<PAGE> 1
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 [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
DOVER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(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
[DOVER CORPORATION LOGO]
------------------------------
Notice Of Annual Meeting Of Stockholders
------------------------------
March 18, 1999
TO THE STOCKHOLDERS:
Please take notice that the Annual Meeting of Stockholders of DOVER
CORPORATION will be held at the Lobby Conference Room, Wilmington Trust Company,
1100 North Market Street, Rodney Square North, Wilmington, Delaware 19801, on
April 27, 1999, at 10:00 A.M., for the following purposes:
1. To elect nine directors;
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 March 1, 1999 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
THIS YEAR DOVER IS PLEASED TO OFFER ITS SHAREHOLDERS THE CHOICE OF VOTING
THEIR SHARES BY RETURNING THE ENCLOSED PROXY BY MAIL OR VIA A TOLL-FREE
TELEPHONE NUMBER. INSTRUCTIONS FOR VOTING BY THESE TWO ALTERNATIVES ARE PRINTED
ON THE ENCLOSED PROXY CARD.
<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 27, 1999 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. This statement and the proxy form
are being first sent to the stockholders on or about March 18, 1999.
As of the close of business on March 1, 1999, the record date for voting,
Dover had outstanding 215,894,434 shares of common stock. Each share of common
stock is entitled to one vote on all matters. Based on reports filed with the
Securities and Exchange Commission by the respective stockholder and in the case
of Ms. Bryant's information provided by her to the Company, to Dover's
knowledge, no stockholder owns beneficially as much as 5% of the outstanding
common stock other than: (a) Oppenheimer Capital, Oppenheimer Tower, World
Financial Center, New York, New York 10281, which beneficially owns 13,745,374
shares (6.3%) as investment advisor to various clients; (b) four direct and
indirect wholly-owned subsidiaries of The Capital Group Companies, Inc., 1110
Santa Monica Boulevard, Los Angeles, CA 90025, each of which beneficially owns
shares of Dover common stock as investment manager or investment advisor to its
various clients as follows: Capital Guardian Trust Company, 9,449,560 shares
(4.2%), Capital International Limited, 2,116,650 shares (1.0%), Capital
International S.A., 2,038,610 shares (0.9%), and Capital International Inc.,
227,100 shares (0.1%), for an aggregate beneficial ownership by such entities of
13,831,920 shares (6.2%); each such entity reported beneficial ownership only of
the shares held in accounts for which it was investment manager or investment
advisor and disclaimed being part of a group for all purposes other than
reporting; and (c) Magalen O. Bryant, Post Office Box 247, Middleburg, VA 22117,
who owns 11,483,628 shares (5.3%), including 1,199,752 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 TO EACH PERSON SOLICITED HEREIN, ON THE WRITTEN REQUEST
OF ANY SUCH PERSON, A COPY OF DOVER'S 1998 ANNUAL REPORT ON FORM 10-K INCLUDING
THE SCHEDULES THERETO, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, ALL
WITHOUT CHARGE (EXCEPT EXHIBITS). 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 nine
(9) 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 persons named as 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
1
<PAGE> 4
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 non-votes 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 by mail or by telephone 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
the cancellation of the proxy.
SECURITY OWNERSHIP
The following table provides information as of March 1, 1999, 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........................................ 8,800(2) *
Magalen O. Bryant...................................... 10,283,876(3) 5.3%
1,199,752(4)
Lewis E. Burns......................................... 435,804 *
Jean-Pierre M. Ergas................................... 24,800 *
Roderick J. Fleming.................................... 6,800 *
Kristiane C. Graham.................................... 625,606(5) *
1,426,486(6)
Rudolf J. Herrmann..................................... 132,364 *
James L. Koley......................................... 26,200(7) *
John F. McNiff......................................... 398,152(8) *
John E. Pomeroy........................................ 264,065 *
Thomas L. Reece........................................ 567,606(9) *
Gary L. Roubos......................................... 537,672(10) *
Jerry W. Yochum........................................ 128,796 *
Directors and Executive Officers as a Group............ 16,075,334 7.4%
</TABLE>
* Less than one percent.
- ---------------
(1) Includes shares which are (a) owned by officers in the Company's Retirement
Savings Plan, totaling 149,953 shares, as of December 31, 1998 and (b)
subject to options exercisable within 60 days for the following person(s):
Mr. Burns, 208,882 shares; Mr. Herrmann, 91,298 shares; Mr. McNiff, 159,194
shares; Mr. Pomeroy, 157,254 shares; Mr. Reece, 258,206 shares; Mr. Roubos,
15,428 shares; Mr. Yochum, 90,598 shares; and all directors and officers as
a group, 1,170,664 shares.
(2) Includes 1,000 shares held by his spouse.
(3) Retiring director; Ms. Bryant's daughter, Kristiane Graham, is a nominee
for director. Includes 304,960 shares held by a corporation over which Ms.
Bryant 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.
2
<PAGE> 5
(5) Nominee for director; Ms. Graham is the daughter of Ms. Bryant. Includes
304,960 shares held by a corporation of which Ms. Graham is a director.
(6) Includes 1,424,076 shares held in various trusts of which she is a
co-trustee sharing voting and investment powers and in which she disclaims
any beneficial interest, 1,910 shares held as custodian for a minor and 500
shares held by her spouse.
(7) Includes 10,000 shares held in various retirement trusts for Mr. Koley and
his spouse and 4,000 shares held by a retirement plan as to which Mr. Koley
is a co-trustee and beneficiary.
(8) Includes 1,200 shares held as custodian for a minor.
(9) Includes 75,410 shares held by his spouse.
(10) Includes 125,848 shares held by his spouse and 126,994 shares held by a
limited liability company as to which he disclaims any beneficial interest.
1. ELECTION OF DIRECTORS
The persons named as proxies will vote the shares covered by a proxy for
the election as directors of the nine (9) 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, except Ms. Graham who is succeeding Ms. Bryant who is retiring from
the Board. Each director elected at the Meeting will serve until the election
and qualification of his or her successor.
Directors will be elected by a plurality of the votes cast. Votes may be
cast only for the nominees listed below. 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................... Chairman, Charter Europe Trust Plc. (financial 1995
61 management); formally Vice Chairman of The Kleinwort
Benson Group, Plc.; Director of The Rouse Company
(real estate development); Director of Harrow
Corporation (industrial manufacturing); Director of
British Gas Plc. and Chairman of The Charities
Official Investment Fund; Director of Daniel Thwaites
Plc. (beverage manufacturer).
Jean-Pierre M. Ergas.............. Executive Vice President, Europe, Alcan Aluminum, Ltd. 1994
59 (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).
</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>
Roderick J. Fleming............... Director, Robert Fleming Holdings Ltd. (financial 1995
45 management); previously 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); Director of Updown Investment
Company Ltd. (financial management) and Director of
West Rand Consolidated Mines Limited (natural
resources).
Kristiane C. Graham............... Private Investor. --
41
James L. Koley.................... Chairman, Koley, Jessen, Daubman & Rupiper, P.C. (law 1989
firm);
68 Chairman of the Board of Directors of Arts-Way
Manufacturing Co., Inc. (agricultural manufacturing).
John F. McNiff.................... Vice President -- Finance of Dover; Director of Allen 1996
56 Telecom, Inc. (telecommunications products) and The
Haven Fund (financial management).
John E. Pomeroy................... President and CEO of Dover Technologies International, 1998
Inc.;
57 Director of Hadco Corporation (electronic
manufacturing); and Adept Technologies, Inc. (robot
systems manufacturing).
Thomas L. Reece................... President and Chief Executive Officer (since May 1994) 1993
of
56 Dover.
Gary L. Roubos.................... Chairman of the Board of Dover; previously Chief 1976
Executive
62 Officer (through May 1994); Director of Bell & Howell
Company (information management); and Omnicom Group,
Inc. (advertising).
</TABLE>
During 1998, the Board of Directors held four meetings. The Board has three
standing committees, namely an Audit Committee, a Compensation Committee and an
Executive Committee. During 1998, the committees held, respectively, two
meetings, one meeting and three meetings.
The Audit Committee is composed of four directors who are not employees of
the Company. The functions of the Audit Committee consist of recommending
annually 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. The members of the
Audit Committee are James L. Koley (Chairman), David H. Benson, Roderick J.
Fleming and Gary L. Roubos. Anthony J. Ormsby had served as Chairman of the
committee until his retirement as of the annual meeting in April 1998.
The Compensation Committee is composed of two directors who are not
employees of the Company. The Compensation Committee approves compensation for
executive officers, grants, awards and payouts under the
4
<PAGE> 7
stock option plan and performance program and compensation plan changes. In
1998, the Compensation Committee held one meeting. The members of the
Compensation Committee are Jean-Pierre M. Ergas (Chairman) and Magalen O.
Bryant. John F. Fort had served as the Chairman of the committee prior to his
resignation from the Board of Directors as of January 29, 1999.
The Executive Committee is composed of four 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 three meetings
during 1998. The members of the Executive Committee are Gary L. Roubos
(Chairman), Magalen O. Bryant, James L. Koley, and Thomas L. Reece. During 1998,
John F. Fort and Anthony J. Ormbsy were members of the committee until their
respective resignation and retirement.
DIRECTORS' COMPENSATION
Management directors receive no compensation for services as a director or
as a member of any Committee. Under the Dover 1996 Non-Employee Directors' Stock
Compensation Plan (the "Directors' Plan"), non-employee directors are granted
2,000 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 meetings attended. For
1998, each non-employee director received 2,000 shares and received a fee of
$2,000 for serving on any of the Board Committees. Each of the non-employee
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 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, 1998.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
-------------------------- -----------------------
AWARDS PAYOUTS
---------- ----------
SECURITIES LONG-TERM
UNDERLYING INCENTIVE ALL
NAME AND OPTIONS PLAN OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (#)(2)(3) PAYOUTS(4) COMPENSATION(5)
------------------ ---- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Thomas L. Reece....................... 1998 $825,000 $850,000 235,131 $1,207,380 $ 6,000
CEO of Dover since May 1994; 1997 800,000 875,000 79,973 1,481,588 7,392
Director and President of Dover 1996 780,000 850,000 109,926 855,168 7,392
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
-------------------------- -----------------------
AWARDS PAYOUTS
---------- ----------
SECURITIES LONG-TERM
UNDERLYING INCENTIVE ALL
NAME AND OPTIONS PLAN OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (#)(2)(3) PAYOUTS(4) COMPENSATION(5)
------------------ ---- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Lewis E. Burns........................ 1998 495,000 375,000 25,822 1,035,868 4,000
Vice President of Dover; 1997 485,000 340,000 21,579 1,203,888 3,800
Director and President of Dover 1996 470,000 320,000 29,456 949,939 66,896
Industries, Inc.
Rudolf J. Herrmann.................... 1998 465,000 325,000 23,488 644,009 7,000
Vice President of Dover; 1997 450,000 305,000 19,899 604,489 7,392
Director and President of Dover 1996 425,000 290,000 27,078 416,813 7,392
Resources, Inc.
John E. Pomeroy....................... 1998 505,000 330,000 24,801 454,979 91,600
Vice President of Dover; 1997 490,000 370,000 22,613 1,875,911 85,203
Director and President of Dover 1996 450,000 325,000 29,822 1,056,957 76,296
Technologies, Inc.
Jerry W. Yochum....................... 1998 465,000 340,000 24,217 712,484 13,570
Vice President of Dover; 1997 450,000 300,000 19,770 919,213 12,962
Director and President 1996 430,000 285,000 26,894 708,923 12,962
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 for the year earned, and were generally paid
in February of the following calendar year. 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.
(2) Awards are shown for services preformed in the calendar year indicated but
were granted in February of the following year.
(3) Mr. Reece's award for 1998 includes 144,839 option shares granted as a
special, one time bonus to reflect Mr. Reece's contribution to the
successful sale of Dover's elevator operations, which closed on January 5,
1999.
(4) The payout amount is determined as described under Long-Term Incentive Plan
Awards for Calendar Year 1999 on page 8. Amounts shown represent payouts
for the three-year performance period ended with the year shown.
6
<PAGE> 9
(5) Represents Company contributions to the Dover Retirement Savings Plan,
Company payments to other defined contribution plans and Company paid life
insurance premiums on a whole life term life insurance policy. For 1998,
these amounts are detailed as follows:
<TABLE>
<CAPTION>
DOVER
RETIREMENT OTHER DEFINED
SAVINGS CONTRIBUTION INSURANCE
NAME PLAN PLANS PREMIUMS TOTAL
---- ------------ ------------- --------- -------
<S> <C> <C> <C> <C>
T. L. Reece................................. $6,000 $ -- $ -- $ 6,000
L. E. Burns................................. 4,000 -- -- 4,000
R. J. Herrmann.............................. 7,000 -- -- 7,000
J. E. Pomeroy............................... 4,000 87,600 -- 91,600
J. W. Yochum................................ 8,000 -- 5,570 13,570
</TABLE>
INCENTIVE PROGRAMS
The Company has an Incentive Stock Option Plan and Cash Performance Program
(the "Performance Plan"), adopted in 1995 (replacing a similar plan which
expired in January 1995), which provides for stock options coordinated with cash
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 this program see the Summary Compensation
Table on pages 5 and 6.
OPTION GRANTS IN LAST CALENDAR YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE PRESENT
NAME GRANTED(#)(1) CALENDAR YEAR ($/SHARE) EXPIRATION DATE VALUE($)(2)
---- ------------- ------------- --------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Thomas L. Reece........ 79,973 9 $35.00 February 5, 2008 $591,000
Lewis E. Burns......... 21,579 2 35.00 February 5, 2008 159,469
Rudolf J. Herrmann..... 19,899 2 35.00 February 5, 2008 147,054
John E. Pomeroy........ 22,613 2 35.00 February 5, 2008 167,110
Jerry W. Yochum........ 19,770 2 35.00 February 5, 2008 146,100
</TABLE>
- ---------------
(1) All options shown were granted in 1998 for services performed in 1997 and
correspond to the awards shown in the Summary Compensation Table for 1997.
Awards made in February 1999 with respect to services performed in 1998,
including the special bonus to Mr. Reece for his contribution to the
successful sale of Dover's elevator operations, are shown in the Summary
Compensation Table for 1998. The options become exercisable on February 5,
2001.
(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 22.45%; expected life 6
years; risk-free interest rate of 6.06%; and an expected dividend yield of
1.1%. This resulted in a discounted per share
7
<PAGE> 10
value of $10.55 (30% 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 20% 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
$7.39 per share.
AGGREGATED OPTION EXERCISES IN LAST CALENDAR YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE(1) OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES YEAR END(#) YEAR END($)
ACQUIRED ON VALUE(1) --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas L. Reece............. 114,156 $2,369,880 158,148 289,937 $3,440,437 $2,603,690
Lewis E. Burns.............. 55,332 1,446,043 178,900 81,017 4,361,420 737,845
Rudolf J. Herrmann.......... 6,937 177,992 66,120 72,155 1,452,705 648,330
John E. Pomeroy............. 46,095 918,674 127,848 81,841 3,043,293 735,929
Jerry W. Yochum............. 26,475 576,275 64,844 72,418 1,403,610 653,340
</TABLE>
- ---------------
(1) Calculated by determining the difference between the exercise price and the
average of the 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, 1998, as the case may be.
LONG-TERM INCENTIVE PLAN AWARDS FOR CALENDAR YEAR 1999
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE
OTHER PERIOD PAYOUTS UNDER
FEBRUARY 1999 UNTIL MATURATION NON-STOCK PRICE
NAME AWARD OR PAYOUT BASED PLANS(1)
---- ------------- ---------------- ----------------
<S> <C> <C> <C>
Thomas L. Reece................................. $345,950 1999-2001 $345,950
Lewis E. Burns.................................. 394,268 1999-2001 394,268
Rudolf J. Herrmann.............................. 358,628 1999-2001 358,628
John E. Pomeroy................................. 378,675 1999-2001 378,675
Jerry W. Yochum................................. 369,765 1999-2001 369,765
</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: (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.
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
8
<PAGE> 11
earnings growth is measured may not be less than an amount equal to 10 percent
of equity or 10 percent of invested capital.
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 the 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% was 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 133.5% to 702% of the award given three years
prior to the year of the payout. Earned payouts may not exceed 1,562%. Given
this range, it is difficult to forecast the required estimates called for by
this column; the amounts shown above, payable in February 2002, 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, 1998 (shown on the Summary Compensation Table, pages 5 and 6) were:
Mr. Reece 414.9%, Mr. Burns 298.1%, Mr. Herrmann 220.7%, Mr. Pomeroy 133.5% and
Mr. Yochum 238.7%.
RETIREMENT PLANS
Dover has a number of 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
supplemental retirement benefits for eligible employees including certain
officers of Dover and its subsidiaries. These supplemental plans basically
extend retirement benefits to cover compensation not covered by underlying
qualified plans because of federal statutory limitations. 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 33, Mr. Burns 39, Mr.
Herrmann 10, and Mr. Yochum 16. All of these persons are vested. The benefit
amounts listed in the table include the annuitized portion of the defined
contribution accumulation attributable to company contributions and one half of
the social security benefits to which the covered employee may be entitled.
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<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 $150,000 $200,000 $250,000 $ 300,000 $ 300,000
600,000 180,000 240,000 300,000 360,000 360,000
700,000 210,000 280,000 350,000 420,000 420,000
800,000 240,000 320,000 400,000 480,000 480,000
900,000 270,000 360,000 450,000 540,000 540,000
1,000,000 300,000 400,000 500,000 600,000 600,000
1,100,000 330,000 440,000 550,000 660,000 660,000
1,200,000 360,000 480,000 600,000 720,000 720,000
1,300,000 390,000 520,000 650,000 780,000 780,000
1,400,000 420,000 560,000 700,000 840,000 840,000
1,500,000 450,000 600,000 750,000 900,000 900,000
1,600,000 480,000 640,000 800,000 960,000 960,000
1,700,000 510,000 680,000 850,000 1,020,000 1,020,000
</TABLE>
In addition to participating in one of Dover's qualified defined
contribution plans, Mr. Pomeroy also participates in the Supplemental Executive
Retirement Program of Dover Technologies. This is a non-qualified account
balance plan which, based on annual salary and bonus, credits to individuals the
amounts which an employer could have contributed 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 1998, Mr. Pomeroy's account was
credited with $56,800. Account balances are currently credited with interest at
the rate of 10% per annum, compounded annually, so long as such individual
remains an employee. Amounts credited are payable in a lump sum upon retirement.
CHANGE OF CONTROL PROVISIONS
The Company has agreements with 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 agreements
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
any award 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 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
10
<PAGE> 13
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 an individual became subject to the excise taxes,
the Company would gross-up the individual's payments to make him or her whole.
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 the Company's executive officers, administers the
Performance Plan, the Dover Corporation Executive Officer Annual Incentive Plan
(the "Incentive Plan") and approves 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, 1997 and 1998 (for
purposes of the special one-time bonus award related to the sale of the elevator
operations). The results of those reviews 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 Dover's total return to
stockholders generally and should be competitive with 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
through salaries and bonuses, on a medium-term basis through three-year payout
cash incentive awards, and on a long-term basis through stock options. The
relative "mix" of medium-term and long-term opportunity is adjusted in
accordance with the breadth of the executive's responsibility across the
organization, with increasingly larger percentages allocated to long-term reward
potential through stock options in the case of those persons who are in
positions to most materially affect the profitability and growth of the Company.
In early 1999, the plan was amended to also cover restricted stock awards, with
voting and dividend rights, that vest up to five years after grant. Restricted
stock is generally not awarded except in connection with special or unusual
circumstances. Cash performance awards and stock option grants are made on an
annual basis. However, to provide incentives to management to increase
stockholder value over the medium and long-term, payouts on cash performance
awards, if earned, occur three years later based on achieving certain
performance goals for the three-year period; restricted stock vests up to five
years after grant; and options generally have 10-year terms and are not
exercisable until three years after their grant. With respect to pensions and
other similar benefit programs, the Committee has set a target at the median of
comparable companies. All compensation to be paid to the executive officers for
1999 is expected to qualify for deductibility for federal income tax purposes
under Section 162(m) of the Code.
11
<PAGE> 14
Annual Compensation: The Committee reviews the Company's performance
annually. The compensation programs of the Company are highly leveraged on the
basis of performance. In setting compensation, the Company reviews the
performance of the Company as compared to the companies in the Management
Compensation Services Project 777 database (the "Project 777 database"). The
Company has for years performed in the top quartile as measured by 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 of a company in the Project 777 database, which determines that company's
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 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 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.
In 1998, the Company adopted the Incentive Plan. The Committee has
discretion to select executive officers to participate in the Incentive Plan in
any given year. Executive officers selected to participate in the Incentive Plan
would receive their annual bonuses, if any, for that year under the terms of the
Incentive Plan instead of the Company's traditional bonus program. Mr. Reece is
the only executive officer who participated in the Incentive Plan for 1998 and
he will do so again for 1999.
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
(i.e., corporate, independent subsidiary and operating levels) over periods of
time longer than one fiscal year, typically three years. 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, the
Performance Plan, which includes both stock-based awards and cash incentive
awards.
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 cash
incentive awards under the Performance Plan. Long-term awards under the Plan are
basically a "mix" of restricted stock, stock based and cash 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. Under the Plan, the maximum award is calculated based on an
individual's base salary, and in some cases, the most current annual cash bonus,
which amount is then multiplied by pre-established factors to determine both the
allocation of the award between cash and options and the value of the two. Once
the value of the stock option grant is determined, the value is converted into a
number of shares based on the fair market value of the Company's stock on the
date of grant. The payout of cash incentive awards is conditional upon
achievement of certain performance criteria over the three-year period
commencing with the year of the award. For a discussion of the performance
criteria with respect to cash incentive awards, see the Long-Term Incentive Plan
Awards for Calendar Year 1999 table on page 8. The multiples for each award are
initially determined by an independent consultant and confirmed by the
Committee. For the officers identified in the Summary Compensation Table, the
cash incentive awards under the Plan were based on multiples ranging from .21 to
.45, and the number of shares granted was based on a multiple ranging from .91
to 1.65.
12
<PAGE> 15
Cash incentive awards are made annually for the three-year performance period
commencing in that year 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 limited (except that the Plan itself limits the
maximum grant to an individual in any given year to 600,000 options) and prior
grants are not considered by the Committee when current grants are awarded,
although a schedule of outstanding stock options for executive officers is
reviewed by the Committee. 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 less than 1/2 of 1% of shares outstanding over the past
five years and was also less than 1/2 of 1% in 1998. 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.
For 1998, in addition to customary awards under the Performance Plan, the
Committee awarded special one-time bonus awards to various executives and
employees in recognition of their contributions to, and the gain generated by,
the successful sale of the elevator operations which closed on January 5, 1999.
For these individuals, the gain on the sale of the elevator business is excluded
from the calculation of long-term Performance Plan payouts and awards. In
keeping with the Committee's principle that the relative mix of cash and
stock-based awards should be based on the individual's ability to affect the
profitability and growth of the Company, the Committee made awards of varying
combinations of cash, restricted stock and stock options depending on the level
of responsibility of the recipient of the award. Of the executives named in the
Summary Compensation Table, only Mr. Reece participated in the special award.
B. CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee awarded Mr. Thomas L. Reece, Chief Executive
Officer, a bonus of $850,000 for 1998, which was equal to 103% of his 1998
salary of $825,000. In addition, Mr. Reece was granted 90,292 option shares
under the Performance Plan and a Cash Performance Award of $345,950. The annual
bonus amount was determined 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
sales and earnings achieved in 1998; (c) the general business environment during
1998; and (d) a subjective judgment factor which is the prerogative of the
Committee. The first three factors were given the greatest weight by the
Committee.
The Committee also awarded Mr. Reece a one-time special bonus award of
144,839 option shares in recognition of his significant contribution to the sale
of the elevator operations.
Compensation Committee: Jean-Pierre M. Ergas (Chairman)
Magalen O. Bryant
13
<PAGE> 16
STOCK PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
DOVER CORPORATION, S&P 500 INDEX & PEER GROUP INDEX
TOTAL STOCKHOLDER RETURNS
<TABLE>
<CAPTION>
PEER GROUP DOVER CORP. S&P 500 INDEX
---------- ----------- -------------
<S> <C> <C> <C>
'Dec-93' 100.00 100.00 100.00
'Dec-94' 101.30 86.49 101.32
'Dec-95' 139.35 125.53 139.40
'Dec-96' 187.76 174.21 171.41
'Dec-97' 265.50 252.22 228.59
'Dec-98' 353.30 285.69 293.92
</TABLE>
This graph assumes $100 invested on December 31, 1993 in Dover Corporation
common stock, the S&P 500 index and a peer group index. 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., Harnischfeger Industries Inc.,
Hubbell Inc. CL B, Illinois Tool Works, Ingersoll-Rand Co., ITT Industries Inc.,
Parker-Hannifin Corp., Pentair Inc., Tecumseh Products Co., TRW Inc., Tyco
International Inc. and United Technologies Corp. Last year's peer group included
General Signal Corp. and Keystone International, which are no longer publicly
traded.
* Total return assumes reinvestment of dividends.
14
<PAGE> 17
MISCELLANEOUS
OTHER MATTERS
Management does not know of any other business to be taken up at the
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 PricewaterhouseCoopers
LLP which resulted from the merger in 1998 of Coopers & Lybrand L.L.P. and Price
Waterhouse LLP is the principal independent public accountant selected in May
1998 to audit the annual accounts of Dover and its subsidiaries. This firm also
audited the financial statements for 1997 and 1998. Representatives of
PricewaterhouseCoopers LLP are not expected to be present at the Meeting.
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 copies provided to
the Company, 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 1998, except that George F. Meserole filed a
late report of routine acquisitions made under a broker-sponsored dividend
reinvestment program and Magalen O. Bryant failed to file a report of a stock
grant under the Directors' Plan.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
In order for stockholder proposals to be included in Dover's proxy
statement for the 2000 Annual Meeting, they must be received by Dover at its
principal executive offices, 280 Park Avenue, New York, NY 10017 by November 19,
1999. 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 25, 2000.
Dated: March 18, 1999
By authority of the Board of
Directors,
ROBERT G. KUHBACH
Secretary
15
<PAGE> 18
PROXY PROXY
DOVER CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, APRIL 27, 1999.
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 27, 1999 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. For participants in the Company's Retirement
Savings Plan, this proxy will govern the voting of stock held for the account of
the undersigned in the Plan.
IMPORTANT -- You now have the option of voting your shares by returning the
enclosed proxy card or by voting by using a toll-free telephone number. On the
reverse side of this proxy card are instructions on how to vote by telephone. If
you vote by telephone, your vote will be recorded as if you mailed in your proxy
card. If you vote by returning this proxy card, you must sign and date this
proxy 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.
<PAGE> 19
PROXY DOVER CORPORATION PROXY
1999 ANNUAL MEETING
<TABLE>
<S> <C> <C> <C> <C>
1. Election of Directors-- For Withhold For All (Except Nominee(s) written below)
All All
</TABLE>
Nominees: (01) D. H. Benson,
(02) J-P. M. Ergas, (03) R. J. Fleming,
(04) K. C. Graham, (05) J. L. Koley,
(06) J. F. McNiff, (07) J. E. Pomeroy,
(08) T. L. Reece, and (09) G. L. Roubos.
2. To transact such other business as may For Against Abstain
properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
Please Sign Here and Return Promptly
Signature(s) Dated: , 1999
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.
<PAGE> 20
FOLD AND DETACH HERE
Control Number
VOTE BY TELEPHONE
CALL* * TOLL FREE * * ON A TOUCH TONE TELEPHONE
1-877-587-0760
THERE is NO CHARGE to you for this call.
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
You will be asked to enter a Control Number which is located in the box on the
left side of this form.
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 for 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.
