 61 Director since June 2019 Independent Committees: Compensation Nominating and Corporate Governance

Mr. Christenson’s extensive experience leading industrial businesses and executing strategic acquisitions, including in his current role as chief executive officer of a public company with global operations, led to the conclusion that he should serve on the Board of Directors.

Mr. Christenson received bachelor of science and master of science degrees in Mechanical Engineering from the University of Massachusetts and a master of business administration degree from Rensselaer Polytechnic Institute.

 

 

 

 

LOGO

Mr. Ashleman was appointed a director and Chief Executive Officer of the Company in December 2020. He has served as President of the Company since February 2020. Prior to that, Mr. Ashleman served since July 2015 as the Company’s Chief Operating Officer. From February 2014 to July 2015, Mr. Ashleman was Senior Vice President and Group Executive of the Company’s Global Dispensing, Fire & Safety/Diversified Products and Health & Science and Optics business segments. From September 2011 to February 2014, Mr. Ashleman was Vice President and Group Executive of the Company’s Fire & Safety/Diversified Products business segment. From April 2010 to September 2011, Mr. Ashleman was President of Gast Manufacturing and Global Dispensing. Mr. Ashleman joined IDEX in March 2008 as President of Gast Manufacturing.

Eric D. Ashleman Age: 54 Director since December 2020 Chief Executive Officer and President

Mr. Ashleman’s significant industrial manufacturing and operations experience, coupled with his extensive management experience, led to the conclusion that he should serve on the Board of Directors. Mr. Ashleman has been integral to the Company’s success, including his role in developing our distinct culture, business model and global strategy.

Mr. Ashleman received a bachelor of arts degree in economics and a master of business administration degree from the University of Michigan.

Mr. Ashleman is a director of Modine Manufacturing Co.

 

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NOT STANDING FOR REELECTION

 

 

 

LOGO

Ms. Warner has served as President and Chief Executive Officer and as a director of Renewable Energy Group, Inc., an advanced biofuel producer, since January 2019. Previously, Ms. Warner served as Executive Vice President, Operations for Andeavor (formerly known as Tesoro Corporation) from August 2016 until October 2018, when Andeavor was acquired by Marathon Petroleum Corp. Prior to that, Ms. Warner served as Andeavor’s Executive Vice President, Strategy and Business Development, since October 2014. From 2012 to 2014, Ms. Warner was Chairman and Chief Executive Officer of Sapphire Energy, Inc. From 2009 to 2011, Ms. Warner was Chairman and President of Sapphire Energy. Prior to 2009, Ms. Warner was Group Vice President, Global Refining, at BP plc.

Cynthia J. Warner Age: 62 Director since February 2013 Independent Committees: Compensation Nominating and Corporate Governance

Ms. Warner’s operating leadership skills, international experience and extensive experience in the energy, refining and transportation industries led to the conclusion that she should serve on the Board of Directors. During her 25 years at BP and Amoco, Inc. (prior to its acquisition by BP), Ms. Warner gained significant knowledge of the global energy industry and served in numerous leadership roles, including overseeing BP’s Global Refining business and its health, safety, security and environmental efforts, with a consistent record of success in coordinating the operations of thousands of employees across BP’s global facilities.

In her role as Chief Executive Officer of Sapphire Energy, an alternative energy venture, Ms. Warner had oversight responsibility for the raising of substantial investment capital and the successful completion of a new demonstration facility for the company.

Ms. Warner received a bachelor of engineering degree in chemical engineering from Vanderbilt University and a master of business administration degree from Illinois Institute of Technology.

Ms. Warner is a director of Sempra Energy.

 

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CORPORATE GOVERNANCE

Framework for Corporate Governance

The Board of Directors has the ultimate authority for the management of the Company’s business. The Corporate Governance Guidelines, the charters of the Board committees, the Code of Business Conduct and Ethics, and the Standards for Director Independence (Governance Documents) provide the framework for the governance of the Company. Copies of the current Governance Documents are available under the Investors link on the Company’s website at www.idexcorp.com.

Corporate Governance Guidelines and Code

of Business Conduct and Ethics

The Corporate Governance Guidelines address matters such as election of directors, size and retirement age for the Board, Board composition and membership criteria, the role and responsibilities of the Board and each of its committees, Board evaluations and the frequency of Board meetings (including meetings to be held without the presence of management).

The Code of Business Conduct and Ethics sets forth the guiding principles of business ethics and certain legal requirements applicable to all of the Company’s employees and directors.

Director Independence

The Board has adopted standards for determining whether a director is independent. These standards are based upon the listing standards of the New York Stock Exchange (NYSE) and applicable laws and regulations and are available on the Company’s website as described above. The Board also reviewed commercial relationships between the Company and organizations with which directors were affiliated by service as an executive officer. The relationships with these organizations involved the Company’s sale or purchase of products or services in the ordinary course of business that were made on arm’s-length terms and other

circumstances that did not affect the relevant directors’ independence under applicable law and NYSE listing standards.

The Board has affirmatively determined, based on these standards and after considering the relationships described immediately above, that the following current directors are independent: Messrs. Beck, Buthman, Christenson, Cook, Mrozek, Parry and Satterthwaite, and Mss. Gunter, Helmkamp and Warner. The Board has also determined that Mr. Ashleman is not independent because he is the Chief Executive Officer and President of the Company (and was, until December 15, 2020, the Chief Operating Officer of the Company). All standing Board committees are, and throughout fiscal year 2020 were, composed entirely of independent directors.

Director Nominations

The Board believes that maintaining a diverse membership with varying backgrounds, skills, expertise and other differentiating personal characteristics promotes inclusiveness, enhances the Board’s deliberations and enables the Board to better represent all of the Company’s constituents. Accordingly, the Board is committed to seeking out highly qualified women and minority candidates, as well as candidates with diverse backgrounds, skills and experiences as part of each Board search the Company undertakes. As part of this commitment, the Board has a policy to include at least two women and at least two racially or ethnically diverse candidates every time the Board conducts a search for a new member. The Board considers the following in selecting nominees for the Board:

Experience (in one or more of the following):

 

    high level leadership experience in business or administrative activities;

 

    specialized expertise in the industries in which the Company competes;

 

    financial expertise;
 

 

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    breadth of knowledge about issues affecting the Company;

 

    ability and willingness to contribute special competencies to Board activities; and

 

    expertise and experience that is useful to the Company and complementary to the background and experience of other Board members, so that an optimal balance and diversity of Board members may be achieved and maintained.

Personal attributes and characteristics:

 

    personal integrity;

 

    loyalty to the Company and concern for its success and welfare, and willingness to apply sound independent business judgment;

 

    awareness of a director’s vital part in the Company’s good corporate citizenship and corporate image;

 

    time available for meetings and consultation on Company matters; and

 

    willingness to assume fiduciary responsibilities.

Qualified candidates for membership on the Board shall not be discriminated against with regard to age, race, color, religion, sex, ancestry, national origin, sexual orientation or disability. In the past, the Company has engaged executive search firms to help identify and facilitate the screening and interviewing of director candidates. Any search firm retained by the Company to find director candidates is instructed to take into account all of the considerations used by our Nominating and Corporate Governance Committee, including diversity. After conducting an initial evaluation of a candidate, the Nominating and Corporate Governance Committee will interview that candidate if it believes the candidate is suitable to be a director. The Nominating and Corporate

Governance Committee may also ask the candidate to meet with other members of the Board.

If the Nominating and Corporate Governance Committee believes a candidate would be a valuable addition to the Board, it will recommend to the full Board appointment or election of that candidate. Annually, the Nominating and Corporate Governance Committee reviews the qualifications and backgrounds of the directors, as well as the overall composition of the Board, and recommends to the full Board the slate of directors for nomination for election at the annual meeting of stockholders.

Board Refreshment and Retirement Policy

As part of its annual process, the Nominating and Corporate Governance Committee reviews each director’s continuation on the Board and also reviews the composition of the Board generally to identify the need for additional directors based on the needs of the Company.

As set forth in our Corporate Governance Guidelines, a director must retire by the end of the term following such director’s 70th birthday. However, the Board, upon the recommendation of the Nominating and Corporate Governance Committee, may waive the requirement in any particular case or change the retirement age if it believes it is in the Company’s best interest.

Board Leadership Structure

The Nominating and Corporate Governance Committee, in consultation with the other independent directors, evaluates on an ongoing basis whether the Board’s leadership structure is appropriate to effectively address the evolving needs of our business and the long-term interests of our stockholders. The Committee then makes recommendations to the Board concerning the Board’s leadership structure, including whether the roles of Chairman and Chief Executive Officer should be separated or combined. The Board, in accordance with our Bylaws, elects a

 

 

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Chairman from among the directors. The Board believes it is in the best interests of the Company and its stockholders for the Board to determine which director is best qualified to serve as Chairman in light of the circumstances at the time, rather than based on a fixed policy. As a result, the roles of Chairman and Chief Executive Officer have been combined at some times, while at other times the roles have been split. In the event that the Chairman is the Chief Executive Officer or is not an independent director, our Bylaws require that an independent Lead Director be elected by a majority of the independent directors.

Until December 2020, Mr. Silvernail, our former Chief Executive Officer, served as Chairman, while Mr. Cook, then an independent member of the Board, served as Lead Director. In conjunction with the transition in executive leadership announced in October 2020, effective December 15, 2020, Mr. Cook became Non-Executive Chairman, Mr. Silvernail stepped down from the Board and Mr. Ashleman became Chief Executive Officer, as well as a member of the Board.

Our separate Chairman and Chief Executive Officer roles enable our Non-Executive Chairman to oversee corporate governance matters and our Chief Executive Officer to lead the Company’s business. Independent directors also chair our Board committees. This structure facilitates effective oversight, further strengthens our Board’s independent leadership and supports our commitment to enhancing shareholder value and strong governance.

The independent non-management directors of the Board meet separately as a group at every regularly scheduled Board meeting. During 2020, the Lead Director presided at these non-management executive sessions. During 2020, the Board held thirteen meetings.

The Board believes that its current leadership structure provides independent board leadership and engagement.

During 2020, each director attended more than 75% of the aggregate number of meetings of the Board and of committees of the Board of which he or she was a member. The Company encourages its directors to attend the annual meeting of stockholders but has no formal policy with respect to that attendance. All of the directors holding office in 2020 attended the 2020 Annual Meeting.

Board’s Role in Risk Oversight

The Board oversees an annual assessment of enterprise risk exposure, and the management of such risk, conducted by the Company’s executives. The risk assessment includes, but is not limited to, an evaluation of the following risks: operational and commercial; human capital management, including talent attraction, retention and development; geopolitical; export/import compliance; IT systems and information security; liquidity; M&A and integration; environmental health and safety compliance, product liability; anticorruption and bribery; foreign currency/exchange rate; and hazards and natural disasters.

When assessing enterprise risk, the Board focuses on the achievement of organizational objectives, including strategic objectives, to improve long-term performance and enhance stockholder value. Direct oversight allows the Board to assess management’s inclination for risk, to determine what constitutes an appropriate level of risk for the Company and to discuss with management the means by which to control risk.

In addition, senior management provides the Board at least once a year and the Audit Committee at least twice a year updates on the Company’s information security/cybersecurity program. Such updates provide the results of internal and external assessments, including an external audit for companywide compliance with the industry-leading NIST (National Institute of Standards and Technologies) Cybersecurity Framework as well as specific business unit alignment with US federal

 

 

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acquisition regulations and UK Cyber Essentials certifications. An annual external penetration test is performed against the Company’s network in addition to monthly internal vulnerability scans. The Company maintains global cybersecurity insurance coverage reviewed annually for adequacy against operations and information systems.

The challenges and risk exposure of COVID-19 required increased engagement of the Board during 2020. The Board held several special meetings to oversee senior management’s response to the global pandemic and COVID-19 risk assessment and mitigation plan. Since the start of the pandemic in early 2020, the Board has discussed and provided oversight regarding COVID-19 risks at each Board meeting and will continue to do so for the foreseeable future.

Board and Committee Assessment Process

On an annual basis, the Board and each Committee conduct assessments, which consist of written self-assessment questionnaires, supplemented by individual interviews of each director conducted by the Chair of the Nominating and Corporate Governance Committee. The results of the assessment process are then reviewed and discussed by the Board and each Committee and have led to process and oversight improvements.

Board’s Engagement with Management

The Board approves the Company’s executive officers, delegates responsibilities for the conduct of the Company’s operations to those officers and monitors their performance. In addition, members of the Board informally mentor executive officers, meeting with such officers individually to share insights and experiences accumulated over the course of the directors’ careers.

While COVID-19 limited in person interactions with management during 2020, directors continued to have virtual meetings with management, as well as virtual manufacturing

facility tours. Some directors were able to visit sites in the United States in early 2020 before travel was restricted.

Board’s Role in Talent Development, Strategic Planning and DEI

Our Board calendar includes at least one meeting per year at which the Board participates in an extensive review of the Company’s talent management and retention strategies, leadership development pipeline and succession plans for senior management.

Each fall the Board participates in a multi-day three-year enterprise strategy review with the

Company’s executive officers and other senior management. Management and the Board agree

upon a strategy and it is used as a lens for decision making at each Board meeting following the annual comprehensive review. As a result, strategy discussions are a regular feature of Board meetings throughout the year.

The Company further enhanced its focus on diversity, equity and inclusion (DEI) during 2020. The Company’s DEI consultant and members of executive management met with the Board during 2020 to discuss the Company’s DEI initiatives, recent successes and ongoing commitments. DEI is an integral part of the Company’s overall strategy, and the Board has made the Company’s DEI progress a standing item on its Board meeting agendas for regularly scheduled meetings.

Director Onboarding and Education

All new directors participate in our director onboarding program. The onboarding process includes meetings with senior leaders to familiarize new directors with the Company’s strategic vision, values and culture; operational and financial reporting structure; and legal, compliance and governance framework. In addition, new directors have also attended training courses led by IDEX senior leaders covering the 80/20 business process that serves as the foundation of IDEX’s operating model

 

 

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and seeks to accelerate profitable growth by focusing resources on our highest value opportunities.

The Board encourages all directors to participate in continuing director education programs, either individually or together with other Committee members, and directors are reimbursed for their expenses for such programs. Over the past year, directors attended virtual education seminars and webinars covering a variety of topics, including board, audit committee and compensation committee leadership, risk oversight and management, strategy, COVID-19, ESG and DEI.

Investor Outreach

We value the input of our stockholders and believe that it is important to understand their questions and concerns about the Company. During 2020, we met with a number of our stockholders and prospective stockholders to answer questions about the Company and learn about matters that are important to them. We plan to continue our investor outreach efforts during 2021.

Corporate Social Responsibility

As an embodiment of our continued commitment to focus on what matters to our various stakeholders, in March 2021, we published our second Corporate Social Responsibility Report, which is available under the Corporate Social Responsibility link on our website at www.idexcorp.com. Human capital management, including DEI, talent attraction, workforce development, and workplace health and safety, as well as quality solutions for our customers, make up many of our most significant ESG-related issues, as identified through our stakeholder engagement. In this report, we disclose our management of and performance in these most-important topics, as well as others identified in our 2018 materiality assessment. We also include in the report our first disclosure in alignment with the Sustainable Accounting Standards Board (SASB) sector standards.

Communications with Our Board

Stockholders and other interested parties may contact the Board and the directors by writing to Corporate Secretary, IDEX Corporation, 3100 Sanders Road, Suite 301, Northbrook, IL 60062. Inquiries sent by mail will be reviewed, sorted and summarized by the Corporate Secretary before they are forwarded to any director.

Recent Amendments to our Bylaws

The Board believes that strong corporate governance is key to long-term stockholder interests. The Board continues to monitor evolving governance standards and enhance our governance practices to serve the long-term interests of IDEX stockholders.

To that end, in 2021, we amended our Bylaws to adopt a majority vote standard in uncontested elections.

We also amended our Bylaws to provide that, under certain circumstances, a stockholder or group of stockholders may include director candidates that they have nominated in the proxy materials for our annual meetings. These “proxy access” bylaw provisions permit an eligible stockholder or group of up to 20 stockholders to nominate candidates for election to our Board. Proxy access candidates will be included in our proxy statement and ballot. The proxy access bylaw provisions provide that holders of at least 3% of our common stock, which can comprise up to 20 stockholders, holding such stock continuously for at least three years, can nominate two individuals or 20% of the Board, whichever is greater, for election at an annual stockholders meeting. Our Bylaws provide details regarding the time frames and procedures that must be followed and other requirements that must be met to nominate directors through this process. Please see the section “STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 2022 ANNUAL MEETING OF STOCKHOLDERS” below for more information.

 

 

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BOARD COMMITTEES

Important functions of the Board are performed by committees comprised of members of the Board. There are three standing committees of the Board: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. Each committee has a written charter that is available on the Company’s website as described above.

Subject to applicable provisions of the Company’s Bylaws and based on the recommendations of the Nominating and Corporate Governance Committee, the Board as a whole appoints the members of each committee each year at its February meeting. The Board may, at any time, appoint or remove committee members or change the authority or responsibility delegated to any committee, subject to applicable law and NYSE listing standards.

The following table summarizes the current membership of the committees of the Board.

 

       
Director   Audit
Committee
  Compensation
Committee
  Nominating
and
Corporate
Governance
Committee

 

Mark A. Beck

 

 

Ö

       

 

Mark A. Buthman

 

 

Ö

       

 

Carl R. Christenson

     

 

Ö

 

 

Ö

 

William M. Cook

 

 

Ö

       

 

Lakecia N. Gunter

     

 

Ö

   

 

Katrina L. Helmkamp

     

 

Ö

 

 

Ö

 

Ernest J. Mrozek

 

 

Ö

       

 

David C. Parry

     

 

Ö

 

 

Ö

 

Livingston L. Satterthwaite

     

 

Ö

 

 

Ö

 

Cynthia J. Warner

     

 

Ö

 

 

Ö

Audit Committee

Pursuant to its charter, the Audit Committee has the authority and responsibility to:

 

    monitor the integrity of the Company’s financial statements, financial reporting process and systems of internal controls regarding finance, accounting, legal and regulatory compliance;

 

    monitor the qualifications, independence and performance of the Company’s independent auditor and monitor the performance of the Company’s internal audit function;

 

    hire and fire the Company’s independent auditor and approve any audit and non-audit work performed by the independent auditor;

 

    provide an avenue of communication among the independent auditor, management and the Board;

 

    prepare the audit committee report that SEC rules require to be included in the Company’s annual proxy statement;

 

    provide oversight of the Company’s compliance and corporate environmental, health and safety functions; and

 

    administer the Company’s Related Person Transactions Policy (described further below).

While the Board has the ultimate oversight responsibility for the risk management process, the Audit Committee focuses on financial risk management and exposure, and legal compliance. The Audit Committee receives an annual risk assessment report from the Company’s internal auditors and reviews and discusses the Company’s financial risk exposures and the steps management has taken to monitor, control and report those exposures.

 

 

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During 2020, Messrs. Beck, Buthman, Cook and Mrozek served as members of the Audit Committee, and the Board determined that each of them is an “audit committee financial expert,” as defined by SEC rules.

The Audit Committee has adopted a written Related Person Transactions Policy regarding the review, approval or ratification of transactions with related persons. All related person transactions are approved by the Audit Committee. If the transaction involves a related person who is an Audit Committee member or immediate family member of an Audit Committee member, that Audit Committee member will not be included in the deliberations or vote regarding approval. In approving the transaction, the Audit Committee must determine that the transaction is fair and reasonable to the Company. At the first Audit Committee meeting of each calendar year, or a subsequent meeting if the Audit Committee so chooses, the Audit Committee reviews any previously approved or ratified related person transactions that remain ongoing and have a remaining term of more than six months or remaining amounts payable to or receivable from the Company of more than $10,000. Based on all relevant facts and circumstances, taking into consideration the Company’s contractual obligations, the Audit Committee determines if it is in the best interests of the Company and its stockholders to continue, modify or terminate any such related person transactions. Since January 1, 2020, there were no related person transactions requiring disclosure under SEC rules.

During 2020, the Audit Committee held eight meetings.

Compensation Committee

The Compensation Committee’s primary purpose and responsibilities are to:

 

    establish the Company’s compensation philosophy and structure the Company’s compensation programs to be consistent with that philosophy;
    develop and recommend to the independent members of the Board for approval the compensation of the Chief Executive Officer;

 

    approve the compensation of the executive officers of the Company (other than the Chief Executive Officer), the Chief Executive Officer’s direct reports and selected other managers identified by the Compensation Committee from time to time, and communicate such compensation decisions to the Board;

 

    develop and recommend to the Board for approval the compensation of the Board;

 

    review and recommend to the Board the Company’s compensation discussion and analysis to be included in the Company’s annual proxy statement; and

 

    produce a Compensation Committee Report on executive compensation to be included in the Company’s annual proxy statement.

To assist the Compensation Committee in discharging its responsibilities, the Compensation Committee retained Frederic W. Cook & Co., Inc. (F.W. Cook) to act as an outside consultant. F.W. Cook is engaged by, and reports directly to, the Compensation Committee.

The Compensation Committee has reviewed the nature of the relationship between itself and F.W. Cook, including all personal and business relationships between the committee members, F.W. Cook and the individual compensation consultants who provide advice to the Compensation Committee. Based on its review, the Compensation Committee did not identify any actual or potential conflicts of interest in F.W. Cook’s engagement as an independent consultant.

F.W. Cook works with the Compensation Committee and management to structure the

 

 

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Company’s compensation programs and to evaluate the competitiveness of its executive compensation levels. F.W. Cook’s primary areas of assistance to the Compensation Committee are:

 

    analyzing market compensation data for all executive positions;

 

    advising on the structure of the Company’s compensation programs;

 

    advising on the terms of equity awards;

 

    assessing the relationship between named executive officer compensation and Company financial performance;

 

    reviewing the risk associated with the Company’s compensation programs; and

 

    reviewing materials to be used in the Company’s annual proxy statement.

F.W. Cook periodically provides the Compensation Committee and management market data on a variety of compensation-related topics. The Compensation Committee has authorized F.W. Cook to interact with the Company’s management, as needed, on behalf of the Compensation Committee, to obtain or confirm information.

The charter of the Compensation Committee permits the Compensation Committee to, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Compensation Committee.

During 2020, Mr. Christenson, Ms. Helmkamp, Mr. Parry, Mr. Satterthwaite and Ms. Warner served as members of the Compensation Committee. None of these directors (i) was an officer or employee of the Company or any of its subsidiaries during 2020, (ii) was formerly an officer of the Company or any of its subsidiaries, or (iii) had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K under the Securities Act of 1933, as amended. There were no relationships between the Company’s executive

officers and the members of the Compensation Committee that require disclosure under Item 407(e)(4) of Regulation S-K.

During 2020, the Compensation Committee held seven meetings.

Nominating and Corporate Governance

Committee

The Nominating and Corporate Governance Committee’s primary purpose and responsibilities are to:

 

    develop and recommend to the Board corporate governance principles and a code of business conduct and ethics;

 

    review periodically the size of the Board and the makeup of the Board committees and make recommendations to the Board regarding any appropriate changes;

 

    develop and recommend criteria for selecting new directors;

 

    identify individuals qualified to become directors consistent with criteria approved by the Board, and recommend that the Board select such individuals as nominees for election to the Board;

 

    make recommendations to the Board regarding any director who submits an offer of resignation under the Company’s Corporate Governance Guidelines because (i) the director did not receive a majority of votes cast for his or her election, or (ii) the director experienced a significant change in his or her principal business, occupation or position or has a significant conflict of interest that cannot be resolved;

 

    screen and recommend to the Board individuals qualified to become Chief Executive Officer in the event of a vacancy and any other senior officer whom the committee may wish to approve;
 

 

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    oversee evaluations of the Board, individual Board members and Board committees;

 

    oversee an orientation program for new directors and a continuing education program for all directors; and

 

    oversee the Company’s corporate social responsibility efforts and progress.

It is the policy of the Nominating and Corporate Governance Committee to consider nominees for the Board recommended by the Company’s stockholders in accordance with the procedures described under “STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 2022 ANNUAL MEETING OF STOCKHOLDERS” below.

Stockholder nominees who are nominated in accordance with these procedures will be given the same consideration as nominees for director from other sources.

During 2020, Mr. Christenson (who was appointed in June 2020), Ms. Helmkamp, Mr. Parry, Mr. Satterthwaite and Ms. Warner served as members of the Nominating and Corporate Governance Committee.

During 2020, the Nominating and Corporate Governance Committee held three meetings.

 

 

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COMPENSATION OF DIRECTORS

The objectives of our director compensation program are to attract highly-qualified individuals to serve on our Board and to align our directors’ interests with the interests of our stockholders. The Compensation Committee periodically reviews the program to ensure that it continues to meet these objectives.

The Company believes that to attract and retain qualified directors, pay levels should be targeted at the 50th percentile (or median) of pay levels for directors at comparable companies. On at least a biennial basis, the Compensation Committee, with the assistance of F.W. Cook, evaluates the competitiveness of director compensation. The primary reference point to determine market pay is the peer group of companies. The peer group used in this analysis was the same peer group used for the Company’s executive compensation analysis. For further details on this topic, refer to “Peer Companies” under “Setting Executive Compensation” in the Compensation Discussion and Analysis below. Market composite data derived from pay surveys available to F.W. Cook and to the Company is also used.

Our director compensation for 2020 is set forth below. In December 2020, Mr. Cook was appointed Non-Executive Chairman of the Board and his additional fee is listed below.

 

   
      2020

 

Annual Retainer and Meeting Fees

 

  

 

$ 90,000  

 

 

Committee Chair Retainer

 

    

 

Audit Committee

 

  

 

$ 18,000  

 

 

Compensation Committee

 

  

 

$ 12,500  

 

 

Nominating and Corporate Governance Committee

 

  

 

$ 10,000  

 

 

Additional Lead Director Fees

 

    

 

Annual Retainer

 

  

 

$ 15,000  

 

 

Annual Equity Grant (100% Restricted Stock Units)

 

  

 

$ 15,000  

 

 

Additional Non-Executive Chairman of the Board Fees

 

    

 

Annual Retainer

 

  

 

$ 100,000  

 

 

Annual Equity Grant (100% Restricted Stock Units)

 

  

 

$ 50,000  

 

 

Value of Equity Grants Upon Initial Election to the Board (100% Restricted Stock Units)

 

  

 

Pro-rated annual  

 

grant  

 

Value of Annual Equity Grants (100% Restricted Stock Units)

 

  

 

$145,000  

 

 

Equity Grants

 

 

Under the Company’s Amended and Restated Non-Employee Director Compensation Policy (Director Compensation Policy), equity grants upon initial election to the Board are made on the date of appointment. Initial equity grant values are equal to the annual grant value prorated for the remaining period of time until the next Annual Meeting. Annual equity grants

to continuing directors are made on the date of the Annual Meeting. All grants are structured to provide 100% of the expected value in the form of restricted stock unit awards and are made under the IDEX Corporation Incentive Award Plan (Incentive Award Plan). The restricted stock units vest in full on the earliest of the third anniversary of the grant date, retirement, failure

 

 

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of the director to be re-elected to the Board, or a change in control of the Company. The restricted stock units are non-transferable until the recipient is no longer serving as a director and are subject to forfeiture if the director terminates service as a director for reasons other than death, disability, retirement, or failure to be re-elected to the Board.

Since the start of 2015, directors have had the ability to defer payment of all or a portion of their annual equity grant.

Directors Deferred Compensation Plan

Under the Company’s Directors Deferred Compensation Plan, directors are permitted to defer their cash compensation as of the date their compensation would otherwise be payable. In general, directors must make elections to defer fees payable during a calendar year by the end of the preceding calendar year. Newly appointed directors have up to 30 days from their appointment to elect to defer future fees.

All amounts deferred are recorded in a memorandum account for each director and are credited or debited with earnings or losses as if such amounts had been invested in an interest-bearing account or certain mutual funds, at the option of the director. The deferred compensation credited to the interest-bearing account is adjusted on at least a quarterly basis with hypothetical earnings equal to the lesser of the Barclays Capital Long Term Bond AAA — Corporate Bond Index as of the first business day in November of the calendar year preceding the year for which the earnings are to be credited or 120% of the long-term applicable federal rate as of the first business day in November.

In accordance with SEC rules, no earnings on deferred compensation are shown in the Director Compensation table below because no “above

market” rates were earned on deferred amounts in 2020. Directors must elect irrevocably to receive the deferred funds either in a lump sum or in equal annual installments of up to 10 years, and to begin receiving distributions either at termination of Board service or at a future specified date.

If a director should die before all amounts credited under the Directors Deferred Compensation Plan have been paid, the unpaid balance in the participating director’s account will be paid to the director’s beneficiary. The memorandum accounts are not funded, and the right to receive future payments of amounts recorded in these accounts is an unsecured claim against the Company’s general assets.

Stock Ownership Guideline

Under the Director Compensation Policy, non-management directors are subject to a stock ownership guideline. Non-management directors are required to maintain direct ownership of shares of Common Stock equal to or greater in value to five times the current annual Board service retainer. No non-management director is permitted to sell shares of Common Stock until the director satisfies the stock ownership guideline. Once a director meets the stock ownership guideline, the director may not sell shares if the sale would put the director below the stock ownership guideline.

As of March 15, 2021, all non-management directors were in compliance with the stock ownership guideline or subject to the mandatory holding requirement until the ownership guideline is met.

 

 

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2020 Director Compensation

The following table summarizes the total compensation earned in 2020 for the Company’s non-management directors. Neither Mr. Ashleman nor Mr. Silvernail received any additional compensation for his service as a director during 2020.

 

Name  

Fees Earned

or Paid in Cash

($)

 

Stock Awards

($) (1)

 

All Other

Compensation

($) (2)

  Total ($)

 

Mark A. Beck

 

 

 

90,000   

 

 

 

145,000   

 

 

 

—   

 

 

 

235,000   

 

 

Mark A. Buthman

 

 

 

108,000   

 

 

 

145,000   

 

 

 

5,000   

 

 

 

258,000   

 

 

Carl R. Christenson

 

 

 

90,000   

 

 

 

145,000   

 

 

 

10,000   

 

 

 

245,000   

 

 

William M. Cook

 

 

 

108,927(3)   

 

 

 

160,000   

 

 

 

10,000   

 

 

 

278,927   

 

 

Katrina L. Helmkamp

 

 

 

100,000   

 

 

 

145,000   

 

 

 

10,000   

 

 

 

255,000   

 

 

Ernest J. Mrozek

 

 

 

90,000   

 

 

 

145,000   

 

 

 

10,000   

 

 

 

245,000   

 

 

David C. Parry

 

 

 

90,000   

 

 

 

145,000   

 

 

 

—   

 

 

 

235,000   

 

 

Livingston L. Satterthwaite

 

 

 

102,500   

 

 

 

145,000   

 

 

 

—   

 

 

 

247,500   

 

 

Cynthia J. Warner

 

 

 

90,000   

 

 

 

145,000   

 

 

 

—   

 

 

 

235,000   

 

 

(1)

Reflects the aggregate grant date fair value of the restricted stock units granted in 2020, determined in accordance with FASB ASC Topic 718 using the assumptions set forth in the footnotes to financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, assuming no forfeitures.

(2)

Reflects matching gifts of up to $10,000 per year directed to Internal Revenue Code 501(c)(3) tax-exempt, non-profit organizations under the IDEX Corporation Matching Gift Program.

(3)

Reflects Mr. Cook’s fees prorated for his service as Lead Director until December 14, 2020 and as Non-Executive Chairman of the Board beginning December 15, 2020.

 

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Directors’ Outstanding Equity Awards at 2020 Fiscal Year End

The following table provides information on restricted stock units and stock option awards held by the Company’s non-management directors and the value of those awards as of December 31, 2020. All outstanding awards are in or exercisable for shares of Common Stock.

 

                        

Option Awards

 

   

Stock Awards

 

                        

Number of Securities
Underlying Unexercised
Options

 

               

Number of    

Shares or    

 Units of Stock     

that Have Not    

Vested and    
settled (#) (b)    

 

 

Market Value
of Shares or
Units of
Stock that
Have Not
Vested ($) (c)

 

Name    Grant Date      Type    

 # Shares   

(#)  

 

Shares          

 Exercised           

(#)          

 

 

 Exercisable   

(#) (a)  

 

 

   Unexercisable 

  (#)

 

   

Option

 Exercise 

Price ($)

 

   

Option

 Expiration 

Date (a)

 

 

Mark A. Beck

  01/02/18     RSU                                            310     61,752
    04/25/18     RSU                                 945   188,244
    05/10/19     RSU                                 845   168,324
    05/07/20     RSU                                             950   189,240

Mark A. Buthman

  04/06/16     RSU                             1,290*   256,968
    02/22/17     RSU                             1,290*   256,968
    04/25/18     RSU                                 945   188,244
    05/10/19     RSU                                 845   168,324
    05/07/20     RSU                                             950   189,240

Carl R. Christenson

  06/17/19     RSU                                  725   144,240
    05/07/20     RSU                                              950   189,240

William M. Cook

  02/21/12     NQSO     3,530     0             3,530     0       42.86       02/21/2022          
    02/15/13     NQSO     3,075     0             3,075     0       50.45       02/15/2023          
    04/25/18     RSU                             1,055   210,156
    05/10/19     RSU                               940   187,248
    05/07/20     RSU                                         1,045   208,164

Katrina L. Helmkamp

  02/19/16     RSU                             1,610*   320,712
    04/25/18     RSU                                 945   188,244
    05/10/19     RSU                                 845   168,324
    05/07/20     RSU                                             950   189,240

Ernest J. Mrozek

  02/15/13     NQSO     3,075     0             3,075     0       50.45       02/15/2023          
    04/25/18     RSU                                 945   188,244
    05/10/19     RSU                                 845   168,324
    05/07/20     RSU                                             950   189,240

David C. Parry

  12/06/12     NQSO     4,930     0             4,930     0       45.08       12/06/2022          
    02/15/13     NQSO     3,075     0             3,075     0       50.45       02/15/2023          
    04/25/18     RSU                                 945   188,244
    05/10/19     RSU                                 845   168,324
    05/07/20     RSU                                             950   189,240

Livingston L. Satterthwaite

  04/05/11     NQSO     4,800     0             4,800     0       45.16       04/05/2021          
    02/21/12     NQSO     3,530     0             3,530     0       42.86       02/21/2022          
    02/15/13     NQSO     3,075     0             3,075     0       50.45       02/15/2023          
    02/20/15     RSU                             1,405*   279,876
    02/19/16     RSU                             1,610*   320,712
    02/22/17     RSU                             1,290*   256,968
    04/25/18     RSU                                 945   188,244
    05/10/19     RSU                                 845   168,324
    05/07/20     RSU                                             950   189,240

Cynthia J. Warner

  02/15/13     NQSO     4,610     0             4,610     0       50.45       02/15/2023          
    04/25/18     RSU                                 945   188,244
    05/10/19     RSU                                 845   168,324
    05/07/20     RSU                                             950   189,240

 

  (a)

All options expire on the 10th anniversary of the grant date.

  (b)

See footnote 1 to table under “SECURITY OWNERSHIP” below for vesting provisions. Amounts marked with an asterisk have vested but the non-employee director has elected to defer settlement. Other amounts listed in this column have not vested or settled.

  (c)

Determined based upon the closing price of the Company’s Common Stock on December 31, 2020.

 

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SECURITY OWNERSHIP

The following table furnishes information as of March 15, 2021, except as otherwise noted, with respect to shares of Common Stock beneficially owned by (i) each director and nominee for director, (ii) each executive officer named in the Summary Compensation Table, (iii) directors, nominees and executive officers of the Company as a group, and (iv) any person who is known by the Company to be a beneficial owner of more than five percent of the outstanding shares of Common Stock.

Except as indicated by the notes to the following table, the holders listed below have sole voting power and investment power over the shares beneficially held by them. Under SEC rules, the number of shares shown as beneficially owned includes shares of Common Stock subject to options that are exercisable currently or will be exercisable within 60 days of March 15, 2021. Shares of Common Stock subject to options that are exercisable within 60 days of March 15, 2021, are considered to be outstanding for the purpose of determining the percentage of shares held by a holder, but not for the purpose of computing the percentage held by others. An * indicates ownership of less than one percent of the outstanding Common Stock.

For purposes of the following table, the address for each of the directors, nominees for director and executive officers of the Company is c/o 3100 Sanders Road, Suite 301, Northbrook, IL 60062.

 

Name and Address of Beneficial Owner  

Shares

Beneficially

Owned

 

Percent of

Class

Directors and Nominees (other than Named Executive Officers):

 

       

Mark A. Beck(1)

 

 

3,050  

 

 

 

*  

 

Mark A. Buthman(1)

 

 

5,320  

 

 

 

*  

 

Carl R. Christenson(1)

 

 

1,675  

 

 

 

*  

 

William M. Cook(1)

 

 

25,878  

 

 

 

*  

 

Lakecia N. Gunter(1)

 

 

220  

 

 

 

*  

 

Katrina L. Helmkamp(1)

 

 

6,055  

 

 

 

*  

 

Ernest J. Mrozek(1)

 

 

 

13,630  

 

 

 

*  

 

David C. Parry(1)

 

 

18,825  

 

 

 

*  

 

Livingston L. Satterthwaite(1)

 

 

18,347  

 

 

*  

 

Cynthia J. Warner(1)

 

 

14,435  

 

 

*  

 

Named Executive Officers:

 

       

Eric D. Ashleman(2)

 

 

91,181  

 

 

 

*  

 

Andrew K. Silvernail(2)

 

 

0  

 

 

 

*  

 

William K. Grogan(2)

 

 

80,275  

 

 

 

*  

 

Denise R. Cade(2)

 

 

38,364  

 

 

 

*  

 

Jeffrey D. Bucklew(2)

 

 

26,749  

 

 

*  

 

Daniel J. Salliotte(2)

 

 

25,025  

 

 

 

*  

 

Directors, Nominees and All Executive Officers as a Group: (19 persons)(3)

 

 

413,203  

 

 

 

0.5%  

 

Other Beneficial Owners:

 

       

The Vanguard Group(4)
100 Vanguard Blvd. Malvern, PA 19355

 

 

8,429,764  

 

 

 

11.1%  

 

BlackRock Inc.(5)
55 East 52nd Street New York, NY 10055

 

 

5,954,195  

 

 

 

7.9%  

 

T. Rowe Price Associates, Inc.(6)
100 East Pratt Street, Baltimore, MD 21202

 

 

5,517,459  

 

 

 

7.2%  

 

 

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(1)

Includes 6,605, 3,075, 8,005, 11,405 and 4,610 shares under exercisable options for Messrs. Cook, Mrozek, Parry and Satterthwaite, and Ms. Warner, respectively. Mss. Gunter and Helmkamp and Messrs. Buthman, Beck and Christenson do not have any options. Includes 1,405 restricted stock units issued to Mr. Satterthwaite on February 20, 2015; for which Mr. Satterthwaite elected to defer settlement; 1,610 restricted stock units issued to Mr. Satterthwaite on February 19, 2016, for which Mr. Satterthwaite elected to defer settlement; 1,290 restricted stock units issued to Mr. Buthman on April 6, 2016, for which Mr. Buthman elected to defer settlement; 310 restricted stock units issued to Mr. Beck on January 2, 2018, for which Mr. Beck elected to defer settlement; 945 restricted stock units issued to each of Mss. Helmkamp and Warner and Messrs. Beck, Buthman, Mrozek, Parry and Satterthwaite on April 25, 2018, which vest on April 25, 2021 (provided that Messrs. Beck, Buthman and Satterthwaite each elected to defer settlement); 1,055 restricted stock units issued to Mr. Cook on April 25, 2018, which vest on April 25, 2021; 845 restricted stock units issued to each of Mss. Helmkamp and Warner and Messrs. Beck, Buthman, Mrozek, Parry and Satterthwaite on May 10, 2019, which vest on May 10, 2022 (provided that Messrs. Beck, Buthman and Satterthwaite each elected to defer settlement); 940 restricted stock units issued to Mr. Cook on May 10, 2019, which vest on May 10, 2022; 725 restricted stock units issued to Mr. Christenson on June 17, 2019, for which Mr. Christenson elected to defer settlement; 950 restricted stock units issued to each of Mss. Helmkamp and Warner and Messrs. Beck, Buthman, Christenson, Mrozek, Parry and Satterthwaite on May 7, 2020, which vest on May 7, 2023 (provided that Messrs. Beck, Buthman, Christenson and Satterthwaite each elected to defer settlement); 1045 restricted stock units issued to Mr. Cook on May 7, 2020, which vest on May 7, 2023; and 220 restricted stock units issued to Ms. Gunter on January 29, 2021, which vest on January 29, 2024. The restricted shares and restricted stock units held by the directors may vest earlier than the dates indicated above upon a change in control of the Company, retirement, or failure to be re-elected to the Board. All shares of restricted stock and restricted stock units are eligible for dividends.

(2)

Includes 61,944, 69,501, 24,012, 5,172 and 30,632 shares under exercisable options for Messrs. Ashleman, Grogan, Bucklew and Salliotte and Ms. Cade, respectively. Mr. Silvernail forfeited all of his option awards that had not yet vested in connection with his separation from the Company on December 15, 2020.

(3)

Includes 243,834 shares under options that are exercisable currently or will be exercisable within 60 days of March 15, 2021.

(4)

Based solely on information in Schedule 13G, as of December 31, 2020, filed by The Vanguard Group (Vanguard) with respect to Common Stock owned by Vanguard and certain subsidiaries. Vanguard has shared power to vote or direct the vote of 121,336 shares of Common Stock, sole power to dispose or to direct the disposition of 8,101,043 shares of Common Stock and shared power to dispose or to direct the disposition of 328,721 shares of Common Stock.

(5)

Based solely on information in Schedule 13G, as of December 31, 2020, filed by BlackRock, Inc. (BlackRock) with respect to Common Stock owned by BlackRock and certain subsidiaries. BlackRock has sole power to vote or to direct the vote of 5,154,810 shares of Common Stock and sole power to dispose or to direct the disposition of all 5,954,195 shares of Common Stock.

(6)

Based solely on information in Schedule 13G, as of December 31, 2020, filed by T. Rowe Price Associates, Inc. (Price Associates). Price Associates has sole power to vote or to direct the vote of 2,300,321 shares of Common Stock and sole power to dispose or to direct the disposition of all 5,517,459 shares of Common Stock.

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes our executive compensation philosophy and programs, and compensation decisions made under those programs for our named executive officers (NEOs) for fiscal year 2020, who are listed below.

 

  Name

 

  Title

Eric D. Ashleman

 

Chief Executive Officer and President(1)

Andrew K. Silvernail

 

Former Chairman and Chief Executive Officer(1)

William K. Grogan

 

Senior Vice President and Chief Financial Officer

Denise R. Cade

 

Senior Vice President General Counsel and Corporate Secretary

Jeffrey D. Bucklew

 

Senior Vice President and Chief Human Resources Officer(2)

Daniel J. Salliotte

 

Senior Vice President, Corporate Development

 

(1)

Effective December 15, 2020, Mr. Silvernail resigned, and Mr. Ashleman was named Chief Executive Officer. Mr. Ashleman was President and Chief Operating Officer prior to his appointment as Chief Executive Officer.

(2)

Mr. Bucklew ceased to serve as Senior Vice President and Chief Human Resources Officer on January 31, 2021.

Principles of Our Compensation Programs

 

 

Pay-for-Performance

 

 

The key principle of our compensation philosophy is
pay-for-performance.

 

 

Alignment with Stockholders’
Interests

 

 

We reward performance that meets or exceeds the performance
goals that the Compensation Committee establishes with the
objective of increasing stockholder value.

 

 

Variation Based on

Performance

 

 

We favor variable pay opportunities that are based on
performance over fixed pay. The total compensation received by
our NEOs varies based on corporate and individual performance
measured against annual and long-term goals.

 

 

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Compensation Philosophy

The following table describes our compensation philosophy that guides our pay programs, structure and decisions.

 

   

Compensation Philosophy

 

How We Deliver

 

Attract and retain an effective management team

 

 

•  We offer a total pay package that consists of both compensation and benefits that are targeted to be competitive with the market.

•  We seek to retain our executives by regularly benchmarking our total compensation package relative to companies of similar size, scope and complexity — our peer group is constructed to include companies within an appropriate range of revenue and market capitalization values.

 

 

Motivate and reward management team with a focus on pay-for-performance

 

 

•  We tie a meaningful portion of total compensation to financial and stock price performance – between 70% to 80% of our compensation mix is tied to performance.

•  Our compensation program provides a mix of base salary, short-term incentives and long-term incentives — the balance of our compensation elements provides direct line of sight with our objectives, motivating executives to outperform on our goals.

•  In line with our compensation philosophy to align pay and performance, when the Company outperforms or underperforms the goals in our incentive plans, payouts can result in above or below target levels, respectively.

 

 

Create a strong financial incentive that aligns with our stockholders and long-term objectives

 

 

•  Through a combination of appropriate performance metrics and targets, executives are paid according to how the Company performs.

•  Specific financial measures used in our incentive programs include:

–  Earnings per share (EPS), cash flow conversion, and organic sales growth in our short-term incentive plan; and

–  Total stockholder return (TSR) relative to companies in the relevant market index in our long-term incentive plan.

 

 

Align the interests of management and stockholders

 

 

•  In order to emphasize long-term stockholder returns, we require our executives to maintain significant stock ownership levels through the use of stock ownership guidelines.

 

 

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Governance Best Practices

The Company employs compensation principles in delivering executive pay that we believe are supportive of the business strategy and governance best practices.

What We Do

 

Ö

Annual Say-on-Pay Vote: We conduct an annual say-on-pay advisory vote. At our 2020 Annual Meeting of Stockholders, more than 95% of the votes cast on the say-on-pay proposal were in favor of the fiscal year 2019 compensation of our NEOs.

 

Ö

Clawback Policy: Our clawback policy allows the Board to recoup any excess incentive compensation paid to our executive officers and other employees if the financial results on which the awards were based are materially restated due to fraud, intentional misconduct or gross negligence of the executive officer or other employee.

 

Ö

Short-Term and Long-Term Incentives/Measures: Our annual and long-term plans provide a balance of incentives and include different measures of performance.

 

Ö

Independent Compensation Consultant: The Compensation Committee engages an independent compensation consultant, who does not provide any services to management.

 

Ö

Stock Ownership Guidelines: To further align the interests of management and our directors with our stockholders, we have significant stock ownership guidelines, which require our executive officers and directors to hold a multiple of their annual compensation in Common Stock.

 

Ö

Limited Perquisites and Related Tax Gross-Ups: We provide limited perquisites and tax gross-ups.

 

Ö

Mitigate Inappropriate Risk Taking: In addition to our clawback policy, stock ownership guidelines and prohibition of hedging and pledging, we structure our compensation programs so that they minimize inappropriate risk taking by our executive officers and other employees, including using multiple performance metrics and multi-year performance periods and capping our annual incentive awards and performance share awards.

What We Don’t Do

 

×

Gross-ups for Excise Taxes: Our executive severance agreements do not contain a gross-up for excise taxes that may be imposed as a result of severance or other payments deemed made in connection with a change in control.

 

×

Reprice Stock Options: Our equity incentive plan prohibits the repricing of stock options and stock appreciation rights without prior stockholder approval.

 

×

Fixed Term Employment Agreements: Employment of our executive officers is “at will” and may be terminated by either the Company or the employee at any time.

 

×

Hedging and Pledging: Our insider trading policy prohibits all employees and directors from hedging and pledging their economic interest in the Common Stock they hold.

 

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Performance Highlights and Impact on Incentive Compensation

Despite the difficult conditions presented with the COVID-19 pandemic in 2020, we were able to deliver for our shareholders, customers and employees as the Company performed well throughout with a focus on workplace safety, business continuity, liquidity and playing offense opportunistically. The performance highlights and accomplishments indicated in the chart below are closely related to the performance metrics under our executive compensation programs.

 

LOGO

2020 Performance Highligts*"EPS, orders and sales were down, butCompany bounced back with a strong 4th quarter"Cash from operations of $569 million,Up 8% from the prior year, led to recordfree cash flow of $518 million, up 9%,131% of adjusted net incomeContinued to pay quarterly dividendat same level each quarterAcquired flow management devices,LLCHow incentives support Performance Short-Term Goals Adjusted EPS Adjusted cash flow as a Percentage of net income Organic sales growthLong-term goals Relative TSRIncentive plan results2020 bonus payout of 90% Adjusted EPS of $5.04 Adjusted cash flow of 133% of Adjusted net income Organic sales growth of -8.8%2018-2020 PSU payout of 201% Three-year TSR of 53% (70th Percentile relative ranking)

 

*

A reconciliation from GAAP to non-GAAP financial measures and other related information is included in Item 6 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In addition to the adjustments noted in the Form 10-K, additional adjustments are used to determine the short-term incentive payouts, including adjustments related to acquisitions and divestitures, actual capital expenditures and actual share count compared to the annual plan.

Key Takeaways of our 2020 Executive Compensation Program

For 2020, our executive compensation programs were designed to directly link compensation opportunities to the financial performance metrics that we believe are the best measures of success in our business: EPS, cash flow conversion, organic sales growth and relative TSR.

 

   

The 2020 bonus payouts were 90% of target. This payout level includes an adjustment due to the Company’s actions in light of the COVID-19 pandemic as described in the Short-Term Incentives section of the 2020 Executive Compensation Program below.

 

   

Our TSR for the 2018-2020 period was 53%, which resulted in 70th percentile performance compared to the companies in the Russell Midcap Index, and resulted in a 201% payout of performance stock units (PSUs). The maximum possible payout is 250%, which is earned when 80th percentile performance is achieved or exceeded.

 

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NEO Compensation Aligns with Company Performance

The compensation opportunities of our executives are directly tied to the performance of the Company. Our pay-for-performance philosophy is demonstrated by the following elements of our executive compensation program for 2020:

Approximately 84% of Mr. Silvernail’s 2020 total targeted pay was performance-based, and an average of approximately 73% of our other NEOs’ total targeted pay in 2020 was performance-based. The charts below show the allocation of 2020 targeted pay across base salary, the annual cash incentive award, and the long-term incentive award for Mr. Silvernail and our other NEOs.*

 

LOGO

Other NEOs 2020 target compensation mix Cash Compensation 48% Equity Compensation 52% Performance-Based 73% Base Salary 27% Short-Term Incentives 21% Long Term Incentives 52%CEO 2020 Target Compensation Mix Cash Compensation 36% Equity Compensation 64%Performance-Based 84% Base Salary 16% Short-Term Incentives 20% Long-Term Incentives 64%

 

*

Data reflects Mr. Silvernail’s target compensation as Chairman and Chief Executive Officer and Mr. Ashleman’s target compensation as President and Chief Operating Officer.

In 2020, our long-term incentives continued to represent the single largest component of our CEO’s and other NEOs’ targeted pay, representing approximately 64% and 52% of total targeted pay, respectively.

Maintaining a balanced perspective is a core part of the Company’s business strategy, which requires employees to take calculated risks to capitalize on anticipated changes in the Company’s numerous businesses. The Compensation Committee believes that balancing the proportion of cash and non-cash awards, as well as short-term versus long-term awards, is important to motivate performance while mitigating risk. Cash-based awards are important in motivating executives for the short-term, while long-term incentives focus executives who have the greatest ability to impact business results on managing the business for the long-term and reinforce the link between their earnings opportunity and the long-term growth of the Company.

Our 2020 incentive awards are directly tied to performance metrics that balance absolute and relative performance goals: EPS, cash flow conversion, organic sales growth and TSR (measured on a relative basis). We believe these are the best measures of our financial success and support the creation of stockholder value.

Role of Say-on-Pay

The Company held an advisory vote on executive compensation (say-on-pay) at the Company’s 2020 Annual Meeting of Stockholders. The say-on-pay advisory vote received support from over 95% of the shares voted at the 2020 Annual Meeting. The Compensation Committee believes this affirms

 

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stockholders’ support of the Company’s approach to executive compensation. Accordingly, the Compensation Committee did not make any material changes to the underlying structure of our executive compensation program for fiscal year 2020. The Compensation Committee will continue to

review and consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for the NEOs.

2020 Executive Compensation Program

The following discussion describes our 2020 compensation elements and 2020 compensation decisions related to our NEOs.

CEO Transition

Effective December 15, 2020, Mr. Silvernail resigned, and Mr. Ashleman was named Chief Executive Officer. The terms of Mr. Silvernail’s separation agreement can be found in the Potential Payments upon Termination or Change in Control section below. In conjunction with Mr. Ashleman’s appointment as Chief Executive Officer, the IDEX Board of Directors established the terms of his compensation with an annual base salary of $900,000, an annual incentive target of 100% of annual base salary and an annual long-term incentive target of $3,700,000.

2020 Key Compensation Elements

The material elements of 2020 compensation for the NEOs are outlined below:

 

Element

  

Type of Pay

  

Purpose

  

General Characteristics

 

Base Salary

  

 

Fixed

  

 

Provides a fixed level of current cash compensation consonant with the executive’s primary duties and responsibilities and necessary to attract, retain and reward NEOs.

 

  

 

Reviewed annually and adjusted as necessary to reflect market changes, salary budgets and individual performance.

 

Short-Term
Incentives —
Annual Bonus

  

 

Performance-
Based

  

 

Focuses NEOs on annual performance by rewarding corporate and individual performance and achievement of pre-determined goals.

 

  

 

Variable cash payments. Annual awards based on performance against pre-determined individual and corporate performance goals.

 

 

Long-Term
Incentives —
Stock Options

  

 

Performance-
Based

  

 

Provides retention through vesting schedules and aligns each NEO’s interests with long-term stockholder interests by linking a substantial portion of each executive’s compensation to increases in the price of Common Stock.

 

  

 

Variable compensation based on stock value. Options are granted with exercise prices not less than fair market value at grant date and vest ratably over four years.

 

Long-Term
Incentives —
PSUs

  

 

Performance-
Based

  

 

Ties long-term compensation to relative performance, further aligning the interests of NEOs with stockholders.

  

 

PSUs vest based on continued service and relative TSR compared to companies in the S&P 500 over a cumulative three-year period.

 

 

Retirement/Other

  

 

Fixed/
Voluntary

 

  

 

Provides overall wealth accumulation and retention.

 

  

 

Various market-based retirement and welfare benefits and perquisites.

 

Base Salary

Base salaries are typically reviewed annually in February and may be adjusted to reflect market data, as well as individual responsibility, experience and performance. The table below highlights the change in 2020 base salary for each NEO, reflecting one or more of the following: annual merit increase, market and/or performance-related adjustments. Base pay is typically paid over 26 bi-weekly

 

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pay periods throughout the year. In 2020, the NEOs and other employees on the same bi-weekly pay schedule received a 27th pay period payment due to the payroll calendar, which resulted in higher amounts listed in the Summary Compensation Table than those listed in the following table.

 

NEO

 

  

 

2019
Base
Salary
Rate
($)

 

    

 

2020
Base
Salary
Rate

($)

 

    

Percentage
Increase

 

 

Eric D. Ashleman1

  

 

630,000

 

  

 

675,000

 

  

 

7

Andrew K. Silvernail

  

 

1,030,000

 

  

 

1,060,900

 

  

 

3

William K. Grogan

  

 

515,000

 

  

 

530,500

 

  

 

3

Denise R. Cade

  

 

474,000

 

  

 

488,000

 

  

 

3

Jeffrey D. Bucklew

  

 

412,000

 

  

 

424,500

 

  

 

3

Daniel J. Salliotte

  

 

354,500

 

  

 

365,000

 

  

 

3

 

(1)

Mr. Ashleman’s base salary rate was increased to $675,000 in connection with his appointment to serve as the Company’s President effective February 21, 2020. His base salary rate was subsequently increased to $900,000 in connection with his appointment to serve as the Company’s Chief Executive Officer effective December 15, 2020.

Short-Term Incentives

 

The Company administers the short-term incentive plan under the Management Incentive Compensation Plan (MICP). The amount of the annual cash bonus paid to each participant is determined under the following formula:

Annual Bonus = Base Salary x Individual Target Bonus Percentage x Business Performance Factor

Individual Target Bonus Percentage for the year is a percentage of the participant’s base salary and is based on the participant’s position and market data. The Business Performance Factor (discussed in more detail below) is calculated based on measurable corporate quantitative objectives, which are given a combined 70% weighting, and one strategic measure with a 30% weighting.

For 2020, the measurable quantitative objectives within the Business Performance Factor were adjusted EPS and adjusted cash flow conversion; the strategic measure was organic sales growth. Organic sales growth is a critical business metric

and helps identify the underlying health of the Company’s businesses and management’s ability to increase sales through innovation and customer focus.

At the beginning of each year, the Compensation Committee agrees on the categories of items that can be excluded or added back to arrive at the adjusted results in calculating the Business Performance Factor, as permitted by the terms of the MICP. After the year is complete, the Compensation Committee reviews the adjustments put forward by the Company for approval, resulting in the final Business Performance Factor. Typical adjustments include, but are not limited to, the impact of acquisition and divestiture-related income and charges, restructuring charges, capital expenditure investments versus plan, and the impact of foreign currency translation.

The categories that the Compensation Committee may consider for adjustments include one that excludes the impact of “extraordinary items (i.e., natural disasters,

 

 

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terrorism, war, etc.).” Another category that the Compensation Committee may consider for adjustment is any “one-time unusual event(s).” It is under these two categories that the Compensation Committee first discussed the potential impact of the pandemic and the possibility of having adjustments while establishing goals at its meeting in February 2020. The Compensation Committee decided at that time not to adjust the goals because it did not want to speculate on the impact of COVID-19 on results prematurely. The Compensation Committee continued to discuss the impact of the pandemic and the Company’s response to the pandemic at its June, September, November and December 2020 meetings and waited for the year to unfold before making a final decision on how 2020 short-term incentives should be impacted. The Compensation Committee ultimately reviewed the impact of COVID-19 and the steps that the Company took in response to the pandemic after the year ended. Rather than adjusting the results under the adjustment process described previously, the Compensation Committee made a discretionary adjustment as explained below.

COVID-19 had a material impact on the Company’s 2020 results and on the targets established at the beginning of the year. As the Compensation Committee considered the impact of COVID-19 on results, it considered the actions the Company implemented at the start of the pandemic to ensure the health and well-being of employees and business continuity, followed by the Company’s shift to an offensive approach to seek new business opportunities to help in the fight against the pandemic. Specifically, the Compensation Committee recognized the following factors:

 

    Leadership reacted quickly to prioritize employee safety, which also led to business continuity. Strict COVID-19 safety protocols were established across the Company early in the pandemic – including social distancing, mask wearing, temperature taking, and
   

quarantine policies, which limited the potential spread of the virus in the Company’s facilities, although the virus was occasionally introduced by employees from the outside community. These actions ensured the ongoing security and long-term viability of the Company.

 

    The Company increased its focus on disciplined cost controls and liquidity to weather the volatile economic conditions and to provide enough capital for its operational needs. The Company quickly modified key performance management processes in all businesses and implemented new tools to aid in a daily focus on cash. In response to the challenges presented by the pandemic, the Company generated record free cash flow in the second quarter, discontinued share buybacks and issued $500 million of new senior notes at its lowest coupon ever to cover debt coming due and bolster its cash position.

 

    The Company effectively used temporary furlough and part-time work alternatives to respond to lower demand and weather the early economic downturn, minimizing permanent job losses and positioning the Company to rebound quickly as the economy began improving. Leadership restructured businesses where impacts were likely to be long-term, positioning those business units for an eventual recovery.

 

   

While addressing the immediate concerns of safety and business continuity, the Company also addressed the rapidly changing needs in a world rising to meet the challenges of the pandemic. The Company focused on serving customers, developing and manufacturing products to overcome COVID-19, delivering solutions that helped us overcome the public health

 

 

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crisis. Business units that were critical suppliers to healthcare and other core industries increased production, including producing components for DNA sequencing and other lab machines, testing materials to detect the virus, and producing machinery critical to the mass-scale production of an eventual vaccine and seals used in hospital ventilators. Other efforts included developing new disinfectant sprayer systems, pumps used in the

   

production of hand sanitizer and water disinfectant systems.

 

    Through these efforts, the Company continued to deliver value for our shareholders, with 2020 TSR at 14% and at the 64th percentile relative to companies in the S&P 500. The Company finished the year with strong fourth quarter orders, adjusted EPS and free cash flow all higher than the prior year period.
 

 

For 2020, the relative weightings and the performance against the quantitative and strategic measures resulted in a calculated Business Performance Factor of 60%, as shown in the table below. In light of the actions that the Company took in anticipation and as a result of the pandemic as described above, the Compensation Committee, in its discretion, decided to adjust the payout of the organic sales growth component, resulting in a final Business Performance Factor of 90% of target for the NEOs, as well as the 190 other leaders and employees linked to the Company’s Business Performance Factor. The Committee chose to adjust organic sales growth to target payout as that metric was drastically impacted by events outside the control of the leaders and, despite actions taken, was quickly and significantly below threshold achievement. Further details can be found in the tables below.

 

MICP Objective           Goal                     Actual*               Payout      

MICP

  Weighting  

   

Business

Performance

Factor

 

 

Adjusted EPS

 

 

 

 

 

 

$5.55

 

 

 

 

 

 

$

 

 

5.04

 

 

 

 

 

 

 

 

 

41.1%

 

 

 

 

 

 

 

 

 

50%

 

 

 

 

 

 

 

 

 

20.6%

 

 

 

 

 

Adjusted Cash Flow Conversion

 

 

 

 

 

 

105%

 

 

 

 

 

 

 

 

 

133%

 

 

 

 

 

 

 

 

 

196.9%

 

 

 

 

 

 

 

 

 

20%

 

 

 

 

 

 

 

 

 

39.4%

 

 

 

 

 

Organic Sales Growth

 

   

 

-2.0%

 

 

 

   

 

-8.8%

 

 

 

   

 

0.0%

 

 

 

   

 

30%

 

 

 

   

 

0.0%

 

 

 

 

Adjustment to Organic Sales Growth

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

30%

 

 

 

 

Total

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

100%

 

 

 

 

 

 

 

 

 

90%

 

 

 

 

 

*

A reconciliation from GAAP to non-GAAP financial measures and other related information is included in Item 6 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In addition to the adjustments noted in the Form 10-K, additional adjustments are used to determine the short-term incentive payouts, including adjustments related to acquisitions and divestitures, actual capital expenditures and actual share count compared to the annual plan.

 

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The short-term incentive payments are included in the 2020 Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column and summarized in the table below.

 

NEO

 

 

Base Salary
Rate ($)

 

   

Individual
Target Bonus
Percentage

 

   

Business
Performance
Factor

 

   

Calculated
Amount (1)

 

   

Discretionary
Adjustment
Percentage

 

   

Discretionary
Adjustment
Amount (2)

 

   

Total
Payment

 

 

Eric D. Ashleman (3)

    900,000       100     60     25,082       30     12,541       37,623  

Eric D. Ashleman (3)

    675,000       90     60     347,569       30     173,785       521,354  

William K. Grogan

    530,500       75     60     238,725       30     119,363       358,088  

Denise R. Cade

    488,000       70     60     204,960       30     102,480       307,440  

Jeffrey D. Bucklew

    424,500       70     60     178,290       30     89,145       267,435  

Daniel J. Salliotte

    365,000       65     60     142,350       30     71,175       215,525  

 

(1)

The short-term incentive payments are included in the 2020 Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column.

(2)

The discretionary adjustment amounts are included in the 2020 Summary Compensation Table under the “Bonus” column.

(3)

Mr. Ashleman’s incentive compensation plan payment was pro-rated for his time as Chief Operating Officer and President until December 14, 2020 and Chief Executive Officer and President beginning on December 15, 2020. Mr. Silvernail left the Company on December 15, 2020 and did not receive an incentive compensation plan payment; however, he received a separation payment equal in value to the incentive compensation plan payment, as indicated in the “All Other Compensation” column of the Summary Compensation Table below.

Prior to 2018, the Company also provided short-term incentive payments under the Incentive Award Plan (IAP) to allow performance-based bonuses to certain executives to be fully deductible under Internal Revenue Code (IRC) Section 162(m). The Tax Cut and Jobs Act eliminated the deductibility of excess qualified performance-based compensation under IRC Section 162(m). The MICP, under which the 2020 short-term incentives were administered, is the plan that has historically governed annual incentives for the broader executive population and the plan under which the Chief Financial Officer received short-term incentive awards prior to 2018. Final awards under the MICP are calculated the same as awards under the IAP had been calculated.

 

2020 Long-Term Incentive Awards

Long-term incentive awards are generally made on an annual basis, or at the time of a special event (such as upon hiring or promotion). We typically grant awards at the February Board meeting each year, or the date of the annual meeting of stockholders. We attempt to make awards during periods when we do not have non-public information that could impact our stock price. Working with its independent compensation consultant, the Compensation Committee granted long-term incentive awards to the NEOs in early 2020. Each NEO has a long-term incentive target established on an

individual basis taking into consideration market practice for each role, and individual impact and performance.

In 2020, the NEOs received annual long-term incentive awards consisting of PSUs and stock options, which are intended to emphasize the link between pay and performance. The target number of PSUs granted was determined by dividing the PSU award value by the closing price of Common Stock on the date of grant. The number of stock options granted was determined by dividing the stock option award value by the grant date fair value, utilizing the Binomial lattice option-pricing model. For

 

 

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additional details of the assumptions made in the valuation of such awards, see note 16 “Share-Based Compensation” of the financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The Compensation Committee may grant awards above or below target based on individual and Company performance. In February 2020, the Compensation Committee reviewed the Company’s performance compared to one- and three-year TSR, revenue and EPS growth of companies in the executive pay peer group (listed below), as well as performance against strategic goals established at the beginning of the year. Based on this review, the Compensation Committee determined to grant at-target long-term incentive award values

to the NEOs for 2020. The Compensation Committee intends to perform a similar review annually and may adjust annual long-term incentives above or below target levels as appropriate to support the Company’s pay-for-performance philosophy.

2020 CEO Awards. For 2020, the Board granted Mr. Silvernail an award based on the Compensation Committee’s recommendation, which considered Mr. Silvernail’s compensation position relative to the market, his outstanding performance in leading the Company, and the Company’s strong performance during the prior three-year period. The following chart shows the grant value recommended by the Compensation Committee and approved by the Board, and the Summary Compensation Table reported value of Mr. Silvernail’s long-term incentive awards for 2019 and 2020. The Summary Compensation Table reported value reflects the grant date fair value determined in accordance with FASB ASC Topic 718.

 

         2019             2020      

Grant Value

  $ 5,475,000    $ 5,475,000 

Reported Value

  $ 6,575,467    $ 6,277,937 

Mr. Ashleman did not receive a special award upon his appointment as Chief Executive Officer on December 15, 2020. The Compensation Committee and the Board determined that Mr. Ashleman’s first equity award as Chief Executive Officer would be in February 2021, as part of the annual award process, and would have a targeted grant value of $3,700,000. As with the other NEOs, the Compensation Committee and the Board will consider similar criteria in assessing future awards for Mr. Ashleman to determine whether an upward or downward adjustment is warranted.

Objectives of Long-Term Incentive Vehicles

The Compensation Committee believes that PSUs and stock options both motivate management actions that drive the creation of stockholder value and promote executive stock ownership. However, each long-term incentive component has different characteristics. The value of the PSUs after the approximate three-year performance period is directly linked to relative TSR, as described above, as well as the stock price movement during the performance period. Stock options provide value only to the extent that the Company’s stock price appreciates above the stock price on the date of grant.

PSU Design Features

The PSUs have an approximate three-year performance period and measure the Company’s relative TSR against the TSR of companies in the S&P 500 index at the end of such period. If the Company achieves 50th percentile TSR performance as compared to the group of companies, each NEO will receive the target number of performance units, paid out in shares of Common Stock. Threshold performance is at the 33rd percentile, which will result in a payout equal to 33% of target; performance below this level will result in zero payout. Maximum payout is 250% of the target number of shares for 80th percentile performance or higher. Payouts are interpolated between the 33rd percentile and 50th percentile and between the

 

 

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50th percentile and 80th percentile performance. Cumulative dividend equivalent payments will be made at the end of the performance period based on the number of shares of Common Stock received by each executive.

In selecting relative TSR as the measure, the Compensation Committee noted that TSR is highly correlated with a combination of other metrics that are important to the Company and to investors, notably: return on invested capital, operating profit margin and compound annual sales growth rate (CAGR).

For the 2020 PSU grant, the Compensation Committee selected the S&P 500 index companies as the comparator group for relative TSR, as IDEX was added to this index in August 2019. Prior to this change, companies in the Russell Midcap index were the comparator group. In addition, a one-year post-vest holding requirement was instituted with the 2020 PSU grant, which will further align our executives’ interests with those of shareholders.

Our PSU grant for the 2018-2020 performance period resulted in a 201% payout based on a 53% TSR, which placed the Company in the 70th percentile of companies in the Russell Midcap Index.

Setting Executive Compensation

Role of Compensation Committee

The Compensation Committee establishes the Company’s compensation philosophy, structures the Company’s compensation programs to be consistent with that philosophy, and approves each element of NEO compensation. In the case of the CEO, the Board reviews, ratifies and approves compensation recommendations made by the Compensation Committee.

The Compensation Committee performs periodic reviews of executive pay tally sheets. The tally sheets outline each executive’s recent annual target and actual pay history, unvested equity holdings and termination payments under

various scenarios. Data from the tally sheets is considered by the Compensation Committee when setting target total compensation. Generally, the Compensation Committee reviews and adjusts target total compensation levels annually. Actual total compensation may vary from target based on performance and changes in stock price over time.

Generally, the amount of compensation realized historically, or potentially realizable in the future, from past equity awards does not directly impact the level at which future pay opportunities are set. When granting equity awards, the Compensation Committee considers market data and Company and individual performance.

Role of Compensation Consultant

The Compensation Committee has the sole authority to retain and replace, as necessary, compensation consultants to provide it with independent advice. The Compensation Committee has engaged F.W. Cook as its independent consultant to advise it on executive and non-employee director compensation matters. This selection was made without the input or influence of management.

Under the terms of its agreement with the Compensation Committee, F.W. Cook will not provide any other services to the Company, unless directed to do so by the Compensation Committee. During fiscal year 2020, F.W. Cook provided no services to the Company other than to advise the Compensation Committee on executive and non-employee director compensation issues. In its review, the Compensation Committee did not identify any conflicts of interest raised by the work F.W. Cook performed in fiscal year 2020, nor any business or personal relationships that would impair F.W. Cook’s independence.

Setting Individual Executive Pay

The Compensation Committee formulates a recommendation of CEO pay based on the financial and operating performance of the

 

 

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Company, the Compensation Committee’s assessment of the CEO and a thorough review of the market benchmarking data discussed below. The CEO pay recommendations put forth by the Compensation Committee are then reviewed and subject to approval by the Board.

The pay packages for the other NEOs are set by the Compensation Committee after taking into consideration the recommendations of the CEO. Individual pay decisions are based on an assessment of the individual executive, utilizing the following criteria:

 

  1.

Contribution

 

    Value to IDEX; short-and long-term

 

    Individual contribution and impact to team performance

 

  2.

Market attractiveness

 

    Supply-demand of role

 

    Experience, background, track record

 

  3.

Replacement difficulty

 

    Challenge of replacing the role with equivalent capability

 

  4.

Experience in role

 

    Overall experience in current or similar role

 

  5.

Company Performance

 

    In determining the long-term incentive award value, the Compensation Committee reviews the Company’s performance relative to our peers against key performance indicators, including growth and returns and stock price performance

 

    The Compensation Committee has the latitude to adjust awards up and
   

down relative to the executives’ target

The Compensation Committee reviews pay data from two primary sources (third party surveys and peer company data) as one input in determining appropriate target compensation levels. The Compensation Committee utilizes the expertise of its independent compensation consultant, F.W. Cook, in developing compensation recommendations for the NEOs, including the CEO. The Compensation Committee believes that to attract and retain qualified management, total direct compensation should be competitively targeted within a range that includes the market median for comparable positions at comparable companies, with market compensation data being only one of many factors considered by the Compensation Committee when setting the compensation levels for any particular executive. While an individual executive’s target compensation is positioned within the competitive range based on the individual factors listed above, actual compensation in any given year should and does vary from target based on Company and individual performance.

The Compensation Committee undertook a review and analysis to ensure that the 2020 executive compensation programs appropriately reflected the market for talent. The Compensation Committee considered relevant market pay practices to ensure the Company’s ability to recruit and retain high performing talent across its diversified markets and global footprint. Two surveys and a peer group analysis were utilized for the 2020 executive compensation market analysis for the NEOs.

Survey Data

The Willis Towers Watson Executive Compensation Database Survey and the Equilar Top 25 Survey were used because they include a broad range of manufacturing companies that are comparable to the Company in size, geography and industry.

 

 

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Peer Companies

The peer group of companies identified below consists of companies that are similar to the Company in terms of their size (i.e., revenue, and market capitalization), diversified industry

profile (ranging from customized manufacturing solutions to emerging markets in highly specialized health science technology), investment in research and development and global presence. In addition, the peer companies have executive officer positions that are comparable to the Company’s in terms of breadth, complexity and scope of responsibilities. F.W. Cook reviewed the composition of the peer group used to benchmark pay in 2019 with the Compensation Committee. Based on that review, for 2020 the Compensation Committee added Agilent Technologies, Inc., Mettler-Toledo International Inc. and Waters Corporation as companies focused on life sciences. Life science-focused business accounts for approximately 20% of the Company’s revenue.

 

Agilent Technologies, Inc.   Lincoln Electric Holdings, Inc.
AMETEK, Inc.   Mettler-Toledo International Inc.
Bruker Corporation   Nordson Corporation
Colfax Corporation   Pentair Ltd.
Crane Co.   PerkinElmer, Inc.
Donaldson Company, Inc.   Roper Technologies, Inc.
Dover Corporation   SPX Flow, Inc.
Enerpac Tool Group   Waters Corporation
Flowserve Corporation   Watts Water Technologies, Inc.
Graco Inc.   Woodward, Inc.
ITT Corporation   Xylem Inc.
KLA-Tencor Corporation    

The Compensation Committee believes that multiple data sources provide for a clearer perspective of the market. As such, with the assistance of management and F.W. Cook, the

Compensation Committee developed an aggregate composite of the market data to establish target compensation levels for the executives weighted as follows:

 

Position(s)   Survey
Weighting
  Peer
Group
Weighting
  Rationale
Chief Executive Officer; and Senior Vice President and Chief Financial Officer   20%     80%     Positions are required to be represented in all of the proxy peer group companies; closest representation of the corporate profile; balance of peer and survey data.
Senior Vice President, General Counsel and Corporate Secretary   70%     30%     Limited number of position matches in the proxy group; pool for talent would include the broader industry representation in the survey data.

President and Chief Operating Officer; Senior Vice President and Chief Human Resources

Officer; and Senior Vice President, Corporate Development

  100%     0%     Very limited number of position matches in the proxy group; pool for talent would include the broader industry representation in the survey data.

Other Compensation Components

Employee Benefits

The NEOs participate in group health, welfare and qualified retirement programs available to all of the Company’s employees. The NEOs also participate in nonqualified supplemental retirement plans, deferred compensation arrangements and supplemental disability benefits. Participation in these nonqualified plans is intended to provide the NEOs with the opportunity to accumulate retirement benefits at levels above the limitations imposed by tax qualified plans. For a more complete

 

 

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explanation of these plans, see the “Narrative to 2020 Summary Compensation Table,” the “Pension Benefits at 2020 Fiscal Year End Table,” the “Narrative to Nonqualified Deferred Compensation at 2020 Fiscal Year End Table,” and the discussion under “Potential Payments upon Termination or Change in Control.”

Severance and Change in Control Benefits

Each of the NEOs is entitled to severance benefits under the terms of written agreements in the event that their employment is actually or constructively terminated without cause. The amount of the benefit, which varies with the individual, depends on whether or not the termination is in connection with a change in control. The level of each NEO’s severance benefits reflects the Company’s perception of the market for their positions at the time the agreements were put in place. For additional information, see the section below entitled “Potential Payments upon Termination or Change in Control.”

Perquisites

The Compensation Committee believes in providing limited perquisites in line with market practice. The NEOs are provided a car allowance. The former CEO was entitled to limited use of the Company’s leased aircraft for non-business purposes. For further details on these perquisites, see the “Narrative to 2020 Summary Compensation Table” below.

Other Executive Compensation Matters

Stock Grant Practices

For all newly issued stock option awards, the exercise price of the stock option award will be the closing price of Common Stock on the NYSE on the date of the grant. If the grant date for the annual awards falls on a weekend, the exercise price of stock option awards will be the closing price of Common Stock on the NYSE on the last trading day preceding the date of grant.

Stock Ownership

Consistent with its executive pay philosophy, the Company requires that executive officers maintain minimum ownership levels of Common Stock as follows:

 

Executive            

Ownership as a Multiple  

of Base Salary  

 

CEO

    5x  

CFO, COO

    3x  

Other NEOs

    2x  

NEOs must comply with these ownership requirements within five years of their date of hire or promotion. Counted for purposes of satisfying ownership requirements are shares directly owned, unvested restricted shares and PSUs at target. As of December 31, 2020, all NEOs met or exceeded the ownership guidelines.

Hedging and Pledging

All directors and employees (including officers) of the Company are prohibited from (i) pledging Company securities (including through holding Company securities in margin accounts), and (ii) engaging in any transaction in which they may profit from short-term speculative swings in the value of the Company’s securities (“hedging”). For this purpose, “hedging” includes “short-sales” (selling borrowed securities that the seller hopes can be purchased at a lower price in the future) or “short sales against the box” (selling, but not delivering, owned securities), “put” and “call” options (publicly available rights to sell or buy securities within a certain period of time at a specified price or the like), and other hedging transactions designed to minimize the risk inherent in owning Common Stock, such as zero-cost collars and forward sales contracts.

Clawbacks

To the extent not in violation of applicable law, the Company reserves the right to recover, or clawback, from current or former directors and

 

 

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officers any wrongfully earned performance-based compensation, including stock-based awards, upon the determination by the Compensation Committee that:

 

    the Company’s financial statements have been restated due to material noncompliance with any financial reporting requirement;

 

    the cash incentive or equity compensation to be recouped was calculated on, or its realized value was affected by, the financial results that were subsequently restated;

 

    the cash incentive or equity compensation would have been less valuable than that actually awarded or paid based upon the application of the correct financial results; and

 

    the pay affected by the calculation was earned or awarded within three years of the restatement.

Tax Gross-Up Provisions

The Company has not entered into any new agreements that include excise tax gross-up provisions with respect to payments contingent upon a change in control since the adoption of a no gross-up policy by the Compensation Committee in February 2011. No executives are eligible for an excise tax gross-up.

The Compensation Committee has exclusive authority to modify, interpret and enforce this policy in compliance with applicable law.

Accounting and Tax Implications — Deductibility of Executive Compensation

In developing compensation programs, the Compensation Committee reviews the estimated accounting and tax impact of all elements of the executive compensation program. Generally, an accounting expense is accrued over the requisite service period of the particular pay element (generally equal to the performance period) and

the Company realizes a tax deduction upon payment to, or realization by, the executive. Previously, many of the awards granted were generally intended to satisfy the requirements for performance-based compensation under IRC Section 162(m). However, the Tax Cuts and Jobs Act (the Act), which became law on December 22, 2017, significantly amended IRC Section 162(m). Pursuant to the Act, the definition of “covered employees” under IRC Section 162(m) was amended to expand the scope of executive officers subject to the deduction limitation, including coverage of a company’s chief financial officer. The Act also eliminated the performance-based compensation exception with respect to tax years beginning January 1, 2018, but included a transition rule with respect to compensation that is provided pursuant to a written binding contract that was in effect on November 2, 2017 and not materially modified after that date. Accordingly, commencing in 2018, the Company’s tax deduction with regard to compensation of “covered employees” is limited to $1 million per taxable year for each officer.

While it is a goal of the Compensation Committee to maximize the deductibility of executive compensation, the Compensation Committee retains the discretion to compensate officers in a manner commensurate with performance and the competitive environment for executive talent, while also consistent with

its compensation philosophy and in the Company’s and its stockholders’ best interests. Accordingly, achieving these goals may have resulted (and may continue to result, in light of the recent changes in law) in compensation that, in certain cases, is not deductible for federal income tax purposes. The Compensation Committee did not make any significant changes to the Company’s executive compensation program for 2020 in response to the changes to IRC Section 162(m).

 

 

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Risk Assessment

The Compensation Committee periodically reviews the potential risks arising from our compensation policies, practices and programs to determine whether any potential risks are material to the Company. In approving the 2020 compensation program design, the Compensation Committee engaged in discussions with FW Cook and management regarding any potential risks and concluded that the Company’s compensation policies and practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy, do not incentivize employees, including executive officers, to take unnecessary or excessive risks, and that any risks arising from the Company’s policies and practices are not reasonably likely to have a material adverse effect on the Company.

In this review, the Compensation Committee considered the attributes of the Company’s policies and practices, including:

 

    the mix of fixed and variable compensation opportunities;

 

    the balance between annual cash and long-term, stock-based performance opportunities;

 

    multiple performance factors tied to key measures of short-term and long-term performance that motivate
   

sustained performance and are based on quantitative measures;

 

    caps on the maximum payout for cash incentives;

 

    stock ownership requirements for executives that encourage a long-term focus on performance;

 

    an insider trading policy that prohibits hedging and pledging;

 

    a clawback policy that applies to performance-based compensation, including stock-based awards, for directors and officers and other employees; and

 

    oversight by an independent compensation committee.

Compensation Committee Report

The Compensation Committee has reviewed the Compensation Discussion and Analysis and discussed its contents with management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Livingston L. Satterthwaite, Chair

Carl R. Christenson

Lakecia N. Gunter

Katrina L. Helmkamp

David C. Parry

Cynthia J. Warner

 

 

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Table of Contents

2020 Summary Compensation Table

The table below and related footnotes summarize the total compensation earned or paid in 2020, 2019 and 2018 for the Company’s CEO, CFO, and each of the three most highly compensated executive officers other than the CEO and CFO.

 

                   
Name and Principal Position   Year     Salary
($)
    Bonus
($) (1)
    Stock
Awards
($) (2)
    Option
Awards
($) (3)
    Non-Equity
Incentive
Plan
Compensation
($) (4)
   

Change in
Pension Value
and
Non-Qualified
Deferred
Compensation
Earnings

($) (5)

   

All Other
Compensation

($) (6)

    Total
($)
 
           

Eric D. Ashleman,

Chief Executive Officer and President

    2020       698,365       186,326       1,131,907       875,072       372,651           143,518       3,407,839  
    2019       620,481           2,597,181       725,030       438,480           165,614       4,546,786  
    2018       574,519               1,114,356       710,045       767,520               156,558       3,322,998  
           

Andrew K. Silvernail,

Former Chairman and

Chief Executive Officer

    2020       1,061,930           3,540,291       2,737,646             1,550,994       8,890,861  
    2019       1,023,654           3,837,834       2,737,633       1,075,320           445,155       9,119,596  
    2018       996,808               4,117,376       2,625,002       1,968,000               418,464       10,125,650  
           

William K. Grogan,

Senior Vice President and

Chief Financial Officer

    2020       547,327       119,363       776,645       600,088       238,725           112,092       2,394,240  
    2019       505,481           792,949       565,006       336,038           130,315       2,329,789  
    2018       463,808               785,139       500,181       578,100               123,367       2,450,595  
           
Denise R. Cade,
Senior Vice President, General Counsel and Corporate Secretary
    2020       503,538       102,480       502,074       387,586       204,960           107,876       1,808,514  
    2019       471,038           634,563       452,638       288,666           128,824       1,975,729  
    2018       457,231               701,752       447,620       528,080               127,374       2,262,057  
           

Jeffrey D. Bucklew,

Senior Vice President and Chief Human Resources Officer

    2020       437,942       89,145       420,263       325,105       178,290           95,956       1,546,701  
    2019       409,461           484,298       345,018       250,908           111,339       1,601,024  
    2018       395,635               533,894       340,032       459,200               109,081       1,837,842  
           

Daniel J. Salliotte,

Senior Vice President, Corporate Development

    2020       376,615       71,175       226,381       175,083       142,350       11,064       84,392       1,087,060  

 

(1)

Reflects discretionary portion of the annual cash bonus under the MICP as described in the Short-Term Incentives section of the 2020 Executive Compensation Program.

(2)

Reflects the aggregate grant date fair value of restricted stock awards and PSUs for the year indicated in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation of those awards granted in 2020, see note 16 “Share-Based Compensation” of the financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. For PSUs granted in 2020, the grant date fair value is based on the probable outcome of the related performance conditions which reflects the target level of performance. The grant date fair value of the PSUs granted in 2020 based on the maximum level of performance is as follows: Mr. Ashleman, $2,829,768; Mr. Silvernail, $8,850,728; Mr. Grogan, $1,941,613; Ms. Cade, $1,255,184; Mr. Bucklew, $1,050,656; and Mr. Salliotte, $565,954. All shares of restricted stock are eligible for dividend equivalent payments when paid on Common Stock and, with respect to PSUs, cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the performance period.

(3)

Reflects the aggregate grant date fair value for the year indicated in accordance with FASB ASC Topic 718. For a discussion of assumptions made in the valuation of stock options granted in 2020, see note 16 “Share-Based Compensation” of the financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

 

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(4)

Reflects the annual cash bonus under the MICP. For 2020, Mr. Silvernail did not receive a bonus payment under the MICP, as he received a separation payment in an equivalent value to his annual bonus. That value is reflected in All Other Compensation (see footnote 6).

(5)

Represents the aggregate increase/decrease in actuarial value under the Pension Plan. Mr. Salliotte was the only NEO who participated in the Pension Plan. See the “Narrative to 2020 Summary Compensation Table” under the heading “Pension Plan” for a description of the Pension Plan. Additional information about the Pension Plan is available in the “Pension Benefits at 2020 Fiscal Year End” table.

(6)

Consists of the following for 2020:

 

           
Name  

Company

Contribution to
401(k) Plan,

Defined
Contribution
Plan and
Accrued

SERP Benefits
($)

    Automotive,
Supplemental
Disability ($) (a)
    Aircraft ($) (b)     Other
Payments ($) (c)
      Total ($)    
           

Eric D. Ashleman

    121,019       22,499       -           -         143,518  
         

Andrew K. Silvernail

    226,061       28,732       102,688       1,193,513       1,550,994  
           

William K. Grogan

    89,987       22,105       -         -         112,092  
         

Denise R. Cade

    84,832       23,044       -         -         107,876  
           

Jeffrey D. Bucklew

    73,979       21,977       -         -         95,956  
         

Daniel J. Salliotte

    65,130       19,262       -         -         84,392  

 

  (a)

Consists of automotive and fuel allowance and supplemental disability premiums.

  (b)

Represents Mr. Silvernail’s personal use of the Company’s leased aircraft. The Company’s methodology for calculating the value of the personal use of the Company leased aircraft is to calculate the incremental costs of such usage to the Company, which includes fuel, landing fees, hangar fees, catering, additional expenses related to the crew and other expenses which would not have otherwise been incurred by the Company if the aircraft had not been used for personal travel.

  (c)

Consists of payment pursuant to Mr. Silvernail’s separation agreement equivalent to the value of the annual bonus Mr. Silvernail would have received had he remained employed by the Company. Additional information about Mr. Silvernail’s separation arrangement is available below under the heading “Quantification of Termination Payments and Benefits — Mr. Silvernail.”

 

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Narrative to 2020 Summary Compensation Table

Perquisites and Supplemental Disability

In addition to benefits generally available to all other U.S.-based non-union employees, the CEO and other NEOs receive an automotive and fuel allowance and participate in a supplemental long-term disability program. The supplemental disability benefit is in addition to the group long-term disability benefit generally available to all U.S.-based non-union employees. The group long-term disability plan provides an annual benefit of 60% of the first $300,000 of base salary, or an annual maximum benefit of $180,000 per year. For the NEOs, the supplemental program provides an annual benefit of 60% of their base salary above $300,000, with a maximum supplemental benefit of $60,000 per year. Mr. Silvernail as Chairman and CEO, was also offered the personal use of the Company leased aircraft (limited to 25 hours per year covered by the Company and up to an additional 25 hours per year for which he is required to reimburse the Company for all incremental costs related to such additional use).

Retirement Benefits

The Company maintains a tax-qualified retirement plan for employees, the IDEX Corporation Savings Plan, in which the CEO and other NEOs participate, which consists of a 401(k) with a prescribed matching contribution (401(k)) and a defined contribution portion (Defined Contribution).

Defined Contribution

The Defined Contribution portion of the IDEX Corporation Savings Plan is an ongoing tax-qualified “defined contribution” plan that provides contributions based on a participant’s compensation and a combination of the

participant’s age and years of service as shown below:

 

Age + Years of

Service

  Company
Contribution
Less than 40   3.5% of Eligible
Compensation
40 but less than 55   4.0% of Eligible
Compensation
55 but less than 70   4.5% of Eligible
Compensation
70 or more   5.0% of Eligible
Compensation

Under the plan, participants are entitled to receive the lump-sum value of their vested account at termination of employment subject to distribution rules under the law. Account balances are 100% vested after three years of service.

401(k)

The 401(k) is an ongoing tax-qualified “401(k)” plan that provides a matching contribution based on the employee’s contribution up to 8% of eligible compensation. The maximum matching contribution by the Company is 4% of eligible compensation. The matching contribution vests 20% for each year of service and is 100% vested after 5 years of service.

Pension Plan

During 2005, the Company redesigned its retirement plans to eliminate the IDEX Corporation Retirement Plan (Pension Plan) for employees hired after 2004. Mr. Salliotte has a frozen benefit under the Pension Plan as of December 31, 2005. The monthly accrued benefit for Mr. Salliotte under the Pension Plan upon retirement at age 65 will not change, although the present value of such benefit will change from year to year. The other NEOs are not Pension Plan participants and were never eligible for the Pension Plan. The Pension Plan was terminated in May 2020.

 

 

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Table of Contents

2020 Grants of Plan-Based Awards

The following table provides information on plan-based awards for all NEOs for 2020.

 

             
      

Estimated Future Payouts Under

Non-Equity Incentive Plan Awards (1)

  Estimated Future Payouts Under
Equity Incentive Plan Awards (2)
    All Other
Stock
Awards:
Number of
Shares of
Stock (#)
   

 

All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)

    Exercise or
Base Price of
Option
Awards
($/Sh)
(3)
    Grant Date
Fair Value of
Stock and
Option
Awards ($)
(4)
 
Name   Grant Date    

Threshold

($)

 

Target

($)

   

Maximum

($)

 

  Threshold  

(#)

   

  Target  

(#)

   

  Maximum  

(#)

 

Eric D. Ashleman

 

 

02/21/2020

 

 

0  

 

 

621,086  

 

 

1,242,172  

 

 

1,683

 

 

 

5,050

 

 

 

12,625

 

 

 

-    

 

 

25,490

 

 

 

173.35

 

 

 

2,006,979

 

Andrew K. Silvernail

 

 

02/21/2020

 

 

0  

 

 

1,326,125  

 

 

2,652,250  

 

 

5,265

 

 

 

15,795

 

 

 

39,488

 

 

 

-    

 

 

79,745

 

 

 

173.35

 

 

 

6,277,937

 

William K. Grogan

 

 

02/21/2020

 

 

0  

 

 

397,875  

 

 

795,750  

 

 

1,155

 

 

 

3,465

 

 

 

8,663

 

 

 

-    

 

 

17,480

 

 

 

173.35

 

 

 

1,376,733

 

Denise R. Cade

 

 

02/21/2020

 

 

0  

 

 

341,600  

 

 

683,200  

 

 

747

 

 

 

2,240

 

 

 

5,600

 

 

 

-    

 

 

11,290

 

 

 

173.35

 

 

 

889,660

 

Jeffrey D. Bucklew

 

 

02/21/2020

 

 

0  

 

 

297,150  

 

 

594,300  

 

 

625

 

 

 

1,875

 

 

 

4,688

 

 

 

-    

 

 

9,470

 

 

 

173.35

 

 

 

745,368

 

Daniel J. Salliotte

 

 

02/21/2020

 

 

0  

 

 

237,250  

 

 

474,500  

 

 

337

 

 

 

1,010

 

 

 

2,525

 

 

 

-    

 

 

5,100

 

 

 

173.35

 

 

 

401,464

 

 

(1)

Amounts reflect payment levels under the MICP at a percentage of base salary for each executive and a Business Performance Factor of 0% for threshold, 100% for target and 200% for maximum. See “Short-Term Incentives” under “Compensation Discussion and Analysis — 2020 Executive Compensation Program.” The amounts actually earned by the NEOs are reflected in the Non-Equity Incentive Plan Compensation column in the 2020 Summary Compensation Table.

(2)

Reflects the range of the number of shares of Common Stock that could be issued pertaining to the PSUs awarded in 2020 under the IAP. The target number of PSUs is used to determine the grant date fair value for this award.

(3)

Reflects closing price of Common Stock on the grant date, which is the fair market value of the stock under the terms of the IAP.

(4)

Represents the grant date fair value of PSUs and stock options granted under the IAP to each NEO in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation of those awards, see note 16 “Share-Based Compensation” of the financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. For PSUs, the grant date fair value is based on the probable outcome of the related performance conditions which reflects the target level of performance. The grant date fair value of the PSUs granted in 2020 based on the maximum level of performance is as follows: Mr. Ashleman, $2,829,768; Mr. Silvernail, $8,850,728; Mr. Grogan, $1,941,613; Ms. Cade, $1,255,184; Mr. Bucklew, $1,050,656; and Mr. Salliotte, $565,954. With respect to PSUs, cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the performance period. For stock options, the actual value a NEO realizes from the stock option will depend on the difference between the market price of the underlying share at exercise and the exercise price of the stock option established at the time of the grant.

Narrative to 2020 Grants of Plan-Based Awards Table

Stock options awarded to the NEOs in 2020 had the following characteristics:

 

   

all are nonqualified stock options;

 

   

all have an exercise price equal to the closing price of Common Stock on the grant date;

 

   

all vest annually in equal amounts over a four-year period based on the NEO’s continued service;

 

   

all vest upon retirement if retirement eligible (for Mr. Silvernail, as defined in his employment agreement and for NEOs other than Mr. Silvernail, NEO is at least age 50, with a minimum of five years of service, and the NEO’s age plus years of service equals 70); and

 

   

all expire 10 years after the date of grant.

 

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PSUs awarded to the NEOs in 2020 had the following characteristics:

 

   

all have an approximate three-year performance period with vesting based on relative TSR and the NEO’s continued service;

 

   

all shares vest upon retirement if the NEO is retirement eligible (for Mr. Silvernail, as defined in his employment agreement and for NEOs other than Mr. Silvernail, the NEO is retirement eligible when he or she is at least age 50, with a minimum of five years of service, and the NEO’s age plus years of service equals 70); but are paid out only based on the Company’s actual TSR as compared to the companies in the S&P 500 index determined as of the last day of the performance period;

 

   

cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the performance period; and

 

   

shares delivered upon vesting are subject to a one-year holding requirement.

 

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Outstanding Equity Awards at 2020 Fiscal Year End

The following table provides information on all PSU, restricted stock and stock option awards held by the NEOs as of December 31, 2020.

 

     
     Option Awards     Stock Awards  
           
     Number of Securities Underlying
Unexercised Options
   

Option
Exercise
Price

($)

    Option
Expiration
Date
    Number of
Shares of Stock
that Have Not
Vested (#)
    Market Value of
Shares of Stock
that Have Not
Vested ($)
    Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#) (2)
   

Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($) (2)

 

 

Name

 

 

 

Exercisable

(#) (1)

 

   

 

Unexercisable

(#) (1)

 

 

Eric D. Ashleman

 

 

5,848

 

 

 

-    

 

 

 

74.74

 

 

 

02/19/2026

 

 

 

-    

 

 

 

-    

 

 

 

29,442

 

 

 

5,864,846

 

   

 

19,038

 

 

 

6,347

 

 

 

93.27

 

 

 

02/22/2027

 

             
   

 

9,355

 

 

 

9,355

 

 

 

138.12

 

 

 

02/22/2028

 

             
   

 

5,153

 

 

 

15,462

 

 

 

144.85

 

 

 

03/01/2029

 

             
   

 

-    

 

 

 

25,490

 

 

 

173.35

 

 

 

02/21/2030

 

                               

Andrew K. Silvernail (3)

                       

William K. Grogan

 

 

843

 

 

 

-    

 

 

 

50.45

 

 

 

02/15/2023

 

 

 

-    

 

 

 

-    

 

 

 

12,885

 

 

 

2,566,692

 

   

 

1,798

 

 

 

-    

 

 

 

72.73

 

 

 

02/13/2024

 

             
   

 

1,383

 

 

 

-    

 

 

 

67.49

 

 

 

10/15/2024

 

             
   

 

2,575

 

 

 

-    

 

 

 

78.43

 

 

 

02/20/2025

 

             
   

 

5,435

 

 

 

-    

 

 

 

74.74

 

 

 

02/19/2026

 

             
   

 

15,836

 

 

 

5,279

 

 

 

91.22

 

 

 

01/03/2027

 

             
   

 

10,548

 

 

 

3,517

 

 

 

93.27

 

 

 

02/22/2027

 

             
   

 

6,590

 

 

 

6,590

 

 

 

138.12

 

 

 

02/22/2028

 

             
   

 

4,016

 

 

 

12,049

 

 

 

144.85

 

 

 

03/01/2029

 

             
   

 

-    

 

 

 

17,480

 

 

 

173.35

 

 

 

02/21/2030

 

                               

Denise R. Cade

 

 

2,092

 

 

 

-    

 

 

 

76.79

 

 

 

10/26/2025

 

 

 

-    

 

 

 

-    

 

 

 

9,411

 

 

 

1,874,671

 

   

 

3,234

 

 

 

-    

 

 

 

74.74

 

 

 

02/19/2026

 

             
   

 

3,601

 

 

 

3,602

 

 

 

93.27

 

 

 

02/22/2027

 

             
   

 

5,897

 

 

 

5,898

 

 

 

138.12

 

 

 

02/22/2028

 

             
   

 

3,217

 

 

 

9,653

 

 

 

144.85

 

 

 

03/01/2029

 

             
   

 

-    

 

 

 

11,290

 

 

 

173.35

 

 

 

02/21/2030

 

                               

Jeffrey D. Bucklew

 

 

7,015

 

 

 

3,005

 

 

 

93.27

 

 

 

02/22/2027

 

 

 

-    

 

 

 

-    

 

 

 

7,462

 

 

 

1,486,431

 

   

 

4,480

 

 

 

4,480

 

 

 

138.12

 

 

 

02/22/2028

 

             
   

 

2,452

 

 

 

7,358

 

 

 

144.85

 

 

 

03/01/2029

 

             
   

 

-    

 

 

 

9,470

 

 

 

173.35

 

 

 

02/21/2030

 

                               

Daniel J. Salliotte

 

 

-    

 

 

 

1,684

 

 

 

93.27

 

 

 

02/22/2027

 

 

 

-    

 

 

 

-    

 

 

 

3,759

 

 

 

748,792

 

   

 

-    

 

 

 

2,078

 

 

 

138.12

 

 

 

02/22/2028

 

             
   

 

-    

 

 

 

3,522

 

 

 

144.85

 

 

 

03/01/2029

 

             
   

 

-    

 

 

 

5,110

 

 

 

173.35

 

 

 

02/21/2030

 

                               

 

(1)

All options expire on the 10th anniversary of the grant date and vest 25% per year on the anniversary of the grant date. As discussed in “Potential Payments upon Termination or Change in Control”, all stock options vest 100% upon a qualifying termination of employment following a change in control.

 

52


Table of Contents
(2)

Represents the number and value of outstanding PSU awards based on performance as of December 31, 2020 as set forth in the following table. Actual number of shares delivered upon vesting will be based on performance through December 31, 2021 for the 2019 PSU award and performance through January 31, 2023 for the PSU award granted in 2020. The 2019 PSU awards are disclosed at 180% of the target and the 2020 PSU awards are disclosed at 169% of the target based on performance through December 31, 2020 and at a closing price of $199.20 on December 31, 2020.

 

  

 

  Grant Date    

Number of
PSUs at
Target

(#)

    Market or
Payout Value of
Unearned
Shares, Units or
Other  Rights
That Have Not
Vested ($)
    Vesting

Eric D. Ashleman

 

 

03/01/2019

 

 

 

5,010

 

 

 

1,796,386

 

 

Award vests on 12/31/2021

   

 

03/28/2019

 

 

 

6,605

 

 

 

2,368,289

 

 

Award vests on 12/31/2021

   

 

02/21/2020

 

 

 

5,050

 

 

 

1,700,172

 

 

Award vests on 01/31/2023

William K. Grogan

 

 

03/01/2019

 

 

 

3,905

 

 

 

1,400,177

 

 

Award vests on 12/31/2021

   

 

02/21/2020

 

 

 

3,465

 

 

 

1,166,515

 

 

Award vests on 01/31/2023

Denise R. Cade

 

 

03/01/2019

 

 

 

3,125

 

 

 

1,120,500

 

 

Award vests on 12/31/2021

   

 

02/21/2020

 

 

 

2,240

 

 

 

754,171

 

 

Award vests on 01/31/2023

Jeffrey D. Bucklew

 

 

03/01/2019

 

 

 

2,385

 

 

 

855,166

 

 

Award vests on 12/31/2021

   

 

02/21/2020

 

 

 

1,875

 

 

 

631,265

 

 

Award vests on 01/31/2023

Daniel J. Salliotte

 

 

03/01/2019

 

 

 

1,140

 

 

 

408,758

 

 

Award vests on 12/31/2021

   

 

02/21/2020

 

 

 

1,010

 

 

 

340,034

 

 

Award vests on 01/31/2023

 

(3)

Mr. Silvernail forfeited all of his equity-based awards that had not yet vested in connection with his separation from the Company on December 15, 2020.

2020 Option Exercises and Stock Vested

The following table provides information on stock option exercises and stock vesting for all NEOs in 2020.

 

     
    

 

Option Awards

 

   

 

Stock Awards

 

 
         

Name

 

 

 

Number of Shares
Acquired on
Exercise (#)

 

   

Value Realized
on Exercise ($) (1)

 

   

 

Number of Shares
Acquired on
Vesting (#)

 

   

Value Realized
on Vesting ($) (2)