DEF 14A of Danaher Corp /De/
Filed Mar 30, 2022 · FY20210001308179-22-000139
ATTENDING THE MEETING
| PROXY STATEMENT SUMMARY | 04 | | PROPOSAL 1 – ELECTION OF DIRECTORS OF DANAHER | 13 | | CORPORATE GOVERNANCE | 20 | | DIRECTOR COMPENSATION | 28 | | DIRECTOR INDEPENDENCE AND RELATED PERSON TRANSACTIONS | 31 | | BENEFICIAL OWNERSHIP OF DANAHER COMMON STOCK BY DIRECTORS, OFFICERS AND PRINCIPAL SHAREHOLDERS | 33 | | PROPOSAL 2 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 35 | | AUDIT COMMITTEE REPORT | 37 | | COMPENSATION DISCUSSION AND ANALYSIS | 38 | | COMPENSATION COMMITTEE REPORT | 52 | | COMPENSATION TABLES AND INFORMATION | 53 | | SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS | 66 | | PROPOSAL 3 – ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION | 72 | | PROPOSAL 4 – SHAREHOLDER PROPOSAL REQUESTING THAT DANAHER AMEND ITS GOVERNING DOCUMENTS TO REDUCE PERCENTAGE OF SHARES REQUIRED FOR SHAREHOLDERS TO CALL SPECIAL MEETING OF SHAREHOLDERS FROM 25% TO 10% | 74 | | GENERAL INFORMATION ABOUT THE ANNUAL MEETING | 76 | | OTHER INFORMATION | 80 | | APPENDIX A RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | 82 |
PROXY STATEMENT SUMMARY
| Name and Principal Position | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | | Rainer M. Blair President and CEO | 1,200,000 | 0 | 5,124,383 | 6,260,494 | 4,128,000 | 0 | 439,390 | 17,152,267 | | Matthew R. McGrew, Executive Vice President and CFO | 798,600 | 0 | 1,537,702 | 1,877,996 | 1,697,025 | 0 | 188,184 | 6,099,507 | | Jennifer L. Honeycutt, Executive Vice President | 750,000 | 0 | 1,313,474 | 1,603,093 | 1,537,500 | 0 | 155,641 | 5,359,708 | | Joakim Weidemanis, Executive Vice President | 936,000 | | 2,049,947 | 2,504,501 | 1,965,600 | 0 | 157,966 | 7,614,014 | | Angela S. Lalor, Senior Vice President-Human Resources | 763,515 | 800,000 | 1,168,499 | 1,427,672 | 1,510,232 | 0 | 156,995 | 5,826,913 |
PROPOSAL 1 Election of Directors
PROPOSAL 1 Election of Directors We are seeking your support for the election of the thirteen candidates whom the Board has nominated to serve on the Board of Directors (each of whom currently serves as a director of the Company), to serve until the 2023 Annual Meeting of shareholders and until his or her successor is duly elected and qualified. We believe the nominees set forth below have qualifications consistent with our position as a large, global and diversified science and technology company. We also believe these nominees have the experience and perspective to guide Danaher as we seek to expand our business in high-growth geographies and high-growth market segments, identify, consummate and integrate appropriate acquisitions, develop innovative and differentiated new products and services, adjust to rapidly changing technologies, business cycles and competition and address the demands of an increasingly regulated environment. Set forth below is biographical information regarding each candidate as of March 11, 2022. Proxies cannot be voted for a greater number of persons than the thirteen nominees named in this Proxy Statement. In the event a nominee declines or is unable to serve, the proxies may be voted in the discretion of the proxy holders for a substitute nominee designated by the Board, or the Board may reduce the number of directors to be elected. We know of no reason why this will occur. Director Nominees
PROPOSAL 1 Election of Directors
| RAINER M. BLAIR | | | | Age 57 Director since: 2020 CHIEF EXECUTIVE OFFICER Committees: • Executive • Finance • Science & Technology Other Public Directorships: • None | Mr. Blair has served as Danaher’s President and Chief Executive Officer since September 2020. Since joining Danaher in 2010, Mr. Blair has served in a series of progressively more responsible general management positions (and as a Danaher officer since 2014), including as Vice President - Group Executive from March 2014 until January 2017 and as Executive Vice President from January 2017 until September 2020. His broad operating and functional experience across diverse end-markets and geographies, in-depth knowledge of Danaher’s businesses and of the Danaher Business System and leadership experience from his service in the U.S. Army are particularly valuable to the Board given the global, diverse nature of Danaher’s portfolio. In addition, Mr. Blair adds deep multi-cultural experience having lived and worked on three continents. | | | | SKILLS AND QUALIFICATIONS: | | | | • Global/international | • M&A | | | • Life sciences | • Public company CEO and/or President | | | • Product innovation | |
PROPOSAL 1 Election of Directors
| LINDA FILLER | | | | Age 62 Director since: 2005 INDEPENDENT Committees: • Nominating & Governance (Chair) • Science & Technology Other Public Directorships: • None | Ms. Filler retired as President of Retail Products, Chief Marketing Officer and Chief Merchandising Officer at Walgreen Co., a retail pharmacy company, in April 2017. Prior to Walgreen Co., Ms. Filler served as President, North America of Claire’s Stores, Inc., a specialty retailer, and in Executive Vice President roles at Walmart Inc., a retail and wholesale operations company, and at Kraft Foods, Inc., a food and beverage manufacturing and processing company. Prior to Kraft Foods, Inc., Ms. Filler served for a number of years at Hanesbrands Inc., a multinational clothing company, including Chief Executive Officer roles for its largest branded apparel businesses. Ms. Filler has served in senior management roles with leading retail and consumer goods companies, with general management responsibilities and responsibilities in the areas of marketing, branding and merchandising. Understanding and responding to the needs of our customers is fundamental to Danaher’s business strategy, and Ms. Filler’s keen marketing and branding insights have been a valuable resource to Danaher’s Board. Her prior leadership experiences with large public companies have given her valuable perspective for matters of global portfolio strategy and capital allocation as well as global business practices. | | | | SKILLS AND QUALIFICATIONS: | | | | • Global/international | • Public company CEO and/or President | | | • Product innovation | • Branding/marketing | | | • M&A | |
PROPOSAL 1 Election of Directors
| TERI LIST | | | | Age 59 Director since: 2011 INDEPENDENT Committees: • Audit • Compensation Other Public Directorships: • Microsoft Corporation • Oscar Health, Inc. • DoubleVerify Holdings, Inc. | Ms. List served as Executive Vice President and Chief Financial Officer of Gap Inc., a global clothing retailer, from January 2017 until March 2020. Prior to joining Gap, she served as Executive Vice President and Chief Financial Officer of Dick’s Sporting Goods, Inc., a sporting goods retailer, from August 2015 to August 2016, and with Kraft Foods Group, Inc., a food and beverage company, as Advisor from March 2015 to May 2015, as Executive Vice President and Chief Financial Officer from December 2013 to February 2015 and as Senior Vice President of Finance from September 2013 to December 2013. From 1994 to September 2013, Ms. List served in a series of progressively more responsible positions in the accounting and finance organization of The Procter & Gamble Company, a consumer goods company, most recently as Senior Vice President and Treasurer. Prior to joining Procter & Gamble, Ms. List was employed by the accounting firm of Deloitte & Touche for almost ten years. Ms. List’s experience dealing with complex finance and accounting matters for Gap, Dick’s, Kraft and Procter & Gamble have given her an appreciation for and understanding of the similarly complex finance and accounting matters that Danaher faces. In addition, through her leadership roles with large, global companies she has insight into the business practices that are critical to the success of a large, growing public company such as Danaher. | | | | SKILLS AND QUALIFICATIONS: | | | | • Global/international | • Accounting | | | • Digital technology | • Finance | | | • M&A | |
PROPOSAL 1 Election of Directors
| WALTER G. LOHR, JR. | | | | Age 78 Director since: 1983 INDEPENDENT Committees: • Audit • Compensation • Finance • Nominating & Governance Other Public Directorships: • None | Mr. Lohr was a partner of Hogan Lovells, a global law firm, until retiring in June 2012, and has also served on the boards of private and non-profit organizations. Prior to his tenure at Hogan Lovells, Mr. Lohr served as assistant attorney general for the State of Maryland. He has extensive experience advising companies in a broad range of transactional matters, including mergers and acquisitions, contests for corporate control and securities offerings. His extensive knowledge of the legal strategies, issues and dynamics that pertain to mergers and acquisitions and capital raising has been a critical resource for Danaher given the importance of its acquisition program. | | | | SKILLS AND QUALIFICATIONS: | | | | • M&A | • Government, legal or regulatory |
PROPOSAL 1 Election of Directors
| JESSICA L. MEGA, MD, MPH | | | | Age 47 Director since: 2019 INDEPENDENT Committees: • Science & Technology Other Public Directorships: • None | Dr. Mega has served as Chief Medical and Scientific Officer at Verily Life Sciences LLC, a subsidiary of Alphabet Inc. focused on life sciences and healthcare, since March 2015. Prior to joining Verily, she served as Cardiologist and Senior Investigator at Brigham & Women’s Hospital from 2008 to March 2015. Dr. Mega has also served as a faculty member at Harvard Medical School and a senior investigator with the TIMI Study Group, where she helped lead international trials evaluating novel cardiovascular therapies and directed the genetics program. Dr. Mega oversees Verily’s clinical and science efforts, focusing on translating technological innovations and scientific insights into partnerships and programs that improve patient outcomes. Dr. Mega’s clinical background and experience re-imagining how clinical trial data is collected and analyzed offer valuable insights for Danaher, given our strategic focus on life sciences and healthcare applications. | | | | SKILLS AND QUALIFICATIONS: | | | | • Life sciences | • Government, legal or regulatory | | | • Health care management | | | | • Digital technology | |
PROPOSAL 1 Election of Directors
| MITCHELL P. RALES | | | | Age 65 Director since: 1983 CHAIRMAN OF THE EXECUTIVE COMMITTEE Committees: • Executive (Chair) • Finance (Chair) Other Public Directorships: • Colfax Corporation | Mr. Rales is a co-founder of Danaher and has served as Chairman of the Executive Committee of Danaher since 1984. He was also President of the Company from 1984 to 1990. Mr. Rales is a brother of Steven M. Rales. The strategic vision and leadership of Mr. Rales and his brother, Steven Rales, helped create the Danaher Business System and have guided Danaher down a path of consistent, profitable growth that continues today. In addition, as a result of his substantial ownership stake in Danaher, he is well-positioned to understand, articulate and advocate for the rights and interests of the Company’s shareholders. | | | | SKILLS AND QUALIFICATIONS: | | | | • Global/international | • Public company CEO and/or President | | | • M&A | • Finance |
PROPOSAL 1 Election of Directors
| STEVEN M. RALES | | | | Age 70 Director since: 1983 CHAIRMAN OF THE BOARD Committees: • Executive • Finance • Science & Technology Other Public Directorships: • None | Mr. Rales is a co-founder of Danaher and has served as Danaher’s Chairman of the Board since 1984. He was also CEO of the Company from 1984 to 1990. Mr. Rales is a brother of Mitchell P. Rales. The strategic vision and leadership of Mr. Rales and his brother, Mitchell Rales, helped create the Danaher Business System and have guided Danaher down a path of consistent, profitable growth that continues today. In addition, as a result of his substantial ownership stake in Danaher, he is well-positioned to understand, articulate and advocate for the rights and interests of the Company’s shareholders. | | | | SKILLS AND QUALIFICATIONS: | | | | • Global/international | • Public company CEO and/or President | | | • M&A | • Finance |
PROPOSAL 1 Election of Directors
| PARDIS C. SABETI, MD, D.PHIL | | | | Age 46 Director since: 2019 INDEPENDENT Committees: • Science & Technology Other Public Directorships: • None | Dr. Sabeti has served as an Investigator for the Howard Hughes Medical Institute (“HHMI”), a non-profit medical research organization, since November 2015. Dr. Sabeti is a professor at the Center for Systems Biology and the Department of Organismic and Evolutionary Biology at Harvard University and the Department of Immunology and Infectious Disease at Harvard T.H. Chan School of Public Health. She is an Institute Member of the Broad Institute of MIT and Harvard. Dr. Sabeti is a computational geneticist with expertise developing new experimental technologies and computational algorithms to investigate the genomes of humans and infectious microbes. Her expertise in infectious disease research offers significant value to Danaher as we seek to develop research tools for use in determining the causes of disease, identification of new therapies and testing of new drugs and vaccines. | | | | SKILLS AND QUALIFICATIONS: | | | | • Life sciences | • Digital technology | | | • Diagnostics | |
PROPOSAL 1 Election of Directors
| A. SHANE SANDERS | | | | Age 59 Director since: 2021 INDEPENDENT Committees: • Audit Other Public Directorships: • None | Mr. Sanders has served as Senior Vice President of Business Transformation at Verizon Communications Inc., a telecommunications company, since March 2020. He has served in a series of progressively more responsible leadership positions since joining Verizon in 1997, including as Senior Vice President of Corporate Finance from 2015 to March 2020. Prior to joining Verizon, Mr. Sanders served in various finance roles at Hallmark Cards, Inc., a retailer of greeting cards and gifts, and Safelite Group, Inc., a provider of vehicle glass repair, and began his career at Grant Thornton, an audit, tax and advisory firm, in 1984. Mr. Sanders’ leadership experiences in Verizon’s accounting and finance organization have spanned a range of functional areas, including financial planning and analysis, risk management, audit and public reporting and compliance. His broad and deep experience in a large, dynamic organization give him a keen understanding of the range of finance and accounting matters and judgments Danaher encounters. In addition, his business transformation experience offers valuable perspectives as Danaher continues to grow and evolve its portfolio of businesses. Mr. Sanders was originally proposed to the Nominating & Governance Committee for election as a director by one of the Company’s independent directors. | | | | SKILLS AND QUALIFICATIONS: | | | | • Global/international | • Finance | | | • M&A | • Digital technology | | | • Accounting | |
PROPOSAL 1 Election of Directors
| JOHN T. SCHWIETERS | | | | Age 82 Director since: 2003 INDEPENDENT Committees: • Audit (Chair) • Nominating & Governance Other Public Directorships: • None | Mr. Schwieters has served as Principal of Perseus TDC, a real estate investment and development firm, since July 2013. He also served as a Senior Executive of Perseus, LLC, a merchant bank and private equity fund management company, from May 2012 to June 2016 and as Senior Advisor from March 2009 to May 2012. In addition to his roles with Perseus, Mr. Schwieters led the Mid-Atlantic region of one of the world’s largest accounting firms after previously leading that firm’s tax practice in the Mid-Atlantic region, and has served on the boards and chaired the audit committees of several NYSE-listed public companies. He brings to Danaher extensive knowledge and experience in the areas of public accounting, tax accounting and finance, which are areas of critical importance to Danaher as a large, global and complex public company. | | | | SKILLS AND QUALIFICATIONS: | | | | • M&A | • Finance | | | • Accounting | |
PROPOSAL 1 Election of Directors
| ALAN G. SPOON | | | | Age 70 Director since: 1999 INDEPENDENT Committees: • Compensation (Chair) Other Public Directorships: • Fortive Corporation • IAC/ InterActiveCorp. • Match Group, Inc. | Mr. Spoon served as Partner Emeritus of Polaris Partners from January 2016 to June 2018, Managing General Partner from 2000 to 2010 and Partner from 2000 to 2018. Within the past five years, Mr. Spoon served on the board of directors of Cable One, Inc. In addition to his leadership roles at Polaris Partners, Mr. Spoon has previously served as president, chief operating officer and chief financial officer of one of the country’s largest, publicly-traded education and media companies, and has served on the boards of numerous public and private companies. His public company leadership experience gives him insight into business strategy, leadership and executive compensation and his public company and private equity experience give him insight into technology and life science trends, acquisition strategy and financing, each of which represents an area of key strategic opportunity for the Company. | | | | SKILLS AND QUALIFICATIONS: | | | | • Product innovation | • Public company CEO and/or President | | | • Digital technology | • Finance | | | • M&A | |
PROPOSAL 1 Election of Directors
| RAYMOND C. STEVENS, PH.D. | | | | Age 58 Director since: 2017 INDEPENDENT Committees: • Science & Technology Other Public Directorships: • None | Professor Stevens has served as Chief Executive Officer of ShouTi, a biotechnology company, since May 2019. He also served as Provost Professor of Biological Sciences and Chemistry, and Director of The Bridge Institute, at the University of Southern California, a private research university, from July 2014 to August 2021. From 1999 until July 2014, he served as Professor of Molecular Biology and Chemistry with The Scripps Research Institute, a non-profit research organization. Professor Stevens has also launched multiple biotechnology companies focused on drug discovery. Professor Stevens is considered among the world’s most influential biomedical scientists in molecular research. A pioneer in human cellular behavior research, he has been involved in the creation of therapeutic molecules that led to breakthrough drugs aimed at curing influenza, childhood diseases, neuromuscular disorders and diabetes. Professor Stevens’ insights in the area of molecular research, as well as his experience bringing industry and academia together to advance drug development, are highly beneficial to Danaher given our strategic focus on the development of research tools used to understand the causes of disease, identify new therapies and test new drugs and vaccines. His extensive experience living and working in China is also valuable to Danaher given China’s strategic significance to our business. | | | | SKILLS AND QUALIFICATIONS: | | | | • Global/international | • Product innovation | | | • Life sciences | |
PROPOSAL 1 Election of Directors
| ELIAS A. ZERHOUNI, MD | | | | Age 70 Director since: 2009 INDEPENDENT Committees: • Nominating & Governance • Science & Technology (Chair) Other Public Directorships: • None | Dr. Zerhouni served as President, Global Research & Development, for Sanofi S.A., a global pharmaceutical company, from 2011 to June 2018. From 2008 until 2011, he provided advisory and consulting services to various non-profit and other organizations as Chairman and President of Zerhouni Holdings. From 2002 to 2008, Dr. Zerhouni served as director of the National Institutes of Health, and from 1996 to 2002, he served as Chair of the Russell H. Morgan Department of Radiology and Radiological Sciences, Vice Dean for Research and Executive Vice Dean of the Johns Hopkins School of Medicine. Dr. Zerhouni, a physician, scientist and world-renowned leader in radiology research, is widely viewed as one of the leading authorities in the United States on emerging trends and issues in medicine and medical care. These insights, as well as his deep, technical knowledge of the research and clinical applications of medical technologies, are of considerable importance given Danaher’s strategic focus in the medical technologies markets. Dr. Zerhouni’s government experience also gives him a strong understanding of how government agencies work, and his experience growing up in North Africa, together with the global nature of the issues he faced at NIH and his role at France-based Sanofi, give him a global perspective that is valuable to Danaher. | | | | SKILLS AND QUALIFICATIONS: | | | | • Global/international | • Health care management | | | • Life sciences | • Government, legal or regulatory | | | • Diagnostics | |
PROPOSAL 1 Election of Directors
| THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOREGOING NOMINEES. |
PROPOSAL 1 Election of Directors
Board Selection and Refreshment Director Selection The Board and its Nominating and Governance Committee believe that it is important that our directors demonstrate:
PROPOSAL 1 Election of Directors
| • | personal and professional integrity and character; | | • | prominence and reputation in the director’s profession; | | • | skills, expertise and background (including business or other relevant experience) that in aggregate are useful and appropriate in overseeing and providing strategic direction with respect to Danaher’s business and serving the long-term interests of Danaher’s shareholders; | | • | the capacity and desire to represent the interests of the shareholders as a whole; and | | • | availability to devote sufficient time to the affairs of Danaher. |
PROPOSAL 1 Election of Directors
The Nominating and Governance Committee is responsible for recommending to the Board a slate of nominees for election at each annual meeting of shareholders. Nominees may be suggested by directors, members of management, shareholders or by a third-party search firm engaged by the Committee. The Committee considers a wide range of factors when assessing potential director nominees. This includes consideration of the current composition of the Board, any perceived need for one or more particular areas of expertise, the balance of management and independent directors, the need for committee-specific expertise, evaluations of other prospective nominees and the qualifications of each potential nominee relative to the attributes, skills and experience described above. The Board does not have a formal or informal policy with respect to diversity but believes that the Board, taken as a whole, should embody a diverse set of skills, knowledge, experiences and backgrounds appropriate in light of the Company’s needs, and in this regard also subjectively takes into consideration the diversity (including with respect to age, race, gender and national origin) of the Board when considering director nominees. When Danaher recruits a director candidate, either a search firm engaged by the Committee or a member of the Board contacts the prospect to assess interest and availability. The candidate will then meet with members of the Board and at the same time, the Committee with the support of the search firm will conduct such further inquiries as the Committee deems appropriate. A background check is completed before a final recommendation is made to appoint a candidate to the Board. A shareholder who wishes to recommend a prospective nominee for the Board should notify the Nominating and Governance Committee in writing using the procedures described below under “Other Information – Communications with the Board of Directors” with whatever supporting material the shareholder considers appropriate. If a prospective nominee has been identified other than in connection with a director search process initiated by the Committee, an initial determination is made as to whether to conduct a full evaluation of the candidate based primarily on whether a new or additional Board member is necessary or appropriate at such time, the likelihood that the prospective nominee can satisfy the evaluation factors described above, any additional inquiries the Committee may, in its discretion, conduct and any other factors the Committee may deem appropriate. The graph below illustrates the diverse set of skills, expertise and backgrounds represented on our Board:
CORPORATE GOVERNANCE
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | Option Awards ($)(1)(2) | Total ($) | | Linda Filler(3) | 0 | 284,644 | 92,404 | 377,048 | | Teri List(3) | 0 | 220,644 | 92,404 | 313,048 | | Walter G. Lohr, Jr. | 167,000 | 91,644 | 92,404 | 351,048 | | Jessica L. Mega, MD, MPH | 125,000 | 91,644 | 92,404 | 309,048 | | Pardis C. Sabeti, MD, D. Phil.(3) | 0 | 216,644 | 92,404 | 309,048 | | A. Shane Sanders (4) | 0 | 171,658 | 92,404 | 264,062 | | John T. Schwieters | 162,000 | 91,644 | 92,404 | 346,048 | | Alan G. Spoon(3) | 0 | 236,644 | 92,404 | 329,048 | | Raymond C. Stevens, Ph.D.(3) | 0 | 216,644 | 92,404 | 309,048 | | Elias A. Zerhouni, MD(3) | 0 | 244,644 | 92,404 | 337,048 |
CORPORATE GOVERNANCE
| The amounts reflected in these columns represent the aggregate grant date fair value of the applicable award computed in accordance with FASB ASC Topic 718. With respect to stock awards, the grant date fair value under FASB ASC Topic 718 is calculated based on the number of shares of Common Stock underlying the award, times the closing price of the Danaher Common Stock on the date of grant (but discounted to account for the fact that RSUs do not accrue dividend rights prior to vesting and distribution). With respect to stock options, the grant date fair value under FASB ASC Topic 718 has been calculated using the Black-Scholes option pricing model, based on the following assumptions (and assuming no forfeitures): a 7.5 year option life; a risk-free interest rate of 1.37%; a stock price volatility rate of 26.07%; and a dividend yield of 0.33% per share.(1) | | The table below sets forth as to each non-management director the aggregate number of unvested RSUs and aggregate number of stock options outstanding as of December 31, 2021. All of the stock options set forth in the table below are fully vested. The RSUs set forth in the table below vest in accordance with the terms described above.(2) |
CORPORATE GOVERNANCE
| Name of Director | Aggregate Number of Danaher Stock Options Owned as of December 31, 2021(#) | Aggregate Number of Unvested Danaher RSUs Owned as of December 31, 2021(#) | | Linda Filler | 20,558 | 365 | | Teri List | 24,048 | 365 | | Walter G. Lohr, Jr. | 28,596 | 365 | | Jessica L. Mega, MD, MPH | 3,876 | 365 | | Pardis C. Sabeti, MD, D. Phil. | 3,876 | 365 | | A. Shane Sanders | 1,216 | 365 | | John T. Schwieters | 28,596 | 365 | | Alan G. Spoon | 24,048 | 365 | | Raymond C. Stevens, Ph.D. | 11,216 | 365 | | Elias A. Zerhouni, MD. | 24,048 | 365 |
CORPORATE GOVERNANCE
| Each of Mss. Filler and List, Messrs. Sanders and Spoon, Professor Stevens and Drs. Zerhouni and Sabeti deferred 100% of his or her 2021 cash director fees into phantom shares of Danaher Common Stock under the Non-Employee Directors’ Deferred Compensation Plan. Since these phantom shares are accounted for under FASB ASC Topic 718, they are reported under the “Stock Awards” column in the table above.(3) |
CORPORATE GOVERNANCE
| Name of Director | 2021 Phantom Shares Received Under Deferred Compensation Plan(#) | | Linda Filler | 678 | | Teri List | 453 | | Pardis C. Sabeti, MD, D. Phil. | 439 | | A. Shane Sanders | 270 | | Alan G. Spoon | 509 | | Raymond C. Stevens, Ph.D. | 439 | | Elias A. Zerhouni, MD. | 538 |
CORPORATE GOVERNANCE
| Mr. Sanders was appointed to the Board in May 2021.(4) |
COMPENSATION DISCUSSION AND ANALYSIS
To achieve these objectives our compensation program combines annual and long-term components, cash and equity, and fixed and variable elements, with a bias toward long-term equity awards tied closely to shareholder returns and subject to significant vesting and/or holding periods. Our executive compensation program rewards our executive officers when they help increase long-term shareholder value, achieve annual business goals and build long-term careers with Danaher. The science and technology markets in which we operate are competitive, with demand sometimes exceeding the supply of talent, resulting in significant increases in compensation paid by the companies with whom we compete for this talent. The same conditions exist in the market for executive-level talent that can provide innovative leadership while managing at a global scale across multiple complex businesses. These trends require us to regularly and proactively assess our executive compensation program to ensure it remains competitive in light of market conditions. Key Recent Changes to Executive Compensation Program Danaher’s Compensation Committee regularly reviews our executive compensation program with a view toward continuous improvement and consideration of investor feedback. In recent years, the Committee has enhanced the program to reinforce the already-strong linkages (1) between pay and performance, (2) between the interests of our shareholders and the interests of our executive officers, and (3) between the Company’s strategic plan and executive compensation program. These improvements have included the introduction of a core revenue growth performance metric in our executive short-term incentive compensation program; and the replacement of time-vested restricted stock units with performance stock units, resulting in an annual executive long-term incentive compensation program that is entirely performance-based. The Committee has enhanced our executive compensation program over the last several years to reinforce our performance-oriented culture and expects to continue to improve the program as appropriate, but also believes that consistent use of best-practice designs is important in effectively communicating key messages to our executives. As a result, the Committee does not revise the program to align with emerging trends unless it sees a clear business rationale for Danaher. 2021 Say-On-Pay Vote We provide our shareholders the opportunity to cast an annual advisory vote with respect to our NEO compensation as disclosed in our annual proxy statement (the “say on pay proposal”). At our annual meeting of shareholders in May 2021, 95% of the votes cast on the say on pay proposal were voted in favor of the proposal. The Committee believes this result affirms shareholders’ support of the Company’s NEO compensation and did not make changes to the Company’s executive compensation program as a result of such vote. 2021 Executive Compensation The chart below summarizes key information with respect to each pay element represented in Danaher’s 2021 executive compensation program:
COMPENSATION DISCUSSION AND ANALYSIS
| Pay Element | Primary Objectives | Form | Performance Requirement | Key Committee Considerations in Determining 2021 Compensation | | Long-Term Incentive Compensation (Equity) | • Attract, retain and motivate skilled executives • Align the interests of management and shareholders by ensuring that realized compensation is: • in the case of stock options, commensurate with long-term changes in share price; and • in the case of PSUs, tied to (1) long-term changes in share price at all performance levels, and (2) attainment of relative TSR and average ROIC performance goals. | Stock options (50%) | • 5-year, time-based vesting schedule • Options only have/increase in value if Danaher stock price increases | • This pay element represented the most significant component of compensation for each NEO for 2021. • This pay element has the heaviest weighting of all our executive compensation program elements because it best supports our retention and motivation objectives and aligns the interests of our executives and shareholders. • From time to time, we also grant time-vested restricted stock units to executive officers, such as in connection with new hires or promotions or to address retention requirements. | | | | Performance stock units (PSUs) (50%) | • 3-year relative TSR and average ROIC performance • 2-year holding period (incremental to 3-year performance period) | |
COMPENSATION DISCUSSION AND ANALYSIS
| Annual Cash Incentive Compensation | • Motivate executives to achieve near-term operational and financial goals that support our long-term business objectives and strategic priorities • Attract, retain and motivate skilled executives • Allow for meaningful pay differentiation tied to annual performance of individuals and groups | Cash | Company Payout Percentage (60%) | | Adjusted EPS(1) (60%) Adjusted Free Cash Flow-to-Adjusted Net Income Ratio(1) (20%) Core Revenue Growth Including Cytiva(1) (20%) | This pay element represented the second-most significant component of compensation for each NEO for 2021. Its focus on near-term performance and the cash nature of the award complements the longer-term, equity-based compensation elements of our program. | | | | | Personal Payout Percentage (40%) | | | | | Fixed Annual Compensation | • Provide sufficient fixed compensation to (1) allow a reasonable standard of living relative to peers, and (2) mitigate incentive to pursue inappropriate risk-taking to maximize variable pay | Cash | N/A | | | • Base salary should be sufficient to avoid competitive disadvantage while facilitating a sustainable fixed cost structure. • We also periodically use fixed cash bonuses for recruitment and retention purposes to attract and retain high-performing executives. |
COMPENSATION DISCUSSION AND ANALYSIS
| WHAT WE DO | | WHAT WE DON’T DO | | | | Five-year vesting requirement for stock options; three-year performance period plus further two-year holding period for PSUs | | No tax gross-up provisions (except as applicable to management employees generally such as relocation policy) | | | Incentive compensation programs feature multiple, different performance measures aligned with the Company’s strategic performance metrics | | No dividend/dividend equivalents paid on unvested equity awards | | | Short-term and long-term performance metrics that balance our absolute performance and our relative performance versus peer companies | | No “single trigger” change of control benefits | | | Rigorous, no-fault clawback policy that is triggered even in the absence of wrongdoing | | No active defined benefit pension program since 2003 | | | Minimum one-year vesting requirement for 95% of shares granted under the Company’s stock plan | | No hedging of Danaher securities permitted | | | Stock ownership requirements for all executive officers | | No long-term incentive compensation is denominated or paid in cash (other than PSU dividend accruals) | | | Limited perquisites and a cap on CEO/CFO personal aircraft usage | | No above-market returns on deferred compensation plans | | | Independent compensation consultant that performs no other services for the Company | | No overlapping performance metrics between short-term and long-term incentive compensation programs |
COMPENSATION DISCUSSION AND ANALYSIS
| ATTRIBUTE | KEY RISK MITIGATING EFFECT | | • Emphasis on long-term, equity-based compensation • Five-year vesting requirement for stock options, and three-year performance period plus further two-year mandatory holding period for PSUs • Rigorous, no-fault clawback policy that is triggered even in the absence of wrongdoing | • Discourages risk-taking that produces short-term results at the expense of building long-term shareholder value • Helps ensure executives realize their compensation over a time horizon consistent with achieving long-term shareholder value • Helps deter inappropriate actions and decisions that could harm Danaher and its key stakeholders | | • Incentive compensation programs feature multiple, complementary performance measures aligned with business strategy | • Mitigates incentive to over-perform with respect to any particular metric at the expense of other metrics | | • Cap on annual cash incentive compensation plan payments and on number of shares that may be earned under equity awards | • Mitigates incentive to over-perform with respect to any particular performance period at the expense of future periods | | • Stock ownership requirements for all executive officers • No hedging of Danaher securities permitted | • Aligns executives’ economic interests with the long-term interests of our shareholders | | • Annual cash incentive compensation awards are subject to Compensation Committee discretion | • Mitigates risks associated with a strictly formulaic program, which could unintentionally incentivize an undue focus on certain performance metrics or encourage imprudent risk taking | | • Independent compensation consultant | • Helps ensure advice will not be influenced by conflicts of interest |
COMPENSATION DISCUSSION AND ANALYSIS
In determining Mr. Blair’s annual equity compensation in February 2021, the Committee considered in particular Mr. Blair’s effective leadership during the pandemic; the Company’s strong financial and operational performance during his tenure; and his progress in further enhancing the Company’s strategy development processes and strategic direction. Equity Award Mix With respect to each of the NEO 2021 annual equity awards, one-half of the target award value was delivered as stock options and one-half as PSUs (please see “Grants of Plan-Based Awards” table for the grant date fair value of the awards granted to each NEO). The Committee believes that the combination of stock options and PSUs effectively balances the goals of incentivizing and rewarding shareholder value creation while supporting our talent retention objectives:
COMPENSATION DISCUSSION AND ANALYSIS
| • | Stock options and PSUs inherently incentivize shareholder value creation, since option holders realize no value unless our stock price rises after the option grant date and the value of PSUs is tied directly to the Company’s relative TSR performance. | | • | Our 2021 NEO stock options vest over five years and our 2021 NEO PSUs are subject to a three-year performance period and a further two-year holding period. In aggregate, these periods promote stability and encourage officers to take a long-term view of our performance. |
COMPENSATION DISCUSSION AND ANALYSIS
| • | Effective in 2022, the Committee has shortened the vesting period for executive stock options to four years. The Committee continually assesses the effectiveness of our executive compensation program, and concluded that a four-year vesting period for stock options now most effectively balances (1) retention considerations in an increasingly competitive market for executive talent, and (2) the traditional, long-term focus of our executive compensation program. | | • | The Committee believes our stock option award program in particular has contributed significantly to our strong performance record, which in turn has generally made our stock option awards valuable over the long-term and highly effective in recruiting, motivating and retaining highly-skilled officers. |
COMPENSATION DISCUSSION AND ANALYSIS
PSU Performance Criteria The executive officer PSUs granted in 2021 are subject to two performance criteria:
RELATIVE TSR
RELATIVE TSR The number of shares of Common Stock that vest pursuant to the PSU award is based primarily on the Company’s total shareholder return (TSR) ranking relative to the S&P 500 Index over an approximately three-year performance period. The Committee established threshold, target and maximum relative TSR performance levels and established a payout percentage curve that relates each level of performance to a payout expressed as a percentage of the target PSUs, as illustrated in the table below:
RELATIVE TSR
| Performance Level (Relative TSR Rank Within S&P 500 Index) | Payout Percentage | | Below 35(th)percentile | 0% | | 35(th)percentile | 50% | | 55(th)percentile | 100% | | 75(th)percentile or above | 200% |
RELATIVE TSR
The payout percentages for performance between the performance levels indicated above are determined by linear interpolation. The Committee selected the S&P 500 Index as the relative TSR comparator group because the index consists of a broad and stable group of companies that represents investors’ alternative capital investment opportunities, reinforcing the linkage between our executive compensation program and the long-term interests of our shareholders.
ROIC
Notwithstanding the above, if the Company’s absolute TSR performance for the period is negative no more than 100% of the target PSUs will vest (regardless of how strong the Company’s performance is on a relative basis), and if the Company’s absolute TSR performance for the period is positive, a minimum of 25% of the target PSUs will vest.
VESTING AND HOLDING PERIOD
| Executive Officer | Target Bonus Percentage | 2021 Personal Performance Objectives | | Rainer M. Blair President and Chief Executive Officer | 200% | The personal performance objectives for Mr. Blair consisted of the degree of Danaher’s 2021 core revenue growth, operating profit margin expansion, free cash flow growth and earnings per share growth; goals with respect to the Company’s associate diversity representation objectives; and qualitative goals related to talent development and succession planning; strengthening of the Company’s strategy development processes and execution with respect thereto; strengthening the Company’s innovation capabilities, science and technology organization and culture and early-stage investment program and execution; and capital allocation and deployment. | | Matthew R. McGrew Executive Vice President and CFO | 125% | Consisted of the degree of Danaher’s 2021 core revenue growth, operating profit margin expansion, earnings per share growth and free cash flow growth; goals with respect to the Company’s associate diversity representation objectives and finance organization associate engagement objectives; and qualitative goals relating to enhancing certain operational processes; strengthening talent management and development and succession planning in the finance organization; cultivation and execution of acquisition opportunities; and the Company’s cyber-security strategy. | | Jennifer Honeycutt Executive Vice President | 125% | Consisted of the degree of year-over-year improvement in core revenue, operating profit margin and working capital turnover for her business units; return-on-invested-capital performance achieved with respect to acquisitions by her business units; quantitative goals for her business units relating to talent development, associate diversity representation, associate engagement, succession planning and other human resources -related metrics, on-time delivery and manufacturing quality; and qualitative goals relating to strategic initiatives; strengthening the Company’s innovation capabilities and commercial execution; and capital deployment. | | Joakim Weidemanis Executive Vice President | 125% | Consisted of the degree of year-over-year improvement in core revenue, operating profit margin and working capital turnover for his business units; return-on-invested-capital performance achieved with respect to acquisitions by his business units; quantitative goals for his business units relating to talent development, succession planning, associate diversity representation and other human resources -related metrics, on-time delivery and manufacturing quality; and qualitative goals relating to strategic initiatives; the Company’s digital capabilities and execution; and capital deployment. | | Angela S. Lalor Senior Vice President | 115% | Consisted of quantitative goals relating to talent development, succession planning, associate diversity representation, associate engagement and retention; and qualitative goals relating to strengthening the Company’s leadership organization, employment branding and diversity and inclusion capabilities; enhancing engagement and retention; and strengthening the Company’s human resources organization. |
DETERMINING TARGET BONUS PERCENTAGE
DETERMINING TARGET BONUS PERCENTAGE In determining the target bonus percentage for each NEO, the Committee considered the relative complexity and importance of the executive’s position and the amount of annual cash incentive compensation that peer companies typically pay to executives serving in comparable roles. With respect to Mr. Blair in particular, although the Committee did not target the performance-based portion of the CEO’s annual cash compensation at any particular percentage of total annual cash compensation, the Committee strategically set the base salary at a level lower, and target annual bonus opportunity at a level higher, than typical among the Company’s peer companies to help ensure that the CEO’s annual cash compensation is highly performance-based.
DETERMINING PERSONAL PAYOUT PERCENTAGE
DETERMINING PERSONAL PAYOUT PERCENTAGE Following the end of 2021, the Committee used its judgment and determined for each NEO a Personal Payout Percentage between 0% and 200%. The Committee believes that its ability to exercise discretion in connection with the annual executive cash incentive compensation awards is an important element in reaching balanced compensation decisions that are consistent with our strategy and reward both current year performance and sustained long-term value creation. The Committee’s ability to exercise discretion:
DETERMINING PERSONAL PAYOUT PERCENTAGE
| • | helps mitigate the risks associated with a rigid and strictly formulaic compensation program, which could unintentionally create incentives for our executives to focus only on certain performance metrics or encourage imprudent risk taking; | | • | gives the Committee flexibility to address changes in economic conditions and our operating environment; and | | • | allows the Committee to adjust compensation based on factors that would not be appropriately reflected by a strictly formulaic approach focused solely on Company performance, such as championing Danaher’s culture and values and recognition of individual performance levels. |
DETERMINING PERSONAL PAYOUT PERCENTAGE
Without assigning any particular weight to any individual factor, the Committee took into account the executive’s execution against their personal performance objectives for the year, the executive’s performance with respect to each of the Company’s five “Leadership Anchors” (which are a set of standards and behaviors that Danaher associates are expected to aspire to and are assessed against), the executive’s overall performance for the year, the size of the Company Payout Percentage for the year, and the amount of annual cash incentive compensation that peer companies typically pay to executives serving in comparable roles. Without limiting the foregoing, with respect to the executive officer team’s 2021 performance as a whole the Committee considered in particular the depth and comprehensiveness of support provided by Danaher to its workforce during the pandemic; the Company’s 2021 financial performance; and the Company’s proactiveness during the year in identifying and executing upon opportunities to invest in the Company’s future financial and competitive positioning. The average Personal Payout Percentage of the NEOs (other than Mr. Blair) was 151%. The Company awarded Mr. Blair a Personal Payout Percentage of 160% for 2021, based primarily on his effective leadership during the pandemic; the Company’s strong financial and operational performance during his tenure; the Company’s progress toward its D+I representation objectives; his progress in further enhancing the Company’s innovation and strategy development processes and strategic direction; and the successful acquisition of Aldevron. Company Payout Percentage The Company Payout Percentage is formulaic, based on the Company’s 2021 performance against the Adjusted EPS, Free Cash Flow Ratio and Core Revenue Growth Including Cytiva metrics described above and below and in Appendix A (the “Metrics”). The Committee weights Adjusted EPS most heavily in the formula because it believes Adjusted EPS correlates strongly with shareholder returns, particularly since Adjusted EPS is calculated in a manner that focuses on gains and charges the Committee believes are most directly related to Company operating performance during the period. The Committee also uses the Free Cash Flow Ratio to help validate the quality of the Company’s earnings, and Core Revenue Growth Including Cytiva to incentivize an appropriate balance between profitability and growth. The Company used “Core Revenue Growth Including Cytiva” (rather than core revenue growth) as the revenue-related performance metric in the 2021 performance formula because it was the primary revenue-related metric the Company used to measure its performance during 2021. For each of the Metrics, the Committee established threshold, target and maximum levels of Company performance, as well as a payout percentage curve that related each level of performance to a payout expressed as a percentage of target bonus. The payout percentage was 0% for below-threshold performance, 50% for threshold performance, 100% for target performance and 200% for performance that equaled or exceeded the maximum. The payout percentages for performance between threshold and target, or between target and maximum, respectively, were determined by linear interpolation. In determining the target performance level and payout percentage curve for the Metrics, the Committee considered historical performance data for the Company and its peer group, analyst consensus earnings estimates for the Company’s peer group, the Company’s annual budget and macroeconomic/end-market trends. For each Metric, the Committee set the performance target at a level it believed would represent attractive financial performance within our industry and would require a high (but achievable) level of Company performance, while requiring what it believed would be outstanding performance to achieve the maximum payout level. Following the end of 2021, the Company Payout Percentage was calculated as follows: Composite Payout Percentage The Company Payout Percentage and Personal Payout Percentage were calculated for each NEO, weighted accordingly and added to yield the officer’s Composite Payout Percentage. The Composite Payout Percentage was multiplied by the NEO’s target bonus amount to yield the executive’s award amount for the year. The 2021 annual cash incentive compensation awards for each of the NEOs are set forth in the Summary Compensation Table. Base Salaries The Committee typically reviews base salaries for executive officers in February of each year and in connection with promotions and new hires. In February 2021, the Committee subjectively determined 2021 base salaries for the NEOs. Without giving specific weight to any particular factor, in each case the Committee used the officer’s prior base salary as the initial basis of consideration and then considered the individual factors described under “– Named Executive Officer Compensation Framework,” focusing on the relative complexity and importance of the executive’s role within Danaher, the market value of the executive’s role and the executive’s performance in the prior year. Given that base salary is one of the elements in the formula for determining annual cash incentive compensation, the Committee also considered how changes in base salary would impact annual cash incentive compensation. Other Compensation Severance Benefits We have entered into Proprietary Interest Agreements with each of our NEOs that include post-employment restrictive covenant obligations. Danaher’s Senior Leader Severance Pay Plan, which each of the NEOs participates in, provides for severance payments under certain circumstances. Mr. Blair’s Proprietary Interest Agreement entitles him to certain additional cash payments if the Company terminates his employment without cause, and the agreement entered into with Ms. Lalor in connection with her hiring entitles her to enhanced severance payments under the Senior Leader Severance Pay Plan. We believe the post-employment restrictive covenant obligations included in these agreements are critical in protecting our proprietary assets, and that the severance payments payable upon a termination without cause are generally commensurate with the severance rights our peers offer executives in comparable roles. There is no change-in-control provision in the Senior Leader Severance Pay Plan or in any NEO employment agreement. EDIP, ECP and DCP As discussed in more detail under “Summary of Employment Agreements and Plans – Supplemental Retirement Program,” each NEO (1) participates in either the Amended and Restated Executive Deferred Incentive Program (“EDIP”), or the Excess Contribution Program (“ECP”), and (2) is eligible to participate in the voluntary Deferred Compensation Plan (“DCP”):
DETERMINING PERSONAL PAYOUT PERCENTAGE
| • | The EDIP and ECP are each non-qualified, unfunded excess contribution programs available to selected members of our management. We use these programs to tax-effectively contribute amounts to executives’ and other participants’ retirement accounts and provide an opportunity to realize tax-deferred, market-based notional investment growth on these contributions. | | • | The DCP allows each participant to voluntarily defer, on a pre-tax basis, up to 85% of their salary and/or up to 85% of their non-equity annual incentive compensation with respect to a given plan year. The DCP gives our executives and other participants an opportunity to defer taxes on cash compensation and realize tax-deferred, market-based notional investment growth on their deferrals. |
DETERMINING PERSONAL PAYOUT PERCENTAGE
Other Benefits and Perquisites All of our executives are eligible to participate in our U.S. 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 U.S. salaried employees and do not discriminate in favor of executive officers. In addition, the Committee makes certain perquisites available to the NEOs; please see the footnotes to the Summary Compensation Table for additional details. The Committee has also adopted a policy prohibiting any tax reimbursement or gross-up provisions in our executive compensation program (except under a policy applicable to management employees generally such as a relocation policy). Peer Group Compensation Analysis The Committee does not target a specific competitive position versus the market or peer companies in determining the compensation of our executives because in light of the Company’s diverse mix of businesses, strict targeting of a specified compensation posture would not appropriately reflect the unique nature of our business portfolio or the degree of difficulty in leading the Company and key businesses and functions. However, the Committee believes it is important to clearly understand the relevant market for executive talent to inform its decision-making and ensure that our executive compensation program supports our recruitment and retention needs and is fair and efficient. As a result, the Committee has worked with FW Cook to develop a peer group for purposes of assessing competitive compensation practices, and periodically reviews compensation data for the peer group derived from publicly filed proxy statements. The Committee periodically reviews the companies included in the peer group to ensure that the peer group remains appropriate. Executive Compensation Peer Group The Company’s peer group (for purposes of all 2021 executive compensation decisions) consisted of the companies set forth below:
DETERMINING PERSONAL PAYOUT PERCENTAGE
| 3M Company | Biogen Inc. | Johnson & Johnson | | Abbott Laboratories | Boston Scientific Corporation | Medtronic Inc. | | Amgen Inc. | Ecolab Inc. | Roper Corporation | | Baxter International, Inc. | Honeywell International Inc. | Stryker Corporation | | Becton Dickinson & Co. | Illinois Tool Works Inc. | Thermo Fisher Scientific Inc. |
DETERMINING PERSONAL PAYOUT PERCENTAGE
The Committee selected companies for inclusion in this peer group based on (1) the extent to which they compete with us in one or more lines of business, for executive talent and for investors, and (2) comparability of revenues, market capitalization, net income, total assets and number of employees. The table below sets forth for this peer group and Danaher information regarding revenue, net income and total assets (based on the most recently reported four quarters for each company as of September 15, 2021), market capitalization (as of September 15, 2021) and employee headcount (based on each company’s most recent fiscal year end as of September 15, 2021), in each case derived from the Standard & Poor’s Capital IQ database.
DETERMINING PERSONAL PAYOUT PERCENTAGE
| ($ IN MILLIONS, EXCEPT NUMBER OF EMPLOYEES) | Revenue | Market Capitalization | Net Income (From continuing operations excluding extraordinary items) | Total Assets | Employees | | 75(th)percentile | $34,347 | $165,115 | $5,832 | $65,822 | 92,500 | | Median | $19,897 | $104,493 | $2,670 | $48,307 | 50,000 | | 25(th)percentile | $12,164 | $64,061 | $1,492 | $24,152 | 40,500 | | Danaher | $26,720 | $232,203 | $5,361 | $78,027 | 68,000 | | DANAHER PERCENTILE RANK | 59% | 93% | 68% | 88% | 56% |
DETERMINING PERSONAL PAYOUT PERCENTAGE
The peer group compensation data that the Committee reviewed in 2021 in connection with its named executive officer compensation decisions estimated the 25th, median and 75th percentile positions among our peers with respect to base salary, annual cash incentive compensation (target and actual), total annual cash compensation (target and actual), long-term incentive compensation, total direct compensation (target and actual), all other compensation, annual change in pension value and above-market interest on non-qualified deferred compensation, and actual total compensation, in each case with respect to each respective NEO position. Named Executive Officer Compensation Framework Danaher’s compensation program is grounded on the principle that each executive must consistently demonstrate exceptional personal performance in order to remain a Danaher executive. Within the framework of this principle and the other objectives discussed above, the Committee exercises its judgment in making executive compensation decisions. The factors that generally shape particular executive compensation decisions (none of which are assigned any particular weight by the Committee) are the following:
DETERMINING PERSONAL PAYOUT PERCENTAGE
| • | The relative complexity and importance of the executive’s position within Danaher. To ensure that the most senior executives are held most accountable for long-term operating results and changes in shareholder value, the Committee believes that both the amount and “at-risk” nature of compensation should increase with the relative complexity and significance of an executive’s position. | | • | The executive’s record of performance, long-term leadership potential and tenure. | | • | Danaher’s performance. Our cash incentive compensation varies annually to reflect near-term changes in operating and financial results. Our long-term compensation is closely aligned with long-term shareholder value creation, both by tying the ultimate value of the awards to long-term shareholder returns and because of the length of time executives are required to hold the awards before realizing their value. | | • | Our assessment of pay levels and practices in the competitive marketplace. The Committee considers market practice in determining pay levels and compensation design to ensure that our costs are sustainable relative to peers and compensation is appropriately positioned to attract and retain talented executives. As noted above, the market for executive-level talent is highly competitive. We also have a history of successfully applying the Danaher Business System, or DBS, to deliver strong operating performance and create shareholder value, and we devote significant resources to training our executives in DBS. As a result of these factors, we believe that our executives are particularly valued by other companies, which creates a high degree of retention risk. |
DETERMINING PERSONAL PAYOUT PERCENTAGE
The philosophy and goals of our compensation program have remained consistent over time, although the Committee considers the factors above within the context of the then-prevailing economic environment and may adjust the terms and/or amounts of compensation accordingly so that they continue to support our objectives. For a description of the role of the Company’s executives and the Committee’s independent compensation consultant in the executive compensation process, please see “Corporate Governance – Board of Directors and Committees of the Board –Compensation Committee.” Other Compensation Policies and Information Long-Term Incentive Compensation Grant Practices Equity awards are granted under Danaher’s Omnibus Plan, which is described in “Summary of Employment Agreements and Plans – 2007 Omnibus Incentive Plan.” Executive equity awards are typically granted as of one of the Company’s four, standardized grant dates during the year, and may also be granted at the time of an executive hire or promotion or upon identification of a specific retention concern. The grant date is either the date of grant approval or a specified date subsequent to the approval date. The timing of equity awards has not been coordinated with the release of material non-public information. The Committee’s general practice is to approve annual equity awards to executive officers at the Committee’s regularly scheduled meeting in February, when the Committee reviews the performance of the executive officers and typically determines the other components of executive compensation. The target dollar value attributable to PSUs and RSUs, as applicable, has been translated into a target number of PSUs or RSUs, as applicable, based on fair market value. Prior to 2021, the target dollar value attributable to stock options was translated into a number of stock options based on a modified Black Scholes calculation that utilized a multi-day average closing price and an assumed ten-year term. Beginning with the equity awards granted in February 2021, the modified Black Scholes value was replaced with the actual Black Scholes value used in the Company’s financial statements with respect to the particular grant. The exercise price for stock option awards granted under the Omnibus Plan equals the closing price of Danaher’s Common Stock on the date of grant (or on the immediately preceding trading day if the date of grant is not a trading day). Since the valuation methodologies used in 2019 and 2020 are not the same as the FASB ASC Topic 718 grant date fair value used for accounting purposes, in those years the equity award target dollar values are not identical to the equity award grant date fair values reflected in the Summary Compensation Table and other compensation tables. Stock Ownership-Related Policies Stock Ownership Requirements To further align management and shareholder interests and discourage inappropriate or excessive risk-taking, our stock ownership policy requires each executive officer to obtain a substantial equity stake in Danaher within five years of their appointment to an executive position, as follows:
DETERMINING PERSONAL PAYOUT PERCENTAGE
| Title | Stock Ownership Multiple | | Chief Executive Officer | 5 times base salary | | Executive Vice President | 3 times base salary | | Senior Vice President | 2 times base salary | | What Counts as Ownership: | What Does Not Count as Ownership: | | • Shares in which the executive or their spouse or child has a direct or indirect interest • Notional shares of Danaher stock in the EDIP, ECP or DCP • Shares held in a 401(k) plan • Unvested RSUs/PSUs (based on target number of shares until vested and then based on the actual number of vested shares) | • Unexercised stock options |
DETERMINING PERSONAL PAYOUT PERCENTAGE
Once an executive officer has acquired a number of Company shares that satisfies the applicable ownership multiple, such number of shares then becomes the officer’s minimum ownership requirement (even if the officer’s salary increases or the fair market value of such shares subsequently changes) until the officer is promoted to a higher level. Each NEO was in compliance with the stock ownership requirements as of December 31, 2021. Pledging Policy Danaher’s Board has adopted a policy that prohibits any director or executive officer from pledging as security under any obligation any shares of Danaher Common Stock that the director or officer directly or indirectly owns and controls (other than shares pledged as of the date the policy was adopted), and provides that pledged shares of Danaher Common Stock do not count toward Danaher’s stock ownership requirements. No NEO has pledged any shares of Danaher Common Stock. Hedging Policy Under our insider trading policy, Danaher directors and employees (including executive officers) are prohibited from engaging in short sales of Danaher Common Stock, transactions in any derivative of a Danaher security (including, but not limited to, buying or selling puts, calls or other options (except for instruments granted under a Danaher equity compensation plan)) or any other forms of hedging transactions with respect to Danaher securities. Recoupment Policy To further discourage inappropriate or excessive risk-taking, the Committee has adopted a rigorous, “no-fault” recoupment (or clawback) policy applicable to Danaher’s executive officers, other individuals who serve on the Danaher Leadership Team and certain other employees (the “covered persons”). Under the policy, in the event of a material restatement of Danaher’s consolidated financial statements (other than any restatement required pursuant to a change in applicable accounting rules), Danaher’s Board may, to the extent permitted by law and to the extent it determines that it is in Danaher’s best interests to do so, in addition to all other remedies available to Danaher require reimbursement or payment to Danaher of:
DETERMINING PERSONAL PAYOUT PERCENTAGE
| • | the portion of any annual incentive compensation payment awarded to any covered person within the three year period prior to the date such material restatement is first publicly disclosed that would not have been awarded had the consolidated financial statements that are the subject of such restatement been correctly stated (except that the Board has the right to require reimbursement of the entire amount of any such annual incentive compensation payment from any covered person whose fraud or other intentional misconduct in the Board’s judgment alone or with others caused such restatement); and | | • | all gains from equity awards realized by any covered person during the twelve-month period immediately following the original filing of the consolidated financial statements that are the subject of such restatement, if the covered person’s fraud or other intentional misconduct in the Board’s judgment alone or with others caused such restatement. |
DETERMINING PERSONAL PAYOUT PERCENTAGE
In addition, the stock plans in which Danaher’s executive officers participate contain provisions for recovering awards upon certain circumstances. Under the terms of the Company’s Omnibus Plan, if an employee is terminated for gross misconduct, the administrator may terminate up to all of the participant’s unexercised or unvested equity awards. In addition, under the terms of each of the EDIP and the ECP, if the administrator determines that the circumstances of a participant’s termination constitute gross misconduct, the administrator may determine that the participant’s vesting percentage is as low as zero with respect to all balances that were contributed by Danaher. Regulatory Considerations Section 162(m) generally disallows a tax deduction to public corporations for compensation in excess of $1 million paid for any fiscal year to certain executive officers. We review the tax impact of our executive compensation on the Company as well as on the executive officers. In addition, we review the impact of our compensation programs against other considerations, such as accounting impact, shareholder alignment, market competitiveness, effectiveness and perceived value to employees. Because many different factors influence a well-rounded, comprehensive and effective executive compensation program, some of the compensation we provide to our executive officers is not deductible under Section 162(m).
COMPENSATION TABLES AND INFORMATION
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(1) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | | Rainer M. Blair | 2021 | 1,200,000 | 0 | 5,124,383 | 6,260,494 | 4,128,000 | 0 | 439,390 | 17,152,267 | | President and CEO | 2020 | 949,067 | 0 | 3,616,939 | 2,968,651 | 2,519,339 | 0 | 342,765 | 10,396,761 | | | 2019 | 840,000 | 0 | 2,565,951 | 2,053,766 | 1,589,700 | 0 | 129,232 | 7,178,649 | | Matthew R. McGrew, | 2021 | 798,600 | 0 | 1,537,702 | 1,877,996 | 1,697,025 | 0 | 188,184 | 6,099,507 | | Executive Vice President and CFO | 2020 | 726,000 | 0 | 1,637,982 | 1,435,173 | 1,564,530 | 0 | 166,358 | 5,530,043 | | | 2019 | 660,000 | 0 | 1,483,078 | 1,186,634 | 1,103,586 | 0 | 152,646 | 4,585,944 | | Jennifer L. Honeycutt, | | | | | | | | | | | Executive Vice President | 2021 | 750,000 | 0 | 1,313,474 | 1,603,093 | 1,537,500 | 0 | 155,641 | 5,359,708 | | Joakim Weidemanis, | 2021 | 936,000 | | 2,049,947 | 2,504,501 | 1,965,600 | 0 | 157,966 | 7,614,014 | | Executive Vice President | 2020 | 881,560 | 0 | 5,065,095 | 4,551,242 | 1,917,000 | 0 | 138,301 | 12,553,198 | | | 2019 | 759,000 | 0 | 2,280,985 | 1,825,639 | 1,379,483 | 0 | 119,872 | 6,364,979 | | Angela S. Lalor, | 2021 | 763,515 | 800,000(5) | 1,168,499 | 1,427,672 | 1,510,232 | 0 | 156,995 | 5,826,913 | | Senior Vice President-Human Resources | 2020 | 727,157 | 800,000(5) | 1,276,951 | 1,118,710 | 1,458,386 | 0 | 121,041 | 5,502,245 |
COMPENSATION TABLES AND INFORMATION
| For a description of the treatment upon a change-of-control of outstanding equity awards granted under the Omnibus Plan, please see “Summary of Employment Agreements and Plans.” The tabular disclosure assumes that upon a change-of-control of Danaher (as defined in the Omnibus Plan), Danaher’s Board does not accelerate the vesting of any unvested RSUs, PSUs or stock options held by the named executive officers. If a change-of-control had occurred as of December 31, 2021 and Danaher’s Board had allowed all of the unvested RSUs, PSUs and stock options held by the named executive officers to accelerate (which would be entirely at the Board’s discretion), the intrinsic value of the stock options, RSUs and PSUs held by these officers that would have been accelerated would have been as follows (no tax reimbursement or gross-up payments would have been triggered by such accelerations): Stock options: Mr. Blair, $51,203,791; Mr. McGrew, $20,156,084; Ms. Honeycutt, $10,176,255; Mr. Weidemanis, $44,652,763; and Ms. Lalor, $23,726,321. RSUs and PSUs: Mr. Blair, $48,754,500; Mr. McGrew, $21,588,253; Ms. Honeycutt, $11,795,441; Mr. Weidemanis, $36,710,686; and Ms. Lalor, $18,937,828.(1) | | The terms of the Omnibus Plan provide for accelerated vesting of a participant’s stock options and a pro rata portion of a participant’s RSUs and PSUs (at target value) if the participant dies during employment. For a description of these provisions under the Omnibus Plan, please see “Summary of Employment Agreements and Plans.”(2) | | If Mr. Blair had retired as of December 31, 2021, he would have qualified for “early retirement” treatment under the terms of the Omnibus Plan, which provides for, among other terms, continued vesting of certain of the participant’s stock options, RSUs and PSUs (based on the actual performance level achieved) following early retirement. For a description of these provisions under the Omnibus Plan, please see “Summary of Employment Agreements and Plans.”(3) | | Please see “Summary of Employment Agreements and Plans” for a description of the respective benefits and cash payments each officer would be entitled to if Danaher terminates the officer’s employment without cause, as well as a description of the post-employment restrictive covenant obligations of each officer. The amounts set forth in the table assume that the officer would have executed Danaher’s standard release in connection with any termination without cause.(4) | | Under the terms of the EDIP and ECP, upon a participant’s death the unvested portion of the Company contributions that have been credited to the participant’s account would immediately vest.(5) |
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS Following is a description of (1) named executive officer employment-related agreements, and (2) the cash incentive compensation, equity compensation, non-qualified deferred compensation and severance pay plans in which Danaher’s named executive officers participate. Each of these plans allows the plan administrator to exercise certain discretion in the administration of the plan, and as a result the plan administrator may administer the plan in a different manner from period to period, or in a different manner with respect to different plan participants, in each case to the extent permitted under the applicable plan. Employment Agreements Named Executive Officer Proprietary Interest Agreements In connection with Mr. Blair’s promotion to the role of President and CEO in 2020, Danaher and Mr. Blair entered into an Amended and Restated Agreement Regarding Competition and Protection of Proprietary Interests (the “Blair Agreement”). Under the Blair Agreement, during and for two years after Mr. Blair’s employment with us, subject to certain customary exceptions, he is prohibited from disclosing or improperly using any of our confidential information; making any disparaging comments about us; competing with us; selling to or soliciting purchases from our customers and prospective customers with respect to products and services about which he has particular knowledge; or hiring or soliciting any of our current or recent employees, and during and for one year after his employment with us he is prohibited from working for any Danaher customers or vendors in any role in which he would use or disclose or threaten to use or disclose any of our confidential information. In addition, with limited exceptions all intellectual property that Mr. Blair develops in connection with his employment with us belongs to us. The Blair Agreement further provides that if we terminate Mr. Blair’s employment without “cause” or if he terminates his employment for “good reason” (each as defined in the Blair Agreement), he will be entitled to (1) a cash amount equal to twelve months of base salary at the rate in effect on the date of termination (the “Termination Date,” and the year in which the Termination Date occurs is referred to as the “Termination Year”), (2) the annual cash incentive compensation award for service in the calendar year prior to the Termination Year, if it has not been paid prior to the Termination Date (the “Accrued Obligation”), (3) a cash amount equal to his target annual cash incentive compensation award for the Termination Year, and (4) a cash amount equal to the product of (x) his target annual cash incentive compensation award for the Termination Year, times (y) a fraction, the numerator of which is the number of calendar days from the beginning of the Termination Year through the Termination Date, and the denominator of which is 365; provided in each case he signs and does not revoke a release of all claims. Any cash severance payments paid under any other Danaher plan or agreement will diminish the severance payments under the Blair Agreement on a dollar-for-dollar basis (except for the Accrued Obligation). We have also entered into an agreement with each of the other NEOs under which each such officer is subject to certain covenants designed to protect Danaher’s proprietary interests (each, a “Proprietary Interest Agreement”). Except for differences in the duration of certain restrictive covenants, the terms of such agreements are substantially the same. During and for specified periods after the officer’s employment with us, subject to certain customary exceptions, the officer is prohibited from disclosing or improperly using any of our confidential information; making any disparaging comments about us; competing with us; selling to or soliciting purchases from our customers and prospective customers with respect to products and services about which the officer has particular knowledge; or hiring or soliciting any of our current or recent employees. Each officer also agrees that with limited exceptions all intellectual property that the officer develops in connection with the officer’s employment with us belongs to us. Certain of the agreements also restrict interfering with our vendor relationships, and certain of the agreements prohibit the officer for a specified period of time from working for any Danaher customers or vendors in any role in which the officer would use or disclose or threaten to use or disclose any of our confidential information. Lalor Agreement Danaher entered into a letter agreement with Ms. Lalor in 2012 in connection with her hiring as Danaher’s Senior Vice President-Human Resources. The provisions under the agreement remaining to be performed entitle Ms. Lalor to:
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS
| • | a retention bonus of $2.4 million payable in three equal installments within 30 days of the eighth, ninth and tenth anniversaries of Ms. Lalor’s employment start date, respectively, subject in each case to continued employment and timely execution of a general release of claims in favor of the Company (installments of such bonus were paid in 2020 and 2021 and the last installment will be paid in 2022); and | | • | participate in the Company’s Senior Leaders Severance Pay Plan, provided that the amount of severance she is eligible for under such plan is equal to the product of (1) her annual base salary at the time of termination and (2) the sum of 100% plus her target annual bonus percentage under the Company’s annual cash incentive compensation plan as of the time of termination. |
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS
Directors’ and Officers’ Indemnification and Insurance Danaher’s Certificate of Incorporation requires it to indemnify to the full extent authorized or permitted by law any person made, or threatened to be made a party to any action or proceeding by reason of their service as a director or officer of Danaher, or by reason of serving at Danaher’s request as a director or officer of any other entity, subject to certain exceptions. Danaher’s Bylaws provide for similar indemnification rights. In addition, each of Danaher Corporation’s directors and executive officers has executed an indemnification agreement with Danaher that provides for substantially similar indemnification rights and under which Danaher has agreed to pay expenses in advance of the final disposition of any such indemnifiable proceeding. Danaher also has in effect directors and officers liability insurance covering all of Danaher’s directors and officers. 2007 Omnibus Incentive Plan The Compensation Committee of the Board of Directors of Danaher (the “Administrator”) administers the Omnibus Plan. The following awards may be granted under the Omnibus Plan: stock options, SARs, restricted stock, RSUs and other stock-based awards (including PSUs), as such terms are defined in the Omnibus Plan, as well as cash-based awards (collectively, all such awards are referred to as “awards”). Award Limits 126,846,408 shares of Common Stock have been authorized for issuance under the Omnibus Plan (the “Maximum Share Limit”). Under the terms of the plan, (1) each share of Common Stock subject to a full value award and granted before February 28, 2017 counts against the Maximum Share Limit as one share of Common Stock, (2) each share of Common Stock subject to a full value award and granted after February 28, 2017 counts against the Maximum Share Limit as 3.56 shares of Common Stock, and (3) if after February 28, 2017 any full value award expires, is canceled, forfeited, cash-settled, exchanged or assumed by a third party or terminates for any other reason, in each case without a distribution of shares of Common Stock to the participant, each share of Common Stock available under that award is added back to the pool of shares available for grant as 3.56 shares of Common Stock. The plan caps the number of shares of Common Stock that may be awarded to any individual in any calendar year under options or SARs at 1,000,000 and under any other stock-based award at 500,000, provided that this cap is doubled in the initial year of hire. Cash-based awards under the plan are subject to an annual limit of $10 million (which amount is doubled in the initial year of hire) per employee participant. The plan also caps the annual cash and equity compensation (based on grant date fair value) that may be awarded to any individual, non-management director at $800,000 ($1,300,000 for any non-management Board chair or vice chair (or similar role)). Prohibition on Share Recycling The following shares of Common Stock do not again become available for awards or increase the number of shares available for grant under the plan: shares of Common Stock (1) tendered by the participant or withheld by the Company in payment of the purchase price of an option or SAR, (2) tendered by the participant or withheld by the Company to satisfy any tax withholding obligation under the plan, (3) repurchased by the Company with proceeds received from the exercise of an option, or (4) subject to a SAR that are not issued in connection with the stock settlement of that SAR upon its exercise. Minimum Vesting Requirement All equity awards granted following the date of the Company’s 2017 annual meeting are subject to a minimum one-year vesting or performance requirement, except that (1) up to five percent (5%) of the Maximum Share Limit may be issued without regard to this minimum vesting period, (2) this minimum vesting period does not apply in the event of death, disability, retirement or other terminations of employment or service, and (3) the Administrator may waive the minimum vesting requirement in the event of a substantial corporate change. Retirement and Other Terminations of Employment Subject to certain terms and conditions set forth in the Omnibus Plan or the applicable award agreement (including the overall term of the award), in general:
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS
| • | upon retiring after reaching age 65, (1) a participant’s unvested options held for at least six months prior to retirement continue to vest and, together with any options that are vested as of the retirement date, remain outstanding and (once vested) may be exercised until the fifth anniversary of the retirement date (or the tenth anniversary with respect to grants made on or after January 1, 2022), (2) any RSUs that are unvested as of the retirement date (and, for grants on or after January 1, 2022, held for at least six months prior to retirement) continue to vest according to their terms, (3) for PSUs granted prior to January 1, 2022, the participant receives a prorated portion of the shares actually earned based on the Company’s performance over the performance period, and (4) for PSUs granted on or after January 1, 2022 and held for at least six months prior to retirement, the participant receives the shares actually earned based on the Company’s performance over the performance period; and | | | • | upon retiring after reaching age 55 and completing ten years of service with Danaher: | | | | • | with respect to grants on or after February 23, 2015 and prior to January 1, 2022, (1) a pro rata portion of the participant’s unvested options held for at least six months prior to retirement continue to vest and, together with any options that are vested as of the retirement date, remain outstanding and (once vested) may be exercised until the fifth anniversary of the retirement date, (2) a pro rata portion of any RSUs that are unvested as of the retirement date continue to vest according to their terms, and (3) with respect to PSUs, the participant receives a prorated portion of the shares actually earned based on the Company’s performance over the performance period. | | | • | with respect to grants on or after January 1, 2022 and held for at least six months prior to retirement, (1) the participant’s unvested options continue to vest and, together with any options that are vested as of the retirement date, remain outstanding and (once vested) may be exercised until the fifth anniversary of the retirement date, (2) any RSUs that are unvested as of the retirement date continue to vest according to their terms, and (3) the participant receives the PSU shares actually earned based on the Company’s performance over the performance period. |
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS
Upon terminations of employment other than retirement (as defined under the Omnibus Plan), unless the Administrator determines otherwise any options or SARs that are vested as of a participant’s termination of employment (including any options or SARs the vesting of which accelerates as a result of the participant’s death) will remain exercisable until the earlier of the expiration of the award’s term or (1) 12 months after termination, if the termination results from the participant’s death or disability, (2) in the Administrator’s discretion, at the time of termination if the participant’s employment is terminated for gross misconduct, or (3) 90 days following the termination date, in all other non-retirement situations. If an award survives for any period of time following termination of employment, it will nonetheless terminate as of the date that the participant violates any post-employment covenant between Danaher and the participant. In addition, upon termination of a participant’s employment or service due to death, generally (1) all of the participant’s outstanding stock options granted under the Omnibus Plan become fully vested, (2) the vesting of a pro rata portion of the participant’s outstanding RSUs is accelerated as of the date of death, and (3) with respect to PSUs as to which the death occurs prior to conclusion of the performance period, the participant’s estate receives a pro rata portion of the target number of shares underlying the PSUs. Recoupment All awards granted under the Omnibus Plan are subject to the Company’s recoupment policy in the form approved by the administrator from time to time, if and to the extent the policy applies according to its terms, as well as any recoupment terms required by applicable law. Term of Plan Unless the Board extends the plan’s term, the administrator may not grant awards under the plan after May 9, 2027. Supplemental Retirement Program Company Contributions Danaher uses the Executive Deferred Incentive Program, or EDIP, and the Excess Contribution Program, or ECP (which is a sub-plan under the 2007 Omnibus Plan) to provide supplemental retirement benefits on a pre-tax basis in excess of qualified plan limitations to select management associates of Danaher and its subsidiaries (including each of the named executive officers, as applicable). Prior to January 1, 2019, the EDIP was the sole plan used by the Company to provide supplemental retirement benefits (and also served as a voluntary deferred compensation program). The ECP became effective as of January 1, 2019 and prior to such date, EDIP participants made a one-time election to either continue participating in the EDIP or participate in the ECP. All participants who join Danaher’s supplemental retirement program at or after January 1, 2019 receive Company contributions under the ECP. All amounts that Danaher contributes to a participant’s account in the EDIP and ECP are deemed invested on a notional basis in Danaher Common Stock. If termination of an employee’s participation in the EDIP or ECP resulted from the employee’s gross misconduct, the Administrator may reduce the employee’s vested interest with respect to all Danaher contributions to as low as zero percent. EDIP At the beginning of each plan year, Danaher credits to the account of each EDIP participant an amount equal to the product of (1) the sum of the participant’s base salary and target bonus as of the end of the prior year; and (2) a percentage determined by the Administrator that is based on the participant’s years of participation in the EDIP, namely 6% for employees who have participated in the EDIP for less than 10 years, 8% after 10 years of EDIP participation and 10% after 15 years of EDIP participation. A participant vests in the amounts that Danaher credits to their EDIP account as follows:
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS
| • | If the participant has both reached age 55 and completed at least five years of service with Danaher or its subsidiaries, the participant immediately vests 100% in each Danaher contribution. | | • | If the participant does not satisfy the conditions described under the preceding bullet, the participant’s vesting percentage is 10% for each full calendar year of participation in the EDIP (after the participant has first completed five years of participation in the EDIP). | | • | If a participant dies while employed by Danaher, their vesting percentage equals 100%. |
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS
ECP Under the ECP, on or about February 1 after the applicable year of participation, Danaher credits to the account of each participant an excess matching contribution and excess non-elective contribution based on the formulas in the Company’s 401(k) plan for matching and non-elective contributions. As a result, each participant can receive the following contributions in the ECP:
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS
| • | a matching contribution to the ECP equal to the sum of (a) 100% of the amount deferred into the Danaher Deferred Compensation Plan, or DCP for the year of participation, up to 3% of the greater of (1) the participant’s compensation that is deferred into the DCP or (2) the participant’s compensation above the IRS compensation limit for qualified retirement plans (“match compensation”), plus (b) 50% of the amount deferred into the DCP for the year of participation in excess of 3%, but not in excess of 5%, of the participant’s match compensation; and | | • | a non-elective contribution equal to 4% of the participant’s rate of base salary and target bonus amount as of December 31 prior to the year of participation in excess of the IRS compensation limit for qualified retirement plans. |
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS
A participant vests in the matching contribution in the ECP made each year on the first anniversary after it is credited to the participant’s account. A participant vests in the non-elective contribution in the ECP made each year on the later of the first anniversary after it is credited to the participant’s account, or the date the participant has completed three years of service with Danaher. If a participant dies while employed by Danaher, their vesting percentage equals 100%. Voluntary Deferrals Each DCP participant is permitted to voluntarily defer into the program, on a pre-tax basis, up to 85% of their salary and/ or up to 85% of their non-equity incentive compensation with respect to a given plan year. Notional earnings on amounts deferred under the program are credited to participant accounts based on the market rate of return of the applicable benchmark investment alternatives offered under the program, which are generally the same as the investment alternatives offered under our 401(k) Plan (except for any investment options that may only be offered under the tax qualified 401(k) Plan). Each participant allocates the amounts the participant voluntarily defers among the available investment alternatives. Participants may change their allocations at any time, provided that any portion of a participant’s account that is subject to the Danaher Common Stock investment alternative must remain allocated to that investment alternative until the account is distributed to the participant. Participants are at all times fully vested in amounts they voluntarily defer into their DCP accounts. Distributions In general, a participant may not receive a distribution of their vested EDIP account balance (including any amounts voluntarily deferred) until after their employment with Danaher terminates. A participant generally may elect to receive a distribution of their DCP account balance following their termination of employment or on a specified future date prior to their termination of employment. The following chart generally describes the timing and manner of distribution of EDIP, ECP and DCP account balances:
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS
| Name of Plan | | Timing of Beginning of Distribution | Period of Distribution | Form of Distribution | | EDIP | Not 100% vested in Danaher contributions | 6 months following termination | Lump sum | Participant may elect to receive distribution in cash, shares of Danaher Common Stock or a combination thereof (but all balances subject to the Danaher Common Stock investment alternative must be distributed in shares of Danaher Common Stock) | | | 100% vested in Danaher contributions | Participant may elect to begin receiving distributions immediately, 6 months, 1 year or 2 years following termination (generally, a distribution after a termination of employment is payable after a 6-month delay) | Participant may elect lump sum, or if at least age 55, annual installments over two, five or ten years | | | ECP | | Participant will begin receiving distributions immediately following termination. A six-month delay may apply if the participant is a “key employee” under applicable tax rules | Lump sum | Shares of Danaher common stock | | DCP | | Participant may elect to begin receiving distributions on the earlier of a fixed date or termination of employment. Distributions on a fixed date must be at least 3 years after the date of election. Distribution elections upon a termination of employment are the same as under the EDIP (a 6-month delay may apply to distributions on a termination of employment if the participant is a “key employee” under applicable tax rules) | Participant may elect lump sum or annual installments over a period of up to 10 years | All balances subject to the Danaher Common Stock investment alternative must be distributed in shares of Danaher Common Stock, and all other balances must be paid in cash |
SUMMARY OF EMPLOYMENT AGREEMENTS AND PLANS
Certain events, such as the participant’s death or an unforeseeable emergency, may impact the timing of a distribution under the EDIP, the ECP or the DCP. Under the EDIP, the ECP and the DCP, Danaher contributions and amounts voluntarily deferred 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. Senior Leader Severance Pay Plan Each of Danaher’s executive officers (in addition to certain other categories of employees as specified in the plan) is entitled to certain benefits under Danaher’s Senior Leader Severance Pay Plan. If a covered employee is terminated without “cause” (as defined below) and except in certain circumstances as specified in the plan, subject to execution of Danaher’s standard form of release the employee is entitled to severance equal to a minimum of three months of annual base salary plus an additional month for each year of service (provided that the three months plus all additional months cannot exceed twelve months in aggregate) paid out over the applicable severance period according to the normal payroll cycle, as well as the opportunity to continue coverage under specified welfare benefit plans of the Company for the duration of the severance period at the same cost as an active employee in a position similar to that held by the employee at termination. There is no change-in control provision in the Senior Leader Severance Pay Plan. To the extent a covered employee is entitled to severance or other post-termination compensation pursuant to the terms of an individual agreement, payments and benefits will only be provided under the plan to the extent they are not duplicative of the payments and benefits provided under the individual agreement. Under the plan, “cause” is defined as (1) the employee’s dishonesty, fraud, misappropriation, embezzlement, willful misconduct or gross negligence with respect to, or any other action in willful disregard of the interests of, Danaher or its affiliates; (2) the employee’s conviction of, or pleading guilty or no contest to (i) a felony, (ii) any misdemeanor (other than a traffic violation), or (iii) any other crime or activity that would impair the employee’s ability to perform duties or impair the business reputation of Danaher or its affiliates; (3) the employee’s willful failure or refusal to satisfactorily perform any duties assigned to the employee; (4) the employee’s failure or refusal to comply with Company standards, policies or procedures, including without limitation the Code of Conduct as amended from time to time; (5) the employee’s violation of any restrictive covenant agreement with Danaher or its affiliates; (6) the employee’s engaging in any activity that is in conflict with the business purposes of Danaher or its affiliates (as determined in the sole discretion of Danaher and its affiliates); or (7) a material misrepresentation or a breach of any of the employee’s representations, obligations or agreements under the plan.