<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 14a-11(c) or 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
Dover Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
LOGO
------------------------------
Notice Of Annual Meeting Of Stockholders
------------------------------
March 14, 1997
TO THE STOCKHOLDERS:
Please take notice that the Annual Meeting of Stockholders of DOVER
CORPORATION will be held at the 3rd Floor Executive Conference Room, Wilmington
Trust Company, 1100 North Market Street, Rodney Square North, Wilmington,
Delaware 19801, on April 22, 1997, at 10:00 A.M., for the following purposes:
1. To elect ten directors; and
2. To transact such other business as may properly come before the meeting.
Only holders of record of the outstanding common stock at the close of
business on February 28, 1997 are entitled to notice of and to vote at the
meeting or any adjournments thereof.
By authority of the Board of Directors,
ROBERT G. KUHBACH
Secretary
STOCKHOLDERS WHO DO NOT PLAN TO ATTEND THE MEETING ARE REQUESTED TO SIGN
AND DATE THE ENCLOSED PROXY AS SOON AS POSSIBLE AND MAIL IT IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
DOVER CORPORATION
PROXY STATEMENT
GENERAL
This statement is furnished to the stockholders of Dover Corporation
(hereinafter called the "Company" or "Dover"), whose principal executive offices
are at 280 Park Avenue, New York, NY 10017, in connection with the solicitation
of proxies by the Board of Directors for use at the Annual Meeting of
Stockholders (the "Meeting") to be held on April 22, 1997 or any adjournments
thereof, for the purposes set forth in the notice of meeting. Dover will pay the
reasonable and actual costs of soliciting proxies, but no amount will be paid to
any officer or employee of Dover or its subsidiaries as compensation for
soliciting proxies. In addition to solicitation by mail, Dover has retained
Morrow & Co. to solicit brokerage houses and other custodians, nominees or
fiduciaries and to send proxies and proxy material to the beneficial owners of
such shares, at a cost not to exceed $12,000. The approximate date on which this
statement and the proxy form are to be first sent to the stockholders will be
March 14, 1997.
As of the close of business on February 28, 1997, the record date for
voting, Dover had outstanding 112,707,541 shares of common stock. Each share of
common stock is entitled to one vote on all matters. To the best of Dover's
knowledge, no stockholder owns beneficially as much as 5% of the outstanding
common stock other than Magalen O. Bryant, Post Office Box 247, Middleburg, VA
22117, who owns 6,092,204 shares (5.4%) including 597,876 shares held in a trust
in which she is a co-trustee sharing voting and investment powers and in which
she disclaims any beneficial interest.
DOVER WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED HEREIN, ON THE
WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF DOVER'S 1996 ANNUAL REPORT ON FORM
10-K INCLUDING THE SCHEDULES THERETO, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. A REQUEST THEREFOR SHOULD BE DIRECTED TO THE CORPORATE SECRETARY AT
DOVER'S OFFICE, 280 PARK AVENUE, NEW YORK, NY 10017.
The shares covered by each proxy will be voted for the election of the ten
(10) nominees or their substitutes as indicated below, unless directed otherwise
in the proxy in which case the shares will be voted as directed. The proxy also
grants discretionary authority to the proxies in connection with other matters
that may properly come before the meeting.
Abstentions and broker non-votes will be included in determining whether a
quorum exists at the Meeting. Approval of each matter specified in the notice of
meeting requires the affirmative vote of a majority, or, in the case of the
election of directors, a plurality, of shares of common stock present in person
or by proxy at the Meeting and entitled to vote thereon. Stockholders may not
cumulate their votes. In determining whether a proposal specified in the notice
of meeting has received the requisite number of affirmative votes, abstentions
and broker non-votes will have the same effect as votes against the proposal,
except with respect to the election of directors where abstentions and broker
nonvotes will result in the respective nominees receiving fewer votes but will
have no effect on the outcome of the vote.
A person giving a proxy may revoke it at any time before it is exercised by
written notice to the Secretary of Dover at the address referred to above or by
attending the Meeting and requesting in writing a return of the proxy.
1
<PAGE> 4
SECURITY OWNERSHIP
The following table provides information as of February 28, 1997, as
reported to the Company by the persons and members of the group listed, as to
the number of shares and the percentage of Dover's common stock beneficially
owned by: (i) each Director and nominee for Director, (ii) each executive
officer listed in the compensation table and (iii) all Directors, nominees and
executive officers of Dover as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES(1) PERCENTAGE
------------------- ----------
<S> <C> <C>
David H. Benson........................................ 2,700(2) *
Magalen O. Bryant...................................... 5,494,328(3) 5.4
597,876(4)
Lewis E. Burns......................................... 172,889 *
Jean-Pierre M. Ergas................................... 10,700 *
Roderick J. Fleming.................................... 1,700
John F. Fort........................................... 49,700 *
Rudolf J. Herrmann..................................... 30,267 *
James L. Koley......................................... 11,700(5) *
John F. McNiff......................................... 171,654(6) *
Anthony J. Ormsby...................................... 58,700(7) *
John E. Pomeroy........................................ 97,880 *
Thomas L. Reece........................................ 190,565(8) *
Gary L. Roubos......................................... 319,679(9) *
Jerry W. Yochum........................................ 38,497 *
Directors and Officers as a Group...................... 7,583,243 6.2
</TABLE>
* Less than one percent.
- ---------------
(1) Includes shares which are (a) owned by officers in the Company's Retirement
Savings Plan, totaling 69,948 shares and (b) subject to options exercisable
within 60 days for the following person(s): Mr. Burns, 95,327 shares; Mr.
Herrmann, 16,648 shares; Mr. McNiff, 118,426 shares; Mr. Pomeroy, 67,887
shares; Mr. Reece, 75,356 shares; Mr. Roubos, 59,285 shares; Mr. Yochum,
26,098 shares; and all directors and officers as a group, 605,366 shares.
(2) Includes 500 shares held by his spouse.
(3) Includes 152,480 shares held by a corporation over which she has control.
(4) Held in a trust of which she is a co-trustee sharing voting and investment
powers and in which she disclaims any beneficial interest.
(5) Includes 5,000 shares held in various retirement trusts for Mr. Koley and
his spouse and 2,000 shares held by a retirement plan as to which Mr. Koley
is a co-trustee and beneficiary.
(6) Includes 600 shares held as custodian for a minor.
(7) Includes 50,000 shares in a personal holding company as to which he
disclaims any beneficial interest.
(8) Includes 37,705 shares held by his spouse.
(9) Includes 62,924 shares held by his spouse and 63,497 shares held by a
limited liability company as to which he disclaims any beneficial interest.
2
<PAGE> 5
1. ELECTION OF DIRECTORS
The proxies will vote the shares covered by a proxy for the election as
directors of the ten (10) nominees listed below unless directed otherwise in the
proxy, in which case the shares will be voted as directed. If any such nominee
for election is not for any reason a candidate for election at the meeting, an
event which management does not anticipate, the proxies will be voted for a
substitute nominee or nominees as may be designated by the Board of Directors
and for the others named below. All the nominees are presently directors. Each
director elected at the annual meeting will serve until the election and
qualification of his successor.
Directors will be elected by a plurality of the votes cast. Only votes cast
for a nominee will be counted, except that the accompanying proxy will be voted
for the nominees in the absence of instructions to the contrary.
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE FOR PAST FIVE YEARS, BECAME
NAME AND AGE POSITIONS WITH DOVER, AND OTHER DIRECTORSHIPS DIRECTOR
- ---------------------------- ------------------------------------------------------ ----------
<S> <C> <C>
David H. Benson............. Non-Executive Director and formerly Vice Chairman of 1995
59 Kleinwort-Benson Group Plc.; Chairman, Kleinwort
Charter Investment Trust Plc. (financial management);
Director of The Rouse Company (real estate
development); Director of Harrow Corporation
(industrial manufacturing); Non-Executive Director of
British Gas Plc. and Marshall Cavendish Ltd.; Trustee
of The Charities Official Investment Fund and The
Pilot Funds (financial management).
Magalen O. Bryant........... Director of Carlisle Companies Incorporated and 1979
68 O'Sullivan Corp. (industrial manufacturing).
Jean-Pierre M. Ergas........ Executive Vice President, Europe, Alcan Aluminum, Ltd. 1994
57 (aluminum manufacturer); previously Chairman and Chief
Executive Officer of American National Can Company
(beverage can manufacturer); Director of ABC Rail
Products Corporation (rail equipment manufacturer);
and Brockway Standard Holdings Corporation (container
manufacturer).
Roderick J. Fleming......... Director, Robert Fleming Holdings Ltd. (financial 1995
43 management); previously International Portfolio
Director (through November 1991), Director, Capital
Markets (through July 1993), and Director of Corporate
Finance UK (through April 1994) at Robert Fleming;
Director of Aurora Exploration and Development
Corporation Ltd. (natural resources); Updown
Investment Company Ltd. (financial management); and
West Rand Consolidated Mines Limited (natural
resources).
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
YEAR FIRST
BUSINESS EXPERIENCE FOR PAST FIVE YEARS, BECAME
NAME AND AGE POSITIONS WITH DOVER, AND OTHER DIRECTORSHIPS DIRECTOR
- ---------------------------- ------------------------------------------------------ ----------
<S> <C> <C>
John F. Fort................ Director of Tyco International Ltd. (fire protection 1989
55 systems and industrial products) and formerly Chairman
(through January 1993) and Chief Executive Officer
(through July 1992); Director Roper Industries
(industrial products).
James L. Koley.............. Chairman, Koley, Jessen, Daubman & Rupiper, P.C. (law 1989
66 firm); Chairman of the Board of Directors of Arts-Way
Manufacturing Co., Inc. (agricultural manufacturing).
John F. McNiff.............. Vice President-Finance of Dover; Director, The Allen 1996
54 Group (telecommunications products); and The Haven
Fund (financial management).
Anthony J. Ormsby........... Private investor. 1971
70
Thomas L. Reece............. President (since May 1993) and Chief Executive Officer 1993
54 (since May 1994) of Dover; prior thereto Vice
President of Dover and President of Dover Resources,
Inc.
Gary L. Roubos.............. Chairman of the Board of Dover; previously Chief 1976
60 Executive Officer (through May 1994) and President
(through May 1993) of Dover for more than five years;
Director of Bell & Howell Company (information
management); Omnicom Group, Inc. (advertising); and
The Treasurers Fund (financial management).
</TABLE>
During 1996, the Board of Directors held five meetings. The Board has three
standing committees, namely an Audit Committee, a Compensation Committee and an
Executive Committee.
The Audit Committee is composed of four directors who are not employees of
the Company. The functions of the Audit Committee consist of annually
recommending to the Board of Directors the appointment of the independent
auditors; reviewing with management and such auditors the audit plan and results
of the auditing engagement; and reviewing management's program for ensuring the
adequacy of Dover's system of internal accounting controls. In 1996, the Audit
Committee held two meetings. Members of the Audit Committee are Anthony J.
Ormsby (Chairman), David H. Benson, Roderick J. Fleming and James L. Koley.
The Compensation Committee is composed of three directors who are not
employees of the Company. It approves compensation for corporate executive
officers, grants, awards and payouts under the stock option plan and performance
program and minor compensation plan changes. In 1996, the Compensation Committee
held one meeting. Its members are John F. Fort (Chairman), Magalen O. Bryant and
Jean-Pierre M. Ergas.
4
<PAGE> 7
The Executive Committee is composed of six directors. The Executive
Committee is generally empowered to act unanimously on behalf of the Board and
meets or otherwise takes action on an as needed basis between the regularly
scheduled quarterly Board meetings. The Executive Committee held no meetings
during 1996. Members of the Executive Committee are Gary L. Roubos (Chairman),
Magalen O. Bryant, John F. Fort, James L. Koley, Anthony J. Ormsby and Thomas L.
Reece.
DIRECTORS' COMPENSATION
Management directors receive no compensation for services as a director or
as a member of any Committee. Effective January 1, 1996, the Company adopted the
Dover 1996 Non-Employee Directors' Stock Compensation Plan (the "Directors'
Plan"). Under the Directors' Plan, non-employee directors are granted 1,000
shares of the Company's Common Stock per year as their primary compensation for
serving as directors. If any director serves for less than a full calendar year,
the number of shares to be granted to that director for the year will be
adjusted pro rata, based on the number of days served. For 1996, each
non-employee director received 1,000 shares and received a fee of $2,000 for
serving on any of the Board Committees. Each of the non-executive directors also
received $1,500 for each Board or Committee meeting attended.
James L. Koley is Chairman of Koley, Jessen, Daubman & Rupiper, P.C., a
Nebraska law firm which has performed legal services on behalf of Dover.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table below shows all remuneration paid by Dover
and its subsidiaries on an accrual basis to the Chief Executive Officer and the
four other most highly paid executive officers for services in all capacities
for each of the three calendar years ended December 31, 1996.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------------
AWARDS PAYOUTS
---------- ----------
ANNUAL SECURITIES LONG-TERM
COMPENSATION(1)(2) UNDERLYING INCENTIVE ALL
NAME AND ------------------------ OPTIONS PLAN OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (#)(3) PAYOUTS COMPENSATION(4)
- -------------------------------------- ---- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Thomas L. Reece....................... 1996 $780,000 $850,000 50,029 $ 855,168 $ 12,391
CEO of Dover since May 1994; 1995 650,000 650,000 60,794 764,541 7,392
Director and President of Dover 1994 450,000 400,000 18,280 209,304 25,693
since May 1993
Lewis E. Burns........................ 1996 470,000 320,000 14,991 949,939 66,896
Vice President of Dover; 1995 450,000 310,000 21,788 670,320 54,800
Director and President of Dover 1994 405,000 235,000 14,300 390,947 42,200
Industries, Inc.
Rudolf J. Herrmann.................... 1996 425,000 290,000 12,589 416,813 7,392
Vice President of Dover; 1995 400,000 230,000 19,880 274,968 7,392
Director and President of Dover 1994 325,000 225,000 10,060 232,064 7,392
Resources, Inc.
[table continues on following page]
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS PAYOUTS
SECURITIES LONG-TERM
ANNUAL UNDERLYING INCENTIVE ALL
NAME AND COMPENSATION(1)(2) OPTIONS PLAN OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (#)(3) PAYOUTS COMPENSATION(4)
- -------------------------------------- ---- -------- -------- ------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
John E. Pomeroy....................... 1996 450,000 325,000 14,703 1,056,957 73,862
Vice President of Dover; 1995 390,000 315,000 19,084 986,076 63,696
Director and President of Dover 1994 340,000 210,000 11,960 432,818 35,292
Technologies, Inc.
Jerry W. Yochum....................... 1996 430,000 285,000 12,877 708,923 22,960
Vice President of Dover; 1995 395,000 240,000 19,562 458,790 12,962
Director and President 1994 365,000 220,000 12,860 445,814 58,818
of Dover Diversified, Inc.
</TABLE>
- ---------------
(1) The bonus amount is determined as described in the Compensation Committee
Report on page 11 of this proxy statement. Cash bonuses for the calendar
years shown have been listed in the year earned, and were generally paid in
February of the following calendar year.
(2) Perquisites and other personal benefits paid to each officer in each
instance aggregated less than $50,000 or 10% of total salary plus bonus, and
accordingly are omitted from the table.
(3) Retroactively adjusted for the 2 for 1 stock split in September 1995.
(4) Represents Company contributions to the Dover Retirement Savings Plan,
reportable annual increase in the Company's obligation to participants under
the Executive Deferred Income Plan or similar accrual, Company payments to
other defined contribution plans and Company paid life insurance premiums on
split-dollar term life insurance. For 1996, these amounts are detailed as
follows:
<TABLE>
<CAPTION>
OTHER
DOVER EXECUTIVE EXECUTIVE
SAVINGS DEFERRED RETIREMENT INSURANCE
NAME PLAN INCOME PLAN PLANS PREMIUMS TOTAL
-------------------------------------- ------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
T. L. Reece........................... $ 7,392 $ 4,949 $ -- $ -- $ 12,391
L. E. Burns........................... 3,696 -- 359,000 -- 362,696
R. J. Herrmann........................ 7,392 -- -- -- 7,392
J. E. Pomeroy......................... 3,696 4,166 66,000 -- 73,862
J. W. Yochum.......................... 7,392 9,998 -- 5,570 22,960
</TABLE>
6
<PAGE> 9
STOCK OPTION PLAN AND CASH PERFORMANCE PROGRAM
The Company has an Incentive Stock Option Plan and Cash Performance
Program, adopted in 1995 (replacing a similar plan which expired in January
1995), which provides for stock options coordinated with performance awards. At
the time of grant, allocations are made such that of each combined award,
greater emphasis is given to cash performance awards at the operating level, and
greater emphasis is given to stock options at the corporate level. Information
on current grants and cash performance awards is given below. For payouts on
prior awards under the old program see the Summary Compensation Table on page 5.
OPTION GRANTS IN LAST CALENDAR YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#)(1) CALENDAR YEAR ($/SHARE) DATE VALUE($)(2)
- -------------------------------- ------------- ------------- --------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Thomas L. Reece................. 50,029 11 $ 47.06 February 8, 2006 $ 684,397
Lewis E. Burns.................. 14,991 3 47.06 February 8, 2006 205,077
Rudolf J. Herrmann.............. 12,589 3 47.06 February 8, 2006 172,218
John E. Pomeroy................. 14,703 3 47.06 February 8, 2006 201,137
Jerry W. Yochum................. 12,877 3 47.06 February 8, 2006 176,157
</TABLE>
- ---------------
(1) The options become exercisable on February 8, 1999.
(2) The Black-Scholes model used to calculate the hypothetical values at date of
grant considers the following factors to estimate the option's present
value: the stock's historic volatility calculated using the average daily
market price of the Company's common stock over a suitable current period,
the expected life of the option, risk-free interest rates and the stock's
expected dividend yield. The assumptions used in the model for this
valuation were: average stock price volatility .259021%; expected life 6
years; risk-free interest rate of 6.03%; and an expected dividend yield of
1.3%. This resulted in a discounted per share value of $20.18 (43% of the
option price). The Black-Scholes model assumes that an option is not
cancelable and that it can be sold at any time for cash. Since those
assumptions are not applicable here, the Company has reduced the above grant
date present values by 22% based upon its historical cancellation rates and
another 10% based upon the Company's expectation that, except in cases of
unusual need, shares acquired through the exercise of options are to be held
by participants for the duration of their employment with Dover. This
resulted in a final grant date present value of $13.68 per share.
7
<PAGE> 10
AGGREGATED OPTION EXERCISES IN LAST CALENDAR YEAR AND YEAR-END OPTION VALUES
(AS ADJUSTED FOR THE 2 FOR 1 STOCK SPLIT IN 1995)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE(1) OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT YEAR END(#) AT YEAR END($)
ACQUIRED ON VALUE(1) --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas L. Reece............. 38,112 $ 1,245,158 57,075 129,103 $ 1,752,640 $ 1,892,525
Lewis E. Burns.............. -- -- 81,027 51,079 1,878,531 828,937
Rudolf J. Herrmann.......... 3,551 102,601 9,769 42,529 207,432 690,604
John E. Pomeroy............. 18,841 682,193 55,927 45,747 1,452,224 719,741
Jerry W. Yochum............. -- -- 13,238 45,299 365,898 724,680
</TABLE>
- ---------------
(1) Calculated by determining the difference between the exercise price and the
average of high and low market price of Dover common stock (as reported on
the New York Stock Exchange-Composite Transactions) for the exercise dates
or December 31, 1996, as the case may be.
LONG-TERM INCENTIVE PLAN AWARDS FOR CALENDAR YEAR 1997
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE
OTHER PERIOD PAYOUTS UNDER
FEBRUARY 1996 UNTIL MATURATION NON-STOCK PRICE
NAME AWARD OR PAYOUT BASED PLANS(1)
- ------------------------------------------------ ------------- ---------------- ----------------
<S> <C> <C> <C>
Thomas L. Reece................................. $ 355,775 1997-1999 $355,775
Lewis E. Burns.................................. 358,628 1997-1999 358,628
Rudolf J. Herrmann.............................. 329,670 1997-1999 329,670
John E. Pomeroy................................. 363,083 1997-1999 363,083
Jerry W. Yochum................................. 327,443 1997-1999 327,443
</TABLE>
- ---------------
(1) The actual cash payout at the end of the three year performance measurement
period will be equal to the award amount multiplied by a percentage which is
derived from a performance matrix, or table, which uses two performance
parameters, namely: (1) (a) real (inflation adjusted) growth in earnings per
share, or (b) real growth in operating earnings; and (2) (a) return on
equity, or (b) return on investment (ROI). Parameters (1) (a) and (2) (a)
apply to Mr. Reece and other Corporate officers and parameters (1) (b) and
(2) (b) apply to the other four listed officers and those participating
officers at independent subsidiaries and operating companies.
8
<PAGE> 11
There is no payout if growth in earnings is not achieved; there is no
payout if return on equity or ROI is less than 10 percent. Moreover, the
earnings in the base year (the year preceding the award year) from which
earnings growth is measured may not be less than an amount equal to 10 percent
of equity or 10 percent of ROI.
There is a $2 million limit on the amount of any annual individual payout,
and the aggregate payout at each appropriate business unit may not exceed an
amount equal to 20% of average annual nominal earnings increase over the three
year performance period. Beginning with 1998 earned payouts, if any, at the
operating company level, the 20% limitation will be increased to 30%. The same
plan is applied to three separate "Business Units" as follows: (a) the entire
company for corporate officers, (b) the market segment subsidiaries for their
respective officers, and (c) operating businesses for their respective officers.
Given the foregoing, the range of payouts is large. For the past three
years, the amounts shown in the Payout Column of the Summary Compensation Table
represent percentage payouts from zero to 1,170% of the award given three years
prior to the year of the payout. Given this range, it is difficult to forecast
the required estimates called for by this column; the amounts shown above,
payable in February 2000, represent payouts at the 100% level on the
aforementioned matrix. This could be achieved with real average annual earnings
growth of 7% and a ROI/Return on Equity of 13% over the three-year performance
period, or various other similar combinations of growth and ROI. Actual payouts
for the three-year performance period ended December 31, 1996 (shown on the
Summary Compensation Table, pages 5 and 6) were: Mr. Reece 629%, Mr. Burns 521%,
Mr. Herrmann 325%, Mr. Pomeroy 693% and Mr. Yochum 433%.
RETIREMENT PLANS
Dover has many defined benefit and defined contribution pension plans
covering substantially all employees of the Company and its domestic and foreign
subsidiaries. Dover also has unfunded supplemental executive retirement plans
and other similar unfunded retirement programs ("SERPs") which provide
retirement benefits for eligible employees including certain officers of Dover
and its subsidiaries. Pursuant to those plans, payments will be made at the
appropriate time (e.g., retirement) to such officers and other plan
participants.
Benefits under various defined benefit plans and related SERPs are based
generally upon (i) final average compensation, defined as the highest 60 months
of compensation out of the last 120 months and (ii) the years of benefit
service. Compensation for plan purposes includes salary and annual bonus but
excludes any payments under the cash performance award program or stock option
awards. Generally, vesting occurs after completion of five years of employment
subsequent to age 18. The following table shows the estimated annual benefits
payable upon retirement to persons in the specified remuneration and years of
service classifications. The years of covered employment for eligible persons
named in the Summary Compensation Table are: Mr. Reece 24, Mr. Herrmann 8, and
Mr. Yochum 14. All of these persons are vested. The benefit amounts listed in
the table do not include Social Security Benefits to which the covered employee
may be entitled.
9
<PAGE> 12
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------
FINAL AVERAGE COMPENSATION 15 20 25 30 35
- -------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 500,000 $109,500 $146,000 $182,400 $218,900 $255,400
600,000 132,000 176,000 219,900 263,900 307,900
700,000 154,500 206,000 257,400 308,900 360,400
800,000 177,000 236,000 294,900 353,900 412,900
900,000 199,500 266,000 332,400 398,900 465,400
1,000,000 222,000 296,000 369,900 443,900 517,900
1,100,000 244,500 326,000 407,400 488,900 570,400
1,200,000 267,000 356,000 444,900 533,900 622,900
1,300,000 289,500 386,000 482,400 578,900 675,400
1,400,000 312,000 416,000 519,900 623,900 727,900
1,500,000 334,500 446,000 557,400 668,900 780,400
</TABLE>
Mr. Pomeroy participates in the Supplemental Executive Retirement Program
of Dover Technologies. This is a nonqualified account balance plan which, based
on annual salary and bonus, credits to individuals the amounts which an employer
could have made to the account of such individual under an existing qualified
defined contribution plan but for current Federal statutory limitations, less
amounts actually contributed to such qualified plans for such individual. For
1996, Mr. Pomeroy's account was credited with $61,500. Account balances are
currently credited with interest at the rate of 10% per annum, compounded
monthly, so long as such individual remains an employee. Amounts credited are
payable in a lump sum upon retirement.
Mr. Burns has a separate supplemental retirement arrangement with the
Company. Under the terms of this arrangement, the Company credits an amount
equal to 8% of Mr. Burns' annual salary plus bonus, less any employer
contributions made to company sponsored qualified plans for Mr. Burns' benefit.
The amount is compounded annually at a rate of 10% and will be paid in a lump
sum payment to Mr. Burns upon his retirement from the Company. For 1996, Mr.
Burns' total credit was $63,200.
CHANGE OF CONTROL PROVISIONS
The Company has agreements (soon to be amended) with Mr. Roubos, Mr. Reece
and other officers including those shown on the Summary Compensation Table
designed to encourage each such officer to continue to carry out his duties with
the Company in the event of a potential change of control of the Company. For
purposes of these agreements, a "change of control" occurs generally when (a) a
person becomes beneficial owner of 20% or more of the Company's common stock,
(b) as a result of a business combination or tender offer, a majority of the
Board of Directors changes, or (c) the stockholders approve a merger or other
business combination, as a result of which the Company ceases to be an
independent public company. The amended agreements will provide that if within
eighteen (18) months following a change of control of the Company the officer's
employment is terminated (all as defined in the agreements) either by the
Company for other than "cause" or "disability" or by such officer for "good
reason", then such officer will receive a lump sum payment equal to three times
the highest base salary and annual bonus (but not a bonus under the Performance
Plan or any other compensation) received by such officer in any of the most
recent five years. The severance amounts to be paid may be subject to reduction
if the officer, at the time of termination, is within 36 months from his normal
retirement age. In addition, upon termination, all cash performance
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awards outstanding will immediately vest and be paid to the officer and all
stock options which have been held by the officer for more than six months will
immediately vest and become exercisable. Also, in the event of a change of
control, the present value of certain unfunded deferred compensation plans,
including the Company's SERP plans, will be paid immediately to such officers in
a lump sum.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes certain
excise taxes on, and limits the deductibility of, certain compensatory payments
made by a corporation to or for the benefit of certain individuals if such
payments are contingent upon certain changes in the ownership or effective
control of the corporation or in the ownership of a substantial portion of the
assets of the corporation, and have an aggregate present value of at least three
times the individual's annualized includable compensation for the base period,
as defined in the Code. Although Dover payments would not be expected to reach
this amount in most cases, if excess taxes are paid they would be grossed-up.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors is
composed entirely of independent outside directors. The Committee approves
annual compensation for corporate executive officers, administers the Dover
incentive stock option and cash performance program and any minor changes in
other compensation programs. From time to time, but not less than once every
five years, the Committee reviews studies done by its independent compensation
consultant as to the competitiveness of the Company's overall executive
compensation program. This was last done in 1994, and to a limited extent in
1996, and the results of that review are reflected in this report.
A. EXECUTIVE COMPENSATION POLICY
The Committee's basic overriding compensation principle is that
compensation at the corporate level, the independent subsidiary level, and at
the operating president level should be linked to total return to stockholders
generally and relative to other comparable companies. The Committee also
believes that all compensation, i.e., annual, medium-term and long-term, should
be closely aligned to the performance of the business over which the executive
has the most control. This is done annually with salaries and bonuses, on a
medium-term (three-year) basis with the cash performance program, and on a
long-term basis with stock options. The relative "mix" of medium-term and
long-term opportunity is also adjusted with increasingly larger percentages
allocated to long-term reward potential the higher the recipient is in the
organization. Performance awards and stock option grants are annual, but payouts
on cash awards, if earned, occur three years later and options generally have a
10-year term, but are not exercisable for three years. With respect to pensions
and other benefit type programs, the Committee has set a target at the median of
comparable companies. Substantially all compensation to be paid to the executive
officers for 1997 is expected to qualify for deductibility for federal income
tax purposes under Section 162(m) of the Code.
Annual Compensation: The Committee reviews the Company's performance
annually. The compensation programs of the Company are highly leveraged on the
basis of performance. The Company has for years performed in the top quartile as
measured by the Management Compensation Services Project 777 database (the
"Project 777 database"), which currently includes in excess of 40% of the
manufacturing companies included in the Fortune 500 Listings. The Project 777
database includes a substantially larger number of companies than the peer index
group referred to in connection with the Stock Performance Graph below. The
average rank in the Project 777 database, which determines the overall standing,
is the average of the following nine separate measurements: return on equity for
one year and five years; return on capital for one
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<PAGE> 14
year and five years; return on sales for the current year; return on assets for
one year and five years; and total capital return for one and five years. As a
result of the 1994 compensation review mentioned above, the Committee has
determined that as long as the Company continues to perform in the top quartile,
salaries and bonuses will be targeted at the 60th to the 75th percentile for all
company executives. Should the Company's performance fall below that level,
compensation targets will be adjusted downward. Annual bonuses vary with annual
performance based upon earnings growth, return on investment and achievement of
special Company goals as well as the Committee's judgment of overall
performance.
Long-Term Compensation: Dover's management, the Committee and the Board of
Directors believe that tangible (cash) and intangible (stock) incentives should
be provided to key management at each of the three levels within the Company
over some longer period of time. Given the different levels and opportunities to
impact Dover's long-term growth, and hence benefit Dover's stockholders, Dover
has a long-term compensation program including both stock options and cash
incentive awards (the "Plan").
Only officers and executives who are in a position to affect materially the
profitability and growth of the Company are eligible for stock options and
incentive awards. The Plan basically provides a "mix" of the two incentives,
with operating management receiving a substantial percentage of their respective
gain opportunity in the form of cash incentive awards, and the executive
officers receiving a substantial portion of their opportunity in the form of
stock options. The basic calculation begins with the individual's base salary
and may include the most current annual cash bonus, which is then multiplied by
a factor to determine the size of the incentive award (100% payout case) and the
value of the stock option grant, which is then converted into shares. For the
officers identified in the Summary Compensation Tables above, the cash incentive
awards under the Plan were based on multiples ranging from .13 to .45, and the
number of shares granted was based on a multiple ranging from .90 to 1.65. In
all cases, the multiples were initially determined by an independent consultant,
and confirmed by the Committee. Cash incentive awards are annual and prior
awards are not considered by the Committee when current awards are made.
Likewise, the number of shares that may be granted to each participant is not
otherwise limited and prior grants are not considered by the Committee when
current grants are awarded. The number of optionees in each annual grant
averages just under one percent of the total number of Dover employees. The
annual shares granted has averaged about 1/3 of 1% of shares outstanding over
the past five years and was less than 1/2 of 1% in 1997. Dover expects that,
except in cases of unusual need, shares acquired through options will be held by
participants (including participant's family members) for the duration of their
employment with the Company.
B. CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee awarded Mr. Thomas L. Reece, Chief Executive
Officer, a bonus of $850,000 for 1996, which was equal to 109% of his 1996
salary. This determination was based upon: (a) outside independent compensation
survey data, which places the compensation of Mr. Reece near the high end of the
median range of the comparative group for companies of Dover's size; (b) the
record sales and earnings achieved in 1996; (c) the 1996 earnings increase of
40%; (d) the general business environment during 1996; and (e) a subjective
judgment factor which is the prerogative of the Committee. The first three
factors were given the greatest weight by the Committee.
Compensation Committee: John F. Fort, Chairman
Magalen O. Bryant
Jean-Pierre M. Ergas
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STOCK PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
TOTAL STOCKHOLDER RETURNS
PEER DOVER S&P
GROUP INDEX CORPORATION 500 INDEX
----------- ----------- ----------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEC-91 100 100 100
DEC-92 110.65 112.18 107.62
DEC-93 138.09 156.01 118.46
DEC-94 138.28 134.93 120.03
DEC-95 189.55 195.86 165.13
DEC-96 255.45 271.89 203.05
</TABLE>
This graph assumes $100 invested on December 31, 1991 in Dover Corporation
common stock, S&P 500 index and a peer group index. Each mark on the axis
displaying the years 1991 through 1996 represents December 31 of that year. The
peer index consists of the following companies selected by the Company based on
its assessment of businesses with similar industrial characteristics: Ametek
Inc., AMP Inc., Applied Power-CL A, Carlisle Cos. Inc., Coltec Industries,
Cooper Industries Inc., Crane Co., Danaher Corp., Eaton Corp., EG&G Inc.,
Emerson Electric Co., Federal Signal Corp., General Electric Co., General Signal
Corp., Harnischfeger Industries Inc., Hubbell Inc., Illinois Tool Works,
Ingersoll-Rand Co., ITT Industries Inc., Keystone International, Parker-Hannifin
Corp., Pentair Inc., Tecumseh Products Co., TRW Inc., Tyco International Inc.
and United Technologies Corp.
* Total return assumes reinvestment of dividends.
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<PAGE> 16
MISCELLANEOUS
OTHER MATTERS
Management does not know of any other business to be taken up at the annual
meeting. If, however, any other business properly comes before the meeting or
any adjournments thereof, the persons named as proxies will vote the shares
covered by a proxy in accordance with their best judgment on such matters.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The independent certified public accounting firm of Coopers & Lybrand
L.L.P. is the principal independent public accountant selected in May, 1996 to
audit the annual accounts of Dover and its subsidiaries, and in such role, has
audited the financial statements for the current year. This firm also audited
the financial statement for the year 1996. Representatives of Coopers & Lybrand
L.L.P. are not expected to be present at the annual meeting.
On August 7, 1995, KPMG Peat Marwick LLP ("Peat Marwick"), which had been
the independent certified public accountant for Dover for many years, was
terminated. The decision to change accountants was recommended by the Company's
management, and approved by both the Company's Audit Committee and Board of
Directors.
Peat Marwick's reports on the financial statements for the year ended
December 31, 1994 contained no adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or accounting
principles, other than to include a statement ". . . in 1992 the Company adopted
the provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 109, 'Accounting for Income Taxes,' and the
Financial Accounting Standards No. 106, 'Employers' Accounting for
Postretirement Benefits Other than Pensions.' "
In connection with its audits for the year ended December 1994, and during
the subsequent interim periods, there had been no disagreements with Peat
Marwick on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, nor have any "reportable
events" (as described in Item 304 (a)(1)(v) of Regulation S-K) occurred.
The Company requested that Peat Marwick furnish it with a letter addressed
to the Securities and Exchange Commission ("SEC") stating whether it agrees with
the above statements, which was done and filed with the SEC.
During the year ended December 1994 and through August 7, 1995, the Company
did not consult with Coopers & Lybrand L.L.P. on items which were subject to
Statement on Auditing Standards No. 50 or which concerned a disagreement or
"reportable event" with the former accountants.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors and officers file reports of ownership and changes of
ownership of the Company's Common Stock with the Securities and Exchange
Commission and the New York Stock Exchange. Based solely on filings made with
the Commission the Company believes that all directors and officers filed on a
timely basis all such reports required of them with respect to stock ownership
and changes in ownership during 1996, except that (a) Mr. Yochum was late in
reporting certain gifts to family members made prior to 1995, which gifts were
reported in his February
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<PAGE> 17
1996 Form 5, (b) the Company filed amended Form 5's for certain officers to
reflect the regular annual stock option grants made in February 1996 and one
spousal gift made in May 1996, and (c) the Company filed Form 5's for the
outside directors about three weeks late due to an administrative error.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
In order for stockholder proposals to be included in Dover's proxy
statement for the 1998 Annual Meeting, they must be received by Dover at its
principal executive offices, 280 Park Avenue, New York, NY 10017 by December 23,
1997. All other stockholder proposals, including nominations for directors, must
be received by Dover not less than 60 days nor more than 90 days prior to the
Meeting, which is scheduled for April 28, 1998.
Dated: March 14, 1997
By authority of the Board of
Directors,
ROBERT G. KUHBACH
Secretary
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<PAGE> 18
DOVER CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /-/
1. Election of Directors -
Nominees: D. H. Benson, M. O. Bryant,
J. P. M. Erges, R. J. Fleming, J. F. Fort,
J. L. Koley, J. F. McNeil, A. J. Ormsby,
T. L. Reece and G. L. Roubos.
For Withhold For All
All All Except those whose name(s) appear below.
/ / / / / / __________________________________________________
2. To transact such other business as may properly
come before the meeting.
For Against Abstain
/ / / / / /
The Board of Directors recommends a Vote FOR Item 1.
Date _____________________________, 1997
________________________________________________________________
Signature
________________________________________________________________
Signature
Please sign exactly as your name or names appear above. For joint accounts,
each owner should sign. When signing as executor,
administrator, attorney, trustee or guardian, etc., please give your full title.
PROXY PROXY
DOVER CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, APRIL 22, 1997
The undersigned hereby appoints Gary L. Roubos, Thomas L. Reece and
Robert G. Kuhbach, or any of them, as the undersigned's proxy or proxies, with
full power of substitution, to vote all shares of Common Stock of Dover
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held in Wilmington, Delaware, on April 22, 1997, at 10:00
A.M., local time, and any adjournments thereof, as fully as the undersigned
could if personally present, upon the proposals set forth on the reverse side
hereof revoking any proxy or proxies heretofore given.
IMPORTANT - THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS
MADE ON THE REVERSE SIDE, BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED ON THE REVERSE SIDE.
