OMB APPROVAL
--------------------------
OMB Number: 3235-0059
Expires: February 28, 2006
Estimated average burden
hours per response...12.75
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 Section 240.14a-12
IDEX 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:
--------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------
3) Filing Party:
--------------------------------------------------------------------------------
4) Date Filed:
--------------------------------------------------------------------------------
PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
(IDEX CORPORATION LOGO)
630 Dundee Road, Suite 400
Northbrook, IL 60062
March 8, 2007
DEAR STOCKHOLDER:
You are cordially invited to attend the Annual Meeting of Stockholders of
IDEX Corporation which will be held on Tuesday, April 3, 2007, at 10:00 a.m.
Central Time, at The Westin Chicago North Shore, 601 North Milwaukee Avenue,
Wheeling, Illinois 60090.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement. Included with the
Proxy Statement is a copy of the Company's 2006 Annual Report. We encourage you
to read the Annual Report. It includes information on the Company's operations,
markets, products and services, as well as the Company's audited financial
statements.
Whether or not you attend the Annual Meeting, it is important that your
shares be represented and voted. Therefore, we urge you to sign, date, and
promptly return the accompanying proxy card in the enclosed envelope.
Alternatively, you can vote over the telephone or the Internet as described on
the proxy card. If you decide to attend the Annual Meeting, you will be able to
vote in person, even if you have previously submitted your proxy card, or voted
by telephone or over the Internet.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company. We look
forward to seeing you at the Annual Meeting.
Sincerely,
-s- Lawrence D. Kingsley
LAWRENCE D. KINGSLEY
Chairman of the Board, President and
Chief Executive Officer
IDEX CORPORATION
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 3, 2007
-------------------
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of IDEX Corporation (the "Company") will
be held on Tuesday, April 3, 2007, at 10:00 a.m. Central Time, at The Westin
Chicago North Shore, 601 North Milwaukee Avenue, Wheeling, Illinois 60090, for
the following purposes:
1. To elect two directors for a term of three years.
2. To ratify the appointment of Deloitte & Touche LLP as auditors of
the Company for 2007.
3. To transact such other business as may properly come before the
meeting.
The Board of Directors fixed the close of business on February 15, 2007, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting.
By Order of the Board of Directors
-s- Frank J. Notaro
FRANK J. NOTARO
Vice President-General Counsel
and Secretary
March 8, 2007
Northbrook, Illinois
---------------------
PROXY STATEMENT
---------------------
The Company has prepared this Proxy Statement in connection with the
solicitation by the Company's Board of Directors of proxies for the Annual
Meeting of Stockholders of IDEX Corporation to be held on Tuesday, April 3,
2007, at 10:00 a.m. Central Time, at The Westin Chicago North Shore, 601 North
Milwaukee Avenue, Wheeling, Illinois 60090. The Company commenced distribution
of this Proxy Statement and the accompanying materials on March 8, 2007.
The Company will bear the costs of preparing and mailing this Proxy
Statement and other costs of the proxy solicitation made by the Company's Board
of Directors. Certain of the Company's officers and employees may solicit the
submission of proxies authorizing the voting of shares in accordance with the
Board of Directors' recommendations, but no additional remuneration will be paid
by the Company for the solicitation of those proxies. These solicitations may be
made by personal interview, telephone, email or facsimile transmission. The
Company has made arrangements with brokerage firms and other record holders of
the Company's Common Stock for the forwarding of proxy solicitation materials to
the beneficial owners of that stock. The Company will reimburse those brokerage
firms and others for their reasonable out-of-pocket expenses in connection with
this work. In addition, the Company has engaged Morrow & Co. to assist in proxy
solicitation and collection at a cost of $5,500, plus out-of-pocket expenses.
1
VOTING AT THE MEETING
The record of stockholders entitled to notice of, and to vote at, the
Annual Meeting was taken as of the close of business on February 15, 2007, and
each stockholder will be entitled to vote at the meeting any shares of the
Company's Common Stock held of record on that date. 53,823,941 shares of the
Company's Common Stock were outstanding at the close of business on February 15,
2007. Each share entitles its holder of record to one vote on each matter upon
which votes are taken at the Annual Meeting. No other securities are entitled to
be voted at the Annual Meeting.
A quorum of stockholders is necessary to take action at the Annual Meeting.
A majority of outstanding shares of the Company's Common Stock present in person
or represented by proxy will constitute a quorum. The Company will appoint
election inspectors for the meeting to determine whether or not a quorum is
present, and to tabulate votes cast by proxy or in person at the Annual Meeting.
Under certain circumstances, a broker or other nominee may have discretionary
authority to vote certain shares of Common Stock if instructions have not been
received from the beneficial owner or other person entitled to vote. The
election inspectors will treat directions to withhold authority, abstentions and
broker non-votes (which occur when a broker or other nominee holding shares for
a beneficial owner does not vote on a particular proposal because such broker or
other nominee does not have discretionary voting power with respect to that item
and has not received instructions from the beneficial owner) as present and
entitled to vote for purposes of determining the presence of a quorum for the
transaction of business at the Annual Meeting. The election of directors
requires a plurality vote, and the ratification of the appointment of Deloitte &
Touche LLP as auditors of the Company for 2007 requires a majority vote, of the
shares of the Company's Common Stock present in person or represented by proxy
at the meeting. Directions to withhold authority will have no effect on the
election of directors, because directors are elected by a plurality of votes
cast. Abstentions will be treated as shares voted against the ratification of
the appointment of Deloitte & Touche LLP as auditors of the Company for 2007.
The Company requests that you mark the accompanying proxy card to indicate
your votes, sign and date it, and return it to the Company in the enclosed
envelope, or vote by telephone or over the Internet as described on the proxy
card. If you vote by telephone or over the Internet, you should not mail your
proxy card. If your completed proxy card or telephone or Internet voting
instructions are received prior to the meeting, your shares will be voted in
accordance with your voting instructions. If you sign and return your proxy card
but do not give voting instructions, your shares will be voted FOR the election
of the Company's nominees as directors, FOR the ratification of the appointment
of Deloitte & Touche LLP as auditors of the Company for 2007, and in the
discretion of the proxy holders as to any other business which may properly come
before the meeting. Any proxy solicited hereby may be revoked by the person or
persons giving it at any time before it has been exercised at the Annual Meeting
by giving notice of revocation to the Company in writing prior to the meeting.
If you decide to attend the Annual Meeting, you will be able to vote in person,
even if you have previously submitted your proxy card, or voted by telephone or
over the Internet. The Company requests that all such written notices of
revocation to the Company be addressed to Frank J. Notaro, Vice President -
General Counsel and Secretary, IDEX Corporation, 630 Dundee Road, Suite 400,
Northbrook, IL 60062.
2
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation, as amended, provides
for a three-class Board, with one class being elected each year for a term of
three years. The Board of Directors currently consists of seven members, two of
whom are Class III directors whose terms will expire at this year's Annual
Meeting, three of whom are Class I directors whose terms will expire at the
Annual Meeting to be held in 2008, and two of whom are Class II directors whose
terms will expire at the Annual Meeting to be held in 2009.
The Company's Board of Directors has nominated two individuals for election
as Class III directors to serve for a three-year term expiring at the Annual
Meeting to be held in 2010, or upon the election and qualification of their
successors. The nominees of the Board of Directors are Ruby R. Chandy and Neil
A. Springer. Ms. Chandy and Mr. Springer are currently serving as directors of
the Company. The nominees and the directors serving in Class I and Class II
whose terms expire in future years and who will continue to serve after the
Annual Meeting are listed below with brief statements setting forth their
present principal occupations and other information, including any directorships
in other public companies.
If for any reason either of the nominees for a Class III directorship are
unavailable to serve, proxies solicited hereby may be voted for a substitute.
The Board, however, expects the nominees to be available.
3
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE NOMINEES IN CLASS III IDENTIFIED BELOW.
NOMINEES FOR DIRECTORSHIP
CLASS III: NOMINEES FOR THREE-YEAR TERM
RUBY R. CHANDY Director since 2006
Vice President of Marketing and Commercial Excellence Age 45
Thermo Fisher Scientific
Ms. Chandy has been a director of the Company since April 4, 2006. Ms.
Chandy has been Vice President of Marketing and Commercial Excellence, Thermo
Fisher Scientific, since 2004. She served as President, Bioscience Technologies
Division, Thermo Electron Corporation, from 2002 to 2004, and as President,
Process Instruments Division, Thermo Electron Corporation, since prior to 2002.
Ms. Chandy is a member of the Nominating and Corporate Governance Committee of
the Board of Directors.
NEIL A. SPRINGER Director since 1990
Managing Director Age 68
Springer & Associates, L.L.C.
Mr. Springer has been a director of the Company since February 27, 1990. He
has been Managing Director of Springer & Associates, L.L.C. since prior to 2002.
Mr. Springer is a director of CUNA Mutual Insurance Group and Mueller Water
Products, Inc. Mr. Springer is the Chairman of the Nominating and Corporate
Governance Committee, and a member of the Audit Committee and the Executive
Committee of the Board of Directors.
4
OTHER INCUMBENT DIRECTORS
CLASS I: THREE-YEAR TERM EXPIRES IN 2008
BRADLEY J. BELL Director since 2001
Executive Vice President and Chief Financial Officer Age 54
Nalco Company
Mr. Bell has been a director of the Company since June 11, 2001. He has
been Executive Vice President and Chief Financial Officer of Nalco Company since
November 5, 2003. Mr. Bell was Senior Vice President and Chief Financial Officer
of Rohm and Haas Company from prior to 2002 until May 31, 2003. Mr. Bell is a
director of Compass Minerals International, Inc. Mr. Bell is Chairman of the
Audit Committee of the Board of Directors.
GREGORY B. KENNY Director since 2002
President and Chief Executive Officer Age 54
General Cable Corporation
Mr. Kenny has been a director of the Company since February 1, 2002. Mr.
Kenny has been President and Chief Executive Officer of General Cable
Corporation since August 2001. Mr. Kenny is a director of General Cable
Corporation and Corn Products International, Inc. Mr. Kenny is Chairman of the
Compensation Committee of the Board of Directors.
LAWRENCE D. KINGSLEY Director since 2005
Chairman of the Board, President and Chief Executive Officer Age 44
IDEX Corporation
Mr. Kingsley was appointed Chairman of the Board by the Board of Directors
on April 4, 2006. Mr. Kingsley has been President and Chief Executive Officer of
the Company since March 22, 2005. From August 2004 to March 2005, Mr. Kingsley
served as Chief Operating Officer of the Company. From March 2004 to August
2004, Mr. Kingsley served as Corporate Vice President and Group Executive,
Danaher Corporation, responsible for the Sensors and Controls businesses. He
served as President, Industrial Controls Group, Danaher Corporation, from April
2002 to July 2004, and as President, Motion Group, Special Purpose Systems,
Danaher Corporation, from January 2001 to March 2002. Mr. Kingsley is Chairman
of the Executive Committee of the Board of Directors.
CLASS II: THREE-YEAR TERM EXPIRES IN 2009
MICHAEL T. TOKARZ Director since 1987
Member Age 57
The Tokarz Group L.L.C.
Mr. Tokarz has been a director of the Company since its organization in
September 1987. He has been a member of The Tokarz Group L.L.C. since February
1, 2002. From prior to 2002 until January 31, 2002, Mr. Tokarz was a member of
Kohlberg Kravis Roberts & Co., L.L.C. Mr. Tokarz is a director of Conseco, Inc.,
MVC Capital, Inc., Mueller Water Products, Inc., and Walter Industries, Inc. Mr.
Tokarz is a member of the Compensation Committee and the Executive Committee of
the Board of Directors.
FRANK S. HERMANCE Director since 2004
Chairman and Chief Executive Officer Age 58
AMETEK, INC.
Mr. Hermance has been a director of the Company since January 5, 2004. Mr.
Hermance has been Chairman and Chief Executive Officer of AMETEK, INC. since
January 2001. Mr. Hermance is a director of AMETEK, INC. Mr. Hermance is a
member of the Audit Committee and the Nominating and Corporate Governance
Committee of the Board of Directors.
5
CORPORATE GOVERNANCE
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has the ultimate authority for the management of the
Company's business. In February 2007, the Board amended and affirmed the
Company's Corporate Governance Guidelines which, along with the charters of the
Board committees and the Company's Code of Business Conduct and Ethics, provide
the framework for the governance of the Company. The Company's Corporate
Governance Guidelines address matters such as composition, size and retirement
age of the Board, Board membership criteria, the role and responsibilities of
the Board, director compensation, share ownership guidelines, and the frequency
of Board meetings (including meetings to be held without the presence of
management). The Company's Code of Business Conduct and Ethics sets forth the
guiding principles of business ethics and certain legal requirements applicable
to all of the Company's employees and directors. Copies of the current Corporate
Governance Guidelines, the charters of the Board committees, and Code of
Business Conduct and Ethics are available on the Company's website at
www.idexcorp.com, or may be obtained by stockholders without charge by sending a
written request to Susan H. Fisher, Director - Investor Relations, IDEX
Corporation, 630 Dundee Road, Suite 400, Northbrook, Illinois 60062.
The Board selects the Company's executive officers, delegates
responsibilities for the conduct of the Company's operations to those officers,
and monitors their performance. During 2006, the Board held seven meetings. The
independent (non-management) directors met in regular executive sessions without
management at each in-person meeting of the Board. Generally, the Chairman of
the Nominating and Corporate Governance Committee presides at the non-management
executive sessions.
The Board has adopted standards for determining whether a director is
independent from management. These standards are based upon the listing
standards of the New York Stock Exchange and applicable laws and regulations.
These standards were included as Appendix A to the Company's Proxy Statement for
its Annual Meeting held in 2006. The Board has affirmatively determined, based
on these standards, that the following directors, two of whom are standing for
election to the Board, are independent: Messrs. Bell, Hermance, Kenny, Springer
and Tokarz and Ms. Chandy. Accordingly, all of the Director nominees are
independent. The Board has also determined that Mr. Kingsley, who is not
standing for election to the Board, is not independent. Mr. Kingsley is the
Chairman of the Board, President and Chief Executive Officer of the Company. The
Board also has determined that all Board standing committees are composed
entirely of independent directors.
Important functions of the Board are performed by committees comprised of
members of the Board. Subject to applicable provisions of the Company's By-Laws
and based on the recommendations of the Nominating and Corporate Governance
Committee, the Board as a whole appoints the members of each committee each year
at its first meeting. The Board may, at any time, appoint or remove committee
members or change the authority or responsibility delegated to any committee.
There are four standing committees of the Board: the Nominating and Corporate
Governance Committee, the Audit Committee, the Compensation Committee, and the
Executive Committee. Each committee other than the Executive Committee (whose
powers are set forth in enabling resolutions of the Board) has a written charter
which is available on the Company's website as described above.
The Nominating and Corporate Governance Committee's primary purpose and
responsibilities are to: develop and recommend to the Board corporate governance
principles and a code of business conduct and ethics; develop and recommend
criteria for selecting new directors; identify individuals qualified to become
directors consistent with criteria approved by the Board, and recommend to the
Board such individuals as nominees to the Board for its approval; screen and
recommend to the Board individuals qualified to become Chief Executive Officer
and any other senior officer whom the committee may wish to approve; and oversee
evaluations of the Board, individual Board members and the Board committees. The
members of the Nominating and Corporate Governance Committee are Messrs.
Springer and Hermance and Ms. Chandy. During 2006, the Nominating and Corporate
Governance Committee held two meetings.
It is the policy of the Nominating and Corporate Governance Committee to
consider nominees for the Board recommended by the Company's stockholders in
accordance with the procedures described under STOCKHOLDER PROPOSALS AND
DIRECTOR NOMINATIONS FOR 2008 ANNUAL MEETING. Stockholder
6
nominees who are nominated in accordance with these procedures will be given the
same consideration as nominees for director from other sources.
The Nominating and Corporate Governance Committee will select nominees for
the Board who demonstrate the following qualities:
Experience (in one or more of the following):
- high-level leadership experience in business or administrative
activities;
- specialized expertise in the industries in which the Company competes;
- financial expertise;
- breadth of knowledge about issues affecting the Company; and
- ability and willingness to contribute special competencies to Board
activities.
Personal attributes:
- personal integrity;
- loyalty to the Company and concern for its success and welfare, and
willingness to apply sound independent business judgment;
- awareness of a director's vital part in the Company's good corporate
citizenship and corporate image;
- time available for meetings and consultation on Company matters; and
- willingness to assume fiduciary responsibilities.
Qualified candidates for membership on the Board shall be considered
without regard to race, color, religion, sex, ancestry, national origin or
disability. In the past, the Company has hired Russell Reynolds and Crist
Associates, executive search firms, to help identify and facilitate the
screening and interview process of director candidates. After conducting an
initial evaluation of a candidate, the Nominating and Corporate Governance
Committee will interview that candidate if it believes the candidate might be
suitable to be a director. The Committee may also ask the candidate to meet with
other members of the Board. If the Committee believes a candidate would be a
valuable addition to the Board of Directors, it will recommend to the full Board
that candidate's appointment or election. Annually, the Nominating and Corporate
Governance Committee shall review the qualifications and backgrounds of the
directors, as well as the overall composition of the Board, and recommend to the
full Board the slate of directors for nomination for election at the annual
meeting of stockholders.
The Audit Committee's primary duties and responsibilities are to: monitor
the integrity of the Company's financial reporting process and systems of
internal control regarding finance, accounting and legal compliance; monitor the
independence and performance of the Company's independent auditor and monitor
the performance of the Company's internal audit function; hire and fire the
Company's auditor and approve any audit and non-audit work performed by the
independent auditor; provide an avenue of communication among the independent
auditor, management and the Board of Directors; prepare the report that the
rules of the Securities and Exchange Commission require to be included in the
Company's annual proxy statement; and administer the Company's Related Person
Transactions Policy (see TRANSACTIONS WITH RELATED PERSONS). The members of the
Audit Committee are Messrs. Bell, Hermance and Springer. The Board of Directors
has determined that Mr. Bell is the "audit committee financial expert," as
defined by the rules of the Securities and Exchange Commission. During 2006, the
Audit Committee held 12 meetings.
The Compensation Committee's primary purpose and responsibilities are to:
establish the Company's compensation philosophy and structure the Company's
compensation programs to be consistent with that philosophy; establish the
compensation of the Chief Executive Officer and other senior officers of the
Company; develop and recommend to the Board of Directors compensation for the
Board; and prepare a compensation committee report as required by the Securities
and Exchange Commission to be included in the Company's annual proxy statement.
The members of the Compensation Committee are Messrs. Kenny and Tokarz. During
2006, the Compensation Committee held five meetings.
7
The Executive Committee is empowered to exercise the authority of the Board
in the management of the Company between meetings of the Board, except that the
Executive Committee may not fill vacancies on the Board, amend the Company's By-
Laws or exercise certain other powers reserved to the Board or delegated to
other Board committees. The members of the Executive Committee are Messrs.
Kingsley, Springer and Tokarz. During 2006, the Executive Committee did not hold
any meetings.
During 2006, each member of the Board of Directors attended more than 75%
of the aggregate number of meetings of the Board of Directors and of committees
of the Board of which he or she was a member. The Company encourages its
directors to attend the Annual Meeting of Stockholders but has no formal policy
with respect to that attendance. All of the directors attended the 2006 Annual
Meeting of Stockholders.
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2006, Messrs. Kenny and Tokarz served as the members of the
Compensation Committee. Neither Mr. Kenny nor Mr. Tokarz (i) was an officer or
employee of the Company or any of its subsidiaries during 2006 (ii) was formerly
an officer of the Company or any of its subsidiaries, or (iii) had any
relationship requiring disclosure by the Company under Item 404 of Regulation S-
K under the Securities Act of 1933. There were no relationships between the
Company's executive officers and the members of the Compensation Committee that
require disclosure under Item 407 of Regulation S-K.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders and other interested parties may contact the Board or any of
the individual directors, including the presiding director, by writing to Frank
J. Notaro, Vice President - General Counsel and Secretary, IDEX Corporation, 630
Dundee Road, Suite 400, Northbrook, Illinois 60062. Inquiries sent by mail will
be reviewed, sorted and summarized by the Company's General Counsel before they
are forwarded to the Board or an individual director.
TRANSACTIONS WITH RELATED PERSONS
The Board of Directors has adopted a Related Person Transactions Policy
regarding the review, approval and ratification of transactions with related
persons. A copy of the policy is attached as Appendix A to this Proxy Statement.
The policy describes the types of transactions covered, the standards to be
applied, and the persons on the Board responsible for reviewing and approving
related person transactions.
8
SECURITY OWNERSHIP
The following table furnishes information as of February 15, 2007, except
as otherwise noted, with respect to shares of the Company's Common Stock
beneficially owned by (i) each director and nominee for director, (ii) each
officer named in the Summary Compensation Table (other than Mr. Williams who is
no longer affiliated with the Company and for whom the Company does not have
current ownership information), (iii) directors, nominees and executive officers
of the Company as a group, and (iv) any person who is known by the Company to be
a beneficial owner of more than five percent of the outstanding shares of Common
Stock. Except as indicated by the notes to the following table and with respect
to Deferred Compensation Units, or DCUs, issued under the Directors Deferred
Compensation Plan and the IDEX Corporation Deferred Compensation Plan for
Officers (the "Officers Deferred Compensation Plan"), the holders listed below
have sole voting power and investment power over the shares beneficially held by
them. Under the Securities and Exchange Commission rules, the number of shares
shown as beneficially owned includes shares of Common Stock subject to options
that currently are exercisable, or will be exercisable, within 60 days of
February 15, 2007. Shares of Common Stock subject to options that are currently
exercisable within 60 days of February 15, 2007, are considered to be
outstanding for the purpose of determining the percentage of the shares held by
a holder, but not for the purpose of computing the percentage held by others. An
* indicates ownership of less than one percent of the outstanding Common Stock.
NAME AND ADDRESS OF BENEFICIAL SHARES BENEFICIALLY DEFERRED COMPENSATION PERCENT OF
OWNER OWNED UNITS(1) CLASS
------------------------------ ------------------- --------------------- ----------
Directors and Nominees
(other than Executive Officers):
Bradley J. Bell(2)............... 41,475 *
Ruby R. Chandy(2)................ 5,065 *
Frank S. Hermance(2)............. 24,975 2,874 *
Gregory B. Kenny(2).............. 31,725 4,780 *
Neil A. Springer(2).............. 68,850 *
Michael T. Tokarz(2)............. 242,124 14,275 *
Named Executive Officers:
Lawrence D. Kingsley(3)(4)....... 327,143 *
Dominic A. Romeo(3)(4)........... 107,420 *
John L. McMurray(3)(4)........... 131,838 2,537 *
Frank J. Notaro(3)(4)............ 88,922 *
Kimberly K. Bors(3)(4)........... 76,061 *
Directors, Nominees and All
Executive Officers as a Group:
(14 persons)(5).................. 1,171,568 24,466 2.2
Other Principal Beneficial Owners:
Ariel Capital Management,
Inc.(6)....................... 7,120,600 13.3
307 North Michigan Avenue, Suite
500
Chicago, IL 60601
Select Equity Group, Inc.(7)..... 4,118,296 7.7
380 Lafayette Street, 6th Floor
New York, NY 10003-6933
Fidelity Management &
Research(8)................... 3,017,829 5.6
One Federal Street
Boston, MA 02110-2003
--------
(1) DCUs are issued under the Directors Deferred Compensation Plan and the
Officers Deferred Compensation Plan and are payable in Common Stock. The
value of these DCUs depends directly on the performance of Common Stock.
The DCUs are not included in Shares Beneficially Owned.
(2) Includes 37,125, 3,375, 23,625, 30,375, 54,000 and 13,500 shares under
exercisable options for Mr. Bell, Ms. Chandy, and Messrs. Hermance,
Kenny, Springer and Tokarz, respectively. Includes 675 shares of
restricted stock issued to each of Messrs. Bell, Hermance, Kenny,
Springer and Tokarz under the Incentive Award Plan (see "Long-Term
Incentives" section of "Compensation Discussion and Analysis" and
"Compensation of Directors" under EXECUTIVE COMPENSATION) on February 2,
2006 which vest on February 2, 2009; 1,015 shares of restricted stock
issued to Ms. Chandy on April 4, 2006 which vest on April 4, 2009; and
675 shares of restricted stock issued to Mr. Bell, Ms. Chandy, and
Messrs. Hermance, Kenny, Springer and
9
Tokarz on February 12, 2007 which vest on February 12, 2010. All shares
of restricted stock are eligible for dividends.
(3) Includes 103,040, 67,500, 125,325, 84,142 and 67,080 shares under
exercisable options for Messrs. Kingsley, Romeo, McMurray and Notaro and
Ms. Bors, respectively.
(4) Includes shares of restricted stock awarded by the Company as follows:
Mr. Kingsley was awarded 115,000 shares of restricted stock on August 23,
2004, as an inducement to accept employment as the Company's Chief
Operating Officer. Such shares were not granted under a plan approved by
stockholders. Under the terms of the award, 23,000 of the shares vested
on August 23 in each of the years 2005 and 2006, and 23,000 of the shares
will vest on August 23 in each of the years 2007 through 2009. In
connection with the vesting of shares on August 23, 2005 and 2006, Mr.
Kingsley surrendered 7,895 and 9,074 shares, respectively, to satisfy
withholding taxes. In connection with his promotion to Chief Executive
Officer on March 22, 2005, Mr. Kingsley was awarded 100,000 shares of
restricted stock under the Incentive Award Plan. Under the terms of such
award, 25,000 shares vested on March 22, 2006, and 25,000 of the shares
will vest on March 22 in each of the years 2007 through 2009. In
connection with the vesting of the shares on March 22, 2006, Mr. Kingsley
surrendered 9,863 shares to satisfy withholding taxes. In addition, Mr.
Kingsley was awarded 17,810 shares of restricted stock under the
Incentive Award Plan on March 22, 2005, which vest on March 22, 2009; and
18,125 shares of restricted stock under the Incentive Award Plan on April
4, 2006, which vest on April 4, 2010; provided he is employed by the
Company on such vesting dates. At December 31, 2006, Mr. Kingsley held
179,935 non-vested shares of restricted stock.
Mr. Romeo was awarded 30,000 shares of restricted stock on January 14,
2004, as an inducement to accept employment as the Company's Vice
President and Chief Financial Officer. Such shares were not granted under
a plan approved by stockholders. Under the terms of the award, 15,000 of
the shares will vest on January 14 in each of the years 2008 and 2009. In
addition, Mr. Romeo was awarded 4,040 shares of restricted stock under
the Incentive Award Plan on March 22, 2005 which vest on March 22, 2009;
2,000 shares of restricted stock under the Incentive Award Plan on
September 27, 2005 which vest on September 27, 2009; and 3,880 shares of
restricted stock under the Incentive Award Plan on April 4, 2006 which
vest on April 4, 2010; provided he is employed by the Company on such
vesting dates. At December 31, 2006, Mr. Romeo held 39,920 non-vested
shares of restricted stock.
Messrs. McMurray and Notaro and Ms. Bors were awarded 3,240, 2,640 and
2,320 shares of restricted stock, respectively, under the Incentive Award
Plan on March 22, 2005 which vest on March 22, 2009; and 2,200, 2,140 and
2,080 shares of restricted stock, respectively, under the Incentive Award
Plan on April 4, 2006, which vest on April 4, 2010; provided the
executive is employed by the Company on such vesting dates.
The restricted shares held by Messrs. Kingsley, Romeo, McMurray, and
Notaro and Ms. Bors may vest earlier than the dates indicated above upon
a change of control of the Company and certain other events. See
"Outstanding Equity Awards at Fiscal Year End" under EXECUTIVE
COMPENSATION.
All shares of restricted stock are eligible for dividends.
(5) Includes 624,237 shares under exercisable options and 253,735 non-vested
shares of restricted stock.
(6) Based on information in Schedule 13G, as of December 31, 2006, filed by
Ariel Capital Management, Inc. ("Ariel") with respect to Common Stock
owned by Ariel and certain other entities which Ariel directly or
indirectly controls or for which Ariel is an investment advisor on a
discretionary basis. The Company has not attempted to verify any of the
foregoing information, which is based solely upon the information
contained in the Schedule 13G.
(7) Based on information in Schedule 13G, as of December 31, 2006, filed by
Select Equity Group, Inc. ("Select Equity") with respect to Common Stock
owned by Select Equity and certain other entities which Select Equity
directly or indirectly controls or for which Select Equity is an
investment advisor on a discretionary basis. The Company has not
attempted to verify any of the foregoing information, which is based
solely upon the information contained in the Schedule 13G.
(8) Based on information in Schedule 13G, as of December 31, 2006, filed by
Fidelity Management & Research ("Fidelity") with respect to Common Stock
owned by Fidelity and certain other entities which Fidelity directly or
indirectly controls or for which Fidelity is an investment advisor on a
discretionary basis. The Company has not attempted to verify any of the
foregoing information, which is based solely upon the information
contained in the Schedule 13G.
10
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
PHILOSOPHY AND OVERVIEW OF COMPENSATION
The Company's executive compensation philosophy is to have a compensation
program that (1) aligns the interests of management and stockholders, (2)
motivates and retains the management team, and (3) results in executives holding
meaningful amounts of the Company's Common Stock.
The Company carries out its compensation philosophy by:
- Compensating executives at the median of the market in which the Company
competes for management talent, if the Company performs at target.
- Providing executives with additional compensation if the Company performs
above target.
- Paying executives a significant portion of their compensation in the form
of long-term equity awards which vest over time.
- Requiring executives to hold targeted amounts of the Company's Common
Stock.
TOTAL COMPENSATION
The compensation the Company provides to its executives includes both non-
variable and variable components. The non-variable components are base salary
and benefits. The variable components are annual cash performance-based bonuses
and long-term equity awards. The primary elements of the Company's 2006
compensation for the named executive officers, or NEOs, in the Summary
Compensation Table, including Lawrence D. Kingsley, who is the chief executive
officer, or CEO, and Dominic A. Romeo, who is the chief financial officer, or
CFO, but excluding Dennis K. Williams, who retired from the position of Chairman
of the Board on April 4, 2006, are outlined below:
ELEMENT PURPOSE CHARACTERISTICS
------- ------- ---------------
Total Direct Compensation Reward each executive for Non-variable and variable
current and future performance cash, non-cash and equity-
through a combination of base based components of
salary, short- and long-term compensation, all targeted at
performance-based incentives, the market median.
and benefits.
Base Salary Provide a fixed level of Established at market median
current cash compensation to and adjusted annually to
reflect the executive's reflect market changes, salary
primary duties and increase budgets, and
responsibilities. individual performance.
Short-Term Provide performance-based cash Target award set at market
Incentives -- Annual compensation in excess of base median, with actual award
Bonus salary. based on Company and
individual performance.
Long-Term Incentives -- Stock Provide long-term compensation Target award set at market
Options tied to increases in the price median, adjusted based on
of the Company's stock, and individual and Company
retention of the executive. performance, priced on grant
date, and vested ratably over
four years.
Long-Term Provide long-term compensation Target award set at market
Incentives -- Restricted tied to the value of the median, adjusted based on
Stock Company's stock, and retention individual and Company
of the executive. performance, and cliff vested
in four years.
11
ELEMENT PURPOSE CHARACTERISTICS
------- ------- ---------------
Retirement Benefits Provide retirement income. Qualified defined contribution
and defined benefit plans, and
a non-qualified supplemental
retirement plan to provide
benefits in excess of IRS
limits under qualified plans.
Other Benefits Provide financial protection Medical, dental, disability,
in the event of injury, life insurance, severance and
illness, disability, death or other employee benefits.
involuntary termination.
Perquisites Provide additional non-cash Company automobile for all
compensation. NEOs and, in the case of the
CEO only, limited personal use
of Company aircraft and
country club membership.
The Company targets the following approximate mix of compensation for the
NEOs:
PERCENT OF TOTAL
DIRECT
COMPENSATION
----------------
ELEMENT OF COMPENSATION CEO OTHER NEOS
----------------------- --- ----------
Base Salary.............................................. 20% 40%
Target Annual Incentives................................. 20% 25%
Target Long-term Incentives.............................. 60% 35%
ROLE OF COMPENSATION COMMITTEE AND DATA USED
The Compensation Committee establishes the Company's compensation
philosophy, structures the Company's compensation programs to be consistent with
that philosophy, and approves each element of each executive officer's
compensation. In the case of the CEO, the compensation determinations made by
the Compensation Committee are ratified by the entire Board.
The Compensation Committee began periodic reviews of executive pay tally
sheets in 2006. The tally sheets outline each executive's annual pay -- target
and actual -- and total accumulated wealth under various performance and
employment scenarios. Data from the tally sheets is considered by the
Compensation Committee when setting target total compensation. Generally, the
Compensation Committee reviews and adjusts target total compensation levels
annually. Actual total compensation may vary from target based on Company and
individual performance, and changes in stock price over time.
Generally, the amount of compensation realized historically, or potentially
realizable in the future, from past compensation awards does not directly impact
the level at which future pay opportunities are set. However, the Compensation
Committee believes that total wealth realized from long-term incentives awarded
in the prior five years (including gains from option exercises) by executives is
an important consideration in determining annual equity grants prospectively.
When granting equity awards, the Compensation Committee reviews both individual
performance and the positioning of previously granted equity awards within
established grant ranges.
To assist the Compensation Committee in discharging its responsibilities,
the Compensation Committee has retained Towers Perrin to act as an independent
outside consultant. Towers Perrin is engaged by, and reports directly to, the
Compensation Committee. Towers Perrin works with the Compensation Committee, in
conjunction with management, to structure the Company's compensation programs
and evaluate the competitiveness of its executive compensation levels.
The Company believes that to attract and retain qualified management, pay
levels (including base salary, incentive compensation at target, and benefits)
should be targeted at the 50(th) percentile (or median) of pay levels of
comparable positions at comparable companies. Actual pay should and does vary
from these targets based on Company and individual performance, and changes in
stock price over time.
12
The primary reference point for the determination of market pay practices
are pay levels for organizations with revenues, business activities, and
complexities similar to those of the Company. Market data is derived from pay
surveys available to the Company's Human Resource function and Towers Perrin.
When developing competitive compensation data, the Human Resource function and
Towers Perrin rely primarily on two market reference points:
- General industry companies with data regressed based on the Company's
revenue size; and
- Industrial manufacturing companies with data regressed based on the
Company's revenue size.
Where general industry or industrial manufacturing data are not available,
data for companies with revenues similar to those of the Company is used.
In evaluating the competitiveness of compensation provided to the CEO, the
Compensation Committee considers as an additional reference point the pay
practices for chief executive officers at a group of companies with operations
similar to those of the Company (the "peer group"). Companies in the peer group
in 2006 were Danaher, Dover, Graco, Illinois Tool Works, Ingersoll-Rand, ITT
Industries, Nordson, Parker Hannifin, Pentair, and Roper Industries. Regressed
data were reviewed for the peer group to account for differences in size. As an
additional reference point, the Compensation Committee also considers
compensation data for companies with market capitalization and operating income
performance similar to those of the Company. These additional reference points
are used together with the available pay surveys to establish the compensation
of the CEO.
The CEO's pay package is set by the Compensation Committee during executive
session based on the financial and operating performance of the Company and its
assessment of the CEO's individual performance. The pay packages for all other
NEOs are based on the recommendations of the CEO to the Compensation Committee.
The Compensation Committee considers the CEO's recommendations, taking into
account each NEO's individual responsibility, experience and overall
performance, as well as internal comparisons of pay within the executive group.
The Compensation Committee reviews the estimated accounting and tax impact
of all elements of the executive compensation program. Generally, an accounting
expense is accrued over the requisite service period of the particular pay
element (generally equal to the performance period) and the Company realizes a
tax deduction upon payment to/or realization by the executive. The Compensation
Committee has been advised that, based on current interpretations, stock options
awarded under the Incentive Award Plan should satisfy the requirements for
performance-based compensation under Internal Revenue Code Section 162(m). In
addition, the Compensation Committee has been advised that Mr. Kingsley's annual
incentive compensation under the Incentive Award Plan should satisfy the
requirements for performance-based compensation under Internal Revenue Code
Section 162(m). The Compensation Committee has been made aware that restricted
stock awards (which vest based on continued employment with the Company) do not
qualify as performance-based compensation and, therefore, may not be tax-
deductible under Internal Revenue Code Section 162(m).
BASE SALARY
Base salaries are reviewed annually and are set based on market
competitiveness, salary increase budgets influenced by Company operating
performance, and individual performance. Factors taken into account to
materially increase or decrease base salary include significant changes in
individual job responsibilities and the growth of the Company.
SHORT-TERM INCENTIVES -- ANNUAL BONUS
All NEOs, other than Mr. Kingsley, participate in the Company's Management
Incentive Compensation Plan ("MICP"). The MICP provides participants with the
opportunity to earn annual cash bonuses. Annual cash bonuses under the MICP are
targeted at approximately the market median, with higher payouts for above-
target performance and lower payouts for below-target performance.
The following factors determine the amount of the annual cash bonus paid to
each participant under the MICP:
- Each participant is assigned an Individual Target Bonus for the year
based on the participant's position. The Individual Target Bonus is a
percentage of the participant's base salary for the year. For the NEOs
who
13
participate in the MICP, the Individual Target Bonus for 2006 was either
57% or 65% of the NEO's base salary.
- A Business Performance Factor is calculated based on Company performance
measured against four quantitative objectives, which are given a combined
75% weighting, and 12 qualitative objectives, which are given a combined
25% weighting. The Compensation Committee believes that performance
against these objectives enhances overall operating results and
ultimately improves stockholder value. The Business Performance Factor is
100% at target performance, and can range from 0% to 200%. The four
quantitative objectives are:
- Organic sales growth over the preceding year, which was targeted at 8%
for 2006, and has a 25% weighting.
- Margin enhancement measured as the profit margin on incremental organic
sales growth over the preceding year, which was targeted at 30% for
2006, and has a 25% weighting.
- Cash flow measured by improvements in operating working capital as a
percentage of sales for the year, which was targeted at a 10% decrease
for 2006, and has a 15% weighting.
- Innovation measured by sales from new products, new applications, and
new markets in the last two years that provide incremental gross
margin, which has a 10% weighting.
The 12 qualitative objectives are behavior-oriented toward business and
process leadership. Quantitative and qualitative objectives and targets
vary from year to year. In the case of Mr. Romeo, Mr. Notaro and Ms.
Bors, all objectives are measured using the Company's consolidated
results. In the case of Mr. McMurray, who is Vice President - Group
Executive of the Fluid & Metering Technologies Group, all objectives are
measured using both the Company's consolidated results and the Fluid &
Metering Technologies Group's results. The Compensation Committee may, in
its discretion, further adjust the Business Performance Factor to account
for factors (such as acquisition consummation and integration) not fully
reflected in the quantitative and qualitative objectives. For 2006,
performance against the quantitative and qualitative factors resulted in
a recommended Business Performance Factor of 115% for Messrs. Romeo and
Notaro and Ms. Bors, and 117% for Mr. McMurray. Principally due to the
Company's 2006 acquisition activities, the Compensation Committee
adjusted the Business Performance Factor to 125% for all of the NEOs
participating in the MICP. Over the past 10 years, the Business
Performance Factor for the NEOs participating in the MICP has been at or
above 100% for six years, and below 100% for four years.
- A Personal Performance Multiplier ranging from 0.75 to 1.30 is assigned
to each participant based on individual performance. Recommendations on
Personal Performance Multipliers for each participant are made by the CEO
to the Compensation Committee at the end of the year. The top 25% of all
MICP participants may receive a Personal Performance Multiplier ranging
from 1.15 to 1.30, the bottom 10% of all MICP participants may receive a
Personal Performance Multiplier ranging from 0.75 to 0.90, and the middle
65% of all MICP participants may receive a Personal Performance
Multiplier ranging from 1.00 to 1.10. Personal Performance Multipliers
above 1.30 or below 0.75 may be assigned to reflect unusually positive or
negative individual performance. For the NEOs participating in the MICP,
the Personal Performance Multipliers for 2006 were between 1.20 and 1.25.
The amount of the annual cash bonus paid to each participant under the MICP
is the product of the participant's Individual Target Bonus, the applicable
Business Performance Factor, and the Personal Performance Multiplier, as shown
below.
Annual Bonus = Individual Target Bonus x Business Performance Factor x Personal
Performance Multiplier
The CEO's annual incentive takes the form of a cash performance award under
the Company's Incentive Award Plan that is based on achieving a consolidated
operating income target. The maximum amount of the performance award that the
CEO can receive under the Company's Incentive Award Plan for any year is 2.0% of
the Company's operating income for the year, which is greater than the maximum
annual cash bonus he could receive if he were a participant in the MICP.
However, the Compensation Committee is allowed to reduce (and historically
always has reduced) the amount of the award based on other quantitative and
qualitative criteria. The CEO receives
14
a performance award under the Company's Incentive Award Plan rather than an
annual cash bonus under the MICP in order to be deductible under Internal
Revenue Code Section 162(m). If the CEO was a participant in the MICP (which
permits upward adjustments based on qualitative factors instead of only downward
adjustments as permitted under the Company's Incentive Award Plan), his annual
cash bonus under the MICP would not be deductible under Internal Revenue Code
Section 162(m).
In 2006, Mr. Kingsley's performance award was payable if the Company had
operating income of $100,000,000 or more. Absent the exercise of the
Compensation Committee's discretion to adjust the award downward, the amount of
Mr. Kingsley's performance award would have been $4,344,000 (2% of the Company's
2006 operating income). The Compensation Committee exercised its discretion to
adjust Mr. Kingsley's performance award downward and, as a result, his
performance award for 2006 was $1,132,900. In exercising this discretion, the
Compensation Committee considered the actual performance of the Company, Mr.
Kingsley's individual performance and the amount that Mr. Kingsley would have
earned as an annual cash bonus if he participated in the MICP with an Individual
Target Bonus equal to 100% of his 2006 base salary.
LONG-TERM INCENTIVES
Long-term incentives are provided to the Company's executives under the
IDEX Corporation Incentive Award Plan ("Incentive Award Plan"), which was
approved by stockholders in 2005. Long-term incentive award guidelines are
established such that the value of the awards for a given executive is
consistent with the Company's desire to deliver target pay at the 50th
percentile of market practice. The actual award within the specified range is
based primarily on individual performance and, to a lesser extent, Company
performance. Each executive is granted an award with an expected value in a
range around a market reference point. The actual value delivered to the
executive may vary above or below the target value based on the performance of
the Company's stock over time, and the timing of the executive's decision to
realize such value.
Long-term incentive awards for the NEOs are currently structured to provide
50% of the expected value in the form of stock options and 50% of the expected
value in the form of restricted stock. The Compensation Committee believes that
stock options and restricted stock incent management actions that drive the
creation of stockholder value and promote executive stock ownership. However,
stock options and restricted stock have different characteristics. Stock options
provide value only to the extent that the Company's stock price appreciates
above the stock price on the date of grant. Restricted stock provides value
regardless of whether the Company's stock price appreciates, and helps retain
executives over the course of business and market cycles that may negatively
impact the Company's operations and stock price in the short term. Because at
the time of grant option shares have a lower expected value than restricted
shares, relatively more option shares are awarded. As a result, stock option
awards provide executives with the potential for greater gain when the Company's
stock increases in price, while restricted stock awards gives executives more
certainty that their equity awards will have some level of value even if the
Company's stock price does not increase. Stock option and restricted stock
awards are equally weighted for the CEO and the other NEOs to reflect the
Compensation Committee's belief that stock price appreciation, retention of
executives, and executive stock ownership are all important objectives.
The stock options awarded to the CEO and other NEOs under the Incentive
Award Plan have historically had the following characteristics:
- All are non-qualified stock options;
- All have an exercise price equal to the closing price of the Company's
stock on the day prior to the grant date (in the future, the closing
price on the grant date will be used);
- All vest annually in equal amounts over a four-year period; and
- All expire 10 years after the date of grant.
15
The restricted stock awarded to the CEO and other NEOs under the Incentive
Award Plan has historically had the following characteristics:
- All shares cliff-vest four years after the grant date; and
- All shares receive dividends in the same amount as the dividends declared
and paid on the Company's Common Stock at the time such dividends are
paid.
The compensation amounts shown for Stock Awards and Option Awards in the
Summary Compensation Table below are the amounts recognized for financial
statement reporting purposes in accordance with Statement of Financial
Accounting Standards (FAS) No. 123(R) using the assumptions set forth in the
footnotes to the financial statements in the Company's Annual Report on Form 10-
K for the year ended December 31, 2006, for awards granted during and prior to
2006, assuming no forfeitures. The ultimate value, if any, that will be realized
with respect to such awards will not be not determinable until the awards are
exercised.
Stock option and restricted stock awards under the Incentive Award Plan are
made on an annual basis on the date of the annual stockholder meeting or at the
time of a special event (such as upon hiring or promotion).
BENEFITS AND PERQUISITES
The CEO and other NEOs participate in the group medical, dental, disability
and life insurance plans generally available to non-union employees of the
Company domiciled in the United States. In addition to benefits generally
available to non-union employees domiciled in the United States, the CEO and
other NEOs receive use of a Company car and participate in a supplemental long-
term disability program. The supplemental disability benefit is in addition to
the group long-term disability benefit generally available to all non-union
employees domiciled in the United States. The group long-term disability plan
provides an annual benefit of 60% of the first $200,000 of base salary, or an
annual maximum benefit of $120,000 per year. For all NEOs other than the CEO,
the supplemental program provides an annual benefit of 60% of their base salary
above $200,000, with a maximum supplemental benefit of $36,000 per year. For the
CEO, the supplemental program provides an annual benefit of 60% of base salary
above $200,000, with a maximum supplemental benefit of $240,000 per year. The
NEOs pay the premiums on all such insurance, but the Company provides a year-end
allowance to the executives equal to the supplemental program premium costs
together with a gross-up on the taxes associated with such year-end allowance.
In addition, the CEO is offered the personal use of corporate aircraft (limited
to 25 hours per year), and a Company-paid membership at a country club. To date,
Mr. Kingsley has elected to not utilize the club membership.
Mr. Kingsley is entitled to severance benefits under the terms of his
employment agreement if his employment is actually or constructively terminated
without cause. Mr. Romeo and Ms. Bors are entitled to severance benefits under
terms of their employment offer letters with the Company in the event their
employment is terminated without cause. In each case, the amount of the benefit,
which varies with the individual, depends upon whether or not such termination
is in connection with a change in control. Mr. McMurray and Mr. Notaro are
entitled to severance benefits under the terms of written agreements in the
event that their employment is actually or constructively terminated without
cause in connection with a change in control. Mr. McMurray and Mr. Notaro are
also entitled to severance under Company's severance policy in the event their
employment is terminated without cause other than in connection with a change in
control.
RETIREMENT BENEFITS
The Company maintains three tax-qualified retirement plans for all non-
union employees domiciled in the United States in which the CEO and other NEOs
may participate. The IDEX Corporation Retirement Plan (the "Pension Plan") is a
defined benefit pension plan, in which certain NEOs participate. The CEO and
NEOs who are not actively participating in the Pension Plan participate in the
IDEX Corporation Defined Contribution Plan (the "Defined Contribution Plan"). An
NEO can actively participate in only one of the two retirement plans.
Additionally, all NEOs are eligible to participate in the IDEX Corporation
Savings Plan (the "401(k) Plan"), which is a 401(k) plan with a prescribed
Company matching contribution. The Company also provides two non-qualified
deferred compensation plans in which the CEO and other NEOs may participate: the
IDEX Corporation
16
Supplemental Executive Retirement Plan (the "SERP"), and the IDEX Corporation
Deferred Compensation Plan for Officers (the "Officers Deferred Compensation
Plan").
During 2005, the Company redesigned its retirement plans to accomplish
three goals:
- Recognize a changing workforce;
- Provide a competitive and consistent retirement program to employees
across the entire organization; and
- Manage overall costs.
As a result of this redesign, the Company provides only the Defined
Contribution Plan and the 401(k) Plan for employees hired after 2004. Employees
who participated in the Pension Plan as of December 31, 2005, and who met
certain age and service requirements, were given the one-time opportunity to
choose:
- To stay in the Pension Plan with the then current match in the 401(k)
Plan (maximum match of 2.8% of eligible pay); or
- To begin participating in the Defined Contribution Plan as of January 1,
2006, with an enhanced match in the 401(k) Plan (maximum match of 4.0% of
eligible pay). Employees who chose this option retain, by law, a frozen
benefit in the Pension Plan as of December 31, 2005.
The Company believes that its retirement benefits are market comparable,
and thus contribute to the Company's ability to attract and retain executive
talent.
PENSION PLAN
The Company and the other sponsoring subsidiaries are required to make an
annual contribution to the Pension Plan in such amounts as are actuarially
required to fund the benefits of the participants in the Pension Plan. The
Pension Plan is an on-going, tax-qualified, "career average" retirement plan
that provides a level of benefit based on a participant's compensation for a
year with periodic updates to average compensation over a fixed five-year
period. Under the Pension Plan, participants are entitled to receive an annual
benefit on retirement equal to the sum of the benefit earned through 1995 using
the five-year average compensation of a participant through 1995, plus the
benefit earned under the then current formula for each year of employment after
1995. For each year of participation through 1995, a participant earned a
benefit equal to 1.25% of the first $16,800 of such average compensation through
1995, and 1.65% of such compensation in excess of $16,800. Beginning January 1,
1996, the benefit earned equals the sum of 1.6% of the first $16,800 of each
year's total compensation, and 2.0% for such compensation in excess of $16,800,
for each full year of service credited after 1995. As required by law,
compensation counted for purposes of determining this benefit is limited. For
all participants in the Pension Plan, the normal form of retirement benefit is
payable in the form of a life annuity with five years of payments guaranteed.
Other optional forms of payment are available.
DEFINED CONTRIBUTION PLAN
The Company and the other sponsoring subsidiaries are required to make an
annual contribution to the Defined Contribution Plan based on a prescribed
contribution formula. The Defined Contribution Plan is an ongoing, tax-
qualified, "defined contribution" plan that provides an annual contribution
based on a participant's compensation for that year and a combination of the
participant's age and service as shown below:
AGE + YEARS OF SERVICE COMPANY CONTRIBUTION
---------------------- --------------------
Less than 40............. 3.5% of Eligible Annual Compensation
40 but less than 55...... 4.0% of Eligible Annual Compensation
55 but less than 70...... 4.5% of Eligible Annual Compensation
70 or more............... 5.0% of Eligible Annual Compensation
Under the Defined Contribution Plan, participants are entitled to receive
the lump sum value of their vested account at termination of employment subject
to distribution rules under the law.
17
401(K) PLAN
The Company and the other sponsoring subsidiaries are required to make
payroll-matching contributions to the 401(k) Plan based on the prescribed
matching contribution formula. The 401(k) Plan is an on-going, tax-qualified,
"401(k)" plan that provides a matching contribution based on the employee's
contribution up to 8% of eligible compensation. The maximum matching
contribution by the Company is either 2.8% of eligible compensation, if the
employee is currently accruing benefits under the Pension Plan, or 4.0% of
eligible compensation, if the employee participates in the Defined Contribution
Plan.
SERP
The SERP is an unfunded, non-qualified plan designed to provide deferred
compensation for officers and other key employees to compensate them for any
benefits lost under the Company's tax-qualified retirement programs due to
limits on compensation and benefits under these tax-qualified plans. Benefits
are payable upon separation of service within the meaning of Internal Revenue
Code Section 409A; however, no benefits are payable prior to the date that is
six months after the date of separation of service, or the date of death of the
employee, if earlier. The SERP has essentially three components for determining
benefits:
Defined Benefit Excess Benefit: If the employee participates or had
participated in the Pension Plan, then the employee will receive an excess
benefit ("DB Excess Benefit") under a formula equivalent to the tax-
qualified Pension Plan formula. Such formula will only consider eligible
compensation above the Internal Revenue Code limits and will restore any
limits on the maximum amount of benefits which may be accrued under a
qualified retirement plan. A DB Excess Benefit will only be accrued for the
appropriate period of service that the employee was an active participant
in the Pension Plan. For the period of service that the employee accrues a
DB Excess Benefit, the employee is not eligible to accrue a DC Excess
Benefit or a 401(k) Restoration Benefit (as defined below).
Defined Contribution Excess Benefit: If the employee participates in
the Defined Contribution Plan, then the employee will receive an excess
benefit ("DC Excess Benefit") under a formula equivalent to the tax-
qualified Defined Contribution Plan formula. Such formula will only
consider eligible compensation above Internal Revenue Code limits and will
restore any benefits limited under the Defined Contribution Plan. A DC
Excess Benefit will only be accrued for the appropriate period of service
that the employee is an active participant in the Defined Contribution
Plan. For the period of service that the employee accrues a DC Excess
Benefit, the employee is not eligible to accrue a DB Excess Benefit, but is
eligible to receive a 401(k) Restoration Benefit (as defined below). Any
benefits that accrue in the defined contribution portion of the SERP are
credited with interest, as determined by the Company, on at least a
quarterly basis, based on an interest rate equal to the Lehman Brothers
Long Term AAA Corporate Bond Yield Average as determined on the first
business day of December prior to the calendar year.
401(k) Restoration Benefit: Beginning as of January 1, 2006, if an
employee participates in the Defined Contribution Plan, then the employee
will receive a restoration benefit ("401(k) Restoration Benefit") equal to
4% of eligible compensation above the limit on compensation under the
Defined Contribution Plan and 401(k) Plan without regard to the limit on
the maximum amount of tax-deferred contributions a participant can make
under such plans. Employees are not required to make any deferrals to any
non-qualified plan to receive this benefit. A 401(k) Restoration Benefit
will only be accrued for the appropriate period of service that the
employee was an active participant in the Defined Contribution Plan. For
the period of service that the employee accrues a DB Excess Benefit, the
employee is not eligible to receive a 401(k) Restoration Benefit. Any
benefits that accrue in the 401(k) Restoration Benefit portion of the SERP
are credited with interest, as determined by the Company, on at least a
quarterly basis, based on an interest rate equal to the Lehman Brothers
Long Term AAA Corporate Bond Yield Average as determined on the first
business day of December prior to the calendar year.
OFFICERS DEFERRED COMPENSATION PLAN
The Officers Deferred Compensation Plan allows corporate and operating
officers to defer eligible employee compensation above the compensation limits
applicable under the tax-qualified plans. Participants can defer their
18
compensation into either an interest-bearing account or a deferred compensation
units account as of the date that such compensation would otherwise be payable.
The deferred compensation credited to the interest-bearing account is credited
with interest, as determined by the Company, on at least a quarterly basis,
based on an interest rate equal to the Lehman Brothers Long Term AAA Corporate
Bond Yield Average as determined on the first business day of December preceding
the calendar year. Deferred compensation credited to the deferred compensation
units account is converted into a number of DCUs, which represent equivalent
shares of the Company's Common Stock. The number of DCUs is determined by
dividing the amount deferred by the closing price of the Company's Common Stock
the day before the date of deferral. The DCUs are entitled to receive dividend
equivalents which are reinvested in DCUs based on the same formula for
investment of a participant's deferral. Both of these accounts are payable upon
separation of service within the meaning of Internal Revenue Code Section 409A;
however, no benefits are payable prior to the date that is six months after the
date of separation of service, or the date of death of the employee, if earlier.
STOCK OWNERSHIP
Consistent with its executive pay philosophy, the Company requires that all
corporate and operating officers retain minimum ownership levels of the
Company's Common Stock. The following stock ownership guidelines were
established by the Board of Directors in 2006.
EXECUTIVE OWNERSHIP MULTIPLE (OF BASE SALARY)
--------- -----------------------------------
CEO............................................... 5 times
CFO............................................... 3 times
Other NEOs........................................ 2-2.5 times
The CEO and all other NEOs must comply with these ownership requirements
within five years of their adoption in 2006, or their date of hire, whichever is
later. Shares that are counted for purposes of satisfying ownership requirements
are shares directly owned, unvested restricted shares, and DCUs. As of December
31, 2006, the CEO and all other NEOs were proceeding towards meeting their
ownership guidelines within the specified five-year period.
Currently, the Company has no explicit policy prohibiting the hedging of
its stock, although the practice is discouraged.
MR. WILLIAMS
Effective as of the Annual Meeting on March 22, 2005, Mr. Williams resigned
his position of President and Chief Executive Officer, but remained as executive
Chairman of the Board until April 4, 2006, in order to transition leadership to
Mr. Kingsley. In connection with such resignation, the Company entered into a
Transition and Retirement Agreement with Mr. Williams. Pursuant to such
agreement, Mr. Williams received, in exchange for his agreement to transition
leadership to Mr. Kingsley and to extend his non-compete with the Company from a
two-year to a five-year period following his retirement, the following amounts:
(1) 22 bi-weekly payments of $109,091 beginning May 11, 2005 and continuing
through March 8, 2006 (the total amount of such payments being $2,400,000); (2)
a lump-sum payment of $1,296,000 and 26 bi-weekly payments of $31,154 upon his
retirement on April 4, 2006, such amounts being equivalent to what Mr. Williams
would have been entitled to receive upon expiration of the term of his
employment agreement on April 30, 2005; (3) payment of his SERP benefit in two
substantially equal installments, as well as all benefits he accrued, and became
vested in, during his employment under the Officers Deferred Compensation Plan
and the 2001 Stock Plan for Officers. These transition payments were not
considered compensation for benefit accrual purposes under the SERP and any
benefits Mr. Williams accrued under the Pension Plan as a result of such
transition payments reduced his SERP benefit. During such period, Mr. Williams
was not eligible for any base salary, or short- or long-term incentive
compensation awards, but he received all other employee benefits and perquisites
he was eligible to receive while he was serving as Chairman of the Board,
President and Chief Executive Officer, including the personal use of the
Company's aircraft up to an incremental cost of $110,000 for the period May 1,
2005 to April 4, 2006. Except as noted above, no other continuing benefits,
perquisites, or other employment-related compensation are due to Mr. Williams.
19
CONCLUSION
This Compensation Discussion and Analysis provides an overview of the
Company's compensation philosophy and components. The tables and narratives
below are provided in support of this Compensation Discussion and Analysis.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed this Compensation Discussion and
Analysis and discussed its contents with the Company's management. Based on this
review and discussion, the Compensation Committee has recommended that the
Compensation Discussion and Analysis be included in the Company's Annual Report
on Form 10-K and in this Proxy Statement.
Gregory B. Kenny, Chairman
Michael T. Tokarz
20
SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation earned in 2006 for the
Company's CEO, CFO, each of the three most highest compensated executive
officers other than the CEO and CFO, and the former Chairman of the Board.
CHANGE IN
PENSION
VALUE AND
NONQUALIFIED
NON-EQUITY DEFERRED ALL
NAME AND PRINCIPAL STOCK OPTION INCENTIVE PLAN COMPENSATION OTHER
POSITION YEAR SALARY BONUS AWARDS(2) AWARDS(3) COMPENSATION(4) EARNINGS(5) COMPENSATION(6)
------------------ ---- -------- ---------- ---------- --------- --------------- ------------ ---------------
Lawrence D. Kingsley.. 2006 $725,000 $ 0 $2,070,131 $614,271 $1,132,900 $ 517 $217,058
Chairman, President
and Chief Executive
Officer
Dominic A. Romeo...... 2006 346,400 0 287,628 284,660 337,800 1,286 67,714
Vice President and
Chief Financial
Officer
John L. McMurray...... 2006 284,000 0 145,461 264,328 288,500 90,253 23,685
Vice President -
Group Executive,
Fluid & Metering
Technologies
Frank J. Notaro....... 2006 262,300 0 46,961 179,779 224,300 614 55,957
Vice President -
General Counsel and
Secretary
Kimberly K. Bors...... 2006 255,800 0 43,165 155,649 218,800 2,456 55,497
Vice President -
Human Resources
Dennis K.
Williams(1)......... 2006 546,027 1,296,000 0 176,871 0 0 648,858
Former Chairman of
the Board
NAME AND PRINCIPAL
POSITION TOTAL
------------------ ----------
Lawrence D. Kingsley.. $4,759,877
Chairman, President
and Chief Executive
Officer
Dominic A. Romeo...... 1,325,488
Vice President and
Chief Financial
Officer
John L. McMurray...... 1,096,227
Vice President -
Group Executive,
Fluid & Metering
Technologies
Frank J. Notaro....... 769,911
Vice President -
General Counsel and
Secretary
Kimberly K. Bors...... 731,367
Vice President -
Human Resources
Dennis K.
Williams(1)......... 2,667,756
Former Chairman of
the Board
--------
(1) Mr. Williams served as Chairman of the Board until his retirement on
April 4, 2006. Pursuant to Mr. Williams' Transition and Retirement
Agreement dated February 25, 2005, Mr. Williams received compensation of
$546,027 from January 1 to March 8, 2006, which is reflected in the table
as Salary, and a lump-sum payment of $1,296,000 on his retirement date,
which is reflected in the table as Bonus. Mr. Williams, also received (a)
$6,160 matching contribution under the 401(k) Plan, (b) $810,000 special
retirement payment, which is payable in bi-weekly installments for one
year from his date of retirement, and of which $591,923 was paid in 2006,
(c) $42,538 for personal use of the Company aircraft, and (d) $8,237 for
costs associated with Company-provided automobile, all of which are
reflected in the table under All Other Compensation. Except as noted
above, no continuing benefits, perquisites, or other employment related
compensation are due to Mr. Williams.
(2) Reflects the amount recognized for financial statement reporting purposes
in accordance with FAS 123(R) using the assumptions set forth in the
footnotes to the financial statements in the Company's Annual Report on
Form 10-K for the year ended December 31, 2006, for restricted stock
awards granted during and prior to 2006, assuming no forfeitures. All
shares of restricted stock are eligible for dividends.
(3) Reflects the amount recognized for financial statement reporting purposes
in accordance with FAS 123(R) using the assumptions set forth in the
footnotes to the financial statements in the Company's Annual Report on
Form 10-K for the year ended December 31, 2006, for stock option awards
granted during and prior to 2006, assuming no forfeitures.
(4) Represents for Mr. Kingsley the annual cash performance award under the
Incentive Award Plan, and for all other NEOs the annual cash bonus under
the MICP, in each case earned in 2006 but paid in February 2007.
(5) Represents the aggregate increase in actuarial value under the Pension
Plan and SERP. Mr. McMurray is the only NEO actively participating in the
Pension Plan. Based on changes to the Company's retirement plans in 2005
and their individual elections, Messrs. Kingsley, Romeo and Notaro and
Ms. Bors do not accrue benefit credits after December 31, 2005 under the
Pension Plan although each has a frozen benefit as of December 31, 2005.
Therefore, the monthly accrued benefit for Messrs. Kingsley, Romeo and
Notaro and Ms. Bors under the
21
Pension Plan upon retirement at age 65 will not change, although the
present value of such benefit will change from year to year. Because the
interest earned on deferred compensation balances under the Officers
Deferred Compensation Plan has been determined to be "at-market," no
above-market earnings on deferred compensation are included.
(6) For all NEOs other than Mr. Williams, includes the following:
(a) Company contributions to the 401(k) Plan and Defined Contribution
Plan, and accrued benefits under the SERP (DC Excess Benefit and
401(k) Restoration Benefit) in the following amounts: Mr. Kingsley -
$119,432; Mr. Romeo - $52,850; Mr. McMurray - $6,160; Mr. Notaro -
$41,784; and Ms. Bors - $39,666.
(b) Lease, maintenance, gas and parking (at headquarters) costs for
Company-provided automobile in the following amounts: Mr. Kingsley -
$15,220; Mr. Romeo - $12,672; Mr. McMurray - $15,192; Mr. Notaro -
$12,770; and Ms. Bors - $14,335.
(c) Year-end allowance for premiums paid for supplemental disability
benefits in the following amounts: Mr. Kingsley - $4,647; Mr. Romeo -
$1,327; Mr. McMurray - $1,413; Mr. Notaro - $850; and Ms. Bors -
$906, plus a tax gross-up on the allowance in the following amounts:
Mr. Kingsley - $3,028; Mr. Romeo - $865; Mr. McMurray - $920; Mr.
Notaro - $554; and Ms. Bors - $590.
For Mr. Kingsley, also includes $74,731 for the personal use of the
Company aircraft. The Company's methodology for calculating the value of
personal use of the Company aircraft is to calculate the incremental
costs of such usage to the Company, which include fuel, landing fees,
hangar fees, catering, additional expenses relating to the crew and other
expenses which would not have otherwise been incurred by the Company if
the aircraft had not been used for personal travel.
GRANTS OF PLAN-BASED AWARDS
The following table provides information on plan-based awards for all NEOs
for 2006.
ALL
OTHER ALL OTHER
STOCK OPTION EXERCISE
ESTIMATED FUTURE PAYOUTS AWARDS: AWARDS: OR BASE
UNDER NON-EQUITY INCENTIVE NUMBER OF NUMBER OF PRICE OF MARKET
PLAN AWARDS(1) SHARES OF SECURITIES OPTION PRICE ON
GRANT ------------------------------ STOCK OR UNDERLYING AWARDS GRANT DATE
NAME DATE THRESHOLD TARGET MAXIMUM UNITS(2) OPTIONS(2) ($ PER SHARE)(3) ($ PER SHARE)
---- ------ --------- ------- ---------- --------- ---------- ---------------- -------------
Lawrence D. Kingsley.. 4/4/06 $ 0 N/A $4,344,000 18,125 70,040 $51.27 $52.00
Dominic A. Romeo...... 4/4/06 84,450 225,200 585,520 3,880 15,000 51.27 52.00
John L. McMurray...... 4/4/06 69,225 184,600 479,960 2,200 8,500 51.27 52.00
Frank J. Notaro....... 4/4/06 56,100 149,600 388,960 2,140 8,250 51.27 52.00
Kimberly K. Bors...... 4/4/06 54,713 145,900 379,340 2,080 8,000 51.27 52.00
Dennis K. Williams.... N/A N/A N/A N/A N/A N/A N/A N/A
GRANT
DATE
FAIR
VALUE OF
STOCK AND
NAME OPTION AWARDS
---- -------------
Lawrence D. Kingsley.. $1,990,109
Dominic A. Romeo...... 426,121
John L. McMurray...... 241,537
Frank J. Notaro....... 234,674
Kimberly K. Bors...... 227,812
Dennis K. Williams.... N/A
--------
(1) For Mr. Kingsley, amount reflects minimum and maximum payment under
Incentive Award Plan. See the "Short-Term Incentives - Annual Bonus"
section of "Compensation Discussion and Analysis." For NEOs other than
Mr. Kingsley, amounts reflect payment levels under the MICP based on 2006
salary levels, a Business Performance Factor of 50% for threshold, 100%
for target and 200% for maximum, and a Personal Performance Multiplier of
0.75 for threshold, 1.00 for target, and 1.30 for maximum. The amounts
actually paid to NEOs are reflected in column titled "Non-Equity
Incentive Plan Compensation" in the Summary Compensation Table above.
(2) See Outstanding Equity Awards At Fiscal Year-End below for vesting of
options and restricted stock.
(3) Reflects closing price of the Company's Common Stock on the day prior to
the grant date, which is the fair market value of the stock on the grant
date under the terms of the Incentive Award Plan.
22
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table provides information on all restricted stock and stock
option awards held by the NEOs and the value of those awards as of December 31,
2006. All outstanding equity awards are in shares of the Company's Common Stock.
OPTION AWARDS STOCK AWARDS
---------------------------------------------------------- ---------------------------------------
NUMBER OF NUMBER OF
SECURITIES SECURITIES
UNDERLYING UNDERLYING NUMBER OF MARKET VALUE OF
UNEXERCISED UNEXERCISED OPTION OPTION SHARES OR UNITS OF SHARES OR UNITS OF
OPTIONS OPTIONS EXERCISE EXPIRATION STOCK THAT HAVE STOCK THAT HAVE NOT
NAME (EXERCISABLE)(1) (UNEXERCISABLE)(1) PRICE DATE NOT VESTED(2) VESTED(3)
---- ---------------- ------------------ -------- ---------- ------------------ -------------------
Lawrence D. Kingsley... 58,000 87,000 $30.87 08/23/14 179,935 $8,530,718
13,765 41,295 40.35 03/22/15
0 70,040 51.27 04/04/16
Dominic A. Romeo....... 30,000 45,000 27.67 01/12/14 39,920 1,892,607
15,000 22,500 27.33 03/23/14
3,125 9,375 40.35 03/22/15
2,500 7,500 42.47 09/27/15
0 15,000 51.27 04/04/16
John L. McMurray....... 22,500 0 16.50 03/23/09 5,440 257,910
22,500 0 18.75 03/28/10
25,500 0 18.97 03/28/11
21,600 5,400 25.30 03/26/12
18,900 12,600 19.67 03/27/13
12,000 18,000 27.33 03/23/14
2,500 7,500 40.35 03/22/15
0 8,500 51.27 04/04/16
Frank J. Notaro........ 9,000 0 18.97 03/28/11 4,780 226,620
20,400 5,100 25.30 03/26/12
19,800 13,200 19.67 03/27/13
11,400 17,100 27.33 03/23/14
2,040 6,120 40.35 03/22/15
0 8,250 51.27 04/04/16
Kimberly K. Bors....... 13,500 9,000 22.70 01/06/13 4,400 208,604
19,800 13,200 19.67 03/27/13
11,400 17,100 27.33 03/23/14
1,790 5,370 40.35 03/22/15
0 8,000 51.27 04/04/16
Dennis K. Williams..... N/A N/A N/A N/A N/A N/A
--------
(1) All options expire on the 10(th) anniversary of the grant date. Options
granted prior to 2005 (with expiration dates prior to 2015) vest 20% per
year on the anniversary of the grant date. Options granted during and
after 2005 (with expiration dates during and after 2015) vest 25% per
year on the anniversary of the grant date. All options vest 100% upon a
change of control.
23
(2) The following table sets forth grant and vesting information for the
outstanding restricted stock awards for all NEOs. All shares vest 100%
upon a change of control.
NUMBER OF SHARES OR
AWARD UNITS OF STOCK THAT
NAME GRANT DATE HAVE NOT VESTED VESTING
---- ---------- ------------------- -------
Lawrence D. Kingsley... 08/23/04 69,000 23,000 vest per year on 8/23/07,
8/23/08 and 8/23/09, or 100% vest on
termination without cause.
03/22/05 17,810 100% vest on 3/22/09
03/22/05 75,000 25,000 vest per year on 3/22/07,
3/22/08 and 3/22/09
04/04/06 18,125 100% vest on 4/04/10
Dominic A. Romeo....... 01/14/04 30,000 15,000 vest on 1/14/08 and 1/14/09,
or 100%
vest on termination without cause.
03/22/05 4,040 100% vest on 3/22/09
09/27/05 2,000 100% vest on 9/27/09
04/04/06 3,880 100% vest on 4/04/10
John L. McMurray....... 03/22/05 3,240 100% vest on 3/22/09
04/04/06 2,200 100% vest on 4/04/10
Frank J. Notaro........ 03/22/05 2,640 100% vest on 3/22/09
04/04/06 2,140 100% vest on 4/04/10
Kimberly K. Bors....... 03/22/05 2,320 100% vest on 3/22/09
04/04/06 2,080 100% vest on 4/04/10
Dennis K. Williams..... N/A N/A N/A
(3) Determined based on the closing price of the Company's Common Stock on
December 29, 2006, the last business day of 2006.
OPTION EXERCISES AND STOCK VESTED
The following table provides information on stock option exercises and
stock vesting for all NEOs in 2006.
OPTION AWARDS STOCK AWARDS
----------------------------- -----------------------------
NO. OF SHARES VALUE NO. OF SHARES VALUE
ACQUIRED ON REALIZED UPON ACQUIRED ON REALIZED UPON
NAME EXERCISE EXERCISE(1) VESTING VESTING(2)
---- ------------- ------------- ------------- -------------
Lawrence D. Kingsley................... 0 $ 0 48,000 $2,247,640
Dominic A. Romeo....................... 0 0 0 0
John L. McMurray....................... 0 0 0 0
Frank J. Notaro........................ 11,000 306,500 0 0
Kimberly K. Bors....................... 0 0 0 0
Dennis K. Williams..................... 107,800 3,085,198 0 0
--------
(1) Calculated as the difference between the closing price of the Company's
Common Stock on the date of exercise and the exercise price.
(2) Calculated based on the closing price of the Company's Common Stock on
the vesting date. For Mr. Kingsley, on March 22, 2006, 25,000 shares
vested at a price of $51.10 per share, and on August 23, 2006, 23,000
shares vested at a price of $42.18 per share.
24
PENSION BENEFITS
The following table provides information related to the potential benefits
payable to each NEO under the Company's Pension Plan and the SERP (with respect
to the DB Excess Benefit described above in the "Retirement Benefits" section of
"Compensation Discussion and Analysis").
NO. OF PRESENT VALUE
YEARS CREDITED OF ACCUMULATED PAYMENTS DURING THE
NAME PLAN NAME SERVICE(1) BENEFIT(2) LAST FISCAL YEAR
---- ------------ -------------- -------------- -------------------
Lawrence D. Kingsley............. Pension Plan 1.33 $ 18,881 $ 0
SERP 1.33 54,501 0
Dominic A. Romeo................. Pension Plan 1.92 31,978 0
SERP 1.92 51,145 0
John L. McMurray................. Pension Plan 14.17 360,856 0
SERP 14.17 233,650 0
Frank J. Notaro.................. Pension Plan 7.75 98,442 0
SERP 7.75 47,026 0
Kimberly K. Bors................. Pension Plan 2.92 46,288 0
SERP 2.92 33,387 0
Dennis K. Williams............... Pension Plan 6.00 206,548 0
SERP 6.00 2,003,572 2,041,586
--------
(1) Credited service is determined under the Pension Plan as of December 31,
2006, or date of termination, if earlier.
(2) The present value of accumulated benefits as of December 31, 2006 is
determined using a 5.80% discount rate, a 5.50% lump sum rate, the GATT
2003 mortality table, and an assumed retirement age of 65.
Based on changes to the Company's retirement plans in 2005, and their
individual elections, Messrs. Kingsley, Romeo and Notaro and Ms. Bors do
not accrue benefit credits after December 31, 2005 under the Pension
Plan. Therefore, the monthly accrued benefit for Messrs. Kingsley, Romeo
and Notaro and Ms. Bors under the Pension Plan upon retirement at age 65
will not change, although the present value of such benefit will change
from year to year.
Pursuant to Mr. Williams' Transition and Retirement Agreement, Mr.
Williams did not accrue any SERP benefits by reason of the compensation
paid in 2006 as Chairman of the Board, and the benefit accruals he earned
under the Pension Plan as a result of such compensation reduced his SERP
benefit. However, the compensation used in the calculation of his SERP
benefit includes $324,000 of the payments made upon his retirement on
April 4, 2006. In connection with his retirement, Mr. Williams became
entitled to receive his SERP benefit payable in two equal
installments -- one payment was made on May 1, 2006, and the second
payment will be made on May 1, 2007.
25
NONQUALIFIED DEFERRED COMPENSATION
The following table provides information related to the potential benefits
payable to each NEO under the Company's deferred compensation plans: the SERP
(with respect to the DC Excess Benefit and 401(k) Restoration Benefit described
above in the "Retirement Benefits" section of "Compensation Discussion and
Analysis") and the Officers Deferred Compensation Plan.
REGISTRANT
CONTRIBUTIONS IN AGGREGATE AGGREGATE BALANCE
LAST FISCAL YEAR AGGREGATE EARNINGS WITHDRAWALS/ AT LAST FISCAL YEAR
NAME PLAN NAME (1) IN LAST FISCAL YEAR DISTRIBUTIONS(2) END
---- ------------- ---------------- ------------------- ---------------- -------------------
Lawrence D. Kingsley...... SERP $101,831 $ 1,745 $ 0 $103,576
Dominic A. Romeo.......... SERP 35,250 604 0 35,854
John L. McMurray.......... Officers Plan 0 21,650 0 203,809
Frank J. Notaro........... SERP 24,184 414 0 24,598
Officers Plan 0 15,919 179,300 0
Kimberly K. Bors.......... SERP 22,066 378 0 22,444
Officers Plan 0 7,931 72,726 0
Dennis K. Williams........ SERP 0 0 0 0
Officers Plan 0 1,010,461 4,777,968 0
--------
(1) None of the NEOs contributed to the Officers Deferred Compensation Plan
in 2006. Mr. McMurray actively participates in the Pension Plan and
therefore is not eligible for a DC Excess Benefit or a 401(k) Restoration
Benefit.
(2) Under special transition rules provided under Internal Revenue Code
Section 409A, participants in the Officers Deferred Compensation Plan
were given a one-time opportunity prior to 2006 to elect to change the
terms of the distribution of their account balances under such plan. Mr.
Notaro, Ms. Bors and Mr. Williams made such a change and elected to
receive a full distribution in 2006.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The Company entered into an employment agreement with Mr. Kingsley when he
was employed as Chief Operating Officer. This agreement was amended in 2005 to
reflect his promotion to President and Chief Executive Officer, effective March
22, 2005. The employment agreement provides for an initial term of five years
and successive twelve-month periods thereafter. If Mr. Kingsley's employment is
terminated by the Company other than for cause, he will receive continuing
salary payments and health benefits for 24 months, a pro-rated portion of 100%
of his base salary (based on the portion of the year he was employed), and a
payment equal to 200% of his base salary payable over 24 months. If Mr.
Kingsley's employment is terminated because of disability, he will receive a
bonus payment equal to a pro-rated portion of 100% of his base salary (based on
the portion of the year he was employed). Additionally, if Mr. Kingsley should
die during the term of the agreement, Mr. Kingsley's wife or estate will receive
a bonus payment equal to a pro-rated portion of 100% of his base salary (based
on the portion of the year he was employed). If his employment is terminated
without cause or he terminates it for certain specified reasons following a
change in control of the Company, Mr. Kingsley will receive his full salary and
health insurance for a period of 36 months following termination, a pro-rata
portion of his bonus for the year of his termination, and a payment equal to
300% of his base salary, payable over 36 months. In addition to vesting upon a
change of control, all non-vested shares of the restricted stock granted to Mr.
Kingsley on August 23, 2004, will vest in the event he is terminated by the
Company other than for cause, or if he terminates his employment because the
Company has taken certain actions with respect to his employment.
The Company has entered into an employment letter agreement with Mr. Romeo.
The agreement does not provide for a fixed term and may be terminated at any
time. If Mr. Romeo's employment is terminated by the Company other than for
cause, he will be entitled to receive continuing salary payments for 18 months.
In the event Mr. Romeo is terminated within two years following a change in
control, the Company will be obligated to pay Mr. Romeo his salary and his then
target MICP bonus for two years. In addition to vesting upon a change of
control,
26
all shares of restricted stock granted to Mr. Romeo in 2004 will vest in the
event he is terminated by the Company other than for cause, or if he dies or
becomes disabled.
The Company has entered into an employment letter agreement with Ms. Bors.
The agreement does not provide for a fixed term and may be terminated at any
time. If Ms. Bors is terminated by the Company other than for cause, she will be
entitled to receive continuing salary and benefits for 12 months. In the event
Ms. Bors is terminated within two years following a change in control, the
Company will be obligated to pay Ms. Bors her salary and her then target MICP
bonus for three years.
The Company has entered into letter agreements with each of Messrs.
McMurray and Notaro providing for three years of compensation and two years of
fringe benefits in the event either is actually or constructively terminated
without cause within two years following a change of control. Otherwise Messrs.
McMurray and Notaro are only eligible for severance based on the Company's
general severance policy available to all employees. Historically, the Company
has paid severance in excess of the policy amount in the event an executive has
been terminated without cause.
The following table sets forth the amount each NEO (other than Mr. Williams
who has already retired) would receive under various termination scenarios using
the following assumptions:
- Termination of employment on December 31, 2006.
- Exercise of all vested options and vesting of all restricted stock based
on the closing market price of $47.41 per share of the Company's Common
Stock on December 31, 2006.
- Receipt of a lump-sum payment of retirement benefits under the Pension
Plan, Defined Contribution Plan, 401(k) Plan, SERP and Officers Deferred
Compensation Plan.
- Interest rate and mortality basis for determining the lump sum value of
Pension Plan and DB Excess Benefit under the SERP are 5.50% and the GATT
2003 mortality table, respectively.
- Receipt of tax gross-ups for any parachute payments, where contractually
provided.
VOLUNTARY TERMINATION IN
TERMINATION/ INVOLUNTARY CONNECTION WITH
TERMINATION FOR TERMINATION NOT FOR CHANGE IN
NAME CAUSE(1) RETIREMENT(1) CAUSE/GOOD REASON CONTROL(2) DEATH(3)
---- --------------- ------------- ------------------- --------------- -----------
Lawrence D. Kingsley.... $1,527,966 N/A $9,202,854 $22,435,374 $13,300,024
Dominic A. Romeo........ 1,077,924 N/A 3,019,824 5,585,551 5,458,268
John L. McMurray........ 5,696,944 $5,696,944 5,773,405 8,175,445 5,653,966
Frank J. Notaro......... 1,851,564 N/A 1,891,918 5,158,683 3,061,220
Kimberly K. Bors........ 1,282,847 N/A 1,538,647 3,681,704 3,093,985
--------
(1) Pension Plan benefits are payable to the extent vested upon termination
only if eligible to retire. Only Mr. McMurray is eligible to retire.
Defined Contribution Plan, 401(k) Plan and SERP benefits are payable to
the extent vested upon termination.
(2) Pension Plan, Defined Contribution Plan and 401(k) Plan benefits are
payable to the extent vested upon change of control. All SERP benefits
become 100% vested and are payable upon change in control.
(3) Except for the Pension Plan, all retirement benefits become 100% vested
at death. Death benefits include spousal benefits paid from the Pension
Plan (as applicable), Defined Contribution Plan, 401(k) Plan and SERP
account balances, and the following life insurance amounts: Mr.
Kingsley - $1,450,000; Mr. Romeo - $1,040,000; Mr. McMurray - $284,000;
Mr. Notaro - $263,000; and Ms. Bors - $640,000. Of these total life
insurance amounts, the NEOs have paid for the following portion of their
life insurance: Mr. Kingsley - $725,000; Mr. Romeo - $693,000; Mr.
McMurray - $0; Mr. Notaro - $0; and Ms. Bors - $384,000.
27
COMPENSATION OF DIRECTORS
The following table summarizes the total compensation earned in 2006 for
the Company's non-management directors. Mr. Kingsley receives no additional
compensation for his service as a director.
FEES EARNED OR PAID STOCK OPTION ALL OTHER
NAME IN CASH(1) AWARDS(1)(2) AWARDS(1)(2) COMPENSATION(1) TOTAL(1)
---- ------------------- ------------ ------------ --------------- --------
Bradley J. Bell................. $48,000 $9,422 $50,953 $ 0 $108,374
Ruby R. Chandy.................. 30,000 9,649 9,478 0 49,127
Frank S. Hermance............... 40,000 9,422 51,060 0 100,482
Gregory B. Kenny................ 44,000 9,422 50,953 0 104,375
Neil A. Springer................ 44,000 9,422 50,953 0 104,375
Michael T. Tokarz(3)............ 40,000 9,422 50,953 6,000 106,375
--------
(1) The amounts shown in this table reflect the following elements of outside
director compensation:
Annual Retainer................................................... $30,000
Annual Board/Committee Meeting Attendance Fee..................... $10,000
Chairman Retainer
Audit Committee (Bell).......................................... $ 8,000
Compensation Committee (Kenny).................................. $ 4,000
Nominating and Corporate Governance Committee (Springer)........ $ 4,000
Equity Grants Upon Initial Election to the Board
Stock options................................................... 3,375
Restricted stock................................................ 1,015
Annual Equity Grants
Stock options................................................... 2,250
Restricted stock................................................ 675
(2) The amounts shown reflect the dollar amount recognized for the financial
statement reporting purposes in accordance with FAS 123(R) using the
assumptions set forth in the footnotes to the financial statements in the
Company's Annual Report on Form 10-K for the year ended December 31,
2006, for restricted stock and stock option awards granted during and
prior to 2006, assuming no forfeitures.
(3) Represents the total Company matching gift contribution under its
Matching Gifts Program for Mr. Tokarz of $6,000.
Equity grants upon initial election to the Board of Directors are made on
the date of appointment. Annual equity grants are made on the first regularly
scheduled meeting of the Board of Directors held each year. All grants are made
under the Incentive Award Plan. The exercise price of each option is equal to
the closing price of the Company's Common Stock on the trading day preceding the
date the option is granted. The options become exercisable one year following
their date of grant. The restricted stock is non-transferable until the
recipient is no longer serving as a director, and is subject to forfeiture if
the director terminates service as a director for reasons other than death,
disability or retirement prior to vesting. The restricted stock will vest in
full on the earlier of the third anniversary of the grant, failure of the
director to be re-elected to the Board, or a change in control.
Under the Directors Deferred Compensation Plan, directors are permitted to
defer their compensation into either an interest-bearing account or a deferred
compensation units account as of the date that such compensation would otherwise
be payable. The deferred compensation credited to the interest-bearing account
is adjusted on a quarterly basis with hypothetical earnings for the quarter
equal to the Lehman Long AAA Bond yield as of December 1 of the calendar year
preceding the year for which the earnings were credited. Amounts credited to the
interest-bearing account are compounded monthly. Deferred compensation credited
to the deferred compensation units account is converted into DCUs by dividing
the deferred compensation by the closing price of the Company's common stock on
the deferral date. In addition, the value of the dividends payable on shares of
common stock are credited to the deferred compensation units account and
converted into DCUs based on the number of DCUs held by
28
the director in his account on the dividend record date, and the closing price
of the common stock on the dividend payment date. Messrs. Hermance, Kenny and
Tokarz defer all of their director fees into the Directors Deferred Compensation
Plan, and have elected to have such fees invested in DCUs.
The Company believes that to attract and retain qualified directors, pay
levels should be targeted at the 50(th) percentile (or median) of pay levels for
directors at comparable companies. From time to time, the Compensation
Committee, with the assistance of Towers Perrin, evaluates the competitiveness
of director compensation. The primary reference point for the determination of
market pay practices are pay levels for organizations with revenues, business
activities and complexities similar to those of the Company. Market data is
derived from pay surveys available to Towers Perrin.
Outside directors are subject to stock ownership guidelines. Outside
directors must comply with the guidelines within five years of their initial
election to the Board, or June 30, 2008, whichever is later. The guidelines
dictate that all outside directors must purchase or acquire the Company's Common
Stock (or DCUs acquired by participation in the Directors Deferred Compensation
Plan) having an aggregate value at the time of purchase or acquisition equal to
three times the annual retainer in effect at July 1, 2003, or upon election,
whichever is later. As of December 31, 2006, all directors were proceeding
towards meeting their ownership guidelines within the specified period.
29
AUDIT COMMITTEE REPORT
For the year ended December 31, 2006, the Audit Committee has reviewed and
discussed the audited financial statements with management and the independent
auditors, Deloitte & Touche LLP. The Committee discussed with the independent
auditors the matters required to be discussed by the Statement of Auditing
Standards No. 61, and reviewed the results of the independent auditors'
examination of the financial statements.
The Committee also reviewed the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1,
discussed with the auditors their independence, and satisfied itself as to the
auditors' independence.
Based on the above reviews and discussions, the Audit Committee recommends
to the Board of Directors that the financial statements be included or
incorporated by reference in the Annual Report on Form 10-K for the year ended
December 31, 2006, for filing with the Securities and Exchange Commission.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings made by the Company under those
statutes, in whole or in part, this report shall not be deemed to be
incorporated by reference into any such filings, nor will this report be
incorporated by reference into any future filings made by the Company under
those statutes.
Bradley J. Bell, Chairman
Frank S. Hermance
Neil A. Springer
30
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The aggregate fees billed to the Company for each of the last two fiscal
years for professional services rendered by the Company's principal accounting
firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and
their respective affiliates (collectively, the "Deloitte Entities"), are set
forth in the table below. All such fees were pre-approved by the Audit Committee
pursuant to its pre-approval policy discussed below.
2006 2005
---------- ----------
Audit fees(1)........................................ $2,419,000 $2,223,000
Audit-related fees(2)................................ 408,000 --
Tax fees(3).......................................... 404,000 492,000
All other fees(4).................................... 10,000 25,000
---------- ----------
Total................................................ $3,241,000 $2,740,000
========== ==========
--------
(1) Audit fees represent the aggregate fees billed for the audit of the
Company's financial statements, review of the financial statements
included in the Company's quarterly reports, and services in connection
with statutory and regulatory filings or engagements.
(2) Audit-related fees represent the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit or review of the Company's financial statements and are not
reported under Audit fees.
(3) Tax fees represent the aggregate fees billed for professional services
for tax compliance, tax advice and tax planning.
(4) All other fees represent the aggregate fees billed for products and
services that are not included in the Audit fees, Audit-related fees, and
Tax fees. The Audit Committee has determined that the provision of these
services is not incompatible with maintaining the principal accountant's
independence.
PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has adopted a policy that requires the pre-approval of
audit and non-audit services rendered by the Deloitte Entities. For audit
services, the accounting firm provides the Audit Committee with an audit
services plan during the first quarter of each fiscal year outlining the scope
of the audit services proposed to be performed for the fiscal year and the
associated fees. This audit services plan must be formally accepted by the Audit
Committee. For non-audit services, management submits to the Audit Committee for
approval during the first quarter of each fiscal year and from time-to-time
during the fiscal year, a list of non-audit services that it recommends the
Audit Committee engage the accounting firm to provide for the current year,
along with the associated fees. Company management and the accounting firm each
confirm to the Audit Committee that any non-audit service on the list is
permissible under all applicable legal requirements. The Audit Committee
approves both the list of permissible non-audit services and the budget for such
services. The Audit Committee delegates to the Chairman the authority to amend
or modify the list of approved permissible non-audit services and fees. The
Chairman reports any actions taken to the Audit Committee at a subsequent Audit
Committee meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than 10% of the Company's Common
Stock to file reports of ownership and changes in ownership with the Securities
and Exchange Commission and the New York Stock Exchange. Officers, directors and
greater than 10% stockholders are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms that
they file. Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons, the Company
believes that, except as set forth in the following sentence, all filing
requirements applicable to its officers, directors and greater than 10%
stockholders were met during the year ended December 31, 2006. The Form 4s for
the February 2, 2006, annual director equity award grants were filed one day
late.
31
PROPOSAL 2 -- APPROVAL OF AUDITORS
The Audit Committee has appointed Deloitte & Touche LLP as the Company's
independent auditors for 2007. Representatives of Deloitte & Touche LLP will
attend the Annual Meeting of Stockholders and will have the opportunity to make
a statement if they desire to do so. They will also be available to respond to
appropriate questions.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR 2007.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR 2008 ANNUAL MEETING
A stockholder desiring to submit a proposal for inclusion in the Company's
Proxy Statement for the 2008 Annual Meeting must deliver the proposal so that it
is received by the Company no later than November 8, 2007. The Company requests
that all such proposals be addressed to Frank J. Notaro, Vice President -
General Counsel and Secretary, IDEX Corporation, 630 Dundee Road, Suite 400,
Northbrook, Illinois 60062, and mailed by certified mail, return receipt
requested. In addition, the Company's By-Laws require that notice of stockholder
nominations for directors and related information be received by the Secretary
not later than 60 days before the anniversary of the 2007 Annual Meeting which,
for the 2008 Annual Meeting, will be February 2, 2008.
32
OTHER BUSINESS
The Board of Directors does not know of any business to be brought before
the Annual Meeting other than the matters described in the Notice of Annual
Meeting. However, if any other matters are properly presented for action, it is
the intention of each person named in the accompanying proxy to vote said proxy
in accordance with his judgment on such matters.
By Order of the Board of Directors,
-s- Frank J. Notaro
FRANK J. NOTARO
Vice President - General Counsel
and Secretary
March 8, 2007
Northbrook, Illinois
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2006, INCLUDING THE FINANCIAL STATEMENT SCHEDULES, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED BY STOCKHOLDERS WITHOUT
CHARGE BY SENDING A WRITTEN REQUEST TO SUSAN H. FISHER, DIRECTOR - INVESTOR
RELATIONS, IDEX CORPORATION, 630 DUNDEE ROAD, SUITE 400, NORTHBROOK, ILLINOIS
60062.
33
APPENDIX A
IDEX CORPORATION
RELATED PERSON TRANSACTIONS POLICY
INTRODUCTION
IDEX Corporation (the "Company") recognizes that Related Person
Transactions (as defined herein) involve issues regarding both conflicts of
interest and disclosure, and therefore the Audit Committee of the Board of
Directors of the Company (the "Committee") has adopted this policy which shall
be followed in connection with all Related Person Transactions involving the
Company. The Committee will review and may amend this policy from time to time.
GENERAL POLICY STATEMENT
No Related Person Transaction may be entered into without the approval of
the Committee in accordance with the procedures set forth herein.
DEFINITIONS
A "Related Person" is any person described in paragraph (a) of Item 404 of
Regulation S-K, including:
(1) an executive officer, a director or a director nominee of the
Company;
(2) a beneficial owner of five percent or more of any class of the
Company's voting securities; and
(3) a person who is an immediate family member of any director,
nominee for director, executive officer or significant stockholder of the
Company (the term "immediate family member" shall include any child, step-
child, parent, step-parent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law and any person
(other than a tenant or employee) sharing the household of any director,
nominee for director, executive officer or significant stockholder of the
Company).
A "Related Person Transaction" is any transaction that is reportable by the
Company under paragraph (a) of Item 404 of Regulation S-K in which the Company
was or is to be a participant and the amount involved exceeds $120,000 and in
which any Related Person had or will have a direct or indirect material
interest. A "transaction" includes, but is not limited to, any financial
transaction, arrangement or relationship (including any indebtedness or
guarantee of indebtedness) or any series of similar transactions, arrangements
or relationships.
APPROVAL PROCESS
Every Related Person Transaction subject to this policy must be approved or
ratified by the Committee. If the transaction involves a Related Person who is a
director or an immediate family member of a director, such director may not
participate in the deliberations or vote respecting such approval or
ratification, provided, however, that such director may be counted in
determining the presence of a quorum at a meeting of the Committee that
considers such transaction.
A Related Person must promptly disclose to the General Counsel any Related
Person Transaction in which such Related Person had or will have a direct or
indirect material interest and all material facts with respect thereto. The
General Counsel will promptly communicate such information to the Chairperson of
the Audit Committee.
In the event the Chairperson of the Committee determines it is impractical
or undesirable to wait until a Committee meeting to consummate a Related Person
Transaction, the Chairperson of the Committee may review and approve the Related
Person Transaction in accordance with the criteria set forth herein. If the
Chairperson or an immediate family member of the Chairperson is the subject
Related Person, such transaction may be reviewed and approved by another member
of the Audit Committee (the Chairperson or such other member is sometimes
referred to as the "Presiding Member"). The Presiding Member shall report any
such approval to the Committee at the next
A-1
regularly scheduled Committee meeting and to the General Counsel. All Related
Person Transactions will be reported by the Committee to the Board.
The Committee or Presiding Member reviewing such Related Person Transaction
will undertake a full review of the proposed Related Person Transaction. The
Committee or Presiding Member considering the matter must be informed of (a) the
Related Person's relationship or interest, including all conflicts of interest
that may exist or otherwise arise on account of the Related Person Transaction,
and (b) the material facts of the proposed Related Person Transaction.
In approving or ratifying any transaction, the Committee or Presiding
Member must determine that the transaction is fair and reasonable to the
Company. The Committee or Presiding Member shall not be required by this policy
to obtain a fairness opinion or other third party support or advice regarding
the fairness of the transaction, but may do so if it (or he or she) so
determines in its (or his or her) discretion. The Committee shall also
periodically review and assess ongoing relationships with Related Persons to
ensure compliance with the Committee's guidelines and directives and to ensure
that such Related Person Transaction remains fair to the Company.
In the event the Company becomes aware of a Related Person Transaction that
has not been approved under this policy prior to its consummation, the matter
shall be reviewed by the Committee or Presiding Member as provided herein. The
Committee or Presiding Member reviewing such transaction shall consider all of
the relevant facts and circumstances respecting such transaction, and shall
evaluate all options available to the Company, including ratification, revision
or termination of such transaction. The Committee or Presiding Member, in
consultation with the Board and working in concert with management as it deems
appropriate, shall take such course of action as the Committee or Presiding
Member deems appropriate under the circumstances. The Committee or Presiding
Member shall also examine the facts and circumstances pertaining to the failure
to present such transaction to the Committee under this policy and shall take
any such action as deemed appropriate under the circumstances.
No approval or ratification of a transaction hereunder shall be deemed to
satisfy or supersede the requirements of the Company's Code of Business Conduct
and Ethics applicable and, to the extent applicable, any transactions subject to
this policy shall also be considered in light of the requirements of such code.
DISCLOSURE
All Related Person Transactions that are required to be disclosed in the
Company's filings with the Securities and Exchange Commission, as required by
the Securities Act of 1933 and the Securities Exchange Act of 1934 and related
rules and regulations, shall be so disclosed in accordance with such laws, rules
and regulations.
The material features of this policy shall be disclosed in the Company's
proxy statement, as required by applicable laws, rules and regulations.
A-2
--------------------------------------------
VOTE BY TELEPHONE
--------------------------------------------
[IDEX LOGO] Have your proxy card available when you call
c/o National City Bank TOLL-FREE 1-888-693-8683 using a touch-tone
Corporate Trust Operations phone and follow the simple instructions to
Loc 5352 record your vote.
P. O. Box 94509
Cleveland, OH 44101-4509
--------------------------------------------
VOTE BY INTERNET
--------------------------------------------
Have your proxy card available when you
access the website WWW.CESVOTE.COM and
follow the simple instructions to record
your vote.
--------------------------------------------
VOTE BY MAIL
--------------------------------------------
Please mark, sign and date your proxy card
and return it in the POSTAGE-PAID ENVELOPE
provided or return it to: National City
Bank, P.O. Box 535300, Pittsburgh, PA 15253.
--------------------------------------------------------------------------------
VOTE BY TELEPHONE VOTE BY INTERNET VOTE BY MAIL
Call Toll-Free using a Access the Website and Return your proxy
touch-tone telephone: cast your vote: in the postage-paid
1-888-693-8683 WWW.CESVOTE.COM envelope provided
--------------------------------------------------------------------------------
VOTE 24 HOURS A DAY, 7 DAYS A WEEK!
YOUR TELEPHONE OR INTERNET VOTE MUST BE RECEIVED BY 6:00 A.M. EASTERN STANDARD
TIME ON APRIL 3, 2007 TO BE COUNTED IN THE FINAL TABULATION.
IF YOU VOTE BY TELEPHONE OR OVER THE INTERNET, DO NOT MAIL YOUR PROXY CARD.
=======================
-->
=======================
| PROXY CARD MUST BE SIGNED AND DATED BELOW. |
v PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING. v
--------------------------------------------------------------------------------
[IDEX LOGO] IDEX CORPORATION
630 DUNDEE ROAD
NORTHBROOK, ILLINOIS 60062
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints BRADLEY J. BELL, LAWRENCE D. KINGSLEY and FRANK
J. NOTARO, and each of them, as Proxies with full power of substitution, and
hereby authorize(s) them to represent and to vote, as designated below, all the
shares of common stock of IDEX Corporation held of record by the undersigned on
February 15, 2007, at the Annual Meeting of stockholders to be held on April 3,
2007, or at any adjournment thereof.
Dated: , 2007
-------------------------------
--------------------------------------------
Signature
--------------------------------------------
Signature if held jointly
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signed as attorney,
executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in full corporate
name by president or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Annual Meeting of
Stockholders, you can be sure your shares are represented at the
meeting by promptly returning your proxy in the enclosed envelope.
| PROXY CARD MUST BE SIGNED AND DATED BELOW. |
v PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING. v
--------------------------------------------------------------------------------
IDEX CORPORATION PROXY
--------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.
1. Election of Directors
Nominees: (1) Ruby R. Chandy (2) Neil A. Springer
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed above
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THE
NOMINEE'S NAME ON THE LINE BELOW:
------------------------------------------------------------------------------------
2. Approval of Deloitte & Touche LLP as auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED, AND TO BE SIGNED, ON THE REVERSE SIDE)