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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
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(Name of Registrant as Specified In Its Charter)
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(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.
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
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SEC 1913 (02-02)
[IDEX CORPORATION LOGO]
630 Dundee Road, Suite 400
Northbrook, IL 60062
February 27, 2004
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of Shareholders of
IDEX Corporation which will be held on Tuesday, March 23, 2004, at 10:00 a.m.
Central Time, at Bank of America, LaSalle Room, 21st Floor, 231 South LaSalle
Street, Chicago, Illinois.
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 2003 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. If you
decide to attend the Annual Meeting, you will of course be able to vote in
person, even if you have previously submitted your proxy card.
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/ Dennis K. Williams
Dennis K. Williams
Chairman of the Board, President
and Chief Executive Officer
IDEX CORPORATION
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 23, 2004
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TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of IDEX Corporation (the "Company") will
be held on Tuesday, March 23, 2004, at 10:00 a.m. Central Time, at Bank of
America, LaSalle Room, 21st Floor, 231 South LaSalle Street, Chicago, Illinois,
for the following purposes:
1. To elect three directors for a term of three years.
2. To ratify the appointment of Deloitte & Touche LLP as auditors of
the Company for 2004.
3. To transact such other business as may properly come before the
meeting.
The Board of Directors fixed the close of business on February 17, 2004, as
the record date for the determination of shareholders owning the Company's
Common Stock 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
February 27, 2004
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 Shareholders of IDEX Corporation to be held on Tuesday, March 23,
2004, at 10:00 a.m. Central Time, in the LaSalle Room of Bank of America, 231
South LaSalle Street, Chicago, Illinois. The Company commenced distribution of
this Proxy Statement and the materials which accompany it on February 27, 2004.
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. Such solicitations may be
made by personal interview, telephone and facsimile transmission. Arrangements
have also been made with brokerage firms and others for the forwarding of proxy
solicitation materials to the beneficial owners of Common Stock held of record
by such persons, and the Company will reimburse such brokerage firms and others
for reasonable out-of-pocket expenses incurred by them in connection therewith.
The Company has engaged Morrow & Co. to assist in proxy solicitation and
collection, and has agreed to pay such firm $4,500, plus out-of-pocket costs and
expenses.
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VOTING AT THE MEETING
The record of shareholders entitled to notice of and to vote at the Annual
Meeting was taken as of the close of business on February 17, 2004, and each
shareholder will be entitled to vote at the meeting any shares of IDEX Common
Stock held of record at that date. An aggregate of 33,146,415 shares of the
Company's Common Stock was outstanding at the close of business on February 17,
2004. 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 shareholders is necessary to take action at the Annual Meeting.
A majority of outstanding shares of Common Stock of the Company 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 2004 requires a majority
vote, of the shares of Common Stock of the Company 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
ratification of the appointment of Deloitte & Touche LLP as auditors of the
Company for 2004. Broker non-votes with respect to a particular proposal will
have no effect on such proposal because they are not considered as present and
entitled to vote with respect to that matter.
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. If your completed proxy card is received prior to or at 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 and FOR
the ratification of the appointment of Deloitte & Touche LLP as auditors of the
Company for 2004, 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 at the meeting. 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, three
of whom are Class III directors whose terms will expire at this year's Annual
Meeting, two of whom are Class I directors whose terms will expire at the Annual
Meeting to be held in 2005, and two of whom are Class II directors whose terms
will expire at the Annual Meeting to be held in 2006.
The Company's Board of Directors has nominated three individuals for
election as Class III directors to serve for a three-year term expiring at the
Annual Meeting to be held in 2007 or upon the election and qualification of
their successors. The nominees of the Board of Directors are Paul E. Raether,
Neil A. Springer and Dennis K. Williams, who 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 directorships in
other public companies.
If for any reason 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.
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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
PAUL E. RAETHER Director since 1988
Member Age 57
Kohlberg Kravis Roberts & Co., L.L.C.
Mr. Raether has been a director of the Company since January 22, 1988.
Since prior to 1999, he has been a member of Kohlberg Kravis Roberts & Co.,
L.L.C. Mr. Raether is a director of KSL Recreation Corporation and Shoppers Drug
Mart Corporation. Mr. Raether is a member of the Nominating and Corporate
Governance Committee of the Board of Directors.
NEIL A. SPRINGER Director since 1990
Managing Director Age 65
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 1999.
Mr. Springer is a director of CUNA Mutual Insurance Group, U.S. Freightways
Corporation and Walter Industries, Inc. Mr. Springer is the Chairman of the
Nominating and Corporate Governance Committee, and a member of the Audit
Committee and Executive Committee of the Board of Directors.
DENNIS K. WILLIAMS Director since 2000
Chairman of the Board, President and Chief Executive Officer Age 58
IDEX Corporation
Mr. Williams was appointed Chairman of the Board, President and Chief
Executive Officer and a director of the Company by the Board of Directors on May
1, 2000. From April 1998 to April 2000, he served as President and Chief
Executive Officer of GE Power Systems Industrial Products. From January 1996
until May 1999, Mr. Williams was President and Chief Executive Officer of GE's
Nuovo Pignone business. Mr. Williams is a director of Washington Group
International, Inc. Mr. Williams is Chairman of the Executive Committee of the
Board of Directors.
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OTHER INCUMBENT DIRECTORS
CLASS II: THREE-YEAR TERM EXPIRES IN 2006
MICHAEL T. TOKARZ Director since 1987
Member Age 54
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 1999 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.,
Evenflo Company, 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 55
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
2000. From 1999 until 2000, Mr. Hermance served as President and Chief Executive
Officer of AMETEK, INC., and from 1996 until 1999, Mr. Hermance served as
President and Chief Operating Officer of AMETEK, INC. Mr. Hermance is a director
of AMETEK, INC. Mr. Hermance is a member of the Audit Committee of the Board of
Directors.
CLASS I: THREE-YEAR TERM EXPIRES IN 2005
BRADLEY J. BELL Director since 2001
Executive Vice President and Chief Financial Officer Age 51
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 since
November 5, 2003. Mr. Bell was Senior Vice President and Chief Financial Officer
of Rohm and Haas Company from prior to 1999 until May 31, 2003. Mr. Bell is
Chairman of the Audit Committee.
GREGORY B. KENNY Director since 2002
President and Chief Executive Officer Age 51
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. From 1999 until August 2001, Mr. Kenny served as
President and Chief Operating Officer of General Cable Corporation, and from
1997 until 1999, Mr. Kenny served as Executive Vice President and Chief
Operating Officer of General Cable Corporation. Mr. Kenny is a director of
General Cable Corporation. Mr. Kenny is Chairman of the Compensation Committee.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has the ultimate authority for the management of the
Company's business. 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 2003, the Board of Directors
held nine 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 made an
affirmative determination that the following members of the Board meet the
standards for "independence" set forth in the New York Stock Exchange corporate
governance listing standards on the basis that they have no material
relationship with the Company (either directly or as a partner, shareholder or
officer of an
5
organization that has a relationship with the Company): Messrs. Bell, Hermance,
Kenny, Raether, Springer and Tokarz. The following members of the Board do not
meet the standards for independence set forth in the NYSE corporate governance
listing standards because they have a material relationship with the Company:
Dennis K. Williams who is our Chairman, President and Chief Executive Officer.
Important functions of the Board of Directors 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 regularly constituted committees of
the Board of Directors: the Executive Committee, the Audit Committee, the
Compensation Committee and the Nominating and Corporate Governance Committee.
The Executive Committee is empowered to exercise the authority of the Board
of Directors in the management of the Company between meetings of the Board of
Directors, 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. Springer, Tokarz and Williams. During 2003, the Executive
Committee did not hold any meetings.
The Audit Committee's primary duties and responsibilities are to: monitor
the integrity of the Company's financial reporting process and systems of
internal controls 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; and prepare the report that the
rules of the Securities and Exchange Commission require to be included in the
Company's annual proxy statement. The members of the Audit Committee are Messrs.
Bell, Hermance and Springer, each of whom satisfy the "independence"
requirements of the New York Stock Exchange. 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 2003, the Audit
Committee held eleven meetings.
The Compensation Committee's primary purpose and responsibilities are to:
establish the compensation of the Chief Executive Officer and other senior
officers of the Company; develop and recommend to the Board of Directors total
compensation for the Board; and produce a compensation committee report on
executive compensation 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, each of whom satisfy the
"independence" requirements of the New York Stock Exchange. During 2003, the
Compensation Committee held five meetings.
The Nominating and Corporate Governance Committee's primary purpose and
responsibilities are to: develop and recommend to the Board of Directors
corporate governance principles and a code of conduct and business ethics;
develop and recommend criteria for selecting new directors; identify individuals
qualified to become Board members 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. Raether and Springer, each of whom satisfy the
"independence" requirements of the New York Stock Exchange. During 2003, the
Nominating and Corporate Governance Committee held two meetings. A copy of the
current charter of the Nominating and Corporate Governance Committee is
available on our website at www.idexcorp.com.
The Nominating and Corporate Governance Committee will consider nominees
for the Board recommended by the Company's shareholders in accordance with the
procedures described under "Shareholder Proposals and Director Nominations for
2005 Annual Meeting." Shareholder nominees that comply with these procedures
will be given the same consideration as nominees for director from other
sources.
6
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 industry;
- 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. 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 to be recommended for nomination for election at the annual meeting of
shareholders. The Company has hired Russell Reynolds, a search firm, to help
identify and facilitate the screening and interview process of director
nominees. 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 election.
During 2003, 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 was a member. The Company encourages the directors to
attend the annual meeting of shareholders. All of the directors attended the
2003 annual meeting of shareholders.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
You can contact the Board or any of the individual directors by writing to
them c/o 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 will be forwarded to the Board or an individual director.
CERTAIN INTERESTS
In 2001, the Company made a $180,000 loan to Mr. Williams, our Chairman of
the Board, President and Chief Executive Officer, to pay withholding taxes on
the 2001 vesting of his restricted stock award. This loan was interest free. The
largest amount outstanding in 2003 under the loan was $165,762. As of February
10, 2004, $0 remained outstanding under the loan as Mr. Williams paid off the
loan in full on such date.
In 2003, the Company paid a $100,000 fee to Kohlberg Kravis Roberts & Co.,
L.L.C., of which Mr. Raether is a member, for consulting and investment advisory
services.
7
COMPENSATION OF DIRECTORS
Non-management directors of the Company receive an annual fee of $30,000
for their services. The Audit, Compensation and Nominating and Corporate
Governance Committee chairperson receives an annual retainer (pro-rated for
partial years of service in the position) of $5,000, $4,000 and $4,000,
respectively. Each Board member receives an attendance fee of $1,000 for each
Board meeting attended in-person, and each member of the Audit, Compensation and
Nominating and Corporate Governance Committees receives an attendance fee of
$500 for each committee meeting attended in-person, in each case accrued and
paid in arrears quarterly when payments of the annual base retainer are made.
Under the Second Amended and Restated IDEX Corporation Directors Deferred
Compensation Plan, directors are permitted to defer their compensation into an
interest-bearing account or into 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 rates on U.S.
government securities with 10-year maturities as of December 1 of the calendar
year preceding the year for which the earnings were credited, plus 200 basis
points. Amounts credited to the interest-bearing account are compounded at least
annually. The deferred compensation credited to the deferred compensation units
account is converted into a number of Common-Stock-equivalent units ("Deferred
Compensation Units") by dividing the deferred compensation by the fair market
value 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 Deferred Compensation Units based
on the number of Deferred Compensation Units on the dividend record date, and
the fair market value of Common Stock on the dividend payment date.
Outside directors receive non-qualified stock options pursuant to the
Amended and Restated IDEX Corporation Stock Option Plan for Outside Directors.
Outside directors are those individuals who are not full-time employees of the
Company or its subsidiaries. Under the Restated Directors' plan, nonqualified
stock options may be granted to outside directors to purchase in the aggregate
up to 337,500 shares of Common Stock. If any option expires or is cancelled
without having been fully exercised, the shares covered thereby may be subject
to the grant of new options. For so long as the plan remains effective, except
for each person who immediately prior to becoming an outside director was a
full-time employee of the Company or any of its subsidiaries, any person who
becomes an outside director after April 19, 2000 will receive an option to
purchase 6,750 shares of Common Stock. On the first regularly scheduled meeting
of the Board of Directors held in January of each year, each outside director
will receive an option to purchase 4,500 shares of Common Stock. The exercise
price is specified in each option, and is equal to the fair market value of a
share of Common Stock on the date the option is granted, as determined under the
plan. Prior to the amendment of the plan in January 2000, the fair market value
was based on the average closing price per share of Common Stock on the New York
Stock Exchange during the 30-day period immediately preceding the date the
option was granted. Under the current terms of the plan, the fair market value
is based on the closing price per share of the Common Stock on the trading day
preceding the date the option is granted. In the year ended December 31, 2003,
each of Messrs. Bell, Kenny and Springer received an option to purchase 4,500
shares of Common Stock at an exercise price of $28.32. On January 5, 2004, Mr.
Hermance received an option to purchase 6,750 shares of Common Stock at an
exercise price of $41.38, and on January 30, 2004, each of Messrs. Bell,
Hermance, Kenny, Raether, Springer and Tokarz received an option to purchase
4,500 shares of Common Stock at an exercise price of $42.25. Upon exercise of
any option, the purchase price of Common Stock may be paid either in cash, in
shares of Common Stock having an aggregate fair market value on the date of
exercise equal to the exercise price, or by delivery of an irrevocable
commitment to use the proceeds from the sale of stock acquired from exercise of
the option.
8
SECURITY OWNERSHIP
The following table furnishes information as of February 17, 2004, except
as otherwise noted, with respect to the shares of Common Stock beneficially
owned by (i) each director and nominee for director, (ii) each officer named in
the Summary Compensation Table, (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 of the Company. Except as indicated by the notes to the following table
and with respect to Deferred Compensation Units issued under the Second Amended
and Restated IDEX Corporation Directors' Deferred Compensation Plan and the IDEX
Corporation 1996 Deferred Compensation Plan for Officers, 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 17, 2004. Shares of common stock subject to options that are currently
exercisable within 60 days of February 17, 2004 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.
SHARES DEFERRED
NAME AND ADDRESS OF BENEFICIALLY COMPENSATION PERCENT OF
BENEFICIAL OWNER OWNED UNITS(1) CLASS
------------------- ------------ ------------ ----------
Directors and Nominees
(Other than Executive Officers):
Bradley J. Bell(2)........................... 13,250 *......
Gregory B. Kenny(2).......................... 6,750 1,003 *......
Paul E. Raether(3)........................... 139,485 13,143 *
Neil A. Springer(2).......................... 40,500 *
Michael T. Tokarz............................ 151,516 7,336 *
Executive Officers:
Dennis K. Williams(4)(5)..................... 512,015 59,761 1.5
Wayne P. Sayatovic(6)........................ 400,400 1.2
David T. Windmuller(7)....................... 74,602 *
John L. McMurray(7).......................... 75,565 1,630 *
Kimberly K. Bors(7).......................... 9,400 1,035 *
Directors, Nominees and All.................... 1,727,678 91,748 5.1
Executive Officers as a Group
(15 persons)(3)(8)
Other Principal Beneficial Owners:
Ariel Capital Management, Inc.(9)............ 7,304,660 22.0
307 North Michigan Avenue, Suite 500
Chicago, IL 60601
Mario J. Gabelli(10)......................... 2,059,653 6.2
GAMCO Investors, Inc.
Gabelli & Company, Inc.
One Corporate Center
Rye, NY 10580
---------------
(1) Deferred Compensation Units are issued under the Second Amended and
Restated IDEX Corporation Directors' Deferred Compensation Plan and the
IDEX Corporation 1996 Deferred Compensation Plan for Officers, and are
payable in IDEX common stock. The value of these Deferred Compensation
Units depends directly on the performance of IDEX Corporation common stock.
The Deferred Compensation Units are not included in Shares Beneficially
Owned.
(2) Includes 11,250, 6,750 and 36,000 shares under option which are eligible
for exercise under the Amended and Restated IDEX Corporation Stock Option
Plan for Outside Directors for Messrs. Bell, Kenny and Springer,
respectively.
(3) Includes 39,485 shares which are owned by a family trust in which Mr.
Raether's wife is trustee.
9
(4) Includes 385,000 shares which are eligible for exercise under the Stock
Plan for Officers.
(5) Mr. Williams was awarded 350,000 shares of restricted stock on April 13,
2000. Under the terms of the award, seventy thousand of the shares vest on
April 30 in each of years 2001 through 2005. In connection with the vesting
of shares on April 30, 2001, April 30, 2002 and April 30, 2003, Mr.
Williams surrendered 22,715, 30,135 and 30,135 shares, respectively, to
satisfy withholding taxes.
(6) Includes 45,000 shares which are owned directly by Mr. Sayatovic's wife,
6,750 shares which are owned by Mrs. Sayatovic as custodian for her
children, and 201,750 shares which are eligible for exercise under the
Stock Plan for Officers.
(7) Includes 72,800, 74,850 and 7,400 shares which are eligible for exercise
under the Stock Plan for Non-Officer Key Employees and the Stock Plan for
Officers, for Messrs. Windmuller, McMurray and Ms. Bors, respectively.
(8) Includes 54,000 shares under option which are eligible for exercise under
the Amended and Restated IDEX Corporation Stock Option Plan for Outside
Directors, 893,070 shares under option which are eligible for exercise
under the Stock Plan for Officers, and 26,250 shares under option which are
eligible for exercise under the Stock Plan for Non-Officer Key Employees.
(9) Based on information in Schedule 13G, as of December 31, 2003, filed by
Ariel Capital Management, Inc. with respect to common stock owned by Ariel
Capital Management, Inc. and certain other entities which Ariel Capital
Management, Inc. directly or indirectly controls or for which Ariel Capital
Management, Inc. 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) Based on information in Schedule 13F, as amended on December 31, 2003,
filed by Mario J. Gabelli, GAMCO Investors, Inc. ("GAMCO") and Gabelli
Funds, LLC ("Gabelli Funds"), with respect to common stock owned by GAMCO,
Gabelli Funds and certain other entities which Mr. Gabelli directly or
indirectly controls and for which he acts as chief investment officer. The
Company has not attempted to independently verify any of the foregoing
information, which is based solely upon the information contained in the
Schedule 13F, as amended.
10
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The total compensation paid to the Company's Chief Executive Officer and
the Company's four highest compensated executive officers other than the Chief
Executive Officer for services rendered to the Company in 2003, 2002 and 2001 is
summarized as follows:
LONG-TERM COMPENSATION
ANNUAL COMPENSATION(1) -----------------------------------
------------------------------- SHARES
OTHER RESTRICTED UNDERLYING LONG-TERM
ANNUAL STOCK OPTIONS INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMP.(2) AWARDS(3) GRANTED PAYOUTS COMPENSATION(4)
--------------------------- ---- -------- -------- --------- ---------- ---------- --------- ---------------
Dennis K. Williams............... 2003 $740,000 $900,000 $230,069 0 100,000 0 $ 6,659
Chairman of the Board,
President 2002 710,000 562,300 277,883 0 85,000 0 11,227
and Chief Executive Officer 2001 685,000 387,600 189,990 0 85,000 0 5,461
Wayne P. Sayatovic............... 2003 261,500 154,700 0 0 24,000 0 4,400
Senior Vice
President -- Finance 2002 251,500 113,100 0 0 24,000 0 4,100
and Chief Financial Officer 2001 243,000 64,800 0 0 24,000 0 3,830
David T. Windmuller.............. 2003 247,500 222,600 0 0 22,000 0 4,400
Vice President -- Group
Executive 2002 238,000 109,300 0 0 18,000 0 4,100
2001 229,000 65,300 0 0 18,000 0 3,830
John L. McMurray................. 2003 239,800 171,600 0 0 21,000 0 4,400
Vice President -- Group
Executive 2002 224,500 83,500 0 0 18,000 0 4,100
and Operational Excellence 2001 214,000 62,600 0 0 17,000 0 3,830
Kimberly K. Bors................. 2003 220,000 173,300 0 0 37,000 0 3,080
Vice President -- Human
Resources
---------------
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) For Mr. Williams, $210,911, $262,966 and $177,612 of the amount shown for
2003, 2002 and 2001, respectively, represents the incremental cost for Mr.
Williams' personal use of the Company's aircraft. For all other individuals,
the value of perquisites provided did not exceed the lesser of $50,000 or
10% of base salary plus bonus.
(3) Mr. Williams was awarded 350,000 shares of restricted stock on April 13,
2000. Seventy thousand of the shares vested on each of April 30, 2001, April
30, 2002 and April 30, 2003, and 70,000 shares will vest on April 30 in each
of years 2004 and 2005. At December 31, 2003, the 140,000 shares of
non-vested restricted stock had a value of $5,822,600 based on the closing
price of our common stock at year-end. The shares are eligible for the
Company's dividend on its common stock.
(4) For Mr. Williams in 2003, 2002 and 2001, amount represents $2,259, $7,127
and $1,631, respectively, in imputed interest on a $180,000 loan made by the
Company to pay withholding taxes on the 2001 vesting of his restricted stock
award, and $4,400, $4,100 and $3,830, respectively, of Company matching
contributions to his Savings Plan individual account. In all other cases,
amount represents Company matching contributions to Savings Plan individual
accounts.
11
OPTION GRANTS IN 2003
The following tables set forth certain information with respect to options
granted in 2003 to the Company's Chief Executive Officer and the Company's four
highest compensated officers other than the Chief Executive Officer:
INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SHARES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR OPTION
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -----------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
---- ---------- -------------- -------- ---------- -- ---
Dennis K. Williams........................ 100,000 10.1 $29.50 03/25/13 $1,855,866 $4,703,446
Wayne P. Sayatovic........................ 24,000 2.4 29.50 03/25/13 445,408 1,128,827
David T. Windmuller....................... 22,000 2.2 29.50 03/25/13 408,291 1,034,758
John L. McMurray.......................... 21,000 2.1 29.50 03/25/13 389,732 987,724
Kimberly K. Bors.......................... 15,000 1.5 34.05 01/06/13 321,316 814,334
Kimberly K. Bors.......................... 22,000 2.2 29.50 03/25/13 408,291 1,034,758
OPTION EXERCISES AND YEAR-END VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED,
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Dennis K. Williams.................. 0 $ 0 261,000 359,000 $3,546,290 $4,151,760
Wayne P. Sayatovic.................. 27,000 495,514 129,750 72,000 1,853,953 759,360
David T. Windmuller................. 8,776 121,870 64,200 58,000 790,818 617,880
John L. McMurray.................... 2,925 60,853 57,650 54,600 776,309 571,644
Kimberly K. Bors.................... 0 0 0 37,000 0 379,530
---------------
(1) Calculated using closing stock price on December 31, 2003 of $41.59.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information with respect to the
Company's equity compensation plans as of December 31, 2003:
NUMBER OF SECURITIES WEIGHTED-AVERAGE NUMBER OF SECURITIES
TO BE ISSUED UPON EXERCISE PRICE OF REMAINING AVAILABLE FOR
EXERCISE OF OUTSTANDING FUTURE ISSUANCE UNDER
OUTSTANDING OPTIONS, OPTIONS, WARRANTS EQUITY COMPENSATION
PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS PLANS(1)
------------- --------------------- ----------------- -----------------------
Equity compensation plans approved by
the
Company's shareholders............... 3,510,370 $30.48 1,427,026(2)(3)
Equity compensation plans not approved
by the Company's shareholders........ 94,463 21.41 298,070(4)
--------- ------ -----------
Total............................. 3,604,833 $30.24 1,725,096
========= ====== ===========
---------------
(1) Excludes securities to be issued upon the exercise of outstanding options,
warrants and rights.
(2) Includes 58,992 shares reserved for future issuance in connection with
Deferred Compensation Units under the Second Amended and Restated IDEX
Corporation Directors Deferred Compensation Plan, 32,190 of which have been
allocated to certain directors in connection with their election to defer
certain fees.
12
(3) Includes 60,075 shares reserved for future issuance in connection with
Deferred Compensation Units under the 1996 Officers Deferred Compensation
Plan which are payable under the 1996 Stock Plan for Officers of IDEX
Corporation, all of which have been allocated to certain officers in
connection with their election to defer certain compensation.
(4) Includes 298,070 shares reserved for future issuance in connection with
Deferred Compensation Units under the 1996 Deferred Compensation Plan for
Non-Officer Presidents, 5,156 of which have been allocated to certain
presidents in connection with their election to defer certain compensation.
Under the 1996 Deferred Compensation Plan for Non-Officer Presidents,
presidents who are not officers are permitted to defer a portion of their
compensation into an interest-bearing account or into 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 rates on U.S. government securities with
10-year maturities as of December 1 of the calendar year preceding the year
for which the earnings were credited, plus 200 basis points. Amounts
credited to the interest-bearing account are compounded at least annually.
The deferred compensation credited to the deferred compensation units
account is converted into a number of Common Stock-equivalent units
("Deferred Compensation Units") by dividing the deferred compensation by the
fair market value 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
Deferred Compensation Units based on the number of Deferred Compensation
Units on the dividend record date, and the fair market value of Common Stock
on the dividend payment date. Deferred compensation is paid on the January 1
following the number of years for which deferral was elected (5 or 10),
retirement, death or termination of employment. Deferred Compensation Units
are distributed in the form of our Common Stock.
PENSION AND RETIREMENT PLANS
Certain employees of the Company, including the executive officers and
certain hourly employees, are covered under the IDEX Corporation Retirement Plan
(the "Retirement Plan"). The Company and the other sponsoring subsidiaries are
required to make an annual contribution to the Retirement Plan in such amounts
as are actuarially required to fund the benefits of the participants. The
Retirement Plan is an ongoing "career average" plan that provides a level of
benefit based on a participant's compensation for a year, historically with
periodic updates to average compensation over a fixed five-year period. Under
the Retirement 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 current formula for each year of employment after 1995. For
each year of participation through 1995, a participant earns 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
Retirement 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.
As of December 31, 2003, the total accrued monthly benefit under the
Retirement Plan for Messrs. Williams, Sayatovic, Windmuller and McMurray and Ms.
Bors was $1,311, $5,699, $4,544, $3,385 and $328, respectively. Assuming
projected earnings in 2004 of $4,535,300, $202,000, $482,500, $434,100 and
$385,900 for Messrs. Williams, Sayatovic, Windmuller and McMurray and Ms. Bors,
respectively, and assuming (except in the case of Mr. Williams whose restricted
stock award will have fully vested in 2005 and Mr. Sayatovic who retired
February 1, 2004) that such earnings remain level until each person reaches age
65, the projected monthly benefit for Messrs. Williams, Windmuller and McMurray
and Ms. Bors under the Retirement Plan would be $4,000, $10,873, $7,418 and
$7,385, respectively, upon retirement at age 65. Mr. Sayatovic's benefit at
retirement was $4,500 after reductions for early retirement.
13
Pursuant to the Company's Supplemental Executive Retirement Plan (the
"SERP"), employees of the Company are entitled to retirement benefits to
compensate for any reduction in benefits under the Retirement Plan arising from
the maximum benefit limitations under Sections 401 and 415 of the Internal
Revenue Code of 1986, as amended (the "Code"). Based on the above assumptions,
the projected monthly benefit at age 65 for Messrs. Williams, Windmuller and
McMurray and Ms. Bors under the SERP would be $45,869, $10,509, $5,651 and
$6,365, respectively. Mr. Sayatovic's monthly benefit was $5,354 at retirement.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr. Williams. The
employment agreement provides for an initial term of five years and successive
twelve-month periods thereafter. Mr. Williams' annual base salary for 2004 is
$775,000, subject to annual review and adjustment. In addition to his annual
base salary, Mr. Williams is eligible to receive an annual cash bonus. Annual
bonuses are paid to Mr. Williams under the Executive Incentive Bonus Plan. If
Mr. Williams' employment is terminated by the Company other than for cause, he
will receive continuing salary payments and fringe benefits for 24 months plus a
bonus payment equal to the sum of 240% of his base salary and a pro-rated
portion of 120% of his base salary (based on the portion of the year he was
employed). If Mr. Williams' employment is terminated because of disability, he
will receive continuing salary payments and fringe benefits for a period of 18
months plus a bonus payment equal to the sum of 180% of his base salary and a
pro-rated portion of 120% of his base salary (based on the portion of the year
he was employed). If Mr. Williams dies before the continuing payments described
above are complete, such payments will continue to Mr. Williams' wife if she
survives him or, if she does not survive him, to his estate. Additionally, if
Mr. Williams should die during the term of the agreement, Mr. Williams' wife or
estate will receive continuing salary payments and fringe benefits for a period
of 18 months plus a bonus payment equal to the sum of 180% of his base salary
and a pro-rated portion of 120% of his base salary (based on the portion of the
year he was employed). In connection with Mr. Williams' employment agreement,
the Company awarded Mr. Williams 350,000 shares of restricted IDEX Common Stock.
Seventy thousand shares of the restricted stock vested on each of April 30,
2001, April 30, 2002 and April 30, 2003, and an additional 70,000 shares vest on
April 30 in each of years 2004 and 2005 if Mr. Williams remains as Chairman of
the Board, President and Chief Executive Officer of the Company. All shares of
the restricted stock will vest in the event Mr. Williams is terminated by the
Company other than for cause or if Mr. Williams terminates his employment
because the Company has taken certain actions with respect to his employment.
The agreement provides for payment of the 20% golden parachute excise tax,
increased for taxes due on the payment, in the event that the Internal Revenue
Service determines any such taxes to be payable due to a change in control.
The Company has entered into an employment agreement with Mr. Sayatovic.
Mr. Sayatovic retired on January 31, 2004. However, since he was a named
executive officer for the fiscal year ended December 31, 2003, we have described
the terms of his employment agreement, as required. The agreement provides for
an initial term of three years and successive 12-month periods thereafter. Mr.
Sayatovic's annual base salary for 2004 is $270,700, subject to annual review
and adjustment. If Mr. Sayatovic's employment is terminated by the Company, he
will be entitled to receive continuing salary payments and fringe benefits for
24 months. If Mr. Sayatovic dies before payments are complete, such payments
will continue to Mr. Sayatovic's wife if she survives him or, if she does not
survive him, to his estate. Mr. Sayatovic will receive a bonus of not less than
his target amount for the entire year in the event he becomes disabled or dies,
or if his employment is terminated by the Company. The agreement provides for
reimbursement of all medical, hospitalization, dental and similar benefits and
expenses for Mr. Sayatovic, his wife and dependents during the term of his
employment with the Company and for the longer of his life or his wife's life.
Reimbursements for medical expenses for Mr. Sayatovic will be reduced until he
attains age 59 to the extent reimbursement is available from other programs
sponsored by subsequent employers. The agreement provides for payment of the 20%
golden parachute excise tax, increased for taxes due on the payment, in the
event that the Internal Revenue Service determines any such taxes to be payable
due to a change in control. The agreement also provides for the payment of
pension benefits equal to the amount Mr. Sayatovic is entitled to receive under
the SERP as currently in effect, to the extent not paid by the SERP.
14
The Company has entered into an employment agreement with Ms. Bors. The
agreement does not provide for a fixed term and may be terminated at any time.
Ms. Bors' annual base salary for 2004 is $237,600, subject to annual review and
adjustment. In addition to her annual base salary, Ms. Bors is eligible to
receive an annual cash bonus. Annual bonuses are paid to Ms. Bors under the
Management Incentive Bonus Plan. If Ms. Bors' employment is terminated by the
Company other than for cause, she will be entitled to receive continuing salary
payments for 12 months. In the event Ms. Bors is actually or constructively
terminated without cause within two years following a change in control, the
Company will be obligated to pay Ms. Bors her salary and her current target
Management Incentive Plan Bonus for three years.
The Company has entered into agreements with each of Messrs. Williams,
Sayatovic, Windmuller and McMurray providing for three years' compensation and
fringe benefits in the event they are actually or constructively terminated
without cause within two years following a change of control.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of the Company reviews
and approves base salary, annual management incentive compensation, and
long-term incentive awards for all corporate officers and certain other key
executives, with the objective of attracting and retaining individuals of the
necessary quality and stature to operate the business. The Committee considers
individual contributions, performance against strategic goals and directions,
and industry-wide pay practices in determining the levels of base compensation
for key executives.
Annual management incentive compensation is paid to corporate officers
other than Mr. Williams and certain other key executives under the Management
Incentive Compensation Plan. The Management Incentive Compensation Plan provides
for payment of annual bonuses based upon performance of the business units of
the Company and individual performance of the employee. Individual target bonus
percentages are based on base salaries and levels of responsibility. Actual
awards are set as a percentage of target based on meeting quantitative and
qualitative performance criteria set each year in connection with the annual
planning process, and adjusted by an individual personal performance multiplier.
Actual payouts under the plan to corporate officers since the Company was formed
in 1988 have ranged from 41% of target to 170% of target. The Committee believes
that this plan is properly leveraged relative to performance of the Company and
its business units.
Long-term incentive awards are granted to corporate officers and certain
other key employees under the Company's 2001 Stock Plan for Officers and the
Third Amended and Restated 1996 Stock Plan for Non-Officer Key Employees. The
awards take the form of stock options which are tied directly to the market
value of the Company's Common Stock.
The Committee believes that both the annual bonus plan and the long-term
incentive plan align the interests of management with the shareholders and focus
the attention of management on the long-term success of the Company. A
significant portion of the executives' compensation is at risk, based on the
financial performance of the Company and the value of the Company's stock in the
marketplace.
The Committee sets compensation of the Company's Chief Executive Officer
annually based on Company performance, his performance, and prevailing market
conditions. Dennis K. Williams has a personal stake in the Company through his
ownership of 267,015 shares of Common Stock of the Company (inclusive of 140,000
shares of non-vested restricted stock), and his ownership of 59,761 Deferred
Compensation Units under the IDEX Corporation 1996 Deferred Compensation Plan
for Officers. He also has options to acquire an additional 620,000 shares of
Common Stock. With this sizeable ownership position, a very large percentage of
Mr. Williams' personal net worth is tied directly to the Company's performance.
Annual bonuses are paid to Mr. Williams based upon the attainment of
operating income performance goals pursuant to the terms of the Executive
Incentive Bonus Plan. The maximum bonus payable to Mr. Williams under the
Executive Incentive Bonus Plan is 2% of the Company's operating income. Mr.
Williams' actual bonus for 2003 was $900,000.
15
Section 162(m) of the Internal Revenue Code limits to $1 million in a
taxable year the deduction publicly-held companies may claim for compensation
paid to executive officers, unless such compensation is performance-based and
meets certain requirements. The Executive Incentive Bonus Plan and the 2001
Stock Plan for Officers satisfy the requirements for performance-based
compensation under Code Section 162(m).
Gregory B. Kenny, Chairman
Michael T. Tokarz
16
AUDIT COMMITTEE REPORT
For the year ended December 31, 2003, 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 the auditors' 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, 2003, for filing with the Commission.
The Board of Directors has determined that the members of the Audit
Committee satisfy the "independence" requirements of the New York Stock
Exchange. The committee is governed by a charter, a copy of which is attached to
this Proxy as Appendix A.
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
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 our Audit Committee
pursuant to our pre-approval policy discussed below.
2003 2002
---------- ----------
Audit fees(1) $1,276,000 $1,025,000
Audit-related fees(2) 287,000 205,000
Tax fees(3) 529,000 836,000
All other fees(4) 26,000 220,000
---------- ----------
Total $2,118,000 $2,286,000
========== ==========
---------------
(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 for those fiscal years.
(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." These services include planning and compliance with Sarbanes-
Oxley regulations in 2003 and filing registration statements in 2002.
17
(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" sections. These services include a special review of controls and
financial reporting related to a foreign subsidiary in 2002. 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 will provide the Audit Committee with an audit
services plan during the third quarter of each fiscal year outlining the scope
of the audit services proposed to be performed for the fiscal year and the fees
therefore, which plan must be formally accepted by the Audit Committee. For
non-audit services, Company management will submit to the Audit Committee for
approval from time-to-time during the fiscal year the list of non-audit services
that it recommends the Audit Committee engage the accounting firm to provide for
the current and subsequent fiscal years, together with a budget therefor.
Company management and the accounting firm will each confirm to the Audit
Committee that each non-audit service on the list is permissible under all
applicable legal requirements. The Audit Committee will approve both the list of
permissible non-audit services and the budget for such services. The Audit
Committee delegates to the Chair the authority to amend or modify the list of
approved permissible non-audit services and fees. The Chair will report action
taken to the Audit Committee at a subsequent Audit Committee meeting.
18
COMMON STOCK PERFORMANCE GRAPH
The following table compares total shareholder returns over the last five
years to the Standard & Poor's (the "S&P") 500 Index, the S&P 600 Small Cap
Industrial Machinery Index and the Russell 2000 Index assuming the value of the
investment in IDEX Common Stock and each index was $100 on December 31, 1998.
Total return values for IDEX Common Stock, the S&P 500 Index, S&P 600 Small Cap
Industrial Machinery Index and the Russell 2000 Index were calculated on
cumulative total return values assuming reinvestment of dividends. The
shareholder return shown on the graph below is not necessarily indicative of
future performance.
(PERFORMANCE GRAPH)
-------------------------------------------------------------------------------------
12/98 12/99 12/00 12/01 12/02 12/03
-------------------------------------------------------------------------------------
IDEX CORPORATION $100.00 $126.73 $140.75 $149.28 $143.94 $186.15
S&P 500 INDEX 100.00 121.04 110.02 96.96 75.54 97.19
S&P 600 SMALL CAP
INDUSTRIAL 100.00 114.12 110.41 118.21 113.17 154.09
RUSSELL 2000 INDEX 100.00 121.43 117.76 120.78 96.04 141.42
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and 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% shareholders are required by SEC 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 all
filing requirements applicable to its officers, directors and greater than 10%
shareholders were met during the year ended December 31, 2003.
PROPOSAL 2 -- APPROVAL OF AUDITORS
The Audit Committee has appointed Deloitte & Touche LLP as the Company's
independent auditors for 2004. Representatives of Deloitte & Touche LLP will
attend the Annual Meeting of Shareholders 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.
19
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 2004.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2005 ANNUAL MEETING
A shareholder desiring to submit a proposal for inclusion in the Company's
Proxy Statement for the 2005 Annual Meeting must deliver the proposal so that it
is received by the Company no later than October 29, 2004. 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 shareholder nominations
for directors and related information be received by the Secretary of the
Company not later than 60 days before the anniversary of the 2004 Annual Meeting
which, for the 2005 Annual Meeting, will be January 21, 2005.
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
February 27, 2004
Northbrook, Illinois
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2003, INCLUDING THE FINANCIAL STATEMENT SCHEDULES, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED BY SHAREHOLDERS WITHOUT
CHARGE BY SENDING A WRITTEN REQUEST THEREFOR TO DOMINIC A. ROMEO, VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER, IDEX CORPORATION, 630 DUNDEE ROAD, SUITE 400,
NORTHBROOK, ILLINOIS 60062.
20
APPENDIX A
IDEX CORPORATION
CHARTER OF AUDIT COMMITTEE
ORGANIZATION
The Audit Committee of IDEX Corporation (the "Company") shall have at least
three members, comprised solely of independent directors as such term is defined
by the New York Stock Exchange. The members of the Audit Committee shall also
satisfy any financial literacy requirements of the New York Stock Exchange. At
least one member of the Audit Committee shall have the accounting or related
financial management expertise as determined by the Board of Directors.
Committee members shall be appointed by the Board of Directors on the
recommendation of the Nominating and Corporate Governance Committee. Committee
members shall hold their offices for one year and until their successors are
elected and qualified, or until their earlier resignation or removal. All
vacancies in the Committee shall be filled by the Board. The Board shall
designate one of the members as Chairman of the Committee, and the Committee
shall keep a separate book of minutes of their proceedings and actions.
The Audit Committee shall meet at least six times each year, or more
frequently as circumstances dictate. To foster open communication, the Audit
Committee should meet at least annually with management and the internal audit
staff and the independent auditor in separate sessions. All meetings shall be at
the call of the Chairman of the Committee. A majority of the members of the
Committee shall constitute a quorum for the transaction of business.
The Committee may form one or more subcommittees, each of which may take
such actions as may be delegated by the Committee. The Committee shall
periodically report on its activities to the Board and make such recommendations
and findings as it deems appropriate. The Committee members shall perform an
annual evaluation of the Committee, as administered by the Nominating and
Corporate Governance Committee. The Committee has the authority to conduct any
investigation appropriate to fulfilling its responsibilities, and it has direct
access to the independent auditor as well as anyone in the organization. The
Committee may, in its sole discretion and at the Company's expense, retain and
terminate legal, accounting or other consultants or experts it deems necessary
in the performance of its duties and without having to seek the approval of the
Board.
PURPOSE
The Committee's primary duties and responsibilities shall be:
- To monitor the integrity of the Company's financial reporting process
and systems of internal controls regarding finance, accounting and
legal compliance.
- To monitor the independence and performance of the Company's
independent auditor and monitor the performance of the Company's
internal audit function.
- To hire and fire the Company's auditor and approve any audit and
non-audit work performed by the independent auditor.
- To provide an avenue of communication among the independent auditor,
management and the Board of Directors.
- To prepare the report that SEC rules require to be included in the
Company's annual proxy statement.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Committee to conduct general investigations or to assure compliance with
laws and regulations and the Company's compliance policies.
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RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually.
Submit this Charter to the Board for approval and have the document
published at least every three years in accordance with regulations
promulgated by the SEC and New York Stock Exchange rules.
2. Review the Company's annual audited financial statements and quarterly
financial statements prior to filing with the SEC or distribution to
stockholders and the public. Review should include discussion with
management and the independent auditor of significant issues regarding
accounting principles, practices and judgments, including the Company's
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations." Based on review and discussions,
recommend to the Board whether the Company's annual financial statements
should be filed with the SEC.
3. Discuss earnings press releases generally, including the use of "pro
forma" or "adjusted" non-GAAP presentations, as well as financial
information and earnings guidance provided to analysts and ratings
agencies.
Independent Auditor
1. Appoint and retain or replace the independent auditor (subject, if
applicable, to stockholder ratification), and approve all audit plans,
engagement fees and terms (including providing comfort letters in
connection with securities underwritings) and all significant non-audit
engagements with the independent auditor. The Audit Committee may
consult with management but shall not delegate these responsibilities.
Ensure the rotation of the lead audit partner as required by law and
consider whether to rotate the audit firm itself.
2. Establish and observe pre-approval policies and procedures for the
engagement of the independent auditor to provide permitted audit and
non-audit services.
3. On an annual basis, review, assess and discuss with the independent
auditor all relationships they have with the Company that could impair
the auditor's independence. Except to the extent permitted by applicable
law, the Company's independent auditor may not perform the following
services for the Company:
- accounting or bookkeeping services;
- internal audit services related to accounting controls, financial
systems or financial statements;
- financial information systems design implementation;
- broker, dealer, investment banking or investment adviser services;
- appraisal or valuation services;
- actuarial services;
- management services or human resource functions; and
- legal or other expert services.
4. Review the independent auditor's audit plan. Discuss scope, staffing,
locations, reliance upon management and general audit approach. Review
with the independent auditor any problems or difficulties the auditor
may have encountered in the conduct of the audit and resolve any
disagreements between the auditors and management.
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5. Develop and recommend to the Board objective policies for the Company's
hiring of employees or former employees of the independent auditor with
due regard for the continuing independence of such auditor.
6. Obtain and review a report by the independent auditor describing the
auditor's internal quality-control procedures and all material issues
raised by the most recent internal quality-control review, or peer
review of the firm, or by any inquiry or investigation by governmental
or professional authorities, within the preceding five years, respecting
one or more independent audits carried out by the firm, and all steps to
deal with such issues.
Financial Reporting Process
1. Discuss matters required to be communicated to audit committees in
accordance with Statement on Auditing Standards No. 61, including such
things as management judgments and accounting estimates, significant
changes in the Company's accounting practices, significant audit
adjustments, disagreements with management and difficulties encountered
in performing the audit.
2. Consider the independent auditor's judgments about the quality (not just
the acceptability) and appropriateness of the Company's accounting
principles as applied in financial accounting. Inquire as to the
independent auditor's views about whether management's choices of
accounting principles appear reasonable from the perspective of income,
asset and liability recognition, and whether those principles are common
practices or minority practices.
3. In consultation with management and the independent auditor, consider
the integrity of the Company's financial reporting processes and
controls, both external and internal. Discuss significant financial risk
exposures and the steps management has take to monitor, control and
report such exposures, including the Company's risk assessment and risk
management policies. Review significant findings prepared by the
independent auditor together with management's responses, including the
status of previous recommendations.
4. Review (a) the accounting treatment accorded significant transactions,
(b) any significant accounting issues, including any second opinions
sought by management on accounting issues, (c) the development,
selection and disclosure of critical accounting estimates and analyses
of the effects of alternative GAAP methods, regulatory and accounting
initiatives, and off-balance sheet structures on the financial
statements of the Company and (d) the Company's use of reserves and
accruals, as reported by management and the independent auditor.
Internal Controls and Legal Compliance
1. Review the budget, plan, changes in plan, activities, organizational
structure and qualifications of the director of the internal audit
department's office and internal audit group, as needed. Review
significant reports prepared by the director of the internal audit
department's office and internal audit group, together with management's
response and follow-up to these reports.
2. Review the appointment, performance and replacement of the director of
the internal audit department and any other senior personnel responsible
for financial reporting.
3. Evaluate whether management is setting the appropriate tone at the top
by communicating the importance of internal controls and evaluate
whether the appropriate individuals possess an understanding of their
roles and responsibilities with respect to internal controls.
4. Consider and review with management, the internal audit group and the
independent auditor the effectiveness or weakness of the Company's
internal controls. Develop in consultation with management a timetable
for implementing recommendations to correct identified weaknesses.
5. Review the coordination between the independent auditor and internal
auditor; the risk assessment processes, scopes and procedures of the
Company's internal audit work; whether such risk assessment processes,
scopes and procedures are adequate to attain the internal audit
objectives as determined by
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the Company's management and approved by the Committee; and the
standards for determining the quality and composition of the Company's
internal audit staff.
6. Review management's monitoring of the company's compliance with laws and
the Company's Code of Conduct and Business Ethics and ensure the
management has proper review systems in place to ensure that the
Company's financial statements, reports and other information
disseminated to governmental organizations, and the public, satisfy
legal requirements.
7. On at least an annual basis, review with the Company's general counsel
the Company's compliance with applicable laws and regulations, and
inquiries received from regulators on governmental agencies.
8. Establish and maintain procedures for (a) the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal controls and auditing matters and (b) the confidential and
anonymous submission by employees of the Company of concerns with
questionable accounting or auditing matters.
9. Request and obtain from the independent auditor assurance that Section
10A (audit requirements) of the Securities Exchange Act of 1934 has not
been implicated.
10. Request and receive reports on the design and implementation of
internal controls. Monitor significant changes in internal controls and
address any known weaknesses.
Miscellaneous
1. Annually prepare and cause to be filed in the Company's annual proxy
statement a report to stockholders as required by the SEC.
2. The Audit Committee may perform any other activities consistent with
this Charter, the Company's Bylaws and governing law, as the Audit
Committee deems appropriate or necessary.
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P R O X Y
DETACH HERE
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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, MICHAEL T. TOKARZ 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 17, 2004, at the Annual Meeting of shareholders to be held on March
23, 2004, or at any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
DETACH HERE
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(Continued from the other side)
(1) Election of Directors -- Class III. Nominees: Paul E. Raether, Neil A.
Springer, and Dennis K. Williams
/ / FOR / / WITHHOLD
(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.
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.
DATED: ________________________ , 2004
______________________________________
SIGNATURE
______________________________________
SIGNATURE IF HELD JOINTLY
PLEASE SIGN EXACTLY AS NAME APPEARS
ABOVE. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNED
AS ATTORNEY, AS 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.