<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] 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 (S)240.14a-11(c) or (S)240.14a-12
DANAHER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
DANAHER CORPORATION
1250 24TH STREET, N.W.
WASHINGTON, D.C. 20037
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 5, 1998
To the Shareholders:
Notice is hereby given that the 1998 Annual Meeting of Shareholders of
Danaher Corporation, a Delaware corporation (the "Company"), will be held at
the Westin Hotel, 2350 M Street, NW, Washington, D.C. 20037, on May 5, 1998 at
3:00 p.m., local time, for the following purposes:
1. To elect one Director to hold office for a term of three years and until
his successor is elected and qualified.
2. To approve the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1998.
3. To approve the material terms of the performance goals for incentive
compensation to the Company's executive officers.
4. To amend the Company's 1987 Stock Option Plan.
5. To approve stock option grants to five executive officers.
6. To approve an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of capital stock of the Company
to a total of three hundred fifteen million (315,000,000) shares,
consisting of three hundred million (300,000,000) shares of common
stock, $.01 par value per share ("Common Stock") and fifteen million
(15,000,000) shares of preferred stock, without par value ("Preferred
Stock");
7. 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 20, 1998 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, 1998
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
1998 ANNUAL MEETING OF SHAREHOLDERS
MAY 5, 1998
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 1998 Annual Meeting of Shareholders
("Annual Meeting") to be held at the Westin Hotel on May 5, 1998 at 3:00 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, 1998. The purpose of the
meeting is to elect one director of the Company; to approve the appointment of
Arthur Andersen LLP as the Company's independent auditors for the current
year; to approve material terms of the performance goals for 1998 incentive
compensation of the Company's executive officers; to approve an amendment to
the Company's 1987 Stock Option Plan; to approve Stock Option Grants to five
executive officers; to approve an amendment to the company's Certificate of
Incorporation to increase the total number or authorize shares of Capital
Stock to three hundred ffteen million shares; 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 20, 1998 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 20, 1998, the record date for determining the shareholders of the
Company entitled to vote at the Annual Meeting, 58,537,110 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 a director 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. 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 (i) performance goals for 1998 incentive compensation to the
Company's executive officers, (ii) the amendment to the Company's 1987 Stock
Option Plan, (iii) approval of Stock Option Grants to five executive officers,
and (iv) approval of the amendment to the Company's Certificate of
Incorporation to increase the number of authorized
<PAGE>
shares of Capital Stock to a total of three hundred fifteen million shares,
requires the affirmative vote of the holders of a majority of the shares of
the Company's Common Stock 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. 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 elections of 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 (i) approval of the performance goals for 1998 incentive
compensation to the Company's executive officers and (ii) the amendment to the
Company's 1987 Stock Option Plan, 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 will not be considered entitled to vote and will
have no effect on the vote required for approval.
BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK BY
DIRECTORS, OFFICERS AND PRINCIPAL SHAREHOLDERS
As of March 20, 1998, the beneficial ownership of Company Common Stock by
directors and the nominees for director, 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............................. 115,874 (9) *
George M. Sherman.............................. 1,104,000 (4) 1.9%
Donald J. Ehrlich.............................. 28,000 (7) *
Walter G. Lohr, Jr............................. 82,000 (8) *
Mitchell P. Rales.............................. 23,213,459 (1) 39.7%
Steven M. Rales................................ 23,213,459 (1) 39.7%
Dennis D. Claramunt............................ 59,200 (5) *
Patrick W. Allender............................ 246,000 (6) *
John P. Watson................................. 87,600 (3) *
A. Emmet Stephenson, Jr........................ 116,060 (2) *
Steven E. Simms................................ 21,400 (10) *
FMR Corp....................................... 4,028,400 (11) 6.9%
T. Rowe Price Associates....................... 3,336,600 (12) 5.7%
All executive officers and directors as a group
(includes 15 persons)......................... 25,384,153 (1)(2) 43.4%
</TABLE>
- --------
(1) The aggregate holdings for Steven and Mitchell Rales include (i) all of
the 20,032,444 shares of Company Common Stock owned by Equity Group
Holdings LLC and Equity Group Holdings II LLC, of which Steven Rales and
Mitchell Rales are the only members, and (ii) 1,597,366 and 1,583,649
shares of Company Common Stock owned directly or through the Danaher
401(k) Plan by Steven Rales and Mitchell Rales, respectively. Steven and
Mitchell Rales each disclaim beneficial ownership of those shares of
Company Common Stock that are owned directly or through the Danaher
401(k) Plan by the other. Their business address, and that of Equity
Group Holdings LLC and Equity Group Holdings II LLC, is 1250 24th Street,
N.W., Washington, D.C. 20037.
(2) Includes 68,060 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 40,000 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. Mr. Stephenson has the option to acquire 8,000
shares of Company stock.
(3) Mr. Watson has the option to acquire 87,600 shares of Company Common
Stock.
2
<PAGE>
(4) Mr. Sherman has the option to acquire 920,000 shares of Company Common
Stock. Includes 3,000 shares held by Sherman Investors Limited
Partnership, a partnership for the benefit of his family. Mr. Sherman
controls the general partner.
(5) Mr. Claramunt has the option to acquire 59,200 shares of Company Common
Stock.
(6) Mr. Allender has the option to acquire 153,000 shares of Company Common
Stock.
(7) Mr. Ehrlich has the option to acquire 8,000 shares of Company Common
Stock.
(8) Mr. Lohr has the option to acquire 8,000 shares of Company Common Stock.
(9) Mr. Caplin has the option to acquire 4,000 shares of Company Common
Stock.
(10) Mr. Simms has the option to acquire 21,400 shares of Company Common
Stock.
(11) FMR Corp.'s address is 82 Devonshire Street, Boston, MA 02109.
(12) T. Rowe Price Associates' address is 100 E. Pratt Street, Baltimore, MD
21202.
* Represents less than 1% of the outstanding Company Common Stock.
Apart from Steven M. Rales, Mitchell P. Rales, FMR Corp. and T. Rowe Price
Associates, 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 1998 Annual Meeting of Shareholders,
shareholders will elect one director to serve until the 2001 Annual Meeting of
Shareholders and until his successor is duly elected and qualified. The Board
of Directors has nominated Mr. Steven M. Rales to serve as a director until
his term expires in 2001. Messrs. Mitchell P. Rales, George M. Sherman and A.
Emmet Stephenson, Jr. will continue to serve as directors in the class whose
term expires in 1999. Messrs. Mortimer M. Caplin, Donald J. Ehrlich and Walter
G. Lohr, Jr. will continue to serve as directors in the class whose term
expires in 2000.
The names of the nominee 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 nominee
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 2001
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION SINCE EXPIRES
---- --- -------------------------- -------- -------
<S> <C> <C> <C> <C>
Steven M. Rales (b,d)......... 46 Chairman of the Board of 1983 2001
the Company since 1984;
during the past five years
he has been a principal in
a number of private
business entities with
interests in manufacturing
companies, media
operations and publicly
traded securities;
Director of Imo Industries
Inc.
</TABLE>
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>
Mortimer M. Caplin(a,c)...... 81 Senior Member of Caplin & 1990 2000
Drysdale, a law firm in
Washington, D.C., for
over five years; Director
of Fairchild Corporation
and Presidential Realty
Corporation.
Donald J. Ehrlich(a,c)....... 60 President, Chairman and 1985 2000
Chief Executive Officer
of Wabash National Corp.
for over five years;
Director of Indiana
Secondary Market for
Educational Loans, Inc.
and INB National Bank,
N.W.
Walter G. Lohr, Jr.(c)....... 54 Partner of Hogan & 1983 2000
Hartson, a law firm in
Baltimore, Maryland, for
over five years.
Mitchell P. Rales(b,d)....... 41 Chairman of the Executive 1983 1999
Committee of the Company
since 1990; during the
past five years he has
been a principal in a
number of private
business entities with
interests in
manufacturing companies,
media operations and
publicly traded
securities; Director of
Imo Industries Inc.
George M. Sherman(d)......... 56 President and Chief 1990 1999
Executive Officer of the
Company since 1990;
Director of Campbell Soup
Company.
A. Emmet Stephenson, Jr.(a).. 52 President of Stephenson 1986 1999
and Co., a private
investment firm in
Denver, Colorado for more
than five years; Chairman
of StarTek, Inc. for more
than five years.
</TABLE>
- --------
(a) Member of the Compensation Committee of the Board of Directors.
(b) Mitchell P. Rales and Steven M. Rales are brothers.
(c) Member of the Audit Committee of the Board of Directors.
(d) Member of the Executive Committee of the Board of Directors.
4
<PAGE>
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors had a total of four meetings during 1997. 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 1997.
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 1997.
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 1997.
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 1997.
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
---- --- -------- -------
<S> <C> <C> <C>
Steven M. Rales......... 46 Chairman of the Board 1984
Mitchell P. Rales....... 41 Chairman of the Executive Committee 1984
George M. Sherman....... 56 Chief Executive Officer, President and Director 1990
Patrick W. Allender..... 51 Senior Vice President, Chief Financial Officer
and Secretary 1987
James H. Ditkoff........ 52 Vice President--Finance and Tax 1991
Dennis D. Claramunt..... 52 Vice President and Group Executive 1994
C. Scott Brannan........ 39 Vice President--Administration and Controller 1987
John P. Watson.......... 54 Vice President and Group Executive 1993
H. Lawrence Culp, Jr. .. 34 Vice President and Group Executive 1995
Daniel L. Comas......... 33 Vice President--Corporate Development 1996
Steven E. Simms......... 42 Vice President and Group Executive 1996
Mark C. DeLuzio......... 40 Vice President--Danaher Business System 1996
Dennis A. Longo......... 41 Vice President--Human Resources 1997
</TABLE>
Steven M. Rales has served as Chairman of the Board since January 1984. In
addition, during the past five years he has been a principal in a number of
private business entities with interests in manufacturing companies, media
operations and publicly traded securities. He is also a director of Imo
Industries, Inc.
Mitchell P. Rales has served as a director of the Company since January
1984. In addition, during the past five years he has been a principal in a
number of private business entities with interests in manufacturing companies,
media operations and publicly traded securities. He is also a director of Imo
Industries, Inc.
5
<PAGE>
George M. Sherman has served as President and Chief Executive Officer and a
director of the Company since February 1990.
Patrick W. Allender has served as Chief Financial Officer of the Company
since March, 1987.
James H. Ditkoff has served as Vice President-Finance and Tax since January,
1991.
Dennis D. Claramunt was appointed Vice President and Group Executive in
1994. He has served as President of Jacobs Chuck Manufacturing Company for
more than the past five years.
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 since September, 1990.
H. Lawrence Culp, Jr. was appointed Vice President and Group Executive in
1995. He has served the Company in an executive capacity (including President
since 1993 at Veeder-Root Company) for more than the past five years.
Daniel L. Comas was appointed Vice President-Corporate Development in 1996.
He has served the Company in an executive capacity in the corporate
development area for more than the past five years.
Steven E. Simms was appointed Vice President and Group Executive in 1996. He
had previously served Black & Decker, most recently as President--Worldwide
Accessories Business.
Mark C. DeLuzio was appointed Vice President-Danaher Business Systems (DBS)
in 1996. He has served the Company as Director-DBS and in financial and
operating positions with Jacobs Vehicle Systems, Inc. for more than the past
five years.
Dennis A. Longo was appointed Vice President-Human Resources in 1997. He has
served the Company as a human resources executive for more than the past five
years.
6
<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 executive officers of the Company who, in addition to the
Chief Executive Officer, received the highest compensation during 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------------------- ---------------------
(E) (F) (G)
(A) OTHER RESTRICTED SECURITIES (H)
NAME AND (C) (D) ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL (B) SALARY BONUS COMPENSATION AWARDS (1) OPTION COMPENSATION (2)
POSITION YEAR ($) ($) ($) ($) (#) ($)
--------- ---- ------- --------- ------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
George M. Sherman....... 1997 675,000 1,457,500 -- 600,000 $61,000
President and CEO 1996 675,000 859,000 -- -- -- 63,000
1995 675,000 921,000 -- -- 300,000 36,000
Patrick W. Allender..... 1997 296,000 325,000 -- -- 100,000 22,000
Senior Vice President
and 1996 270,833 260,000 -- -- 25,000 14,000
CFO 1995 243,333 250,000 -- -- 15,000 14,000
Steven E. Simms......... 1997 280,000 200,000 -- -- 85,000 22,000
Vice President and 1996 210,000 160,000 -- -- 107,000 --
Group Executive
John P. Watson.......... 1997 247,000 180,000 -- -- 85,000 22,000
Vice President and 1996 236,000 100,000 -- -- 10,000 14,000
Group Executive 1995 213,000 120,000 -- -- 7,000 14,000
Dennis D. Claramunt..... 1997 228,000 170,000 -- -- 85,000 22,000
Vice President and
Group 1996 211,000 130,000 -- -- 12,000 14,000
Executive 1995 196,000 150,000 -- -- 7,000 14,000
</TABLE>
- --------
(1) Mr. Sherman received a grant of 400,000 shares in 1990; 200,000 have been
issued and 200,000 are deferred until retirement. Issued shares
participate in dividends ( $20,000 in 1997, $18,000 in 1996 and $16,000 in
1995) on a non-preferential basis. The value of the 400,000 shares at
December 31, 1997 was $25,250,000.
(2) Includes contributions to the Company's 401(k) and executive retirement
plans and financial consulting fees for all individuals; in the case of
Mr. Sherman, it also includes supplemental term life insurance ($17,000
for 1997) and financial consulting fees ($22,000 for 1997).
7
<PAGE>
GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information relating to options
granted to purchase shares of the Company Common Stock.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (3)
--------------------------------------------------- -------------------------------
(B) (C)
NO. OF SECURITIES % OF TOTAL (D)
UNDERLYING OPTIONS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE (E)
GRANTED EMPLOYEES IN PRICE EXPIRATION (F) (G) (H)
(#) (1) FISCAL YEAR ($/SH)(2) DATE 0%($) 5%($) 10%($)
NAME ----------------- ------------ --------- ---------- ----- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George M. Sherman....... 600,000 37.5% 44.25 3/13/07 0 16,700,000 42,300,000
Patrick W. Allender..... 100,000(4) 6.2% 47.75 5/14/07 0 3,000,000 7,600,000
John P. Watson.......... 85,000(4) 5.3% 47.75 5/14/07 0 2,550,000 6,470,000
Dennis D. Claramunt..... 85,000(4) 5.3% 47.75 5/14/07 0 2,550,000 6,470,000
Steven E. Simms......... 85,000(4) 5.3% 47.75 5/14/07 0 2,550,000 6,470,000
</TABLE>
- --------
(1) Options become exercisable on the fifth anniversary of the date of grant,
except for Mr. Sherman's options, of which half become exercisable in
three years, and half become exercisable in four years.
(2) Options were granted at fair market value on the date of grant.
(3) The dollar amounts set forth under these columns are the result of
calculations of assumed annual rates of stock price appreciation from the
date of the grant to the date of expiration of such options of 0%, 5%, and
10%. These assumptions are not intended to forecast future price
appreciation of the Company's stock price. The Company's stock price may
increase or decrease in value over the time period set forth above.
(4) Subject to shareholder approval.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
The following table sets forth certain information concerning the number of
unexercised options and the value of unexercised options at the end of 1997
for the executive officers whose compensation is reported in the Summary
Compensation Table. Value is considered to be, in the case of unexercised
options, the difference between the exercise price and the market price at
December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
ACQUIRED VALUE OPTION AT FY-END (#) MONEY OPTIONS AT FY-
ON EXERCISE REALIZED EXERCISABLE/ END($) EXERCISABLE/
# $ UNEXERCISABLE UNEXERCISABLE
----------- -------- ----------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
George M. Sherman....... -0- -0- 920,000 980,000(1) $ 49,930,000 $ 48,270,000
Dennis D. Claramunt..... -0- -0- 59,200 110,800 $ 2,782,000 $ 2,164,000
Patrick W. Allender..... -0- -0- 153,000 157,000 $ 7,174,000 $ 3,369,000
John P. Watson.......... -0- -0- 87,600 114,400 $ 4,185,000 $ 2,350,000
Steven E. Simms......... -0- -0- 21,400 170,600 $ 573,400 $ 3,600,000
</TABLE>
- --------
(1) Includes options to acquire 40,000 shares transferred in trust to family
members. Mr. Sherman disclaims beneficial ownership of these options.
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. A grant of an option to acquire 2,000 shares of
Company Common Stock at $60.1875 (fair market value at date of grant) per
share was made to these directors.
8
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
Pursuant to the terms of termination agreements between the Company and
Messrs. Sherman and Watson, if the Company were to terminate their employment
without cause, as defined therein, Mr. Sherman's salary and benefits would
continue for an additional 24 months, and Mr. Watson'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.
COMPENSATION COMMITTEE
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. The members of the Compensation Committee
are A. Emmet Stephenson, 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 Securities Exchange Act of
1934.
Total executive officer compensation is comprised of three principal
components: annual salary, annual incentive compensation, and grants of
options to purchase Company Common Stock. In the case of Mr. Sherman, this
included a restricted stock grant at the time of his hire. The Committee
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 his
relationship to other executive positions within the Company, as negotiated at
the date of hire. This base is then adjusted annually based on the Committee's
assessment of individual performance.
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), working capital management (working capital turnover) and
economic value added. 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.
Second, 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 Common 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. Thus the compensation value of this element is
directly related to the performance of the Company as measured by its returns
to shareholders over at least a five year period.
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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. 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. He also received 400,000 shares of
restricted stock (see Summary Compensation Table) and an option to acquire
1,000,000 shares (see Year End Option Value Table) of the Company Common
Stock, and has received, or will receive, tax gross-up payments related to
these items. 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 Committee evaluated each executive's annual incentive compensation
awards for 1997. The Committee assessed their performance in light of the
targets referenced above, which were substantially exceeded, and awarded total
incentive compensation payments to executives other than Group Executives of
$2,472,500 for 1997. For the years 1998-2002, the Committee has established a
maximum bonus payment of up to $2,500,000 per executive, subject to approval
by the Company's shareholders of the performance goals, which are applicable
to all of the Company's executive officers, other than Group Executives.
The Committee has considered the impact of 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 designed the program for awarding 1998-2002 incentive
compensation to executive officers other than Group Executives so that such
bonuses will comply with an exception to the $1 million deduction limit for
performance-based compensation. Accordingly, the full amount of any such bonus
payments for 1998-2002 should be deductible. One of the requirements of this
exception is that shareholders approve certain material terms under which the
bonus is to be paid. In this regard, the Company's shareholders are being
asked to approve the material terms used for calculating the 1998-2002 bonus
awards for the Company's executive officers other than Group Executives, as
discussed in Proposal 3 hereto.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
A. EMMET STEPHENSON, JR.
MORTIMER M. CAPLIN
DONALD J. EHRLICH
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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, 1997 with the cumulative total return on the S & P 500
Index (the equity index) and the S&P Manufacturing Index (the peer index). The
comparison assumes $100 was invested on December 31, 1992 in the Company's
Common Stock and in each of the above indices with reinvestment of dividends.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG DANAHER CORPORATION
S&P 500 INDEX AND S&P MANUFACTURING INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
S&P
Measurement Period DANAHER S&P MANUFACTURING
(Fiscal Year Covered) CORPORATION 500 INDEX INDEX
- --------------------- --------------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-12/31/1992 $100.00 $100.00 $100.00
FYE 12/31/1993 $146.98 $109.99 $121.40
FYE 12/31/1994 $201.90 $111.41 $125.66
FYE 12/31/1995 $245.99 $153.27 $176.96
FYE 12/31/1996 $361.93 $188.62 $235.42
FYE 12/31/1997 $490.79 $251.19 $324.20
</TABLE>
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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, and from the firm of Hogan & Hartson, of which Mr. Lohr, a
Director, is a partner. The amount of such fees for 1997 was less than five-
percent of each firm's gross revenues. These transactions, which are conducted
on an arms length basis, are not material, either individually or in the
aggregate.
PROPOSAL 2.
APPROVAL OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Arthur Andersen LLP, an international
accounting firm of independent certified public accountants, to act as
independent accountants for the Company and its consolidated subsidiaries for
1998. Arthur Andersen LLP 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 LLP 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 LLP TO SERVE AS INDEPENDENT AUDITORS FOR THE COMPANY FOR 1998.
PROPOSAL 3.
APPROVAL OF PERFORMANCE GOALS
Beginning in 1994, federal income tax laws limit deductions for publicly
held corporations with respect to compensation in excess of $1 million paid to
an executive officer who is named in its proxy statement. However,
compensation payable solely on account of attainment of one or more
performance goals is not subject to the deduction limit if the performance
goals are objective, pre-established and determined by a compensation
committee comprised solely of two or more outside directors, the material
terms under which the compensation is paid are disclosed to shareholders and
approved by a majority vote, and the compensation committee certifies that the
performance goals and other material terms were in fact satisfied before
amounts were paid.
In order to ensure that the full amount of the bonus payment that may be
made to the executive officers other then Group Executives for each of the
five years beginning with 1998 is deductible for federal income tax purposes,
the material terms of the performance goals under which that bonus is to be
paid are described below and the shareholders will be asked to approve those
material terms. Payment of the bonus based on these performance goals is
conditioned upon and subject to approval by the shareholders of the Company of
the material terms of these performance goals.
The maximum bonus payable to any executive officer other than Group
Executives will be determined under a formula and will not exceed $2.5
million. The maximum bonus payable to each executive officer other than Group
Executives is computed under a formula approved by the Compensation Committee
on March 5, 1998, that is based on the Company's reported earnings per share
from continuing operations. The Compensation Committee reserves the right, in
its sole and absolute discretion, not to award any bonus to the executive
officers other than Group Executives or to award any of them a bonus of less
than the maximum amount determined in accordance with the formula described
above.
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THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE MATERIAL
TERMS OF THE PERFORMANCE GOALS ESTABLISHED FOR THE PAYMENT OF BONUSES TO THE
EXECUTIVE OFFICERS OTHER THAN GROUP EXECUTIVES. APPROVAL REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE HOLDERS OF COMMON STOCK VOTED AT THE
MEETING ON THIS PROPOSAL.
PROPOSAL 4.
AMEND THE COMPANY'S 1987 STOCK OPTION PLAN
The Company's 1987 Stock Option Plan (the "Plan") was approved by the
shareholders at the 1987 Annual Meeting. On March 5, 1998, the Board of
Directors approved a comprehensive set of amendments to the Plan, which would
(1) designate the Compensation Committee as the administrator of the Plan, (2)
increase the maximum number of stock options from 5,000,000 to 7,500,000, (3)
increase the maximum number of stock options that can be granted to any
individual from 1,300,000 to 2,500,000, (4) prohibit the issuance of incentive
stock options, stock appreciation rights, or stock option grants at less than
the stock's fair market value on the date of grant, and (5) make certain other
changes in the time for vesting and exercising stock options. The complete
text of the Plan, as amended, is attached as Exhibit A.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE
AMENDMENTS 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 5.
APPROVE STOCK OPTION GRANTS
On May 14, 1997, the Compensation Committee approved the following grants of
non-qualified stock options under the 1987 Stock Option Plan: 100,000 options
to Patrick W. Allender, the Company's Senior Vice President and Chief
Financial Officer, and 85,000 options to each of the Company's four Group
Executives--Dennis D. Claramunt, H. Lawrence Culp, Jr., Steven E. Simms, and
John P. Watson. The exercise price on all five option grants is $47.75 per
share, which was the fair market value of Danaher's stock on the date of these
grants, and all of the options become exercisable on May 14, 2002, unless an
optionee dies or becomes totally disabled prior to May 14, 2002, in which case
his options vest in five equal annual installments beginning on May 14, 1998.
All five option grants were made subject to approval by the Company's
shareholders at their 1998 annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE OPTION
GRANTS TO THE CHIEF FINANCIAL OFFICER AND FOUR GROUP EXECUTIVES. 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.
PROPOSAL NO. 6
APPROVAL OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED CAPITAL STOCK
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of capital stock of the Company to a
13
<PAGE>
total of three hundred fifteen million (315,000,000) shares, consisting of
three hundred million (300,000,000) shares of Common Stock, $.01 par value per
share ("Common Stock") and fifteen million (15,000,000) shares of preferred
stock, without par value ("Preferred Stock"). The capital stock of the
Company, prior to the approval of the amendment, consists of 140,000,000
shares, consisting of one hundred twenty five million (125,000,000) shares of
Common Stock, $.01 par value per share and fifteen million (15,000,000) shares
of preferred stock, without par value.
The Board of Directors believes that it is in the Company's best interests
to have additional shares of Common Stock authorized to meet the Company's
future business needs as they arise. In particular, a portion of the shares of
Common Stock that would become available for issuance if the proposal were
adopted may be used by the Company in connection with the previously announced
recommendation of the Board of Directors of a two-for-one split of its
outstanding Common Stock. If approved, the distribution of the split shares
would be made to stockholders on approximately May 29, 1998.
Other than in connection with the possible stock-split, the Company's
management has no present arrangements, agreements, understandings or plans
for the additional shares proposed to be authorized.
If the proposal is adopted, it will become effective upon filing of a
Certificate of Amendment to the Company's Certificate of Incorporation. The
text of the proposed amendment is set forth in Exhibit B hereto.
The affirmative vote of the majority of the votes entitled to be cast by all
holders of outstanding Common Stock of the Company is required for approval of
this amendment to the Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING PROPOSAL AND
SIGNED PROXIES WHICH ARE RETURNED WILL BE SO VOTED UNLESS A CONTRARY VOTE IS
DESIGNATED ON THE PROXY CARD.
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 1999 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 26, 1998 for inclusion in the Proxy
Statement and Proxy relating to the 1999 Annual Meeting of Shareholders.
By Order of the Board of Directors
/s/ Patrick W. Allender
Patrick W. Allender
Secretary
Dated: March 30, 1998
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1997 MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING TO THE COMPANY.
14
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EXHIBIT A
DANAHER CORPORATION
1998 STOCK OPTION PLAN
PURPOSE
Danaher Corporation, a Delaware corporation ("Danaher" or the "Company"),
wishes to recruit, reward, and retain key employees and outside directors. To
further these objectives, the Company hereby sets forth the Danaher
Corporation 1998 Stock Option Plan (the "Plan"), effective as of May 5, 1998,
to provide options ("Options") to employees to purchase shares of the
Company's common stock (the "Common Stock"). The Plan constitutes an amendment
to, and substitution for, the Danaher Corporation 1987 Stock Option Plan (the
"1987 Plan").
OPTIONEES
All Employees and non-Employee directors ("Eligible Directors") of Danaher
and Eligible Subsidiaries are eligible for option grants under this Plan.
Eligible employees and directors become "optionees" when the Administrator
grants them an option under this Plan. The term optionee also includes, where
appropriate, a person authorized to exercise an Option in place of the
original recipient.
Employee means any person employed as a common law employee of the Company
or an Eligible Subsidiary.
ADMINISTRATOR
The Administrator will be the Compensation Committee of the Board of
Directors of Danaher (the "Compensation Committee"), unless the Board
specifies another committee. The Board may also act under the Plan as though
it were the Compensation Committee.
The Administrator is responsible for the general operation and
administration of the Plan and for carrying out its provisions and has full
discretion in interpreting and administering the provisions of the Plan.
Subject to the express provisions of the Plan, the Administrator may exercise
such powers and authority of the Board as the Administrator may find necessary
or appropriate to carry out its functions. The Administrator may delegate its
functions (other than those described in the GRANTING OF OPTIONS section) to
officers or employees.
The Administrator's powers will include, but not be limited to, the power to
amend, waive, or extend any provision or limitation of any Option. The
Administrator may act through meetings of a majority of its members or by
unanimous consent.
GRANTING OF OPTIONS
Subject to the terms of the Plan, the Administrator will, in its sole
discretion, determine
the recipients of option grants,
the terms of such grants,
the schedule for exercisability (including any requirements that the
optionee or the Company satisfy performance criteria),
the time and conditions for expiration of the Option, and
the form of payment due upon exercise.
The Administrator's determinations under the Plan need not be uniform and
need not consider whether possible optionees are similarly situated.
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Options granted to employees are not intended to qualify as "incentive stock
options" ("ISOs") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), or the corresponding
provision of any subsequently enacted tax statute.
The Administrator may not reduce the Exercise Price of any outstanding
Option, other than as provided under Adjustments upon Changes in Capital
Stock.
Substitutions
The Administrator may also grant Options in substitution for options or
other equity interests held by individuals who become Employees of the Company
or of an Eligible Subsidiary as a result of the Company's acquiring or merging
with the individual's employer. If necessary to conform the Options to the
options for which they are substitutes, the Administrator may grant substitute
Options under terms and conditions that vary from those the Plan otherwise
requires.
DATE OF GRANT
The Date of Grant will be the date as of which the Administrator awards an
Option to an optionee, as specified in the Administrator's minutes.
EXERCISE PRICE
The Exercise Price is the value of the consideration that an optionee must
provide in exchange for one share of Common Stock. The Administrator will
determine the Exercise Price under each Option and may set the Exercise Price
without regard to the Exercise Price of any other Options granted at the same
or any other time. The Company may use the consideration it receives from the
optionee for general corporate purposes.
The Exercise Price per share for the Options may not be less than 100% of
the Fair Market Value of a share on the Date of Grant.
Fair Market Value
Fair Market Value of a share of Common Stock for purposes of the Plan will
be determined as follows:
if the Common Stock is traded on a national securities exchange, the
closing sale price on that date;
if the Common Stock is not traded on any such exchange, the closing sale
price as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("Nasdaq") for such date;
if no such closing sale price information is available, the average of
the closing bid and asked prices as reported by Nasdaq for such date; or
if there are no such closing bid and asked prices, the average of the
closing bid and asked prices as reported by any other commercial service
for such date.
For any date that is not a trading day, the Fair Market Value of a share of
Common Stock for such date shall be determined by using the closing sale price
or the average of the closing bid and asked prices, as appropriate, for the
immediately preceding trading day.
EXERCISABILITY
The Administrator will determine the times and conditions for exercise of
each Option but may not extend the period for exercise beyond the tenth
anniversary of its Date of Grant.
Options will become exercisable at such times and in such manner as the
Administrator determines and the Option Certificate indicates; provided,
however, that the Administrator may, on such terms and conditions as it
determines appropriate, accelerate the time at which the optionee may exercise
any portion of an Option.
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If the Administrator does not specify otherwise, Options for Employees will
become exercisable as to one-fifth of the covered shares on each of the first
five anniversaries of the Date of Grant, and Options for Eligible Directors
will become exercisable in full as of the Date of Grant. Unless the
Administrator provides otherwise, the passage of time after an optionee's
Retirement will continue to count for purposes of determining the extent to
which an Option is exercisable.
No portion of an Option that is unexercisable at an optionee's termination
of employment for any reason other than Retirement (as defined below) will
thereafter become exercisable, unless the Option Certificate provides
otherwise, either initially or by amendment. All unexpired Options become
fully exercisable at age 65 irrespective of whether the person then retires.
METHOD OF EXERCISE
To exercise any exercisable portion of an Option, the optionee must:
Deliver a written notice of exercise to the Secretary of the Company (or
to whomever the Administrator designates), in a form complying with any
rules the Administrator may issue, signed by the optionee, and specifying
the number of shares of Common Stock underlying the portion of the Option
the optionee is exercising;
Pay the full Exercise Price by cashier's or certified check for the
shares of Common Stock with respect to which the Option is being exercised,
unless the Administrator consents to another form of payment (which could
include the use of Common Stock); and
Deliver to the Administrator such representations and documents as the
Administrator, in its sole discretion, may consider necessary or advisable.
Payment in full of the Exercise Price need not accompany the written notice
of exercise provided the notice directs that the stock certificates for the
shares issued upon the exercise be delivered to a licensed broker acceptable
to the Company as the agent for the individual exercising the option and at
the time the stock certificates are delivered to the broker, the broker will
tender to the Company cash or cash equivalents acceptable to the Company and
equal to the Exercise Price.
If the Administrator agrees to payment through the tender to the Company of
shares of Common Stock, the individual must have held the stock being tendered
for at least six months at the time of surrender. Shares of stock offered as
payment will be valued, for purposes of determining the extent to which the
optionee has paid the Exercise Price, at their Fair Market Value on the date
of exercise. The Administrator may also, in its discretion, accept attestation
of ownership of Common Stock and issue a net number of shares upon Option
exercise.
OPTION EXPIRATION
No one may exercise an Option more than ten years after its Date of Grant.
Unless the Option Certificate provides otherwise, either initially or by
amendment, no one may exercise an Option after the first to occur of:
Employment Termination
The 30th day after the date of termination of employment (other than for
death, Disability, or Retirement), where termination of employment means the
time when the employer-employee or other service-providing relationship
between the employee and the Company ends for any reason, including
retirement. Unless the Option Certificate provides otherwise, termination of
employment does not include instances in which the Company immediately rehires
a common law employee as an independent contractor. The Administrator, in its
sole discretion, will determine all questions of whether particular
terminations or leaves of absence are terminations of employment;
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Retirement
For either Early or Normal Retirement (both as defined below and both
collectively referred to as "Retirement"), the fifth anniversary of
Retirement. Solely for purposes of this Plan, "Normal Retirement" occurs on
the date an employee voluntarily ceases to be an Employee at or after reaching
age 65, and "Early Retirement" occurs on the date an employee voluntarily
ceases to be an Employee if both (i) the employment termination occurs before
the Employee reaches age 65 and (ii) the Administrator determines that the
cessation constituted "retirement" for purposes of this Plan. In deciding
whether a termination of employment of employment is an Early Retirement, the
Administrator need not consider the definition under any other Company Plan;
Gross Misconduct
For the Company's termination of the optionee's employment as a result of
the optionee's Gross Misconduct, the time of such termination. For purposes of
this Plan, "Gross Misconduct" means the optionee has
committed fraud, misappropriation, embezzlement, or willful
misconduct that has resulted or is likely to result in
material harm to the Company;
committed or been indicted for or convicted of, or pleaded
guilty or no contest to, any misdemeanor (other than for minor
infractions or traffic violations) involving fraud, breach of
trust, misappropriation, or other similar activity, or any
felony; or
committed an act of gross negligence or otherwise acted with
willful disregard for the Company's best interests in a manner
that has resulted or is likely to result in material harm to
the Company.
Disability
For disability, the earlier of (i) the first anniversary of the optionee's
termination of employment for disability and (ii) 60 days after the optionee
no longer has a disability, where "disability" means the inability to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or that
has lasted or can be expected to last for a continuous period of not less than
twelve months; or
Death
The date 12 months after the optionee's death.
If exercise is permitted after termination of employment, the Option will
nevertheless expire as of the date that the former employee violates any
covenant not to compete or other post--employment covenant in effect between
the Company and the former employee.
Nothing in this Plan extends the term of an Option beyond the tenth
anniversary of its Date of Grant, nor does anything in this OPTION EXPIRATION
section make an Option exercisable that has not otherwise become exercisable.
OPTION CERTIFICATES
Option Certificates will set forth the terms of each Option and will include
such terms and conditions, consistent with the Plan, as the Administrator may
determine are necessary or advisable. To the extent the certificate is
inconsistent with the Plan, the Plan will govern. The Option Certificates may
contain special rules. The Administrator may, in its discretion, require
Option agreements rather than certificates.
STOCK SUBJECT TO PLAN
Except as adjusted below under CORPORATE CHANGES, the aggregate number of
shares of Common Stock that may be issued under the Options may not exceed 7.5
million shares and the maximum number of shares that may be subject to Options
for a single individual may not exceed 2.5 million shares. The Common Stock
may come from treasury shares, authorized but unissued shares, or previously
issued shares that the Company reacquires, including shares it purchases on
the open market. If any Option expires, is canceled, or terminates for any
other reason, the shares of Common Stock available under that Option will
again be available for the granting of new Options.
No adjustment will be made for a dividend or other right for which the
record date precedes the date of exercise.
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<PAGE>
The optionee will have no rights of a stockholder with respect to the shares
of stock subject to an Option except to the extent that the Company has issued
certificates for, or otherwise confirmed ownership of, such shares upon the
exercise of the Option.
The Company will not issue fractional shares pursuant to the exercise of an
Option, but the Administrator may, in its discretion, direct the Company to
make a cash payment in lieu of fractional shares.
PERSON WHO MAY EXERCISE
During the optionee's lifetime and except as provided under TRANSFERS,
ASSIGNMENTS, AND PLEDGES, only the optionee or his duly appointed guardian or
personal representative may exercise the Options. After his death, his
personal representative or any other person authorized under a will or under
the laws of descent and distribution may exercise any then exercisable portion
of an Option. If someone other than the original recipient seeks to exercise
any portion of an Option, the Administrator may request such proof as it may
consider necessary or appropriate of the person's right to exercise the
Option.
ADJUSTMENTS UPON CHANGES IN CAPITAL STOCK
Subject to any required action by the Company (which it shall promptly take)
or its stockholders, and subject to the provisions of applicable corporate
law, if, after the Date of Grant of an Option,
the outstanding shares of Common Stock increase or decrease or change
into or are exchanged for a different number or kind of security by reason
of any recapitalization, reclassification, stock split, reverse stock
split, combination of shares, exchange of shares, stock dividend, or other
distribution payable in capital stock, or
some other increase or decrease in such Common Stock occurs without the
Company's receiving consideration,
the Administrator will make a proportionate and appropriate adjustment in the
number of shares of Common Stock underlying each Option, so that the
proportionate interest of the optionee immediately following such event will,
to the extent practicable, be the same as immediately before such event.
Unless the Administrator determines another method would be appropriate, any
such adjustment to an Option will not change the total price with respect to
shares of Common Stock underlying the unexercised portion of the Option but
will include a corresponding proportionate adjustment in the Option's Exercise
Price.
The Administrator will make a commensurate change to the maximum number and
kind of shares provided in the STOCK SUBJECT TO PLAN section.
Any issue by the Company of any class of preferred stock, or securities
convertible into shares of common or preferred stock of any class, will not
affect, and no adjustment by reason thereof will be made with respect to, the
number of shares of Common Stock subject to any Option or the Exercise Price
except as this ADJUSTMENTS section specifically provides. The grant of an
option under the Plan will not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure, or to merge or to consolidate, or to
dissolve, liquidate, sell, or transfer all or any part of its business or
assets.
Substantial Corporate Change
Upon a Substantial Corporate Change, the Plan and the Options will terminate
unless provision is made in writing in connection with such transaction for
the assumption or continuation of outstanding Options, or
the substitution for such options or grants of any options or grants
covering the stock or securities of a successor employer corporation, or a
parent or subsidiary of such successor, with appropriate adjustments as to
the number and kind of shares of stock and prices, in which event the
Options will continue in the manner and under the terms so provided.
Unless the Board determines otherwise, if an Option would otherwise
terminate pursuant to the preceding sentence, optionees will have the right,
at such time before the consummation of the transaction causing such
termination as the Board reasonably designates, to exercise any unexercised
portions of the Option, whether or not they had previously become exercisable.
However, unless the Board determines otherwise, the acceleration
5
<PAGE>
will not occur if it would render unavailable "pooling of interest" accounting
for any reorganization, merger, or consolidation of the Company.
A Substantial Corporate Change means the
dissolution or liquidation of the Company,
merger, consolidation, or reorganization of the Company with one or more
corporations in which the Company is not the surviving corporation,
the sale of substantially all of the assets of the Company to another
corporation, or
any transaction (including a merger or reorganization in which the
Company survives) approved by the Board that results in any person or
entity (other than any affiliate of the Company as defined in Rule
144(a)(1) under the Securities Act) owning 100% of the combined voting
power of all classes of stock of the Company.
SUBSIDIARY EMPLOYEES
Employees of Company Subsidiaries will be entitled to participate in the
Plan, except as otherwise designated by the Board of Directors or the
Committee.
Eligible Subsidiary means each of the Company's Subsidiaries, except as the
Board otherwise specifies. Subsidiary means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if,
at the time an Option is granted to a Participant under the Plan, each of the
corporations (other than the last corporation in the unbroken chain) owns
stock possessing 20% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
LEGAL COMPLIANCE
The Company will not issue any shares of Common Stock under an Option until
all applicable requirements imposed by Federal and state securities and other
laws, rules, and regulations, and by any applicable regulatory agencies or
stock exchanges, have been fully met. To that end, the Company may require the
optionee to take any reasonable action to comply with such requirements before
issuing such shares. No provision in the Plan or action taken under it
authorizes any action that is otherwise prohibited by Federal or state laws.
The Plan is intended to conform to the extent necessary with all provisions
of the Securities Act of 1933 ("Securities Act") and the Securities Exchange
Act of 1934 ("Exchange Act") and all regulations and rules the Securities and
Exchange Commission issues under those laws. Notwithstanding anything in the
Plan to the contrary, the Administrator must administer the Plan, and Options
may be granted and exercised, only in a way that conforms to such laws, rules,
and regulations. To the extent permitted by applicable law, the Plan and any
Options will be deemed amended to the extent necessary to conform to such
laws, rules, and regulations.
PURCHASE FOR INVESTMENT AND OTHER RESTRICTIONS
Unless a registration statement under the Securities Act covers the shares
of Common Stock an optionee receives upon exercise of his Option, the
Administrator may require, at the time of such exercise, that the optionee
agree in writing to acquire such shares for investment and not for public
resale or distribution, unless and until the shares subject to the Option are
registered under the Securities Act. Unless the shares are registered under
the Securities Act, the optionee must acknowledge:
that the shares purchased on exercise of the Option are not so
registered,
that the optionee may not sell or otherwise transfer the shares unless
the shares have been registered under the Securities Act in
connection with the sale or transfer thereof, or
6
<PAGE>
counsel satisfactory to the Company has issued an opinion
satisfactory to the Company that the sale or other transfer of such
shares is exempt from registration under the Securities Act, and
such sale or transfer complies with all other applicable laws,
rules, and regulations, including all applicable Federal and state
securities laws, rules, and regulations.
Additionally, the Common Stock, when issued upon the exercise of an Option,
will be subject to any other transfer restrictions, rights of first refusal,
and rights of repurchase set forth in or incorporated by reference into other
applicable documents, including the Company's articles or certificate of
incorporation, by-laws, or generally applicable stockholders' agreements.
The Administrator may, in its sole discretion, take whatever additional
actions it deems appropriate to comply with such restrictions and applicable
laws, including placing legends on certificates and issuing stop- transfer
orders to transfer agents and registrars.
TAX WITHHOLDING
The optionee must satisfy all applicable Federal, state, and local income
and employment tax withholding requirements before the Company will deliver
stock certificates upon the exercise of an Option. The Company may decide to
satisfy the withholding obligations through additional withholding on salary
or wages. If the Company does not or cannot withhold from other compensation,
the optionee must pay the Company, with a cashier's check or certified check,
the full amounts required for withholding. Payment of withholding obligations
is due at the same time as is payment of the Exercise Price. If the Committee
so determines, the optionee may instead satisfy the withholding obligations by
directing the Company to retain shares from the Option exercise, by tendering
previously owned shares, or by attesting to his ownership of shares (with the
distribution of net shares), or by having a broker tender to the Company cash
equal to the withholding taxes.
TRANSFERS, ASSIGNMENTS, AND PLEDGES
Unless the Administrator otherwise approves in advance in writing or as set
forth below, an Option may not be assigned, pledged, or otherwise transferred
in any way, whether by operation of law or otherwise or through any legal or
equitable proceedings (including bankruptcy), by the optionee to any person,
except by will or by operation of applicable laws of descent and distribution.
If Rule 16b-3 under the Exchange Act then applies to an Option, the optionee
may not transfer or pledge shares of Common Stock acquired upon exercise of an
Option until at least six months have elapsed from (but excluding) the Date of
Grant, unless the Administrator approves otherwise in advance in writing. The
Administrator may, in its discretion, expressly provide that an optionee may
transfer his Option, without receiving consideration, to (i) members of the
optionee's immediate family (children, grandchildren, or spouse), (ii) trusts
for the benefit of such family members, or (iii) partnerships whose only
partners are such family members.
AMENDMENT OR TERMINATION OF PLAN AND OPTIONS
The Board may amend, suspend, or terminate the Plan at any time, without the
consent of the optionees or their beneficiaries; provided, however, that no
amendment will deprive any optionee or beneficiary of any previously declared
Option. Except as required by law or by the CORPORATE CHANGES section, the
Administrator may not, without the optionee's or beneficiary's consent, modify
the terms and conditions of an Option so as to adversely affect the optionee.
No amendment, suspension, or termination of the Plan will, without the
optionee's or beneficiary's consent, terminate or adversely affect any right
or obligations under any outstanding Options.
PRIVILEGES OF STOCK OWNERSHIP
No optionee and no beneficiary or other person claiming under or through
such optionee will have any right, title, or interest in or to any shares of
Common Stock allocated or reserved under the Plan or subject to any Option
except as to such shares of Common Stock, if any, that have been issued to
such optionee.
7
<PAGE>
EFFECT ON OUTSTANDING OPTIONS
All options outstanding under the 1987 Plan will remain subject to the terms
of the 1987 Plan before its amendment into this Plan; provided, however, that
limitations imposed on such options by Rule 16b-3 will continue to apply only
to the extent Rule 16b-3 so requires.
EFFECT ON OTHER PLANS
Whether exercising an Option causes the optionee to accrue or receive
additional benefits under any pension or other plan is governed solely by the
terms of such other plan.
LIMITATIONS ON LIABILITY
Notwithstanding any other provisions of the Plan, no individual acting as a
director, employee, or agent of the Company shall be liable to any optionee,
former optionee, spouse, beneficiary, or any other person for any claim, loss,
liability, or expense incurred in connection with the Plan, nor shall such
individual be personally liable because of any contract or other instrument he
executes in such other capacity. The Company will indemnify and hold harmless
each director, employee, or agent of the Company to whom any duty or power
relating to the administration or interpretation of the Plan has been or will
be delegated, against any cost or expense (including attorneys' fees) or
liability (including any sum paid in settlement of a claim with the Board's
approval) arising out of any act or omission to act concerning this Plan
unless arising out of such person's own fraud or bad faith.
NO EMPLOYMENT CONTRACT
Nothing contained in this Plan constitutes an employment contract between
the Company and the optionee. The Plan does not give the optionee any right to
be retained in the Company's employ, nor does it enlarge or diminish the
Company's right to terminate the optionee's employment.
APPLICABLE LAW
The laws of the State of Delaware (other than its choice of law provisions)
govern this Plan and its interpretation.
DURATION OF PLAN
Unless the Board extends the Plan's term, the Administrator may not grant
Options after May 4, 2008. The Plan will then terminate but will continue to
govern unexercised and unexpired Options.
APPROVAL OF SHAREHOLDERS
The Plan must be submitted to the shareholders of the Company for their
approval within 12 months after the Board of Directors of the Company adopts
the Plan. The adoption of the Plan is conditioned upon the approval of the
shareholders of the Company, and failure to receive their approval will render
the Plan and any outstanding options thereunder void and of no effect.
8
<PAGE>
EXHIBIT B
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF DANAHER CORPORATION
- -------------------------------------------------------------------------------
PURSUANT TO SECTION 242 OF THE GENERAL
CORPORATION LAWS OF THE STATE OF DELAWARE
- -------------------------------------------------------------------------------
Danaher Corporation, a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), does hereby certify:
FIRST: That Paragraph I. of Article FOURTH of the Certificate of
Incorporation of the Corporation be amended and read in its entirety as
follows:
FOURTH: I. The total number of shares of stock which the Corporation shall
have authority to issue is 315,000,000 shares of which 300,000,000 shares,
$.01 par value per share, shall be of a class designated "Common Stock" and
of which 15,000,000 shares, without par value, shall be designated
"Preferred Stock".
SECOND: That the foregoing amendment has been duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
1
<PAGE>
DANAHER CORPORATION
PROXY FOR 1998
ANNUAL MEETING OF SHAREHOLDERS--MAY 5, 1998
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, 1998, 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
5, 1998, 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, 4, 5, 6 and
7. PLEASE SIGN AND DATE ON THE REVERSE SIDE.
1. ELECTION OF DIRECTORS
Nominee Mr. Steven M. Rales to serve as director with a term
expiring in 2001.
FOR all Nominees WITHHOLD
[_] AUTHORITY
FOR ALL
NOMINEES
[_]
To withhold authority to vote for an individual Nominee,
write that Nominee's name on the line below.
-------------------------------------------------------------
2. APPROVAL OF APPOINTMENT OF AUDITORS
[_] FOR [_] AGAINST [_] ABSTAIN
<PAGE>
3. APPROVAL OF PERFORMANCE GOALS FOR 1998 BONUS TO COMPANY EXECUTIVE OFFICERS
[_] FOR [_] AGAINST [_] ABSTAIN
4. AMENDMENT TO THE 1987 STOCK OPTION PLAN
[_] FOR [_] AGAINST [_] ABSTAIN
5. APPROVAL OF OPTION GRANT TO FIVE EXECUTIVE OFFICERS
[_] FOR [_] AGAINST [_] ABSTAIN
6. APPROVAL OF AMENDMENT TO COMPANY'S CERTIFICATE OF INCORPORATION.
[_] FOR [_] AGAINST [_] ABSTAIN
7. IN THEIR DISCRETION on any other matter which may properly come before the
meeting, including any adjournment thereof.
Dated: __________________ , 1998
________________________________
________________________________
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 [SOLID BLOCK] IN BLUE OR BLACK INK
<PAGE>
DANAHER CORPORATION
PROXY FOR 1998
ANNUAL MEETING OF SHAREHOLDERS--MAY 5, 1998
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, 1998, 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 5, 1998, 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, 4, 5, 6
and 7. PLEASE SIGN AND DATE ON THE REVERSE SIDE.
- -------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
FOLD AND DETACH HERE
<PAGE>
Please mark
[X ] your votes
as this
WITHHOLD
FOR all AUTHORITY
NOMINEES FOR ALL NOMINEES
1. ELECTION OF DIRECTORS
Nominees Mr. Steven M. Rales to serve as
Director with a term expiring in 2001 [ ] [ ]
- -
To withhold authority to vote for an
individual Nominee, write that Nominee's
name on the line below.
- ----------------------------------------
FOR AGAINST ABSTAIN
2. Approval of Appointment of Auditors [ ] [ ] [ ]
- - -
3. Approval of Performance Goals for 1998 [ ] [ ] [ ]
Bonus to Company Executive Officers - - -
4. Amendment to the 1987 Stock [ ] [ ] [ ]
Option Plan - - -
FOR AGAINST ABSTAIN
5. Approval of Option Grant to Five [ ] [ ] [ ]
Executive Officers - - -
6. Approval of Amendment to Company's FOR AGAINST ABSTAIN
Certificate of Incorporation [ ] [ ] [ ]
- - -
7. IN THEIR DISCRETION on any other matter which may properly come before the
meeting, including any adjournment thereof.
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.)
Signature(s) ___________________________ Date _______________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
