SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
DONALDSON COMPANY, INC.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
[DONALDSON LOGO]
DONALDSON COMPANY, INC.
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TIME: 10:00 a.m., central time, Friday, November 19, 1999
PLACE: The Conference Center at Atrium Center, 3105 E. 80th Street,
Bloomington, Minnesota.
ITEMS OF (1) Election of three directors;
BUSINESS:
(2) Ratification of appointment of Ernst & Young LLP as
independent auditors of the Company; and
any other business that properly comes before the meeting.
RECORD DATE: Stockholders of record at the close of business on September
24, 1999 are entitled to notice of and to vote at the meeting
or any adjournment. A list of such stockholders will be
available prior to the meeting at the office of the Company,
1400 West 94th Street, Minneapolis, Minnesota for examination
by any such stockholder for any purpose germane to the meeting.
By Order of the Board of Directors
Norman C. Linnell
SECRETARY
Dated: October 13, 1999
- --------------------------------------------------------------------------------
IMPORTANT
STOCKHOLDERS ARE ENCOURAGED TO VOTE THEIR PROXY BY TELEPHONE AS DESCRIBED IN
THE ENCLOSED TELEPHONE VOTING INSTRUCTIONS OR DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, TO WHICH NO POSTAGE NEED BE AFFIXED
IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
DONALDSON COMPANY, INC.
1400 WEST 94TH STREET
MINNEAPOLIS, MINNESOTA 55431
-----------------------------
PROXY STATEMENT
MAILING DATE OCTOBER 13, 1999
-----------------------------
SOLICITATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Donaldson Company, Inc. (the "Company") for use at the Annual Meeting of
Stockholders to be held on November 19, 1999, and at any adjournments thereof.
The person signing a proxy may revoke it any time before it is exercised. Each
valid proxy received prior to the meeting will be voted according to the
stockholder's directions. If no direction is given, such proxies will be voted
in favor of (1) the nominees for directors identified herein, and (2) ratifying
the auditors named herein.
The cost of this solicitation of proxies will be borne by the Company. In
addition to solicitation of proxies by the use of the mails, there may be
incidental personal solicitations by telephone, special communications or in
person, by officers, directors and regular employees of the Company who will not
receive additional compensation therefor. The Company will reimburse banks,
brokerage firms and other nominees, custodians and fiduciaries for reasonable
expenses incurred by them in sending proxy materials and annual reports to the
beneficial owners of stock. The Company has engaged Morrow & Co., Inc. to assist
in proxy solicitation for an estimated fee of $5,000 plus out-of-pocket
expenses. This proxy statement and the accompanying proxy are first being mailed
to stockholders on or about October 13, 1999.
VOTING SECURITIES
Stockholders of record as of the close of business on September 24, 1999
will be entitled to vote at the meeting. The Company then had approximately
46,032,230 shares of Common Stock outstanding, each of which entitles its holder
to one vote. Representation at the meeting of a majority of the outstanding
shares is required for a quorum.
If an executed proxy card is returned or a proxy is voted by telephone, and
the stockholder has abstained from voting on any matter or, in the case of the
election of directors has withheld authority to vote with respect to any or all
of the nominees, the shares represented by such proxy will be considered present
at the meeting for purposes of determining a quorum and for purposes of
calculating the vote, but will not be considered to have been voted in favor of
such matter or, in the case of the election of directors, in favor of such
nominee or nominees. If an executed proxy is returned by a broker holding shares
in street name which indicates that the broker does not have discretionary
authority as to certain shares to vote on one or more matters, such shares will
be considered present at the meeting for purposes of determining a quorum, but
will not be considered to be represented at the meeting for purposes of
calculating the vote with respect to such matter.
Shares of Common Stock credited to the accounts of participants in the
Automatic Dividend Reinvestment Program of the Company have been added to the
participants' other holdings and included in the enclosed proxy. Participants in
the Company's employee benefit plans are entitled to instruct the plan trustee
as to how to vote all shares of Donaldson Common Stock allocated to their
accounts under the plans as of the record date, and will receive a separate
voting instruction card for directing the plan trustee to vote such shares.
1
<PAGE>
SECURITY OWNERSHIP
Set forth below is information regarding persons known by the Company to
own beneficially more than 5% of the outstanding Common Stock of the Company
based on the number of shares of Common Stock outstanding on September 24, 1999:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------- ----------------------- --------
<S> <C> <C>
Donaldson Company, Inc.
Employee Stock Ownership Plan ............ 5,391,741(1) 11.7%
c/o Fidelity Management Trust Company
82 Devonshire Street
Boston, MA 02109
Pioneering Management Corporation ........ 4,890,000(2) 10.6%
60 State Street
Boston, MA 02109
</TABLE>
- ------------------
(1) These shares are held in trust for the benefit of participants in the
Company's ESOP for which Fidelity Management Trust Company is the trustee
and claims no voting or investment power over the indicated shares.
(2) Pioneering Management Corporation is a registered investment adviser with
sole voting power with respect to all 4,890,000 shares and shared investment
power with respect to all 4,890,000 shares. Information is based solely on a
Schedule 13G filed with the Securities and Exchange Commission by Pioneering
Management Corporation with respect to shares held as of December 31, 1998.
The following table sets forth information as of July 31, 1999, regarding the
beneficial ownership of the Company's Common Stock by each director, each of the
Named Officers (as hereinafter defined) and all executive officers and directors
of the Company as a group. Except as otherwise indicated, the named beneficial
owner has sole voting and investment power with respect to the shares held by
such beneficial owner.
<TABLE>
<CAPTION>
TOTAL PERCENT EXERCISABLE
NAME OF INDIVIDUAL OR GROUP SHARES (1) OF CLASS OPTIONS (1)
--------------------------- ---------- -------- ------------
<S> <C> <C> <C>
William G. Van Dyke ................... 959,789(2) 2.1 550,406
Nickolas Priadka ...................... 254,732(3) * 124,881
James R. Giertz ....................... 210,178 * 125,628
William M. Cook ....................... 159,230 * 104,615
Lowell F. Schwab ...................... 134,878 * 88,458
S. Walter Richey ...................... 51,057 * 25,200
Kendrick B. Melrose ................... 49,539 * 25,200
Stephen W. Sanger ..................... 43,282 * 25,200
Jack W. Eugster ....................... 37,535 * 21,200
F. Guillaume Bastiaens ................ 19,330 * 13,200
Paul B. Burke ......................... 15,408 * 9,200
Janet M. Dolan ........................ 14,182 * 9,200
John Grundhofer ....................... 9,648 * 5,200
Directors and Officers as a Group ..... 2,495,402 5.4 1,257,945
</TABLE>
- ------------------
* Less than 1%
(1) Includes restricted shares, shares held in trust and the shares underlying
options exercisable within 60 days, as listed under the Exercisable Options
column.
(2) Includes 65,936 shares held by immediate family members.
(3) Includes 24,358 shares held in a trust of which, Mr. Priadka is a trustee
and has shared voting and investment power.
2
<PAGE>
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall consist
of not less than three nor more than 15 directors and that the number of
directors may be fixed from time to time by the affirmative vote of a majority
of the directors. The Board of Directors has fixed the number of directors
constituting the entire Board at nine. Vacancies and newly created directorships
resulting from an increase in the number of directors may be filled by a
majority of the directors then in office and the directors so chosen will hold
office until the next election of the class for which such directors shall have
been chosen and until their successors are elected and qualified. Directors are
elected for a term of three years with positions staggered so that approximately
one-third of the directors are elected at each annual meeting of the
stockholders. The terms of F. Guillaume Bastiaens, Janet M. Dolan and S. Walter
Richey expire at the annual meeting. Mr. Bastiaens was elected by the Board in
1995, Ms. Dolan in 1996 and Mr. Richey in 1991. It is intended that proxies
received will be voted, unless authority is withheld, FOR the election of the
nominees presented on Page 4, namely F. Guillaume Bastiaens, Janet M. Dolan and
S. Walter Richey. The director nominees receiving the highest number of votes
will be elected to fill the seats on the Board.
The Board of Directors meets on a regularly scheduled basis. During the
past fiscal year, the Board held six meetings. Each director attended at least
75% of the aggregate of the Board meetings and meetings of Board committees on
which each served.
The Board of Directors has assigned certain responsibilities to standing
committees. The Audit Committee is composed of directors F. Guillaume Bastiaens,
Janet M. Dolan, Kendrick B. Melrose, S. Walter Richey (Chair) and Stephen W.
Sanger, all of whom are non-employee directors. The Audit Committee held three
meetings during the past fiscal year. Functions of the Audit Committee are
described in the Audit Committee Charter adopted by the Board of Directors on
September 24, 1999 and set forth in Exhibit A. The Audit Committee satisfied its
obligations under this charter in the past year.
The Human Resources Committee is composed of directors Paul B. Burke, Jack
W. Eugster, John F. Grundhofer, Kendrick B. Melrose and Stephen W. Sanger
(Chair), all of whom are non-employee directors. This Committee held two
meetings during the past fiscal year. The functions of this committee include
review of management development, approval of compensation arrangements for
senior management and administration of the Company's stock compensation plans.
The Committee on Directors' Affairs is composed of directors Paul B. Burke,
Janet M. Dolan, Jack W. Eugster (Chair), John F. Grundhofer and S. Walter
Richey, all of whom are non-employee directors. This Committee did not meet
formally during the past fiscal year. The Committee's duties are to review the
organization of the Board and its committees, propose to the Board a slate of
directors for election by the stockholders at each Annual Meeting, propose
candidates to fill vacancies on the Board and approval of director compensation.
The Committee will consider nominees for director recommended by stockholders.
Recommendations should be addressed to the Secretary, Donaldson Company, Inc.,
P.O. Box 1299, Minneapolis, MN 55440. Any proposal by a stockholder for the
nomination of a candidate for director at the annual meeting for the election of
directors is required by the Company's Bylaws to be submitted in writing to the
Secretary and received at the principal executive offices of the Company not
less than 90 days nor more than 120 days prior to the anniversary date of the
immediately preceding annual meeting.
The Board of Directors has no reason to believe that any nominees will be
unavailable or unable to serve, but in the event any nominee is not a candidate
at the meeting, the persons named in the enclosed proxy intend to vote in favor
of the remaining nominees and of such other person, if any, as they may
determine.
3
<PAGE>
The table below and on the following page sets forth additional information
with respect to each nominee for election as a director and each other person
whose term of office as a director will continue after the meeting.
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- ---- -----------------------------------------------------------------------------
<S> <C>
FOR A TERM EXPIRING IN 2002:
F. Guillaume Bastiaens Vice Chairman of Cargill, Inc. (1997) and President, Food Sector of Cargill,
Age - 56 Inc. (Agribusiness). Previously, Executive Vice President of Cargill, Inc.
Director Since 1995
Janet M. Dolan Chief Executive Officer (1999) and President (1998). Previously Chief
Age - 50 Operating Officer (1998) and Executive Vice President of Tennant Company
Director Since 1996 (manufacturer of floor maintenance equipment and coating products). Also,
a director of William Mitchell College of Law.
S. Walter Richey Retired Chairman, President and Chief Executive Officer of Meritex, Inc.
Age - 63 and its predecessor corporation Space Center Company (owns and manages
Director Since 1991 business properties and distribution centers). Also, a director of U.S.
Bancorp and a member of the Board of Overseers of the Curtis L. Carlson
School of Management at the University of Minnesota.
DIRECTORS CONTINUING IN OFFICE
FOR A TERM EXPIRING IN 2001:
Paul B. Burke Chairman (1995), President and Chief Executive Officer of BMC Industries,
Age - 43 Inc. (manufacturer of precision imaged and optical products).
Director Since 1996
Kendrick B. Melrose Chairman and Chief Executive Officer of The Toro Company (manufacturer
Age - 59 of outdoor maintenance products). Also, a director of Jostens, Inc., SurModics,
Director since 1991 Inc. and The Valspar Corporation.
Stephen W. Sanger Chairman and Chief Executive Officer of General Mills, Inc. (1995) (consumer
Age - 53 products and services). Previously, an executive officer of various groups
Director since 1992 and divisions of General Mills, Inc. Also, a director of The Dayton Hudson
Corporation.
FOR A TERM EXPIRING IN 2000:
Jack W. Eugster Chairman, President and Chief Executive Officer of The Musicland Group,
Age - 54 Inc. (retail consumer products). Also, a director of Damark International,
Director since 1993 Inc., Jostens, Inc., MidAmerican Energy Company and Shopko Stores, Inc.
William G. Van Dyke Chairman and Chief Executive Officer (1996) and President (1994) of the
Age - 54 Company. Previously, Executive Vice President. Also, a director of Graco
Director since 1994 Inc.
John F. Grundhofer Chairman, and Chief Executive Officer of U.S. Bancorp (financial services).
Age - 60 Also, a director of Minnesota Mutual Life Insurance Company and Irvine
Director since 1997 Apartment Communities, Inc.
</TABLE>
4
<PAGE>
DIRECTOR COMPENSATION
Directors who are not employees receive a retainer fee of $20,000 annually
and are paid $1,000 for each Board or Committee meeting attended. Committee
Chairs receive an additional annual retainer of $2,500. Pursuant to the
Company's Compensation Plan for Non-Employee Directors, any non-employee
director may elect, prior to each year of their term, to defer all or part of
his or her director compensation received during the upcoming year. Each
participating director is entitled to a Company credit on the balance in his or
her deferral account at the ten-year Treasury Bond rate plus 2%. The deferral
election must also specify the manner for distribution of the deferral balance.
The 1991 Master Stock Compensation Plan, as amended (the "Plan"), provides
for non-employee directors to be credited with shares to a deferred stock
account in lieu of 30% of the annual retainer for services as a Director to be
rendered in the following service year. The Plan also allows a director to elect
to receive a credit of shares to a deferred stock account in lieu of all or part
of the remaining retainer and meeting fees. The directors also receive a credit
for dividend reinvestment shares. The Company contributes an amount equal to the
deferred stock accounts to a trust and the trust purchases shares of Donaldson
Common Stock. Each director is entitled to direct the trustee to vote all shares
allocated to the director's account in the trust. The Common Stock will be
distributed to each director following the director's retirement from the Board
pursuant to the director's deferral payment election. The trust assets remain
subject to the claims of the Company's creditors. The trust becomes irrevocable
in the event of a "Change in Control" as defined under the Plan.
The Company's Non-Qualified Stock Option Program for Non-employee Directors
provides for the automatic grant of a non-qualified stock option for 3,600
shares of Common Stock to each non-employee Director of the Company who is a
member of the Board on December 1 each year. The exercise price of such options
is the closing price of Common Stock in consolidated trading on the first
business day of December in the respective year. The options awarded prior to
December 1, 1998 are fully vested and have a term of ten years. The options
awarded on December 1, 1998 vest annually beginning on the first anniversary in
three equal installments and have a term of ten years. The option award was
modified beginning in 1998 to include a "reload option" granted at the time of
exercise of the original option for the number of shares equal to the shares
used in payment of the purchase price. The one-time reload option feature is
similar to that included in the option grants to officers.
Shares credited to deferred stock accounts to non-employee directors under
the 1991 Master Stock Compensation Plan in fiscal 1999, were as follows:
Bastiaens, 556 shares, Burke, 1,410 shares, Dolan, 1,372 shares, Eugster, 1,119
shares, Grundhofer, 1,219 shares, Melrose, 1,201 shares, Richey, 1,611 shares,
and Sanger, 1,696 shares.
5
<PAGE>
INDEPENDENT AUDITORS
Upon recommendation of its Audit Committee, the Board of Directors has
appointed Ernst & Young LLP as independent public accountants to audit the books
and accounts of the Company for the fiscal year ending July 31, 2000, such
appointment to continue at the pleasure of the Board of Directors and subject to
ratification by the stockholders. Ernst & Young LLP has audited the books and
accounts of the Company since 1951. Representatives of Ernst & Young LLP are
expected to be present at the meeting with the opportunity to make a statement
and to respond to appropriate questions. In the event this appointment is not
ratified, the Board will appoint other independent auditors for the subsequent
fiscal year.
The Board of Directors recommends that stockholders vote FOR ratification
of the appointment of Ernst & Young LLP as independent auditors for the fiscal
year ending July 31, 2000.
EXECUTIVE COMPENSATION
The following table sets forth as to each person who was at the end of
fiscal 1999, the Chief Executive Officer and the other four most-highly
compensated executive officers of the Company information concerning the cash
and noncash compensation for services rendered to the Company for each of the
last three fiscal years (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------------
ANNUAL COMPENSATION (1) AWARDS PAYOUTS
------------------------ --------------------------- --------------
SECURITIES
UNDERLYING
RESTRICTED STOCK
STOCK OPTIONS/SARS ALL OTHER
FISCAL AWARD(S) (SHARES) LTIP PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (5) (2) ($) (3) ($) (4)
- ----------------------------- -------- ------------ ----------- ------------ -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
WILLIAM G. VAN DYKE ......... 1999 539,615 678,000 0 78,000 0 29,208
Chairman, Chief 1998 483,846 606,000 0 78,000 301,219 27,373
Executive Officer and 1997 450,000 540,000 0 131,704 586,253 173,520
President
WILLIAM M. COOK ............. 1999 213,654 203,379 0 26,000 0 6,947
Senior Vice President, 1998 196,539 172,126 0 26,000 55,377 3,796
Commercial and Industrial 1997 178,154 85,260 0 43,484 101,772 46,214
JAMES R. GIERTZ ............. 1999 239,962 158,621 0 35,304 0 6,219
Senior Vice President and 1998 219,769 134,451 0 57,964 137,324 6,672
Chief Financial Officer 1997 199,808 151,639 0 61,360 854,911 61,582
NICKOLAS PRIADKA ............ 1999 224,654 121,795 0 27,000 0 5,985
Senior Vice President, 1998 207,154 140,697 0 42,631 110,124 5,803
OEM Engine Systems and 1997 187,808 133,739 0 61,400 207,984 56,340
Parts
LOWELL F. SCHWAB ............ 1999 200,962 129,204 0 24,000 0 5,782
Senior Vice President, 1998 183,462 151,782 0 24,000 93,020 5,477
Operations 1997 168,450 152,491 0 26,474 537,361 56,243
</TABLE>
- ------------------
(1) Includes any portion deferred under the Management Compensation Plan.
(2) Shares adjusted for stock splits.
(3) Earned under the Company's 1991 Master Stock Compensation Plan during the
three-year period ending in the fiscal year in which the payout is listed.
Payout is made in the form of the Company's common stock and delivered
during the following fiscal year.
(4) Amounts in this column for 1999 and 1998 represent the dollar value of share
allocations (i) under the Company's match for bonus and salary under the
Company's ESOP and 401k benefit plans; and
6
<PAGE>
(ii) under the Company's match for deferred bonus and salary and salary in
excess of the limits established by Section 415 of the Internal Revenue
Code contributed by the Company to an unqualified supplemental plan. The
amounts for fiscal 1999 are:
<TABLE>
<CAPTION>
SALARY DEFERRED SALARY
NAME AND BONUS MATCH AND BONUS MATCH EXCESS MATCH
----------------------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
William G. Van Dyke ......... $4,217 $ 0 $29,208
William M. Cook ............. 4,568 984 5,963
James R. Giertz ............. 4,536 0 6,219
Nickolas Priadka ............ 4,601 1,513 4,472
Lowell F. Schwab ............ 4,581 0 5,782
</TABLE>
1997 amounts represent the dollar value of share allocations under the
Company's ESOP and benefits in excess of the limits established by Section
415 of the Internal Revenue Code contributed by the Company to an
unqualified supplemental plan.
(5) Amounts in the Restricted Stock Award column represent the dollar value of
grants of restricted stock under the Company's 1991 Master Stock
Compensation Plan. Regular dividends are paid on the restricted shares. At
the end of fiscal 1999, the number and value of the aggregate restricted
stockholdings for the Named Officers were: William G. Van Dyke, 0, $0; James
R. Giertz, 25,000, $620,313; Nickolas Priadka, 8,400, $208,425; Lowell F.
Schwab, 8,400, $208,425; and William M. Cook, 0, $0. No restricted stock
awards were made to Executive Officers as a group and Non-Executive Officer
Employees as a Group.
OPTION/SARS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
--------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ANNUAL RAT
SECURITIES OPTIONS/SARS ASSUMED PRECIATIONES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE AP TERM (3) FOR OPTION
OPTIONS/SARS EMPLOYEES OR BASE EXPIRATION ------------------------------
NAME GRANTED (2) IN FISCAL YEAR PRICE/SH ($) DATE 0% ($) 5% ($) 10% ($)
- -------------------------- -------------- --------------- -------------- ----------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
WILLIAM G. VAN DYKE 73,400 15.7 20.00 12/03/08 0 924,384 2,343,245
4,600 1.0 20.75 12/31/08 0 60,104 152,359
WILLIAM M. COOK 26,000 5.6 20.00 12/03/08 0 327,439 830,032
JAMES R. GIERTZ 29,000 6.2 20.00 12/03/08 0 365,220 925,805
6,304(4) 1.4 19.00 12/21/05 0 48,186 112,081
NICKOLAS PRIADKA 25,500 5.5 20.00 12/03/08 0 321,142 814,070
1,500 .3 20.75 12/31/08 0 19,599 49,682
LOWELL F. SCHWAB 24,000 5.1 20.00 12/03/08 0 302,251 766,184
ALL EXECUTIVE OFFICERS
AS A GROUP 221,349 47.5
ALL NON-EXECUTIVE OFFICER
EMPLOYEES AS A GROUP 245,000 52.5
</TABLE>
- ------------------
(1) No stock appreciation rights ("SARs") have been granted.
(2) All grants (other than as noted in footnote(4)) during the period were
non-qualified stock options granted at the market value on date of grant for
a term of ten years, vesting immediately and were granted with the right to
use shares in lieu of the exercise price and to satisfy any tax withholding
obligations.
(3) These amounts represent certain assumed rates of appreciation over the full
term of the option. The value ultimately realized, if any, will depend on
the amount by which the market price of the Company's stock exceeds the
exercise price on date of sale.
7
<PAGE>
(4) These grants were made to individuals who exercised an option during fiscal
1999 and made payment of the purchase price using shares of previously owned
Company stock. This restoration or "reload" grant is for the number of
shares equal to the shares used in payment of the purchase price or withheld
for tax withholding. The option price is equal to the market value of the
Company's stock on the date of exercise and will expire on the same date as
the original option which was exercised. These options, which are the result
of such a restoration, do not contain the reload feature.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS/SARS
(2) AT FISCAL YEAR-END (2)(3)
SHARES VALUE ------------------------------- ------------------------------
ACQUIRED ON REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME EXERCISE (1) ($) (SHARES) (SHARES) ($) ($)
- ---- -------------- ----------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
WILLIAM G. VAN DYKE 76,080(4) 1,001,490 550,406 67,750 6,155,944 306,391
WILLIAM M. COOK 2,402(4) 14,862 104,615 22,333 839,865 99,020
JAMES R. GIERTZ 7,650 50,681 125,628 26,983 647,751 136,230
NICKOLAS PRIADKA 51,780(4) 794,872 124,881 23,150 959,224 102,303
LOWELL F. SCHWAB 0 0 88,458 19,650 755,220 79,397
</TABLE>
- ------------------
(1) The number of shares shown in this column is larger than the number of
shares actually acquired on exercise. The actual number of shares received
is reduced by the number of shares delivered in payment of the exercise
price and shares withheld to cover withholding taxes.
(2) No SARs were exercised in fiscal 1999.
(3) This value is based on the difference between the exercise price of such
options and the closing price of Company Common Stock as of fiscal year-end
1999.
(4) The officers elected under the Deferred Stock Option Gain Plan to defer
receipt of the shares to be acquired upon exercise. The officers receive a
credit of shares to a deferred stock account and also receive a credit for
dividend reinvestment shares.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE UNDER NON-STOCK
SHARES, UNITS OR OTHER PERIOD PRICE-BASED PLAN
OR OTHER UNTIL MATURATION ------------------------------------
NAME RIGHTS (1) OR PAYOUT THRESHOLD TARGET MAXIMUM
- ---- --------------- ------------------ ----------- -------- --------
<S> <C> <C> <C> <C> <C>
WILLIAM G. VAN DYKE 14,400 8/1/98 - 7/31/01 7,200 14,400 39,600
WILLIAM M. COOK 4,900 8/1/98 - 7/31/01 2,450 4,900 13,475
JAMES R. GIERTZ 5,400 8/1/98 - 7/31/01 2,700 5,400 14,850
NICKOLAS PRIADKA 5,100 8/1/98 - 7/31/01 2,550 5,100 14,025
LOWELL F. SCHWAB 4,500 8/1/98 - 7/31/01 2,250 4,500 12,375
</TABLE>
- ------------------
(1) Awards are of Performance Units, each of which represents the right to
receive one share of the Company's common stock. Awards are earned only if
the Company achieves the minimum Performance Objectives and the Award Value
will be based on a weighting of compound corporate net sales growth and
after-tax return on investment over the three year period. The amounts shown
in the table under the headings "Threshold", "Target" and "Maximum" are
amounts awarded at 50%, 100% and 275% of the targeted award. The award may
also be adjusted upward by 25% for consistency if earnings per share
increase in each of the three years in the period by at least 5%.
8
<PAGE>
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Human Resources Committee of the Board of Directors, consisting of five
independent, non-employee directors ("the Committee"), is responsible for
establishing the compensation programs for the Company's executive officers. The
objectives of the Company's executive compensation program are to:
o emphasize a pay-for-performance philosophy by placing significant portions
of pay at risk and requiring outstanding results for payment at the
threshold level;
o attract and retain the best executives available in our industry and have
their compensation levels keyed to a peer group of companies;
o motivate and reward executives responsible for attaining the financial and
strategic objectives essential to the Company's long-term success focusing
on earnings per share growth and continued growth in stockholder value; and
o align the interests of executives with those of the Company's stockholders
by providing a significant portion of compensation in the form of Company
common stock. Common stock ownership objectives have been established for
all executive officers ranging from five to ten times base salary.
BASE SALARIES. Base salaries for all executives are reviewed annually based
on performance and market conditions. A performance appraisal is required for
all executives of the Company. The Committee approves and/or determines the
annual base salary increases for all senior executives based on performance of
the executive and external market data. Our objective is that base salaries
should approximate the mid-point (average) of senior executives of manufacturing
companies of similar size in the United States. The Company uses nationally
known consultant surveys for external market data.
ANNUAL CASH INCENTIVE. Executive officers are eligible for target awards
under the annual incentive program that range up to 60% of base salary. The size
of the target award is determined by the executive officer's position and
competitive data for similar positions at the peer and cross-industry companies
as presented in the same nationally recognized surveys as are used for the base
salary. The Company sets aggressive performance goals and, in keeping with the
strong performance-based philosophy, the resulting awards decrease or increase
substantially if actual Company performance fails to meet or exceeds targeted
levels. Payments can range from 0% to 200% of the target awards. Executive
officers have up to 100% of their annual cash incentive opportunity linked to
achieving record Earnings Per Share (EPS).
Consequently, executive officers must obtain record EPS, thereby increasing
stockholder value, to receive a competitive annual cash incentive.
LONG-TERM INCENTIVE COMPENSATION. There was no payout under the long-term
incentive plan in 1999 based on the Company's failure to achieve the minimum
performance objectives for net sales growth. The volatility in the long-term
incentive plan payouts for the three years shown in the summary compensation
table is consistent with the at risk nature of the payouts and the pay for
performance philosophy. The Long-Term Performance Award program is based on
three-year compounded growth in net sales and an after-tax Return on Investment
that exceeds the Company's weighted average cost of capital. Under this program,
the Committee selected eligible executives and established an incentive
opportunity as a percentage of base salary. In order for a participant to
receive a payout, minimum performance must be attained. The Committee
occasionally grants restricted stock with a fixed restriction period, usually
five years, to insure retention of key executives. The Committee also believes
that significant stock option grants encourage the executive officers to own and
hold Donaldson stock and tie their long-term economic interests directly to
those of the stockholders. Stock options are typically granted annually. In
determining the number of shares covered by such options, the Committee takes
into account position levels, base salary, and other factors relevant to
individual performance but does not consider the amount and terms of options and
restricted stock already held by the executive.
Targets for the incentive portion of compensation are tied to financial
performance in the sixty-fifth percentile of the peer group.
STOCK OWNERSHIP. Ownership of Donaldson stock is expected of Donaldson
executives. The Committee believes that linking a significant portion of the
executive's current and potential net worth to the Company's success, as
reflected in the stock price, gives the executive a stake similar to the
stockholders. The Committee
9
<PAGE>
has established stock ownership guidelines for the Named Officers and certain
other executive officers, which encourage retention of shares obtained through
the exercise of options. The guidelines range from five to ten times base
salary. The goal of the Chief Executive Officer is ten times annual base salary.
Mr. Van Dyke currently exceeds this ownership goal.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. Mr. Van Dyke's fiscal 1999
base salary and incentive award were determined by the Committee in accordance
with the methodology described above.
BASE SALARY. Mr. Van Dyke's base salary for calendar 1999 was $565,000,
which is below the market mid-point for manufacturing companies of similar
size.
ANNUAL BONUS. Mr. Van Dyke's bonus award for fiscal 1999 was $678,000.
This annual bonus was earned under the annual incentive program based on
earning per share growth of $1.31, up 15% over the previous record earned
in fiscal 1998.
STOCK OPTIONS. Mr. Van Dyke received annual option grants in December
1998 of options to purchase 78,000 shares of stock.
LONG-TERM INCENTIVE PLAN PAYOUT. Mr. Van Dyke received no payout under the
Long-Term Incentive Plan in 1999 based on the Company's failure to achieve
the minimum performance objectives for net sales growth.
POLICY ON QUALIFYING COMPENSATION. The Company's policy is to preserve the
tax deduction for compensation paid to its Chief Executive Officer and other
senior executive officers. In accordance with this policy, in November 1994 the
stockholders approved the material terms of the performance goals for payment of
the cash bonus under the Company's Annual Cash Bonus Plan for Designated
Executives. The 1991 Master Stock Compensation Plan has been amended to limit
the number of shares that can be granted in any one year to any one individual
to further the policy of preserving the tax deduction for compensation paid to
executives.
CONCLUSION. The executive officer compensation program administered by the
Committee provides incentive to attain strong financial performance and an
alignment with stockholder interests. The Committee believes that the Company's
compensation program focuses the efforts of Company executive officers on the
continued achievement of growth and profitability for the benefit of the
Company's stockholders.
SUBMITTED BY THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS
Stephen W. Sanger, Chair
Paul B. Burke
Jack W. Eugster
John F. Grundhofer
Kendrick B. Melrose
PERFORMANCE GRAPHS
The following graphs compare the cumulative total stockholder return on the
Company's Common Stock for the last five fiscal years and nine fiscal years with
the cumulative total return of the Standard & Poor's 500 Stock Index and the
Standard & Poor's Index of Manufacturing Companies. The first graph assumes the
investment of $100 in the Company's Common Stock and each of the indexes at the
market close on fiscal year-end 1994 and the reinvestment of all dividends. The
second graph assumes the investment of $100 in the Company's Common Stock and
each of the indexes at the market close on fiscal year-end 1989 and the
reinvestment of all dividends. The Company believes the second graph is useful
in showing the cumulative total stockholder return over the ten-year period of
consecutive double-digit increases in earnings per share.
10
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[PLOT POINTS CHART]
FISCAL YEARS ENDED JULY 31
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Donaldson .................. $ 100.00 $ 110.45 $ 102.86 $ 172.07 $ 158.09 $ 213.75
S&P 500 .................... 100.00 126.11 147.00 223.65 266.78 320.68
S&P Manufacturing .......... 100.00 137.02 162.12 253.52 249.49 348.68
</TABLE>
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN
[PLOT POINTS CHART]
FISCAL YEARS ENDED JULY 31
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Donaldson ............ $ 100.00 $ 181.27 $ 209.85 $ 274.83 $ 341.32
S&P 500 .............. 100.00 106.50 120.09 135.45 147.27
S&P Manufacturing .... 100.00 109.34 115.50 120.57 139.40
</TABLE>
[WIDE TABLE CONTINUED]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Donaldson ............ $ 455.79 $ 503.42 $ 468.79 $ 784.24 $ 720.48 $ 974.16
S&P 500 .............. 154.87 195.31 227.67 346.38 413.16 496.62
S&P Manufacturing .... 162.16 222.19 262.92 411.13 404.60 565.45
</TABLE>
11
<PAGE>
PENSION BENEFITS
The Company maintains the Donaldson Company, Inc. Salaried Employees'
Pension Plan (the "Retirement Plan"), a defined benefit pension plan that
provides retirement benefits to eligible employees through a cash balance
benefit structure. Participants in the Retirement Plan accumulate benefits in a
hypothetical account balance through annual interest credits, and pay credits
that vary with age, service and pay. At retirement or termination of employment,
the vested account balance is payable to the participant in the form of an
immediate or deferred lump sum or actuarially equivalent annuity.
Under the cash balance benefit structure, account balances receive an
Interest Credit annually. The Interest Credit is defined as the current plan
year's Interest Crediting Rate times the account balance as of the beginning of
the plan year. The Interest Crediting Rate for a particular plan year is equal
to the average auctioned yield of one-year U.S. Treasury Bills during the month
of June preceding the plan year, plus one percent. The Interest Crediting Rate
is 5.89% for the 1999 plan year.
Additionally, Pay Credits are credited to the account balance at the end of
each plan year. The participant's Pay Credit Percentages are determined by the
participant's years of age and service with the Company and its affiliates as of
the end of each plan year. The participant's Base Pay Credit is equal to the
Base Pay Credit Percentage times total covered compensation during the plan year
("Pensionable Earnings"). The participant's Excess Pay Credit is equal to the
Excess Pay Credit Percentage times Pensionable Earnings in excess of the Social
Security taxable wage base. The following table displays the Pay Credit
Percentages for the sum of years of age and service shown:
<TABLE>
<CAPTION>
PAY CREDIT PERCENTAGES
----------------------
SUM OF YEARS OF AGE PLUS SERVICE BASE EXCESS
---------------------------------- --------- ---------
<S> <C> <C>
Less than 40 3.0% 3.0%
40 -- 49 4.0 4.0
50 -- 59 5.0 5.0
60 -- 69 6.5 5.0
70 or more 8.5 5.0
</TABLE>
As of August 1, 1999, the sum of years of age plus service for Messrs. Van
Dyke, Giertz, Priadka, Schwab and Cook were 80, 47, 82, 69 and 64, respectively.
The individuals named in the Summary Compensation Table are also eligible
for retirement benefits under the Donaldson Company, Inc. Excess Retirement Plan
(the "Excess Retirement Plan"). The Excess Retirement Plan is an unfunded,
non-qualified deferred compensation arrangement that primarily provides
retirement benefits that cannot be payable under the Retirement Plan because of
the maximum limitations imposed on qualified plans by the Code. The projections
below set forth the estimated annual benefit payable to each of the individuals
named in the Summary Compensation Table as a single life annuity at age 65 under
the Retirement and Excess Retirement Plans: Mr. Van Dyke, $532,397; Mr. Giertz,
$229,047; Mr. Priadka, $180,098; Mr. Schwab, $151,815; and Mr. Cook, $255,075.
These projections are based on the following assumptions: (1) employment until
age 65; (2) no increase in pensionable earnings after the 1998 plan year; (3)
interest credits at the actual rate of 5.89% during the 1999 plan year, and
6.00% thereafter; and (4) conversion to a single life annuity at normal
retirement age is based on an interest rate of 6.00% and the Unisex 1983 Group
Annuity Mortality table.
The individuals named in the Summary Compensation Table are also eligible
for retirement benefits under the Donaldson Company, Inc. Supplemental Executive
Retirement Plan (the "SERP"). The SERP has been designed to assure participants
a lump sum retirement benefit from all company funded retirement programs equal
to six times their average compensation (three highest consecutive years) upon
reaching age 62 with 20 years of service. However, this retirement benefit is
prorated for retirements with less than 20 years of service and further reduced
by 2% for each year retirement precedes age 62. In determining whether the SERP
must supplement the other retirement programs to reach this benefit target, the
Company will consider the lump sum value of the benefits described in the
previous paragraph and footnote (5) to the Summary Compensation Table, as well
as any vested pension benefits payable from prior employers, if any. Assuming
the SERP remains unchanged and employment continues to age 65 at current
compensation levels, no benefits are expected to be required from the SERP for
any of the participants.
12
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section
16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers to file initial reports of ownership
and reports of changes in ownership with the SEC and the New York Stock
Exchange. To the Company's knowledge, based on a review of copies of such forms
and written representations furnished to the Company during fiscal 1999, all
Section 16(a) filing requirements applicable to the Company's directors and
executive officers were satisfied.
CHANGE-IN-CONTROL ARRANGEMENTS
Each of the Named Officers has a severance agreement with the Company
designed to retain the executive and provide for continuity of management in the
event of an actual or threatened change of control in the Company (as defined in
the agreements). The agreements provide that in the event of a change of
control, each key employee would have specific rights and receive certain
benefits if, within three years after a change in control, the employee is
terminated without cause or the employee terminates voluntarily under
"constructive involuntary" circumstances as defined in the agreement. In such
circumstance the employee will receive a severance payment equal to three times
the employee's annual average compensation calculated over the five years
preceding such termination as well as continued health, disability and life
insurance for three years after termination. The 1980 and 1991 Master Stock
Compensation Plans, the supplementary retirement benefit plan and deferred
compensation arrangements also provide for immediate vesting or payment in the
event of termination under circumstances of a change in control.
2000 STOCKHOLDER PROPOSALS
Any stockholder wishing to include a proposal in the Company's Proxy
Statement for its 2000 annual meeting of stockholders must submit such proposal
for consideration in writing to the Secretary of the Company at the address
indicated on the first page of this Proxy Statement no later than June 16, 2000.
Under the Company's Bylaws, a shareholder proposal not included in the Company's
Proxy Statement for its 2000 annual meeting of stockholders is untimely and may
not be presented in any manner at the 2000 annual meeting of stockholders unless
the stockholder wishing to make such proposal follows certain specified notice
procedures set forth in the Company's Bylaws, including delivering notice of
such proposal in writing to the Secretary of the Company at the address
indicated on the first page of this Proxy Statement no earlier than July 21,
2000 and no later than August 20, 2000.
OTHER MATTERS
The Company is not aware of any matter, other than as stated above, which
will or may properly be presented for action at the meeting. If any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed form of proxy to vote the shares represented by such
proxies in accordance with their best judgment.
By Order of the Board of Directors
/s/ Normac C. Linnell
Norman C. Linnell
SECRETARY
October 13, 1999
13
<PAGE>
EXHIBIT A
AUDIT COMMITTEE CHARTER
MISSION STATEMENT
The audit committee will assist the board of directors in fulfilling its
oversight responsibilities. The audit committee will review the financial
reporting process, the system of internal control, the audit process and the
company's process for monitoring compliance with laws, regulations and the
company's code of conduct. In performing its duties, the committee will maintain
effective working relationships with the board of directors, management, and the
internal and external auditors.
ORGANIZATION
The audit committee will be organized consistent with the following
significant parameters:
SIZE OF THE COMMITTEE: The audit committee will have no less than three
and no more than six members.
QUALIFICATIONS: Committee members must be "Independent Directors" of the
company. (Members of the audit committee will be considered independent if they
have no relationship to the corporation that may interfere with the exercise of
their independence from management and the corporation.) In addition, each
committee member must be "Financially Literate" or must achieve this status
through training within six months of being appointed to the committee (for
these purposes, "Financial Literacy" is the ability to read and understand
fundamental financial statements, including the balance sheet, income statement
and cash flow statement).
FREQUENCY OF MEETINGS: The committee will have three regularly scheduled
meetings each fiscal year, in September, November and May. In addition, the
committee will meet at other times if deemed necessary to completely discharge
its duties and responsibilities as outlined in this charter.
APPOINTMENT OF MEMBERS AND CHAIRPERSON: Each committee member will be
selected by the Chairman of the Board of Directors and will serve a term of one
year. Committee members can serve successive one-year terms without limitation.
The Chairperson of the Audit Committee will be selected by the Chairman of the
Board of Directors and will serve in that capacity for one year. The Chairperson
must have academic training in accounting or current or past experience in
positions of senior financial management (for example, currently or previously
held the position of Chief Financial Officer, Chief Executive Officer or
Chairman of a corporation). The Chairperson can serve successive terms in this
capacity without limitation.
ROLES AND RESPONSIBILITIES
A broad outline of the roles and responsibilities of the audit committee is
presented below.
INTERNAL CONTROL:
1. Evaluate whether senior management has established and appropriately
reinforced the importance of internal control within the organization,
2. Evaluate the scope, effectiveness and significant findings of the
self-audit process for North American operations,
3. Review the internal auditor's report on the results of the annual self
audit survey,
4. Review the internal auditor's report and significant findings for the
company's international operations,
5. Evaluate whether recommendations for improved internal control are
effectively implemented by management.
FINANCIAL REPORTING:
1. Annually review the significant risks the company is exposed to and
evaluate management's plan to manage these uncertainties,
2. Review and evaluate management's interpretation and implementation of
mandated changes to accounting and reporting requirements,
A-1
<PAGE>
3. Review the annual financial statements for accuracy and completeness,
4. Evaluate the accounting treatment of unusual or non-recurring
transactions such as restructuring charges and acquisitions,
5. Evaluate significant income statement and balance sheet items which
require management judgement,
6. Review and approve the 10K, including the Management Discussion and
Analysis (MD&A), before public release,
7. Review and approve the process for preparing interim, unaudited
(quarterly) financial statements.
COMPLIANCE WITH LAWS, REGULATIONS AND COMPANY POLICIES:
1. Review the effectiveness of the system for monitoring compliance with
laws and regulations,
2. Review the significant findings from the annual self audit survey of
compliance matters,
3. Ensure that the company's compliance manual, code of conduct and corporate
policy statements are kept up to date and are accessible to and usable by
the entire organization.
RELATIONSHIP WITH EXTERNAL AUDITOR:
1. Recommend the external auditor appointment to the Board of Directors,
2. Review and approve the scope of the external audit to be performed each
fiscal year,
3. Confirm the independence of the external auditor,
4. Meet with the external auditors to review the accuracy, completeness and
overall quality of the annual financial statements.
REPORTING REQUIREMENTS
The audit committee Chairperson will update the full Board of Directors
regarding the significant items of discussion at each committee meeting.
Additional reports on matters of special interest will be submitted to the Board
of Directors as appropriate. In addition to Board of Director communication, the
following information will be reported to the shareholders in the annual proxy
statement: (1) confirmation that the company has a formal, documented audit
committee charter, (2) confirmation that the audit committee satisfied its
obligations under the charter in the prior year, (3) the full text of the audit
committee charter at least once every three years and after any significant
modification is approved by the Board of Directors.
A-2
<PAGE>
DONALDSON COMPANY, INC.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 19, 1999
10:00 A.M., CENTRAL TIME
THE CONFERENCE CENTER AT ATRIUM CENTER
3105 E. 80TH STREET
BLOOMINGTON, MINNESOTA
- --------------------------------------------------------------------------------
[DONALDSON LOGO] DONALDSON COMPANY, INC. PROXY
- --------------------------------------------------------------------------------
The undersigned appoints WILLIAM G. VAN DYKE and NORMAN C. LINNELL, and each of
them, as Proxies, each with the power to appoint his substitute, to represent
and vote, as designated below, all shares of the undersigned at the 1999 Annual
Meeting of Stockholders of Donaldson Company, Inc. at The Conference Center at
Atrium Center, 3105 E. 80th Street, Bloomington, Minnesota, at 10:00 a.m.,
Central Time, on Friday, November 19, 1999, and at any adjournment thereof.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the Meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL. THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS, DONALDSON COMPANY, INC.
(CONTINUED, AND TO BE SIGNED AND DATED ON OTHER SIDE)
<PAGE>
----------------------------
COMPANY #
CONTROL #
----------------------------
VOTE BY TELEPHONE
QUICK --- EASY --- IMMEDIATE
CALL TOLL FREE --- ON A TOUCH TONE TELEPHONE
1-800-240-6326 -- ANYTIME
Your telephone vote authorizes the named proxies to vote your shares in the
same manner as if you marked, dated, signed and returned your proxy card. The
deadline for telephone voting is noon (ET), November 18, 1999.
AUTOMATED TELEPHONE VOTING INSTRUCTIONS
1. Using a TOUCH-TONE telephone, dial 1-800-240-6326. Please make sure you stay
on the line until you receive a confirmation of your vote.
2. When prompted, enter the 3-digit Company Number located in the box on the
upper right hand corner of the proxy card.
3. When prompted, enter your 7-digit numeric Control Number that follows the
Company Number.
OPTION #1: To vote as the Board of Directors recommends on ALL proposals:
Press "1" When asked, please confirm your vote by pressing 1 --
THANK YOU FOR VOTING.
OPTION #2: If you choose to vote on each proposal separately: Press "0" You
will hear these instructions:
Proposal 1: To vote FOR ALL nominees, press "1"; to WITHHOLD FOR
ALL nominees, press "9"; to WITHHOLD FOR AN
INDIVIDUAL nominee, press "0" and listen to the
instructions.
Proposal 2: To vote FOR, press "1"; AGAINST, press "9"; ABSTAIN,
press "0"
When asked, please confirm your vote by pressing
"1" -- THANK YOU FOR VOTING.
IF YOU VOTE BY TELEPHONE, DO NOT MAIL BACK YOUR PROXY
PLEASE DETACH HERE
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------- -------
THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR:
1. Election of directors: 01 F. GUILLAUME BASTIAENS 03 S. WALTER RICHEY [ ] Vote FOR [ ] Vote WITHHELD
02 JANET M. DOLAN all nominees from all nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), ----------------------------------------------------
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX TO THE RIGHT.
----------------------------------------------------
2. Ratify appointment of Ernst & Young LLP as independent auditors. [ ]For [ ] Against [ ] Abstain
Address Change? Mark Box [ ]
Indicate changes below:
Date
----------------------------------
----------------------------------------------------
----------------------------------------------------
PLEASE DATE AND SIGN ABOVE exactly as name appears,
indicating, if appropriate, official position or
representative capacity. If stock is held in joint
tenancy, each joint owner should sign.
- ------- -------
</TABLE>
<PAGE>
[LOGO] DONALDSON(R)
DONALDSON COMPANY, INC.
ANNUAL MEETING -- NOVEMBER 19, 1999
The undersigned appoints WILLIAM G. VAN DYKE and NORMAN C. LINNELL, and each of
them, as Proxies, each with the power to appoint his substitute, to represent
and vote, as designated below, all shares of the undersigned at the 1999 Annual
Meeting of Stockholders of Donaldson Company, Inc. at The Conference Center at
Atrium Center, 3105 E. 80th Street, Bloomington, Minnesota, at 10:00 a.m.,
Central Time, on Friday, November 19, 1999, and at any adjournment thereof.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the Meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL. THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS, DONALDSON COMPANY, INC.
(CONTINUED, AND TO BE SIGNED AND DATED ON OTHER SIDE)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR:
1. ELECTION OF DIRECTORS.
Nominees: (01) F. GUILLAUME BASTIAENS, (02) JANET M. DOLAN,
(03) S. WALTER RICHEY
[ ] VOTE FOR all nominees [ ] WITHHOLD VOTE from all nominees
To withhold authority to vote for any __________________________________
nominee(s), write the number(s) of the | |
nominee(s) in the box to the right. |__________________________________|
2. Ratify appointment of Ernst & Young LLP
as independent auditors. [ ] For [ ] Against [ ] Abstain
Date _________________________, 1999
__________________________________
| |
| |
|__________________________________|
PLEASE DATE AND SIGN ABOVE exactly
as name appears, indicating, if
appropriate, official position or
representative capacity. If stock is
held in joint tenancy, each joint
owner should sign.
