DHR » Topics » Other Compensation

This excerpt taken from the DHR DEF 14A filed Mar 20, 2009.

Other Compensation

Severance and Change-of-Control Benefits. We have entered into an employment agreement with Mr. Culp, which was originally dated as of July 18, 2000 and was subsequently amended on November 19, 2001 and December 30, 2008 (effective January 1, 2009). The agreement provides for payments upon certain events of termination, including in connection with a change-of-control. In addition:

 

   

the terms of Mr. Culp’s 2006 option grant and 2003 RSU award provide for an accelerated vesting schedule in the event he dies or is terminated for disability, and vest fully upon a change of control; and

 

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Mr. Culp’s 2006 option grant also provides for an accelerated vesting schedule in the event he is terminated without cause or resigns for good reason.

The termination and change-of-control provisions of these employment arrangements are described in “— Employment Agreements.” The amendments to Mr. Culp’s employment agreement executed on December 30, 2008 conformed the agreement to Section 409A of the Code and helped ensure that the terms of the agreement would not impair the Company’s ability to deduct Mr. Culp’s annual cash incentive compensation under Section 162(m) of the Code. In preparing these amendments the parties also identified certain ambiguous provisions in the agreement relating to the formula for calculating the cash portion of his severance payments. These ambiguous provisions were addressed by replacing the references to “target annual bonus” in the severance provisions with a reference to the average of the annual bonus awards paid to Mr. Culp during the three years preceding the year of termination, but not to exceed 250% of his then-current base salary. The amounts that Mr. Culp would have been entitled to under his employment arrangements had any termination or change-of-control event occurred on December 31, 2008 are set forth in “—Potential Payments upon Termination or Change-of-Control” and reflect the employment agreement amendments described above.

When the Committee adopted the severance and change-of-control provisions in Mr. Culp’s employment arrangements in 2000, 2003 and 2006, it focused on three key objectives:

 

   

ensuring that Mr. Culp has sufficient security such that he is not discouraged from taking appropriate risks in seeking to maximize value for shareholders (and in the context of a change-of-control, ensuring that Mr. Culp is not deterred from pursuing, and actively supports, change-of-control opportunities that may arise that would maximize value for shareholders);

 

   

tying most of the potential value of his severance arrangements to the degree to which Danaher’s stock price has increased over his tenure; and

 

   

ensuring that Mr. Culp’s total compensation package is competitive as compared to other potential opportunities that may be available to him.

If Danaher were to pursue a change-of-control transaction beneficial to Danaher shareholders, the Committee believes that Mr. Culp’s active support of the transaction through closing would be critical in ensuring the success of such a transaction. Though the non-equity amounts payable to Mr. Culp in connection with a change-of-control are subject to a “double trigger,” the Board adopted a “single trigger” for the equity awards that vest upon a change-of-control to provide a more powerful retention incentive during change-of-control discussions. Since it was entered into in 2000, Mr. Culp’s employment agreement also requires Danaher to pay, and make Mr. Culp whole with respect to, any excise tax payments he may owe upon a change-of-control as a result of any payments he receives from Danaher or from or a party that acquires Danaher. Mr. Culp’s severance and change-of-control arrangements are different than that of the other named executive officers because when they were entered into they reflected terms common with respect to the CEO position. We do not believe the competitive marketplace requires making similar provisions available to executives at this time, and the vesting provisions applicable to the equity awards granted to Mr. Culp subsequent to 2006 do not accelerate upon severance (other than upon death, as provided for in the 2007 Plan) or change-of-control. In addition, the Committee has adopted a position that it will not agree to any tax-reimbursement or gross-up provisions in any future executive officer compensation arrangement, except for gross-ups provided pursuant to a plan or policy applicable to management employees of the Company generally, such as a relocation or expatriate tax equalization policy.

We have entered into agreements with each of our other named executive officers which provide for severance payments under certain circumstances as consideration for post-employment non-competition, non-solicitation and confidentiality obligations (Mr. Culp has agreed to similar post-employment covenants in his employment agreement). We believe that these post-employment restrictive covenants are critical in protecting our human resources and other proprietary assets, and we amended these agreements in March 2009 to further strengthen the protections that they provide to the Company. Other than as described above, we do not have any formal employment agreements with any of the named executive officers.

 

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Benefits and Perquisites. All of our executives are eligible to participate in our employee benefit plans, including our group medical, dental, vision, disability, accidental death and dismemberment, life insurance, flexible spending and 401(k) plans. These plans are generally available to all salaried employees and do not discriminate in favor of executive officers. In addition, the perquisites provided to the named executive officers as a group consist primarily of reimbursement for an annual physical, club dues, tax preparation, financial planning and other professional services, parking, car allowance or car lease and related expenses, tickets for sporting events, and, with respect to Mr. Culp, additional term life insurance (which benefit terminated as of December 31, 2008) and personal use of the Danaher plane when not in use for business purposes. Mr. Comas is also allowed certain personal use of the Danaher plane. Not every named executive officer uses each of the perquisites listed above. The Committee annually reviews and approves all perquisites made available to our named executive officers. The Committee believes that the nature and level of perquisites provided to each of the named executive officers is generally commensurate with what our peers provide to persons in similar positions, and helps make our total executive compensation plan competitive. We do not provide tax gross-ups with respect to any perquisites.

In addition, each named executive officer participates in the Amended and Restated Danaher Corporation & Subsidiaries Executive Deferred Incentive Program, or EDIP. The EDIP is a shareholder-approved, non-qualified, unfunded deferred compensation program available to selected members of our management; for a summary of the plan, please see “Employee Benefit Plans—Executive Deferred Incentive Program.” We use the EDIP to contribute amounts to executives’ retirement accounts on a tax effective basis, and to give our executives a tax effective way to save for retirement. The amount we contribute annually to the executives’ EDIP accounts is set at a level that we believe is competitive with comparable plans offered by other companies in our industry. EDIP participants do not begin vesting in the amounts that we contribute to their EDIP account until they have participated in the program for five years, and do not fully vest in such amounts until they have participated in the program for 15 years. EDIP participants may defer on a tax-free basis all or any portion of their salary and bonus in a given year. Given that the EDIP is intended as a vehicle for retirement savings, the earnings rates we offer for EDIP balances are the same as the funds offered under our 401(k) plan.

This excerpt taken from the DHR DEF 14A filed Apr 3, 2008.

Other Compensation

Severance and Change-of-Control Benefits. We have entered into an employment agreement with Mr. Culp dated as of July 18, 2000, and amended as of November 19, 2001, that provides for payments upon certain events of termination, including in connection with a change-of-control. In addition:

 

   

the terms of Mr. Culp’s 2003 and 2006 option grants and 2003 RSU award provide for an accelerated vesting schedule in the event he dies or is terminated for disability, and vest fully upon a change of control; and

   

Mr. Culp’s 2003 and 2006 option grants also provide for an accelerated vesting schedule in the event he is terminated without cause or resigns for good reason.

The termination and change-of-control provisions of Mr. Culp’s employment agreements are described in “— Employment Agreements”, and the amounts that Mr. Culp would have been entitled to had any of the termination or change-of-control events mentioned above occurred on December 31, 2007, are set forth in “— Potential Payments upon Termination or Change-of-Control.” Mr. Culp has agreed to post-employment non-competition, non-solicitation and confidentiality obligations in his employment agreement, which are also described in “—Employment Agreements.”

In adopting the severance and change-of-control provisions in these arrangements, our Board focused on three key objectives:

 

   

ensuring that Mr. Culp has sufficient security such that he is not discouraged from taking appropriate risks in seeking to maximize value for shareholders (and in the context of a change-of-control, ensuring that Mr. Culp is not deterred from pursuing, and actively supports, change-of-control opportunities that may arise that would maximize value for shareholders);

   

tying most of the potential value of his severance arrangements to the degree to which Danaher’s stock price has increased over his tenure; and

 

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ensuring that Mr. Culp’s total compensation package is competitive as compared to other potential opportunities that may be available to him.

If Danaher were to pursue a change-of-control transaction beneficial to Danaher shareholders, the Committee believes that Mr. Culp’s active support of the transaction through closing would be critical in ensuring the success of such a transaction. Though the non-equity amounts payable to Mr. Culp in connection with a change-of-control are subject to a “double trigger,” the Board adopted a “single trigger” for the equity awards that vest upon a change-of-control to provide a more powerful retention incentive during change-of-control discussions. Mr. Culp’s employment agreement also requires Danaher to pay, and make Mr. Culp whole with respect to, any excise tax payments he may owe upon a change-of-control as a result of any payments he receives from Danaher or from or a party that acquires Danaher. Mr. Culp’s severance and change-of-control arrangements are different than that of the other named executive officers because they were negotiated in connection with his appointment as CEO, and reflect terms that the Committee believes are common with respect to the CEO position. We do not believe the competitive marketplace requires making similar provisions available to other executives at this time.

We have entered into non-competition agreements with each of our other named executive officers which provide for severance payments under certain circumstances as consideration for post-employment non-competition, non-solicitation and confidentiality obligations. We believe that these post-employment restrictive covenants are critical in protecting our human resources and other proprietary assets. Other than as described above, we do not have any formal employment agreements with any of the named executive officers.

Benefits and Perquisites. All of our executives are eligible to participate in our employee benefit plans, including our group medical, dental, vision, disability, accidental death and dismemberment, life insurance and 401(k) plans. These plans are generally available to all salaried employees and do not discriminate in favor of executive officers. In addition, the perquisites provided to the named executive officers as a group consist primarily of reimbursement for club dues and tax preparation, financial planning and other professional services, parking, car allowance or car lease and related expenses, tickets for sporting events, annual physical, and, with respect to Mr. Culp, additional term life insurance and personal use of the Danaher plane when not in use for business purposes. Mr. Comas is also allowed certain personal use of the Danaher plane. Not every named executive officer uses each of the perquisites listed above. The Committee annually reviews and approves all perquisites made available to our named executive officers. The Committee believes that the nature and level of perquisites provided to each of the named executive officers is generally commensurate with what our peers provide to persons in similar positions, and helps make our total executive compensation plan competitive.

In addition, each named executive officer participates in the Amended and Restated Danaher Corporation & Subsidiaries Executive Deferred Incentive Program, or EDIP. The EDIP is a shareholder-approved, non-qualified, unfunded deferred compensation program available to selected members of our management; for a summary of the plan, please see “Employee Benefit Plans — Executive Deferred Incentive Program.” We use the EDIP to contribute amounts to executives’ retirement accounts on a tax effective basis, and to give our executives a tax effective way to save for retirement. The amount we contribute annually to the executives’ EDIP accounts is set at a level that we believe is competitive with comparable plans offered by other companies in our industry. EDIP participants do not begin vesting in the amounts that we contribute to their EDIP account until they have participated in the program for five years, and do not fully vest in such amounts until they have participated in the program for 15 years. EDIP participants may defer on a tax-free basis all or any portion of their salary and bonus in a given year. Given that the EDIP is intended as a vehicle for retirement savings, the earnings rates we offer for EDIP balances are the same as the funds offered under our 401(k) plan.

This excerpt taken from the DHR DEF 14A filed Apr 10, 2007.

Other Compensation

Severance and Change-of-Control Benefits. We have entered into an employment agreement with Mr. Culp dated as of July 18, 2000, and amended as of November 19, 2001, that provides for payments upon certain events of termination, including in connection with a change-of-control. In addition, the terms of Mr. Culp’s 2003 and 2006 option grants provide for an accelerated vesting schedule in the event he dies, is terminated without cause or for disability or resigns for good reason, the terms of his 2003 RSU award provide for an accelerated vesting schedule if he dies or is terminated for disability, and his 2003 and 2006 option grants and 2003 RSU award vest fully upon a change-of-control. The amounts that Mr. Culp would have been entitled to had one of the termination or change-of-control events mentioned above occurred on December 31, 2006, are set forth in “— Potential Payments upon Termination or Change-of-Control.” Mr. Culp has agreed to post-employment non-competition, non-solicitation and confidentiality obligations in his employment agreement, which are described in “—Employment Agreements.”

In adopting the severance and change-of-control provisions in these arrangements, our Board focused on three key objectives: ensuring that Mr. Culp has sufficient security such that he is not discouraged from taking appropriate risks in seeking to maximize value for shareholders (and in the context of a change-of-control, ensuring that Mr. Culp is not deterred from pursuing, and actively supports, change-of-control opportunities that may arise that would maximize value for shareholders); tying most of the potential value of his severance arrangements to the degree to which Danaher’s stock price has increased over his tenure; and ensuring that Mr. Culp’s total compensation package is competitive as compared to other potential opportunities that may be available to him. If Danaher were to pursue a change-of-control transaction beneficial to Danaher shareholders, the Committee believes that Mr. Culp’s active support of the transaction through closing would be critical in ensuring the success of such a transaction. Though the non-equity amounts payable to Mr. Culp in connection with a change-of-control are subject to a “double trigger,” the Board adopted a “single trigger” for the equity awards that vest upon a change-of-control to provide a more powerful retention incentive during change-of-control discussions.

 

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We have also entered into non-competition agreements with each of our other named executive officers which provide for severance payments under certain circumstances as consideration for post-employment non-competition, non-solicitation and confidentiality obligations. We believe that these post-employment restrictive covenants are critical in protecting our human resources and other proprietary assets.

Other than as described above, we do not have any formal employment agreements with any of the named executive officers, although certain severance arrangements were set forth in the offer letter that we extended to Mr. Simms when he joined us in 1996 (see “—Employment Agreements” for a summary). We believe that this severance protection was an important component in helping us recruit Mr. Simms to join our executive team.

Benefits and Perquisites. All of our executives are eligible to participate in our employee benefit plans, including our group medical, dental, vision, disability, accidental death and dismemberment, life insurance and 401(k) plans. These plans are generally available to all salaried employees and do not discriminate in favor of executive officers.

In addition to the benefits described above, the perquisites provided to the named executive officers as a group consist primarily of reimbursement for club dues and tax preparation and financial planning services, parking, car allowance or car lease, annual physical, and, with respect to Mr. Culp, term life insurance and personal use of the Danaher plane when not in use for business purposes. Not every named executive officer receives each of the perquisites listed above. The Committee annually reviews and approves all perquisites provided to our named executive officers. The Committee believes that the nature and level of perquisites provided to each of the named executive officers is generally commensurate with what our peers provide to persons in similar positions, and helps make our total executive compensation plan competitive.

In addition, each named executive officer participates in the Amended and Restated Danaher Corporation & Subsidiaries Executive Deferred Incentive Program, or EDIP. The EDIP is a shareholder-approved, non-qualified, unfunded deferred compensation program available to selected members of our management; for a summary of the plan, please see “Proposal 6. Approval of Amendment to the Amended and Restated Danaher Corporation & Subsidiaries Executive Deferred Incentive Program.” We use the EDIP to contribute amounts to executives’ retirement accounts on a tax effective basis, and to give our executives a tax effective way to save for retirement. The amount we contribute annually to the executives’ EDIP accounts is set at a level that we believe is competitive with comparable plans offered by other companies in our industry. EDIP participants may defer on a tax-free basis all or any portion of their salary and bonus in a given year. Given that the EDIP is intended as a vehicle for retirement savings, the earnings rates we offer for EDIP balances are the same as the funds offered under our 401(k) plan. All amounts deferred under the EDIP are unfunded and unsecured obligations of Danaher, receive no preferential standing and are subject to the same risks as any of Danaher’s other general obligations.

 

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