<PAGE>
DANAHER CORPORATION
1250 24TH STREET, N.W.
WASHINGTON, D.C. 20037
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 17, 1994
To the Shareholders:
Notice is hereby given that the 1994 Annual Meeting of Shareholders of
Danaher Corporation, (the "Company"), a Delaware corporation (the "Company"),
will be held at the ANA Hotel, 2401 M Street, NW, Washington, D.C. 20037, on
May 17, 1994 at 4:00 p.m., local time, for the following purposes:
1. To elect three Directors to hold office for a term of three years and
until their successors are elected and qualified.
2. To approve the appointment of Arthur Andersen & Co. as the Company's
independent auditors for the year ending December 31, 1994.
3. To approve an amendment to the 1987 Stock Option Plan of the Company.
4. To approve the grant of an option to acquire shares of Company stock to
be made to Mr. George M. Sherman, President and Chief Executive
Officer.
5. To consider and act upon such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on March 23, 1994 as
the record date for determination of shareholders entitled to notice of and to
vote at the meeting and any adjournment thereof.
Whether or not you expect to be present, please sign, date and return the
enclosed proxy card as promptly as possible in the enclosed stamped envelope,
the postage on which will be valid if mailed in the United States.
By Order of the Board of Directors
/s/ Patrick W. Allender
Patrick W. Allender
Secretary
March 30, 1994
EVERY SHAREHOLDER'S VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND MAIL THE
ENCLOSED PROXY CARD AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU PLAN TO
ATTEND THE DANAHER CORPORATION ANNUAL MEETING.
<PAGE>
PROXY STATEMENT
DANAHER CORPORATION
1250 24TH STREET, N.W.
WASHINGTON, D.C. 20037
(202) 828-0850
1994 ANNUAL MEETING OF SHAREHOLDERS
MAY 17, 1994
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Danaher Corporation, a Delaware corporation (the
"Company"), of proxies for use at the 1994 Annual Meeting of Shareholders
("Annual Meeting") to be held at the ANA Hotel on May 17, 1994 at 4:00 p.m.,
local time, and at any and all adjournments thereof. The Company's principal
address is 1250 24th Street, N.W., Washington, D.C. 20037. The date of mailing
of this Proxy Statement is on or about March 30, 1994. The purpose of the
meeting is to elect three directors of the Company, to approve the appointment
of Arthur Andersen & Co. as the Company's independent auditors for the current
year, to approve an amendment to the 1987 Stock Option Plan of the Company, to
approve the grant of an option to acquire shares of Company stock to be made to
Mr. George M. Sherman, President and Chief Executive Officer, and to transact
such other business as may properly come before the meeting.
OUTSTANDING STOCK AND VOTING RIGHTS
In accordance with the By-laws of the Company, the Board of Directors has
fixed the close of business on March 23, 1994 as the record date for
determining the shareholders entitled to notice of, and to vote at, the Annual
Meeting. Only shareholders of record on that date will be entitled to vote. A
shareholder who submits a proxy on the accompanying form has the power to
revoke it by notice of revocation directed to the proxy holders of the Company
at any time before it is voted. A subsequently dated proxy, when filed with the
Secretary of the Company, will constitute revocation. Proxies will be voted as
specified on the proxy card and, in the absence of specific instructions, will
be voted for the proposals described in this Proxy Statement and in the
discretion of the proxy holders on any other matter which properly comes before
the meeting. A shareholder who has given a proxy may nevertheless attend the
meeting, revoke the proxy and vote in person. The Board of Directors has
selected Steven M. Rales and Mitchell P. Rales to act as proxies with full
power of substitution.
Solicitation of proxies may be made by mail, personal interview, telephone
and telegraph by officers and other management employees of the Company, who
will receive no additional compensation for their services. The total expense
of the solicitation will be borne by the Company and may include reimbursement
paid to brokerage firms and others for their expenses in forwarding material
regarding the Annual Meeting to beneficial owners.
The only outstanding securities of the Company entitled to vote at the Annual
Meeting are shares of Common Stock. As of the close of business on March 23,
1994, the record date for determining the shareholders of the Company entitled
to vote at the Annual Meeting, 28,556,127 shares of the Common Stock of the
Company, $.01 par value ("Company Common Stock"), were issued and outstanding.
Each outstanding share of Company Common Stock entitles the holder to one vote
on all matters brought before the Annual Meeting. The quorum necessary to
conduct business at the Annual Meeting consists of a majority of the
outstanding shares of Company Common Stock as of the record date.
The election of the directors nominated will require a plurality of the votes
cast in person or by proxy at the Annual Meeting by holders of shares of the
Company's Common Stock. In the election of directors, each stockholder is
entitled to cast one vote for each director to be elected; cumulative voting is
not permitted.
<PAGE>
Approval of the appointment of the Company's auditors will require the
affirmative vote of the holders of a majority of the shares of the Company's
Common Stock cast at the Annual Meeting in person or by proxy. Approval of the
amendment to the 1987 Stock Option Plan and the approval of the grant of an
option to acquire shares of Company stock to be made to Mr. Sherman require the
affirmative vote of the holders of a majority of the shares of common stock of
the Company present, or represented, and entitled to vote at the annual
meeting.
Abstentions and "broker non-votes" are counted as present in determining
whether the quorum requirement is satisfied. Abstentions and "non-votes" are
treated as votes against proposals presented to stockholders other than
elections of directors. For purpose of the election of directors, abstentions
and broker non-votes are not considered to be votes cast and do not affect the
plurality vote required for directors. For purposes of the appointment of the
Company's auditors, abstentions and broker non-votes will not be considered
votes cast for the foregoing purposes. For purposes of approval of the
amendment to the 1987 Stock Option Plan and the approval of the option grant to
Mr. Sherman, abstentions are treated as present and entitled to vote on the
matter and have the effect of a vote against the proposal and broker non-votes
are not considered to be votes cast.
BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK BY
DIRECTORS, OFFICERS AND PRINCIPAL SHAREHOLDERS
As of March 23, 1994, the beneficial ownership of Company Common Stock by
directors and the nominees for directors, by each of the executive officers
named in the Summary Compensation Table, by any principal Shareholders
beneficially owning more than five percent of the Company's Common Stock and by
all present executive officers and directors of the Company as a group, was as
follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME BENEFICIALLY OWNED OF CLASS
- ---- ------------------ --------
<S> <C> <C>
Mortimer M. Caplin............................... 53,937 *
George M. Sherman................................ 600,000(4) 2.1%
Donald J. Ehrlich................................ 10,000 *
Walter G. Lohr, Jr............................... 37,000 *
Mitchell P. Rales................................ 12,684,649(1) 44.4%
Steven M. Rales.................................. 12,684,649(1) 44.4%
W. John Weinhardt................................ 24,000(5) *
Patrick W. Allender.............................. 67,227(6) *
John P. Watson................................... 7,200(7) *
A. Emmet Stephenson, Jr.......................... 58,030(2) *
T. Rowe Price Associates, Inc. .................. 1,450,849(3) 5.1%
All executive officers and directors as a group
(includes 13 persons)........................... 13,564,043(1)(2) 47.5%
</TABLE>
- --------
(1) The aggregate holdings for Steven and Mitchell Rales include all of the
10,013,783 shares of Company Common Stock owned by Equity Group Holdings,
of which Steven M. Rales and Mitchell P. Rales are the general partners.
All of the shares owned by Equity Group Holdings are held with sole voting
and dispositive power. Their business address, and that of Equity Group
Holdings, is 1250 24th Street, N.W., Washington, D.C. 20037.
(2) Includes 34,030 shares of Company Common Stock held in the names of
Stephenson Ventures, a limited partnership of which the sole general
partner is A. Emmet Stephenson, Jr., and 20,000 shares held in the name of
Tessa Fund, a general partnership beneficially owned by trusts for the
benefit of the daughter of Mr. Stephenson, who is the general partner for
control purposes only. Bank One, Denver as Trustee owns 4,000 shares in
individual retirement accounts for the benefit of A. Emmet Stephenson, Jr.
and his wife.
(3) T. Rowe Price Associates, Inc.'s address is: 100 E. Pratt Street,
Baltimore, Maryland 21202.
2
<PAGE>
(4) Mr. Sherman has the option to acquire 500,000 shares of common stock.
(5) Mr. Weinhardt has the option to acquire 24,000 shares of common stock.
(6) Mr. Allender has the option to acquire 20,000 shares of common stock.
(7) Mr. Watson has the option to acquire 7,200 shares of common stock.
* Represents less than 1% of the outstanding Company Common Stock.
Apart from Steven M. Rales and Mitchell P. Rales and T. Rowe Price
Associates, Inc., the Company knows of no other person that beneficially owns
5% or more of its Common Stock.
PROPOSAL 1.
ELECTION OF DIRECTORS OF THE COMPANY
The Company's Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes with the number of directors in
each class to be as equal as possible. The Board has fixed the number of
directors of the Company at seven. At the 1994 Annual Meeting of Shareholders,
shareholders will elect three directors to serve until the 1997 Annual Meeting
of Shareholders and until their successors are duly elected and qualified. The
Board of Directors has nominated Messrs. Mortimer M. Caplin, Donald J. Ehrlich
and Walter G. Lohr, Jr. to serve as directors in the class whose term expires
in 1997. Messrs. Mitchell P. Rales, George M. Sherman and A. Emmet Stephenson,
Jr. will continue to serve as directors in the class with a term expiring in
1996, and Mr. Steven M. Rales will continue to serve as a director with his
term expiring in 1995.
The names of the nominees and the directors continuing in office, their
principal occupations, the years in which they became directors and the years
in which their terms expire are set forth below. In the event the nominees
shall decline or be unable to serve, it is intended that the proxies will be
voted in the discretion of the proxy holders. The Company knows of no reason to
anticipate that this will occur.
NOMINEES FOR ELECTION AT THIS YEAR'S ANNUAL MEETING
TO SERVE IN THE CLASS WHOSE TERM EXPIRES IN 1997
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION SINCE EXPIRES
---- --- -------------------- -------- -------
<C> <C> <S> <C> <C>
Mortimer M. Caplin (a,c). 77 Senior Member of Caplin & 1990 1994
Drysdale, a law firm in
Washington, D.C., for over
five years; Director of
Fairchild Industries, Inc.,
Fairchild Corporation,
Presidential Realty
Corporation, and Unigene
Laboratories, Inc.
Donald J. Ehrlich (a,c) 56 President and Director of 1985 1994
Wabash National Corp. for
five years; Director of
Indiana Secondary Market for
Educational Loans, Inc. and
INB National Bank, N.W.
Walter G. Lohr, Jr. (a) 50 Partner of Hogan & Hartson, a 1983 1994
law firm in Baltimore,
Maryland, since 1992;
attorney in private practice
1987-1992.
</TABLE>
(a) Member of the Compensation Committee of the Board of Directors.
(b) Mitchell Rales and Steven Rales are brothers.
(c) Member of the Audit Committee of the Board of Directors.
3
<PAGE>
CURRENT DIRECTORS WHOSE TERM WILL
CONTINUE AFTER THIS MEETING
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION SINCE EXPIRES
---- --- -------------------- -------- -------
<C> <C> <S> <C> <C>
Steven M. Rales (b)...... 42 Chairman of the Board of the 1983 1995
Company since 1984; Chief
Executive Officer of the
Company until Feb. 1990;
General Partner of Equity
Group Holdings, a
partnership located in
Washington, D.C. with
interests in publicly traded
securities, manufacturing
companies and media
operations, since 1979; and
Director of Wabash National
Corp.
Mitchell P. Rales (b).... 37 President of the Company from 1983 1996
1987 to February 1990;
Executive Vice President of
the Company from January
1984 to March 1987; General
Partner of Equity Group
Holdings, a general
partnership located in
Washington, D.C. with
interests in publicly traded
securities, manufacturing
companies and media
operations, since 1979;
Director of Wabash National
Corp. From July 1, 1991 to
January 2, 1992, Mr. Rales
served as acting president
of CPC-Rexcel, Inc., a
manufacturer of plastic food
containers, following the
resignation of that
company's chief executive
officer, until the search
for a new chief executive
officer was completed. CPC-
Rexcel, Inc. filed a
voluntary petition under
Chapter 11 of the Federal
Bankruptcy Code in November
1992.
George M. Sherman........ 52 President and Chief Executive 1990 1996
Officer of the Company since
February 1990; Executive
Vice President and President
of the Power Tools and Home
Improvement Group of The
Black & Decker Corporation
from 1985 to 1990.
A. Emmet Stephenson, (c). 48 President of Stephenson and 1986 1996
Co., a private investment
management firm in Denver,
Colorado for more than five
years; Senior Partner of
Stephenson Merchant Banking
for more than five years.
</TABLE>
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors had a total of four meetings during 1993. All
directors attended at least 75% of the meetings of the Board of Directors and
of the Committees of the Board of Directors on which they served during 1993.
The Executive Committee acts on behalf of the Board of Directors of the
Company between meetings of the Board of Directors. The Executive Committee
comprised of Messrs. George M. Sherman, Steven M. Rales and Mitchell P. Rales
met two times in 1993.
The Audit Committee reviews the financial statements of the Company to
confirm that they reflect fairly the financial condition of the Company and to
appraise the soundness, adequacy and application of accounting and operating
controls. The Audit Committee recommends independent auditors to the Board of
Directors, reviews the scope of the audit function of the independent auditors
and reviews audit reports rendered by the independent auditors. The Audit
Committee met two times during 1993.
4
<PAGE>
The Compensation Committee reviews the Company's Compensation philosophy and
programs, and exercises authority with respect to the payment of direct
salaries and incentive compensation to Company officers. The Compensation
Committee is also responsible for the oversight of the stock option plans of
the Company. The Compensation committee met two times in 1993.
The Company has no Nominating Committee of its Board of Directors.
EXECUTIVE OFFICERS OF THE REGISTRANT
Executive Officers of the Company are:
<TABLE>
<CAPTION>
OFFICER
NAME AGE POSITION SINCE
---- --- -------- -------
<C> <C> <S> <C>
Steven M. Rales..... 42 Chairman of the Board 1984
Mitchell P. Rales... 37 Chairman of the Executive Committee 1984
George M. Sherman... 52 Chief Executive Officer, President and 1990
Director
Patrick W. Allender. 47 Senior Vice President, Chief Financial 1987
Officer and Secretary
James H. Ditkoff.... 48 Vice President-Finance/Tax 1991
W. John Weinhardt... 43 Vice President and Group Executive 1991
C. Scott Brannan.... 35 Vice President Administration and Controller 1987
John P. Watson...... 49 Vice President and Group Executive 1993
</TABLE>
Steven M. Rales has served as Chairman of the Board since January 1984. He
has been a General Partner, since 1979, in Equity Group Holdings, a general
partnership located in Washington, D.C. with interests in media operations,
publicly traded securities and manufacturing companies.
Mitchell P. Rales has served as a director of the Company since January
1984, President from March 1987 to January 1990 and Executive Vice President
from January 1984 to March 1987. He has been a General Partner of Equity Group
Holdings since 1979. From July 1, 1991 to January 2, 1992, Mr. Rales served as
acting president of CPC-Rexcel, Inc., a manufacturer of plastic food
containers, following the resignation of that company's chief executive
officer and until the search for a new chief executive officer was completed.
CPC-Rexcel, Inc. filed a voluntary petition under Chapter 11 of the Federal
Bankruptcy Code in November 1992.
George M. Sherman has served as President and Chief Executive Officer and a
director of the Company since February 1990. He served as a corporate
Executive Vice President and President of the Power Tools and Home Improvement
Group at The Black and Decker Corporation from 1985 to 1990.
Patrick W. Allender has served as Chief Financial Officer of the Company
since March, 1987.
James H. Ditkoff was appointed Vice President-Finance/Tax in January, 1991.
He has served in an executive capacity in finance/tax for the Company since
September, 1988. He was Vice President, Taxes for Pepsico, Inc. prior thereto.
W. John Weinhardt was appointed Vice President and Group Executive in
January, 1991. Prior to joining the Company in November, 1990, he held various
management positions with Prestolite Wire Corporation and Bendix/Allied Signal
Corporation, including most recently President and CEO of Prestolite Wire
Corporation.
C. Scott Brannan was appointed Vice President-Administration and Controller
of the Company in November, 1987.
John P. Watson was appointed Vice President and Group Executive in 1993. He
has served the Company in an executive capacity in its Tool Group since
September, 1990. He was Executive Vice President for the Sterling Group, a
division of the Kohler Company, prior thereto.
5
<PAGE>
COMPENSATION OF DIRECTORS
AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
compensation for the last three completed fiscal years of the Chief Executive
Officer and the five executive officers of the Company who, in addition to the
Chief Executive Officer, received the highest compensation during 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
- ------------------------------------------------------- ---------------------
AWARDS
---------------------
(E)
OTHER (F) (G) (H)
(A) ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND (C) (D) COMPEN- STOCK UNDER- COMPEN-
PRINCIPAL (B) SALARY BONUS SATION(1) AWARDS(2) LYING SATION(3)
POSITION YEAR ($) ($) ($) ($) OPTION (#) ($)
--------- ---- ------- ------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
George M. Sherman...... 1993 675,000 800,000 -- -- 200,000 $34,000
President and CEO 1992 675,000 540,000 1,027,998 -- -- 27,000
1991 675,000 145,800 -- -- -- 24,000
Steven M. Rales........ 1993 295,000 -- -- -- -- 19,000
Chairman of the Board 1992 295,000 -- -- -- -- 19,000
1991 295,000 -- -- -- -- 18,000
Mitchell P. Rales...... 1993 295,000 -- -- -- -- 19,000
Chairman, 1992 295,000 -- -- -- -- 19,000
Executive Committee 1991 295,000 -- -- -- -- 18,000
W. John Weinhardt...... 1993 187,500 234,000 -- -- 15,000 19,000
Vice President and 1992 176,666 135,200 -- -- -- 19,000
Group Executive 1991 175,000 105,000 -- -- -- 1,000
Patrick W. Allender.... 1993 176,666 180,000 -- -- 30,000 19,000
Senior Vice President 1992 157,500 124,000 -- -- 20,000 19,000
and CFO 1991 140,833 31,300 -- -- -- 18,000
John P. Watson......... 1993 180,666 150,000 -- -- 25,000 19,000
Vice President and 1992 164,333 100,000 -- -- 6,000 19,000
Group Executive 1991 153,500 -- -- -- -- 18,000
</TABLE>
- --------
(1) Represents tax gross-up payments on restricted stock grant
(2) Mr. Sherman received a grant of 200,000 shares in 1990; 100,000 are
currently vested and 100,000 vest in August, 1996. Vested shares
participate in dividends ($12,000 in 1993, none prior thereto) on a non-
preferential basis. The value of the 200,000 shares at December 31, 1993
was $7,625,000.
(3) Includes contributions to the Company's 401(k) plan for all individuals; in
the case of Mr. Sherman, it also includes supplemental term life insurance
($6,000) and financial consulting fees ($9,000).
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information relating to options
granted to purchase shares of the Company Common Stock.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (3)
- ----------------------------------------------------------------------- -------------------------------
(A) (B) (C) (D) (E) (F) (G) (H)
NO. OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#) (1) FISCAL YEAR ($/SH)(2) DATE 0%($) 5%($) 10%($)
---- ------------ ------------ --------- ---------- ------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
George Sherman (4)...... 200,000 37.3% $27.00 4/8/03 $ 0 3,396,003 8,606,191
W. John Weinhardt....... 15,000 2.8% $36.50 12/7/03 $ 0 891,817 1,967,572
Patrick W. Allender..... 30,000 5.6% $36.50 12/7/03 $ 0 1,783,634 3,935,144
John P. Watson.......... 20,000 3.7% $29.88 5/18/03 $ 0 973,424 1,550,019
John P. Watson.......... 5,000 0.9% $36.50 12/7/03 $ 0 297,272 655,857
</TABLE>
- --------
(1) Options become exercisable ratably beginning one year from date of grant
through five years from date of grant.
(2) Options were granted at fair market value on the date of grant.
(3) The dollar amounts set forth under these columns are the result of
calculations of assumed annual rates of stock price appreciation from the
date of the grant to the date of expiration of such options of 0%, 5%, and
10%. These assumptions are not intended to forecast future price
appreciation of the Company's stock price. The Company's stock price may
increase or decrease in value over the time period set forth above.
(4) Options are subject to shareholders' approval.
FY-END OPTION VALUES
The following table sets forth certain information concerning the number of
unexercised options and the value of unexercised options at the end of 1993 for
the executive officers whose compensation is reported in the Summary
Compensation Table. Value is considered to be, in the case of unexercised
options, the difference between the exercise price and the market price at
December 31, 1993. No stock options were exercised by any of the executive
officers named in the Summary Compensation Table during 1993.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---- ---------------------- ----------------------
<S> <C> <C>
George M. Sherman................. 500,000/200,000(1) $12,687,500/$2,225,000
W. John Weinhardt................. 24,000/ 31,000 570,000/ 404,375
Patrick W. Allender............... 13,000/ 52,000 275,625/ 472,500
John P. Watson.................... 7,200/ 33,800 148,350/ 195,525
</TABLE>
- --------
(1) Subject to Shareholders Approval.
7
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not officers of the Company receive meeting attendance
fees of $750 per meeting (excluding telephonic meetings), together with
quarterly fees of $3,000.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
Pursuant to the terms of termination agreements between the Company and
Messrs. Sherman, Watson and Weinhardt, if the Company were to terminate
employment without cause, as defined therein, Mr. Sherman's salary and
benefits would continue for an additional 24 months, and Messrs. Watson and
Weinhardt's salary and benefits would continue for an additional 12 months.
See "Report of The Compensation Committee of the Board of Directors on
Executive Compensation" for further discussion of Mr. Sherman's contract.
BOARD INTERLOCKS AND INSIDER PARTICIPATION
CONCERNING EXECUTIVE OFFICER COMPENSATION
Messrs. Steven M. Rales, Mitchell P. Rales and George M. Sherman receive a
salary set by the Compensation Committee of the Board of Directors and also
serve as directors, however, they do not participate in deliberations
regarding their own compensation. Messrs. Steven M. Rales and Mitchell P.
Rales also serve as directors and participate in deliberations concerning
executive officer compensation at Wabash National Corp., of which Donald J.
Ehrlich, a director of the Company, serves as President. The members of the
Compensation Committee are Walter G. Lohr, Jr., Mortimer M. Caplin and Donald
J. Ehrlich.
REPORT OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The report is not deemed to be "soliciting material" or to be "filed" with
the Securities and Exchange Commission (the "SEC") or subject to the SEC's
proxy rules or to the liabilities of Section 18 of the Securities Exchange Act
of the 1934 (the "1934 Act"), and the report shall not be deemed to be
incorporated by reference into any prior or subsequent filing by the
Corporation under the Securities Act of 1933 or the 1934 Act.
Total executive officer compensation is comprised of three principal
components: annual salary, annual incentive compensation, and grants of
options to purchase Company stock. In the case of Mr. Sherman, this included a
restricted stock grant at the time of his hire. The Board endeavors to
establish total compensation packages for each executive officer equal to the
value of that executive's services determined by both what other companies
have or might pay the executive for his services and this relationship to
other executive positions within the Company, as negotiated at the date of
hire. This base is then adjusted annually based on the Board's assessment of
individual performance. To date, the Board has been satisfied in assessing
these values without the assistance of outside consulting services.
A fundamental element of the Company's compensation policy is that a
substantial portion of each executive's compensation be directly related to
the success of the Company. This is accomplished in two ways. First, the
annual incentive compensation program requires that the Company, or the
Company's businesses for which the executive is directly responsible, achieve
certain minimum targets in earnings level (earnings per share which has a
majority weighting) and working capital management (working capital turnover,
which has a minority weighting). If performance for the year is below minimum
targeted levels (generally approximately three-quarters of the earnings target
must be achieved and working capital management must exceed target levels)
there would be no payment. If the minimum targets are met or exceeded, each
executive receives a formula-based payout taking into account the Company's
performance and his or her personal contribution thereto.
8
<PAGE>
Secondly, executives and other key employees who, in the opinion of the
Committee, contribute to the growth, development and financial success of the
Company are eligible to be awarded options to purchase Company stock. These
grants are normally made at the fair market value on the date of grant with
vesting over a five year period. In addition to the factors discussed above,
the amount of options granted is impacted both by the level of the employee
within the Company's management and the amount of options previously granted to
the employee. Thereby, the compensation value of this element is directly
related to the performance of the Company as measured by its returns to
stockholders over at least a five year period.
Mr. Sherman's compensation is governed by a written contract dated January 2,
1990, whereby he agreed to serve as President and Chief Executive Officer. The
contract provides for Mr. Sherman to be paid a base salary of $675,000 per year
and an annual formula-based incentive compensation award, if earned, as
determined by the Compensation Committee. He also received 200,000 shares of
restricted stock (see Summary Compensation Table) and an option to acquire
500,000 shares (see Year End Option Value Table) of the Company stock, and has
received, or will receive, tax gross-up payments related to these items. In
addition, Mr. Sherman's contract requires the Company to provide supplemental
term life insurance and financial consulting services to him (see Summary
Compensation Table) and to provide severance benefits discussed previously.
The Compensation Committee had two deliberations concerning Mr. Sherman's
1993 Compensation during which the members considered a grant of additional
options to acquire Company shares under the Company's 1987 Employee Stock
Option Plan. The Committee discussed Mr. Sherman's contribution to the
development, growth, and financial success of the Company as well as the
Company's preference for performance based compensation. The Committee and
subsequently the Board of Directors recommended, and Mr. Sherman agreed, that
his base salary, which has not increased since he joined the Company, would not
be increased during the remainder of the term of his contract. Therefore,
during the remaining term of his contract with the Company, any increases in
Mr. Sherman's compensation will be tied directly to the financial performance
of the Company and the Company's stock price. In that regard, the Board of
Directors granted to Mr. Sherman options to acquire 200,000 shares of the
Company stock at an option price equal to the fair market value as of the
effective date of the grant, subject to ratification of the Compensation
Committee and approval by the shareholders at the 1994 annual meeting. The
Committee also evaluated Mr. Sherman's annual incentive compensation award for
1993. The Committee assessed Mr. Sherman's performance in light of the targets
referenced above and awarded Mr. Sherman an incentive compensation payment of
$800,000 for 1993. For 1994, the Committee has established a maximum bonus
payment of up to $1,000,000 based on achievement of the above described
criteria.
The Committee has considered the impact of newly enacted provisions of the
federal income tax laws that in certain circumstances disallow compensation
deductions in excess of $1 million for any year with respect to the executive
officers named in proxy statements of publicly traded companies. The Securities
and Exchange Commission requires compensation committees of public companies to
state their compensation policies relative to this $1 million deduction limit.
With respect to the Company's Chief Executive Officer, a portion of his
compensation is determined pursuant to a binding contract dated January 2, 1990
and, accordingly, is not subject to the deduction limit. In addition, the
Committee has determined that the provisions of the Company's 1987 Stock Option
Plan as proposed to be amended by Proposal 3 should enable the Company to
comply, to the extent deemed desirable, with an exception to the $1 million
deduction limit for performance-based compensation with respect to awards made
under that plan. The Committee also believes that the 1994 bonus award to be
paid to the Company's Chief Executive Officer will not exceed the $1 million
deduction limit and accordingly should be fully deductible by the Company.
The Committee does not anticipate that the compensation of the other named
executive officers will be affected by the deductibility limit referred to
above.
The Company does not maintain a long-term incentive plan. The Company has not
repriced any options or stock appreciation rights during the last ten years.
9
<PAGE>
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Walter G. Lohr, Jr.
Mortimer M. Caplin
Donald J. Ehrlich
STOCK PERFORMANCE CHART
As part of proxy statement disclosure requirements mandated by the Securities
and Exchange Commission, the Company is required to provide a five-year
comparison of the cumulative total shareholder return on its Common Stock with
that of a broad equity market index and either a published industry index or a
Company constructed peer group index. This graph is not deemed to be
"soliciting material" or to be "filed" with the SEC or subject to the SEC's
proxy rules or to the liabilities of Section 18 of the 1934 Act, and the graph
shall not be deemed to be incorporated by reference into any prior or
subsequent filing by the Corporation under the Securities Act of 1933 or the
1934 Act.
The following chart compares the yearly percentage change in the cumulative
total shareholder return in the Company's Common Stock during the five years
ended December 31, 1993 with the cumulative total return on the S&P 500 Index
(the equity index) and the Wilshire 5000 Index (the peer index). The comparison
assumes $100 was invested on December 31, 1988 in the Company's Common Stock
and in each of the above indices with reinvestment of dividends.
[INSERT CHART]
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, from time to time, has been involved in transactions with Equity
Group Holdings and its affiliates. The Company has received legal services from
the firm of Caplin & Drysdale, of which Mr. Caplin, a Director, is a principal.
The amount of such fees for 1993 was less than five-percent of such firm's
gross revenues. These transactions, which are conducted on an arms length basis
are not material, either individually or in the aggregate.
10
<PAGE>
PROPOSAL 2.
APPROVAL OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Arthur Andersen & Co., a national
accounting firm of independent certified public accountants, to act as
independent accountants for the Company and its consolidated subsidiaries for
1994. Arthur Andersen & Co. has been the Company's auditors since 1976 and has
advised the Company that the firm does not have any direct or indirect
financial interest in the Company or any of its subsidiaries, nor has such
firm had any such interest in connection with the Company during the past five
years other than its capacity as the Company's independent certified public
accountants. A representative of Arthur Andersen & Co. is expected to be
present at the Annual Meeting and will have an opportunity to make a statement
if he desires to do so and to be available to answer questions from
shareholders.
The Board of Directors of the Company unanimously recommends that
shareholders vote FOR ratification and approval for the selection of Arthur
Andersen & Co. to serve as independent auditors for the Company for 1994.
PROPOSAL 3.
AMENDMENT TO THE 1987 STOCK OPTION PLAN
The Company's 1987 Stock Option Plan (the "Plan") was approved by
shareholders at the 1987 Annual Meeting. An amendment to the Plan increasing
the number of shares available for award from 1,300,000 to 1,800,000 and
limiting the total number of option shares awarded to any individual under the
Plan to 500,000 shares was approved by the Board of Directors, subject to
shareholder approval. The text of the proposed amendment is set forth as
Exhibit A to this Proxy Statement.
PURPOSE OF THE PLAN
The Purpose of this Plan is to increase the ownership of the Company Common
Stock by those key employees who contribute to the continued growth,
development and financial success of the Company and its subsidiaries, and to
attract and retain such employees and reward them for the Company's
performance. The Plan permits grants of non-qualified stock options and stock
appreciation rights.
NUMBER OF SHARES
The Plan as amended, provides that 1,800,000 share of Common Stock of the
Company will be available for awards to key employees in the form of non-
qualified stock options and stock appreciation rights, subject to adjustment
to reflect certain subsequent events relating to Common Stock such as stock
dividends, stock splits and share exchanges. The shares of Company Common
Stock utilized in connection with the Plan may be either authorized but
unissued shares or shares acquired and held in the treasury of the Company. No
more than 500,000 shares may be issued to any individual with respect to
awards made under the Plan.
ADMINISTRATIVE; ELIGIBILITY
The selection and the extent of participants in the Plan will be determined
by the Board of Directors, which may delegate its authority to a committee
(the "Committee") consisting of at least two members of the Board of Directors
who are not eligible for awards. Key employees of the Company and its
subsidiaries who, in the opinion of the Committee, contribute to the growth,
development and financial success of the Company or its subsidiaries are
eligible for awards. In determining the size of awards, the Committee will
take into account a participant's responsibility level, performance,
potential, cash compensation level and the fair market value of the Company
Common Stock at the time of the award as well as such other considerations as
it deems appropriate. The Board of Directors estimates that approximately 100
persons are eligible to receive awards under the Plan.
DURATION; EFFECTIVE DATE
The Plan has been effective since October 20, 1987, and options may be
granted under the Plan until October 20, 1997.
11
<PAGE>
NON-QUALIFIED STOCK OPTIONS
The Board of Directors or the Committee may grant a participant options which
are non-qualified under the Internal Revenue Code of 1986. The timing and size
of options awarded will be subject to guidelines adopted by the Committee,
which may in its discretion provide that an option may not be exercised in
whole or in part for any period or periods. Options may be reacquired in the
discretion of the Board of Directors or the Committee for cash.
STOCK APPRECIATION RIGHTS
In the discretion of the Board of Directors or the Committee, any or all
optionees may be given the right at any time during the option period, to
surrender all or part of their options and to receive from the Company a
payment equal to the appreciation that they would have realized on shares of
stock had the related options been exercised and the option stock sold.
The amount payable by the Company upon exercise of a stock appreciation right
may be paid either in cash, in Common Stock of the Company or in a combination
thereof, as the Board of Directors of the Committee in its sole discretion
shall determine. However, the total number of shares which may be received
pursuant to a stock appreciation right may not exceed the total number of
shares subject to the related option. Shares to which a stock appreciation
right is related shall be used not more than once to calculate the amounts to
be received pursuant to an exercise of such right. The Board of Directors or
the Committee, may, in its sole discretion prohibit or limit the exercise of
stock appreciation rights for a period or periods as to determines to be in the
best interest of the Company and its stockholders.
STOCK OPTION AGREEMENTS
Non-qualified stock options will be evidenced by agreements approved by the
Board of Directors or the Committee, and a stock appreciation right will be
evidenced by an agreement incorporated in or amending the stock option
agreement to which the stock appreciation right relates. These agreements will
contain terms and conditions relating to medium of payment, number of shares,
option price (which will not be less than 85% of the fair market value of the
shares subject to the option on the date of grant), date of exercise,
repurchases, exercise in the event a participant ceases employment with the
Company, and other provisions that the Committee deems advisable.
SUBSTITUTE AWARDS
Non-qualified stock options and stock appreciation rights may be granted
under the Plan in substitution for similar awards held by employees of the
corporations who become or are about to become key employees of the Company as
a result of a merger, acquisition of assets or stock, consolidation or
reorganization. The terms and conditions of the substitute awards may vary from
the terms and conditions of the Plan to such extent as the Committee at the
time of the grant may deem appropriate in order to conform, in whole or in
part, to provisions of awards in substitution for which they are granted.
However, no variation which materially extends the period for granting awards,
or materially modifies the requirements as to eligibility can be effected
without shareholder approval.
EFFECT OF MERGER OR ACQUISITION
If the Company is the surviving or resulting corporation in any merger,
acquisition of assets or stock, consolidation or reorganization, rights granted
under the Plan shall survive, and the Board of Directors shall make any
necessary determinations and adjustments to preserve the rights and benefits of
participants. If the Company is not the surviving or resulting corporation in
any such transaction, the successor corporation may, but shall not be required
to, assume the rights and obligations of the Company under the Plan.
AMENDMENT OF PLAN
The Board of Directors may at any time and from any time alter, amend,
suspend, or discontinue the Plan, except no such action may be taken without
stockholder approval which materially increase the benefits to participants
under the Plan, materially increases the number of shares to be issued,
materially extends the period for granting awards, or materially modifies the
requirements as to eligibility. In addition, no such action may be taken which
adversely affects the rights of a participant under the Plan without his
consent.
12
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
Under current law, there will be no federal income tax consequences to either
the optionee or the Company upon the grant of a non-qualified stock option. An
option holder who exercises a non-qualified stock option will generally realize
compensation taxable as ordinary income in an amount equal to the difference
between the option price and the fair market value of the shares on the date of
the exercise. The option holder's basis in such shares will be their fair
market value on the date of exercise, and when he disposes of the shares he
will generally recognize capital gain or loss, either long-term or short-term,
depending on the holding period of the shares.
The grant of a stock appreciation right will not result in taxable income to
the option holder or a deduction to the Company. An option holder who exercises
a stock appreciation right will realize compensation taxable as ordinary income
in an amount equal to the cash or the fair market value of the shares received
on the date of exercise. The option holder's basis in any share received will
be equal to the amount of compensation income recognized with respect to the
exercise, and when he disposes of the shares he will generally recognize
capital gain or loss, either long-term or short-term, depending on the holding
period of the shares.
Generally, the Company is entitled to a deduction in the amount of the income
recognized by the option holder at the time an option or stock appreciation
right is exercised. Beginning in 1994, the Company's deductions for an
executive officer named in the proxy statement may be limited to the extent
compensation paid to such officer for any year exceeds $1 million. However, an
exception to this limit is provided with respect to options and stock
appreciation rights granted at fair market value under a plan that is approved
by shareholders and administered by outside directors who satisfy certain
conditions imposed by proposed regulations issued by the Internal Revenue
Service, provided the plan limits the maximum number of shares that may be
issued to any individual. If the Company's shareholders approve the proposed
amendment of the Plan, it is expected that the requirements of this exception
will be satisfied for options and stock appreciation rights granted at fair
market value under the Plan.
The Internal Revenue Service has ruled that an employee who allows a stock
appreciation right to expire, other than as a result of exercising the related
option, will have taxable income in the year of expiration equal to the amount
of cash or the fair value of stock which he would have received if he had
exercised his stock appreciation right.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE AMENDMENT
TO THE 1987 STOCK OPTION PLAN. APPROVAL REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK OF THE COMPANY PRESENT, OR
REPRESENTED, AND ENTITLED TO VOTE AT THE ANNUAL MEETING.
PROPOSAL 4.
APPROVAL OF OPTION GRANT TO PRESIDENT
AND CHIEF EXECUTIVE OFFICER
By Unanimous Written Consent dated as of April 8, 1993, the Board of
Directors of the Company granted 200,000 non-qualified stock options to George
M. Sherman under the Company's 1987 Stock Option Plan at fair market value at
the close of business on that date ($27.00 per share), subject to approval of
the Compensation Committee of the Board of Directors and by a vote of a
majority of the Company's shareholders. The Compensation Committee approved
this grant (see Report of Compensation Committee) on December 7, 1993.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE OPTION
GRANT TO THE PRESIDENT AND CHIEF EXECUTIVE OFFICER. APPROVAL REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK OF THE COMPANY
PRESENT, OR REPRESENTED, AND ENTITLED TO VOTE AT THE ANNUAL MEETING.
13
<PAGE>
OTHER MATTERS
The management of the Company is not aware of any other business that may
come before the meeting. However, if additional matters properly come before
the meeting, proxies will be voted at the discretion of the proxy holders.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1995 Annual Meeting of
Shareholders of the Company must be received by the Company at its principal
executive offices, Danaher Corporation, 1250 24th Street, N.W., Washington,
D.C. 20037, no later than November 27, 1994 for inclusion in the Proxy
Statement and Proxy relating to the 1995 Annual Meeting of Shareholders.
By Order of the Board of Directors
/s/ Patrick W. Allender
Patrick W. Allender
Secretary
Dated: March 30, 1994
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1993 MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING TO THE COMPANY.
14
<PAGE>
EXHIBIT A
AMENDMENT TO DANAHER CORPORATION
1987 STOCK OPTION PLAN
Resolved that, as recommended and declared advisable by the Board of
Directors, the Company's 1987 Stock Option Plan be amended by striking out
SECTION FIVE in its entirety and substituting in lieu thereof the following:
SECTION FIVE. GRANT OF AWARDS AND LIMITATION
OF NUMBER OF SHARES OF STOCK AWARDED.
The Board or the Committee may, from time to time, grant Awards of Stock to
one or more Eligible Employees; provided that (i) subject to any adjustment
pursuant to Section Eleven or Twelve, the aggregate number of shares of Stock
subject to awards under this Plan may not exceed 1,800,000 shares; (ii) to the
extent that an Award lapses or the rights of the Participant to whom it was
granted terminate, any shares of Stock subject to such Awards shall again be
available for the grant of an award hereunder; and (iii) shares ceasing to be
subject to an award because of the exercise of a Non-qualified Stock Option and
Stock Appreciation Right shall no longer be available for the grant of an Award
hereunder and (iv) no Eligible Employee shall receive an Award or Awards under
this Plan for, in the aggregate, more than 500,000 shares. In determining the
size of awards, the Board or the Committee may take into account a
Participant's responsibility level, performance, potential, cash compensation
level, the Fair Market Value of the Stock at the time of Awards and such other
considerations as it deems appropriate.
15
<PAGE>
DANAHER CORPORATION
PROXY FOR 1994
ANNUAL MEETING OF SHAREHOLDERS--MAY 17, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DANAHER
CORPORATION
The undersigned acknowledges receipt of the Proxy Statement and Notice, dated
March 30, 1994, of the Annual Meeting of Shareholders and hereby appoints
Steven M. Rales and Mitchell P. Rales, and each of them, with full power of
substitution, the attorneys, agents and proxies of the undersigned, to act for
and in the name of the undersigned and to vote all the shares of Common Stock
of the undersigned which the undersigned is entitled to vote at the Annual
Meeting of Shareholders of Danaher Corporation (the "Company") to be held May
17, 1994, and at any adjournment or adjournments thereof, for the following
matters:
PLEASE SEE REVERSE SIDE
Dated: , 1994
-------------------
--------------------------------
--------------------------------
Signature of Shareholder(s)
Please sign, date and promptly return this proxy in the enclosed envelope. No
postage is required if mailed in the United States. (Please sign exactly as
your name appears in the space on the left. If stock is registered in more than
one name, each holder should sign. When signing as an attorney, administrator,
executor, guardian or trustee, please add your title as such. If executed by a
corporation, the proxy must be signed by a duly authorized officer, and his
title should appear next to his signature.)
<PAGE>
Proxies will be voted in the manner directed herein by the undersigned. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 and 4.
(Please sign and date on the reverse side.)
1. ELECTION OF DIRECTORS
Nominees Mortimer M. Caplin, Donald J. Ehrlich and Walter G. Lohr, Jr. to serve
in the class of directors with a term expiring in 1997.
WITHHOLD
AUTHORITY
for
all
FOR all Nominees Nominees
[_] [_]
To withhold authority to vote for an individual Nominee, write that Nominee's
name on the line below.
- --------------------------------------------------------------------------------
2. APPROVAL OF AUDITORS
For Against Abstain
[_] [_] [_]
3. APPROVAL OF AMENDMENT TO 1987 STOCK OPTION PLAN
For Against Abstain
[_] [_] [_]
4. APPROVAL OF GRANT OF AN OPTION TO ACQUIRE COMPANY STOCK MADE TO PRESIDENT
AND CEO
For Against Abstain
[_] [_] [_]
5. IN THEIR DISCRETION on any other matter which may properly come before the
meeting, including any adjournment thereof.
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK
<PAGE>
LOGO
DANAHER CORPORATION
PROXY FOR 1994
ANNUAL MEETING OF SHAREHOLDERS--MAY 17, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DANAHER
CORPORATION
The undersigned acknowledges receipt of the Proxy Statement and Notice, dated
March 30, 1994, of the Annual Meeting of Shareholders and hereby appoints
Steven M. Rales and Mitchell P. Rales, and each of them, with full power of
substitution, the attorneys, agents and proxies of the undersigned, to act for
and in the name of the undersigned and to vote all the shares of Common Stock
of the undersigned which the undersigned is entitled to vote at the Annual
Meeting of Shareholders of Danaher Corporation (the "Company") to be held May
17, 1994, and at any adjournment or adjournments thereof, for the following
matters:
Proxies will be voted in the manner directed herein by the undersigned. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 and 4.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
1. ELECTION OF DIRECTORS. Nominees Mortimer M. Caplin, Donald J. Ehrlich and
Walter G. Lohr, Jr. to serve in the class of directors with a term expiring
in 1997.
[_] FOR Nominees [_] WITHHOLD AUTHORITY for Nominees
To withhold authority to vote for an individual Nominee,
write that Nominee's name on the line below.
-----------------------------------------------------------
<PAGE>
2. APPROVAL OF AUDITORS
[_] FOR [_] AGAINST [_] ABSTAIN
3. APPROVAL OF AMENDMENT TO 1987 STOCK OPTION PLAN
[_] FOR [_] AGAINST [_] ABSTAIN
4. APPROVAL OF GRANT OF AN OPTION TO ACQUIRE COMPANY STOCK MADE TO THE
PRESIDENT AND CEO
[_] FOR [_] AGAINST [_] ABSTAIN
5. IN THEIR DISCRETION on any other matter which may properly come before the
meeting, including any adjournment thereof.
Dated: , 1994
-------------------
--------------------------------
--------------------------------
Signature of Shareholder(s)
Please sign, date and promptly return this proxy in the enclosed envelope. No
postage is required if mailed in the United States. Please sign exactly as your
name appears in the space on the left. If stock is registered in more than one
name, each holder should sign. When signing as an attorney, administrator,
executor, guardian or trustee, please add your title as such. If executed by a
corporation, the proxy must be signed by a duly authorized officer, and his
title should appear next to his signature.)
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK
