-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, DlW6Bg1qTnwQ36OBa+1BBeG//q+cY0+irtfX1r4uU8iLSASTWtmQFiLKTWqpbdu6 ANzxcvFvrCZrroa1KN7PKg== 0000950109-94-000522.txt : 19940324 0000950109-94-000522.hdr.sgml : 19940324 ACCESSION NUMBER: 0000950109-94-000522 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940517 FILED AS OF DATE: 19940323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DANAHER CORP /DE/ CENTRAL INDEX KEY: 0000313616 STANDARD INDUSTRIAL CLASSIFICATION: 3585 IRS NUMBER: 591995548 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 34 SEC FILE NUMBER: 001-08089 FILM NUMBER: 94517362 BUSINESS ADDRESS: STREET 1: 1250 24TH ST NW STREET 2: SUITE 800 CITY: WASHINGTON STATE: DC ZIP: 20037 BUSINESS PHONE: 2028280850 FORMER COMPANY: FORMER CONFORMED NAME: DMG INC DATE OF NAME CHANGE: 19850221 DEF 14A 1 DEFINITIVE NOTICE AND PROXY DANAHER CORPORATION 1250 24TH STREET, N.W. WASHINGTON, D.C. 20037 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 17, 1994 To the Shareholders: Notice is hereby given that the 1994 Annual Meeting of Shareholders of Danaher Corporation, (the "Company"), a Delaware corporation (the "Company"), will be held at the ANA Hotel, 2401 M Street, NW, Washington, D.C. 20037, on May 17, 1994 at 4:00 p.m., local time, for the following purposes: 1. To elect three Directors to hold office for a term of three years and until their successors are elected and qualified. 2. To approve the appointment of Arthur Andersen & Co. as the Company's independent auditors for the year ending December 31, 1994. 3. To approve an amendment to the 1987 Stock Option Plan of the Company. 4. To approve the grant of an option to acquire shares of Company stock to be made to Mr. George M. Sherman, President and Chief Executive Officer. 5. To consider and act upon such other business as may properly come before the meeting. The Board of Directors has fixed the close of business on March 23, 1994 as the record date for determination of shareholders entitled to notice of and to vote at the meeting and any adjournment thereof. Whether or not you expect to be present, please sign, date and return the enclosed proxy card as promptly as possible in the enclosed stamped envelope, the postage on which will be valid if mailed in the United States. By Order of the Board of Directors /s/ Patrick W. Allender Patrick W. Allender Secretary March 30, 1994 EVERY SHAREHOLDER'S VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU PLAN TO ATTEND THE DANAHER CORPORATION ANNUAL MEETING. PROXY STATEMENT DANAHER CORPORATION 1250 24TH STREET, N.W. WASHINGTON, D.C. 20037 (202) 828-0850 1994 ANNUAL MEETING OF SHAREHOLDERS MAY 17, 1994 This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Danaher Corporation, a Delaware corporation (the "Company"), of proxies for use at the 1994 Annual Meeting of Shareholders ("Annual Meeting") to be held at the ANA Hotel on May 17, 1994 at 4:00 p.m., local time, and at any and all adjournments thereof. The Company's principal address is 1250 24th Street, N.W., Washington, D.C. 20037. The date of mailing of this Proxy Statement is on or about March 30, 1994. The purpose of the meeting is to elect three directors of the Company, to approve the appointment of Arthur Andersen & Co. as the Company's independent auditors for the current year, to approve an amendment to the 1987 Stock Option Plan of the Company, to approve the grant of an option to acquire shares of Company stock to be made to Mr. George M. Sherman, President and Chief Executive Officer, and to transact such other business as may properly come before the meeting. OUTSTANDING STOCK AND VOTING RIGHTS In accordance with the By-laws of the Company, the Board of Directors has fixed the close of business on March 23, 1994 as the record date for determining the shareholders entitled to notice of, and to vote at, the Annual Meeting. Only shareholders of record on that date will be entitled to vote. A shareholder who submits a proxy on the accompanying form has the power to revoke it by notice of revocation directed to the proxy holders of the Company at any time before it is voted. A subsequently dated proxy, when filed with the Secretary of the Company, will constitute revocation. Proxies will be voted as specified on the proxy card and, in the absence of specific instructions, will be voted for the proposals described in this Proxy Statement and in the discretion of the proxy holders on any other matter which properly comes before the meeting. A shareholder who has given a proxy may nevertheless attend the meeting, revoke the proxy and vote in person. The Board of Directors has selected Steven M. Rales and Mitchell P. Rales to act as proxies with full power of substitution. Solicitation of proxies may be made by mail, personal interview, telephone and telegraph by officers and other management employees of the Company, who will receive no additional compensation for their services. The total expense of the solicitation will be borne by the Company and may include reimbursement paid to brokerage firms and others for their expenses in forwarding material regarding the Annual Meeting to beneficial owners. The only outstanding securities of the Company entitled to vote at the Annual Meeting are shares of Common Stock. As of the close of business on March 23, 1994, the record date for determining the shareholders of the Company entitled to vote at the Annual Meeting, 28,556,127 shares of the Common Stock of the Company, $.01 par value ("Company Common Stock"), were issued and outstanding. Each outstanding share of Company Common Stock entitles the holder to one vote on all matters brought before the Annual Meeting. The quorum necessary to conduct business at the Annual Meeting consists of a majority of the outstanding shares of Company Common Stock as of the record date. The election of the directors nominated will require a plurality of the votes cast in person or by proxy at the Annual Meeting by holders of shares of the Company's Common Stock. In the election of directors, each stockholder is entitled to cast one vote for each director to be elected; cumulative voting is not permitted. Approval of the appointment of the Company's auditors will require the affirmative vote of the holders of a majority of the shares of the Company's Common Stock cast at the Annual Meeting in person or by proxy. Approval of the amendment to the 1987 Stock Option Plan and the approval of the grant of an option to acquire shares of Company stock to be made to Mr. Sherman require the affirmative vote of the holders of a majority of the shares of common stock of the Company present, or represented, and entitled to vote at the annual meeting. Abstentions and "broker non-votes" are counted as present in determining whether the quorum requirement is satisfied. Abstentions and "non-votes" are treated as votes against proposals presented to stockholders other than elections of directors. For purpose of the election of directors, abstentions and broker non-votes are not considered to be votes cast and do not affect the plurality vote required for directors. For purposes of the appointment of the Company's auditors, abstentions and broker non-votes will not be considered votes cast for the foregoing purposes. For purposes of approval of the amendment to the 1987 Stock Option Plan and the approval of the option grant to Mr. Sherman, abstentions are treated as present and entitled to vote on the matter and have the effect of a vote against the proposal and broker non-votes are not considered to be votes cast. BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK BY DIRECTORS, OFFICERS AND PRINCIPAL SHAREHOLDERS As of March 23, 1994, the beneficial ownership of Company Common Stock by directors and the nominees for directors, by each of the executive officers named in the Summary Compensation Table, by any principal Shareholders beneficially owning more than five percent of the Company's Common Stock and by all present executive officers and directors of the Company as a group, was as follows:
NUMBER OF SHARES PERCENT NAME BENEFICIALLY OWNED OF CLASS - ---- ------------------ -------- Mortimer M. Caplin............................... 53,937 * George M. Sherman................................ 600,000(4) 2.1% Donald J. Ehrlich................................ 10,000 * Walter G. Lohr, Jr............................... 37,000 * Mitchell P. Rales................................ 12,684,649(1) 44.4% Steven M. Rales.................................. 12,684,649(1) 44.4% W. John Weinhardt................................ 24,000(5) * Patrick W. Allender.............................. 67,227(6) * John P. Watson................................... 7,200(7) * A. Emmet Stephenson, Jr.......................... 58,030(2) * T. Rowe Price Associates, Inc. .................. 1,450,849(3) 5.1% All executive officers and directors as a group (includes 13 persons)........................... 13,564,043(1)(2) 47.5%
- -------- (1) The aggregate holdings for Steven and Mitchell Rales include all of the 10,013,783 shares of Company Common Stock owned by Equity Group Holdings, of which Steven M. Rales and Mitchell P. Rales are the general partners. All of the shares owned by Equity Group Holdings are held with sole voting and dispositive power. Their business address, and that of Equity Group Holdings, is 1250 24th Street, N.W., Washington, D.C. 20037. (2) Includes 34,030 shares of Company Common Stock held in the names of Stephenson Ventures, a limited partnership of which the sole general partner is A. Emmet Stephenson, Jr., and 20,000 shares held in the name of Tessa Fund, a general partnership beneficially owned by trusts for the benefit of the daughter of Mr. Stephenson, who is the general partner for control purposes only. Bank One, Denver as Trustee owns 4,000 shares in individual retirement accounts for the benefit of A. Emmet Stephenson, Jr. and his wife. (3) T. Rowe Price Associates, Inc.'s address is: 100 E. Pratt Street, Baltimore, Maryland 21202. 2 (4) Mr. Sherman has the option to acquire 500,000 shares of common stock. (5) Mr. Weinhardt has the option to acquire 24,000 shares of common stock. (6) Mr. Allender has the option to acquire 20,000 shares of common stock. (7) Mr. Watson has the option to acquire 7,200 shares of common stock. * Represents less than 1% of the outstanding Company Common Stock. Apart from Steven M. Rales and Mitchell P. Rales and T. Rowe Price Associates, Inc., the Company knows of no other person that beneficially owns 5% or more of its Common Stock. PROPOSAL 1. ELECTION OF DIRECTORS OF THE COMPANY The Company's Certificate of Incorporation provides that the Board of Directors shall be divided into three classes with the number of directors in each class to be as equal as possible. The Board has fixed the number of directors of the Company at seven. At the 1994 Annual Meeting of Shareholders, shareholders will elect three directors to serve until the 1997 Annual Meeting of Shareholders and until their successors are duly elected and qualified. The Board of Directors has nominated Messrs. Mortimer M. Caplin, Donald J. Ehrlich and Walter G. Lohr, Jr. to serve as directors in the class whose term expires in 1997. Messrs. Mitchell P. Rales, George M. Sherman and A. Emmet Stephenson, Jr. will continue to serve as directors in the class with a term expiring in 1996, and Mr. Steven M. Rales will continue to serve as a director with his term expiring in 1995. The names of the nominees and the directors continuing in office, their principal occupations, the years in which they became directors and the years in which their terms expire are set forth below. In the event the nominees shall decline or be unable to serve, it is intended that the proxies will be voted in the discretion of the proxy holders. The Company knows of no reason to anticipate that this will occur. NOMINEES FOR ELECTION AT THIS YEAR'S ANNUAL MEETING TO SERVE IN THE CLASS WHOSE TERM EXPIRES IN 1997
DIRECTOR TERM NAME AGE PRINCIPAL OCCUPATION SINCE EXPIRES ---- --- -------------------- -------- ------- Mortimer M. Caplin (a,c). 77 Senior Member of Caplin & 1990 1994 Drysdale, a law firm in Washington, D.C., for over five years; Director of Fairchild Industries, Inc., Fairchild Corporation, Presidential Realty Corporation, and Unigene Laboratories, Inc. Donald J. Ehrlich (a,c) 56 President and Director of 1985 1994 Wabash National Corp. for five years; Director of Indiana Secondary Market for Educational Loans, Inc. and INB National Bank, N.W. Walter G. Lohr, Jr. (a) 50 Partner of Hogan & Hartson, a 1983 1994 law firm in Baltimore, Maryland, since 1992; attorney in private practice 1987-1992.
(a) Member of the Compensation Committee of the Board of Directors. (b) Mitchell Rales and Steven Rales are brothers. (c) Member of the Audit Committee of the Board of Directors. 3 CURRENT DIRECTORS WHOSE TERM WILL CONTINUE AFTER THIS MEETING
DIRECTOR TERM NAME AGE PRINCIPAL OCCUPATION SINCE EXPIRES ---- --- -------------------- -------- ------- Steven M. Rales (b)...... 42 Chairman of the Board of the 1983 1995 Company since 1984; Chief Executive Officer of the Company until Feb. 1990; General Partner of Equity Group Holdings, a partnership located in Washington, D.C. with interests in publicly traded securities, manufacturing companies and media operations, since 1979; and Director of Wabash National Corp. Mitchell P. Rales (b).... 37 President of the Company from 1983 1996 1987 to February 1990; Executive Vice President of the Company from January 1984 to March 1987; General Partner of Equity Group Holdings, a general partnership located in Washington, D.C. with interests in publicly traded securities, manufacturing companies and media operations, since 1979; Director of Wabash National Corp. From July 1, 1991 to January 2, 1992, Mr. Rales served as acting president of CPC-Rexcel, Inc., a manufacturer of plastic food containers, following the resignation of that company's chief executive officer, until the search for a new chief executive officer was completed. CPC- Rexcel, Inc. filed a voluntary petition under Chapter 11 of the Federal Bankruptcy Code in November 1992. George M. Sherman........ 52 President and Chief Executive 1990 1996 Officer of the Company since February 1990; Executive Vice President and President of the Power Tools and Home Improvement Group of The Black & Decker Corporation from 1985 to 1990. A. Emmet Stephenson, (c). 48 President of Stephenson and 1986 1996 Co., a private investment management firm in Denver, Colorado for more than five years; Senior Partner of Stephenson Merchant Banking for more than five years.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD The Board of Directors had a total of four meetings during 1993. All directors attended at least 75% of the meetings of the Board of Directors and of the Committees of the Board of Directors on which they served during 1993. The Executive Committee acts on behalf of the Board of Directors of the Company between meetings of the Board of Directors. The Executive Committee comprised of Messrs. George M. Sherman, Steven M. Rales and Mitchell P. Rales met two times in 1993. The Audit Committee reviews the financial statements of the Company to confirm that they reflect fairly the financial condition of the Company and to appraise the soundness, adequacy and application of accounting and operating controls. The Audit Committee recommends independent auditors to the Board of Directors, reviews the scope of the audit function of the independent auditors and reviews audit reports rendered by the independent auditors. The Audit Committee met two times during 1993. 4 The Compensation Committee reviews the Company's Compensation philosophy and programs, and exercises authority with respect to the payment of direct salaries and incentive compensation to Company officers. The Compensation Committee is also responsible for the oversight of the stock option plans of the Company. The Compensation committee met two times in 1993. The Company has no Nominating Committee of its Board of Directors. EXECUTIVE OFFICERS OF THE REGISTRANT Executive Officers of the Company are:
OFFICER NAME AGE POSITION SINCE ---- --- -------- ------- Steven M. Rales..... 42 Chairman of the Board 1984 Mitchell P. Rales... 37 Chairman of the Executive Committee 1984 George M. Sherman... 52 Chief Executive Officer, President and 1990 Director Patrick W. Allender. 47 Senior Vice President, Chief Financial 1987 Officer and Secretary James H. Ditkoff.... 48 Vice President-Finance/Tax 1991 W. John Weinhardt... 43 Vice President and Group Executive 1991 C. Scott Brannan.... 35 Vice President Administration and Controller 1987 John P. Watson...... 49 Vice President and Group Executive 1993
Steven M. Rales has served as Chairman of the Board since January 1984. He has been a General Partner, since 1979, in Equity Group Holdings, a general partnership located in Washington, D.C. with interests in media operations, publicly traded securities and manufacturing companies. Mitchell P. Rales has served as a director of the Company since January 1984, President from March 1987 to January 1990 and Executive Vice President from January 1984 to March 1987. He has been a General Partner of Equity Group Holdings since 1979. From July 1, 1991 to January 2, 1992, Mr. Rales served as acting president of CPC-Rexcel, Inc., a manufacturer of plastic food containers, following the resignation of that company's chief executive officer and until the search for a new chief executive officer was completed. CPC-Rexcel, Inc. filed a voluntary petition under Chapter 11 of the Federal Bankruptcy Code in November 1992. George M. Sherman has served as President and Chief Executive Officer and a director of the Company since February 1990. He served as a corporate Executive Vice President and President of the Power Tools and Home Improvement Group at The Black and Decker Corporation from 1985 to 1990. Patrick W. Allender has served as Chief Financial Officer of the Company since March, 1987. James H. Ditkoff was appointed Vice President-Finance/Tax in January, 1991. He has served in an executive capacity in finance/tax for the Company since September, 1988. He was Vice President, Taxes for Pepsico, Inc. prior thereto. W. John Weinhardt was appointed Vice President and Group Executive in January, 1991. Prior to joining the Company in November, 1990, he held various management positions with Prestolite Wire Corporation and Bendix/Allied Signal Corporation, including most recently President and CEO of Prestolite Wire Corporation. C. Scott Brannan was appointed Vice President-Administration and Controller of the Company in November, 1987. John P. Watson was appointed Vice President and Group Executive in 1993. He has served the Company in an executive capacity in its Tool Group since September, 1990. He was Executive Vice President for the Sterling Group, a division of the Kohler Company, prior thereto. 5 COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth certain information concerning the compensation for the last three completed fiscal years of the Chief Executive Officer and the five executive officers of the Company who, in addition to the Chief Executive Officer, received the highest compensation during 1993. SUMMARY COMPENSATION TABLE
LONG TERM ANNUAL COMPENSATION COMPENSATION - ------------------------------------------------------- --------------------- AWARDS --------------------- (E) OTHER (F) (G) (H) (A) ANNUAL RESTRICTED SECURITIES ALL OTHER NAME AND (C) (D) COMPEN- STOCK UNDER- COMPEN- PRINCIPAL (B) SALARY BONUS SATION(1) AWARDS(2) LYING SATION(3) POSITION YEAR ($) ($) ($) ($) OPTION (#) ($) --------- ---- ------- ------- --------- ---------- ---------- --------- George M. Sherman...... 1993 675,000 800,000 -- -- 200,000 $34,000 President and CEO 1992 675,000 540,000 1,027,998 -- -- 27,000 1991 675,000 145,800 -- -- -- 24,000 Steven M. Rales........ 1993 295,000 -- -- -- -- 19,000 Chairman of the Board 1992 295,000 -- -- -- -- 19,000 1991 295,000 -- -- -- -- 18,000 Mitchell P. Rales...... 1993 295,000 -- -- -- -- 19,000 Chairman, 1992 295,000 -- -- -- -- 19,000 Executive Committee 1991 295,000 -- -- -- -- 18,000 W. John Weinhardt...... 1993 187,500 234,000 -- -- 15,000 19,000 Vice President and 1992 176,666 135,200 -- -- -- 19,000 Group Executive 1991 175,000 105,000 -- -- -- 1,000 Patrick W. Allender.... 1993 176,666 180,000 -- -- 30,000 19,000 Senior Vice President 1992 157,500 124,000 -- -- 20,000 19,000 and CFO 1991 140,833 31,300 -- -- -- 18,000 John P. Watson......... 1993 180,666 150,000 -- -- 25,000 19,000 Vice President and 1992 164,333 100,000 -- -- 6,000 19,000 Group Executive 1991 153,500 -- -- -- -- 18,000
- -------- (1) Represents tax gross-up payments on restricted stock grant (2) Mr. Sherman received a grant of 200,000 shares in 1990; 100,000 are currently vested and 100,000 vest in August, 1996. Vested shares participate in dividends ($12,000 in 1993, none prior thereto) on a non- preferential basis. The value of the 200,000 shares at December 31, 1993 was $7,625,000. (3) Includes contributions to the Company's 401(k) plan for all individuals; in the case of Mr. Sherman, it also includes supplemental term life insurance ($6,000) and financial consulting fees ($9,000). 6 OPTION GRANTS IN LAST FISCAL YEAR The following table sets forth certain information relating to options granted to purchase shares of the Company Common Stock.
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR INDIVIDUAL GRANTS OPTION TERM (3) - ----------------------------------------------------------------------- ------------------------------- (A) (B) (C) (D) (E) (F) (G) (H) NO. OF SECURITIES % OF TOTAL UNDERLYING OPTIONS EXERCISE OPTIONS/SARS GRANTED TO OR BASE GRANTED EMPLOYEES IN PRICE EXPIRATION NAME (#) (1) FISCAL YEAR ($/SH)(2) DATE 0%($) 5%($) 10%($) ---- ------------ ------------ --------- ---------- ------------------- ----------- George Sherman (4)...... 200,000 37.3% $27.00 4/8/03 $ 0 3,396,003 8,606,191 W. John Weinhardt....... 15,000 2.8% $36.50 12/7/03 $ 0 891,817 1,967,572 Patrick W. Allender..... 30,000 5.6% $36.50 12/7/03 $ 0 1,783,634 3,935,144 John P. Watson.......... 20,000 3.7% $29.88 5/18/03 $ 0 973,424 1,550,019 John P. Watson.......... 5,000 0.9% $36.50 12/7/03 $ 0 297,272 655,857
- -------- (1) Options become exercisable ratably beginning one year from date of grant through five years from date of grant. (2) Options were granted at fair market value on the date of grant. (3) The dollar amounts set forth under these columns are the result of calculations of assumed annual rates of stock price appreciation from the date of the grant to the date of expiration of such options of 0%, 5%, and 10%. These assumptions are not intended to forecast future price appreciation of the Company's stock price. The Company's stock price may increase or decrease in value over the time period set forth above. (4) Options are subject to shareholders' approval. FY-END OPTION VALUES The following table sets forth certain information concerning the number of unexercised options and the value of unexercised options at the end of 1993 for the executive officers whose compensation is reported in the Summary Compensation Table. Value is considered to be, in the case of unexercised options, the difference between the exercise price and the market price at December 31, 1993. No stock options were exercised by any of the executive officers named in the Summary Compensation Table during 1993.
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS OPTIONS AT FY-END(#) AT FY-END($) EXERCISABLE/ EXERCISABLE/ NAME UNEXERCISABLE UNEXERCISABLE ---- ---------------------- ---------------------- George M. Sherman................. 500,000/200,000(1) $12,687,500/$2,225,000 W. John Weinhardt................. 24,000/ 31,000 570,000/ 404,375 Patrick W. Allender............... 13,000/ 52,000 275,625/ 472,500 John P. Watson.................... 7,200/ 33,800 148,350/ 195,525
- -------- (1) Subject to Shareholders Approval. 7 COMPENSATION OF DIRECTORS Directors who are not officers of the Company receive meeting attendance fees of $750 per meeting (excluding telephonic meetings), together with quarterly fees of $3,000. EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT Pursuant to the terms of termination agreements between the Company and Messrs. Sherman, Watson and Weinhardt, if the Company were to terminate employment without cause, as defined therein, Mr. Sherman's salary and benefits would continue for an additional 24 months, and Messrs. Watson and Weinhardt's salary and benefits would continue for an additional 12 months. See "Report of The Compensation Committee of the Board of Directors on Executive Compensation" for further discussion of Mr. Sherman's contract. BOARD INTERLOCKS AND INSIDER PARTICIPATION CONCERNING EXECUTIVE OFFICER COMPENSATION Messrs. Steven M. Rales, Mitchell P. Rales and George M. Sherman receive a salary set by the Compensation Committee of the Board of Directors and also serve as directors, however, they do not participate in deliberations regarding their own compensation. Messrs. Steven M. Rales and Mitchell P. Rales also serve as directors and participate in deliberations concerning executive officer compensation at Wabash National Corp., of which Donald J. Ehrlich, a director of the Company, serves as President. The members of the Compensation Committee are Walter G. Lohr, Jr., Mortimer M. Caplin and Donald J. Ehrlich. REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION The report is not deemed to be "soliciting material" or to be "filed" with the Securities and Exchange Commission (the "SEC") or subject to the SEC's proxy rules or to the liabilities of Section 18 of the Securities Exchange Act of the 1934 (the "1934 Act"), and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by the Corporation under the Securities Act of 1933 or the 1934 Act. Total executive officer compensation is comprised of three principal components: annual salary, annual incentive compensation, and grants of options to purchase Company stock. In the case of Mr. Sherman, this included a restricted stock grant at the time of his hire. The Board endeavors to establish total compensation packages for each executive officer equal to the value of that executive's services determined by both what other companies have or might pay the executive for his services and this relationship to other executive positions within the Company, as negotiated at the date of hire. This base is then adjusted annually based on the Board's assessment of individual performance. To date, the Board has been satisfied in assessing these values without the assistance of outside consulting services. A fundamental element of the Company's compensation policy is that a substantial portion of each executive's compensation be directly related to the success of the Company. This is accomplished in two ways. First, the annual incentive compensation program requires that the Company, or the Company's businesses for which the executive is directly responsible, achieve certain minimum targets in earnings level (earnings per share which has a majority weighting) and working capital management (working capital turnover, which has a minority weighting). If performance for the year is below minimum targeted levels (generally approximately three-quarters of the earnings target must be achieved and working capital management must exceed target levels) there would be no payment. If the minimum targets are met or exceeded, each executive receives a formula-based payout taking into account the Company's performance and his or her personal contribution thereto. 8 Secondly, executives and other key employees who, in the opinion of the Committee, contribute to the growth, development and financial success of the Company are eligible to be awarded options to purchase Company stock. These grants are normally made at the fair market value on the date of grant with vesting over a five year period. In addition to the factors discussed above, the amount of options granted is impacted both by the level of the employee within the Company's management and the amount of options previously granted to the employee. Thereby, the compensation value of this element is directly related to the performance of the Company as measured by its returns to stockholders over at least a five year period. Mr. Sherman's compensation is governed by a written contract dated January 2, 1990, whereby he agreed to serve as President and Chief Executive Officer. The contract provides for Mr. Sherman to be paid a base salary of $675,000 per year and an annual formula-based incentive compensation award, if earned, as determined by the Compensation Committee. He also received 200,000 shares of restricted stock (see Summary Compensation Table) and an option to acquire 500,000 shares (see Year End Option Value Table) of the Company stock, and has received, or will receive, tax gross-up payments related to these items. In addition, Mr. Sherman's contract requires the Company to provide supplemental term life insurance and financial consulting services to him (see Summary Compensation Table) and to provide severance benefits discussed previously. The Compensation Committee had two deliberations concerning Mr. Sherman's 1993 Compensation during which the members considered a grant of additional options to acquire Company shares under the Company's 1987 Employee Stock Option Plan. The Committee discussed Mr. Sherman's contribution to the development, growth, and financial success of the Company as well as the Company's preference for performance based compensation. The Committee and subsequently the Board of Directors recommended, and Mr. Sherman agreed, that his base salary, which has not increased since he joined the Company, would not be increased during the remainder of the term of his contract. Therefore, during the remaining term of his contract with the Company, any increases in Mr. Sherman's compensation will be tied directly to the financial performance of the Company and the Company's stock price. In that regard, the Board of Directors granted to Mr. Sherman options to acquire 200,000 shares of the Company stock at an option price equal to the fair market value as of the effective date of the grant, subject to ratification of the Compensation Committee and approval by the shareholders at the 1994 annual meeting. The Committee also evaluated Mr. Sherman's annual incentive compensation award for 1993. The Committee assessed Mr. Sherman's performance in light of the targets referenced above and awarded Mr. Sherman an incentive compensation payment of $800,000 for 1993. For 1994, the Committee has established a maximum bonus payment of up to $1,000,000 based on achievement of the above described criteria. The Committee has considered the impact of newly enacted provisions of the federal income tax laws that in certain circumstances disallow compensation deductions in excess of $1 million for any year with respect to the executive officers named in proxy statements of publicly traded companies. The Securities and Exchange Commission requires compensation committees of public companies to state their compensation policies relative to this $1 million deduction limit. With respect to the Company's Chief Executive Officer, a portion of his compensation is determined pursuant to a binding contract dated January 2, 1990 and, accordingly, is not subject to the deduction limit. In addition, the Committee has determined that the provisions of the Company's 1987 Stock Option Plan as proposed to be amended by Proposal 3 should enable the Company to comply, to the extent deemed desirable, with an exception to the $1 million deduction limit for performance-based compensation with respect to awards made under that plan. The Committee also believes that the 1994 bonus award to be paid to the Company's Chief Executive Officer will not exceed the $1 million deduction limit and accordingly should be fully deductible by the Company. The Committee does not anticipate that the compensation of the other named executive officers will be affected by the deductibility limit referred to above. The Company does not maintain a long-term incentive plan. The Company has not repriced any options or stock appreciation rights during the last ten years. 9 COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS Walter G. Lohr, Jr. Mortimer M. Caplin Donald J. Ehrlich STOCK PERFORMANCE CHART As part of proxy statement disclosure requirements mandated by the Securities and Exchange Commission, the Company is required to provide a five-year comparison of the cumulative total shareholder return on its Common Stock with that of a broad equity market index and either a published industry index or a Company constructed peer group index. This graph is not deemed to be "soliciting material" or to be "filed" with the SEC or subject to the SEC's proxy rules or to the liabilities of Section 18 of the 1934 Act, and the graph shall not be deemed to be incorporated by reference into any prior or subsequent filing by the Corporation under the Securities Act of 1933 or the 1934 Act. The following chart compares the yearly percentage change in the cumulative total shareholder return in the Company's Common Stock during the five years ended December 31, 1993 with the cumulative total return on the S&P 500 Index (the equity index) and the Wilshire 5000 Index (the peer index). The comparison assumes $100 was invested on December 31, 1988 in the Company's Common Stock and in each of the above indices with reinvestment of dividends. [INSERT CHART] CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company, from time to time, has been involved in transactions with Equity Group Holdings and its affiliates. The Company has received legal services from the firm of Caplin & Drysdale, of which Mr. Caplin, a Director, is a principal. The amount of such fees for 1993 was less than five-percent of such firm's gross revenues. These transactions, which are conducted on an arms length basis are not material, either individually or in the aggregate. 10 PROPOSAL 2. APPROVAL OF APPOINTMENT OF AUDITORS The Board of Directors has appointed Arthur Andersen & Co., a national accounting firm of independent certified public accountants, to act as independent accountants for the Company and its consolidated subsidiaries for 1994. Arthur Andersen & Co. has been the Company's auditors since 1976 and has advised the Company that the firm does not have any direct or indirect financial interest in the Company or any of its subsidiaries, nor has such firm had any such interest in connection with the Company during the past five years other than its capacity as the Company's independent certified public accountants. A representative of Arthur Andersen & Co. is expected to be present at the Annual Meeting and will have an opportunity to make a statement if he desires to do so and to be available to answer questions from shareholders. The Board of Directors of the Company unanimously recommends that shareholders vote FOR ratification and approval for the selection of Arthur Andersen & Co. to serve as independent auditors for the Company for 1994. PROPOSAL 3. AMENDMENT TO THE 1987 STOCK OPTION PLAN The Company's 1987 Stock Option Plan (the "Plan") was approved by shareholders at the 1987 Annual Meeting. An amendment to the Plan increasing the number of shares available for award from 1,300,000 to 1,800,000 and limiting the total number of option shares awarded to any individual under the Plan to 500,000 shares was approved by the Board of Directors, subject to shareholder approval. The text of the proposed amendment is set forth as Exhibit A to this Proxy Statement. PURPOSE OF THE PLAN The Purpose of this Plan is to increase the ownership of the Company Common Stock by those key employees who contribute to the continued growth, development and financial success of the Company and its subsidiaries, and to attract and retain such employees and reward them for the Company's performance. The Plan permits grants of non-qualified stock options and stock appreciation rights. NUMBER OF SHARES The Plan as amended, provides that 1,800,000 share of Common Stock of the Company will be available for awards to key employees in the form of non- qualified stock options and stock appreciation rights, subject to adjustment to reflect certain subsequent events relating to Common Stock such as stock dividends, stock splits and share exchanges. The shares of Company Common Stock utilized in connection with the Plan may be either authorized but unissued shares or shares acquired and held in the treasury of the Company. No more than 500,000 shares may be issued to any individual with respect to awards made under the Plan. ADMINISTRATIVE; ELIGIBILITY The selection and the extent of participants in the Plan will be determined by the Board of Directors, which may delegate its authority to a committee (the "Committee") consisting of at least two members of the Board of Directors who are not eligible for awards. Key employees of the Company and its subsidiaries who, in the opinion of the Committee, contribute to the growth, development and financial success of the Company or its subsidiaries are eligible for awards. In determining the size of awards, the Committee will take into account a participant's responsibility level, performance, potential, cash compensation level and the fair market value of the Company Common Stock at the time of the award as well as such other considerations as it deems appropriate. The Board of Directors estimates that approximately 100 persons are eligible to receive awards under the Plan. DURATION; EFFECTIVE DATE The Plan has been effective since October 20, 1987, and options may be granted under the Plan until October 20, 1997. 11 NON-QUALIFIED STOCK OPTIONS The Board of Directors or the Committee may grant a participant options which are non-qualified under the Internal Revenue Code of 1986. The timing and size of options awarded will be subject to guidelines adopted by the Committee, which may in its discretion provide that an option may not be exercised in whole or in part for any period or periods. Options may be reacquired in the discretion of the Board of Directors or the Committee for cash. STOCK APPRECIATION RIGHTS In the discretion of the Board of Directors or the Committee, any or all optionees may be given the right at any time during the option period, to surrender all or part of their options and to receive from the Company a payment equal to the appreciation that they would have realized on shares of stock had the related options been exercised and the option stock sold. The amount payable by the Company upon exercise of a stock appreciation right may be paid either in cash, in Common Stock of the Company or in a combination thereof, as the Board of Directors of the Committee in its sole discretion shall determine. However, the total number of shares which may be received pursuant to a stock appreciation right may not exceed the total number of shares subject to the related option. Shares to which a stock appreciation right is related shall be used not more than once to calculate the amounts to be received pursuant to an exercise of such right. The Board of Directors or the Committee, may, in its sole discretion prohibit or limit the exercise of stock appreciation rights for a period or periods as to determines to be in the best interest of the Company and its stockholders. STOCK OPTION AGREEMENTS Non-qualified stock options will be evidenced by agreements approved by the Board of Directors or the Committee, and a stock appreciation right will be evidenced by an agreement incorporated in or amending the stock option agreement to which the stock appreciation right relates. These agreements will contain terms and conditions relating to medium of payment, number of shares, option price (which will not be less than 85% of the fair market value of the shares subject to the option on the date of grant), date of exercise, repurchases, exercise in the event a participant ceases employment with the Company, and other provisions that the Committee deems advisable. SUBSTITUTE AWARDS Non-qualified stock options and stock appreciation rights may be granted under the Plan in substitution for similar awards held by employees of the corporations who become or are about to become key employees of the Company as a result of a merger, acquisition of assets or stock, consolidation or reorganization. The terms and conditions of the substitute awards may vary from the terms and conditions of the Plan to such extent as the Committee at the time of the grant may deem appropriate in order to conform, in whole or in part, to provisions of awards in substitution for which they are granted. However, no variation which materially extends the period for granting awards, or materially modifies the requirements as to eligibility can be effected without shareholder approval. EFFECT OF MERGER OR ACQUISITION If the Company is the surviving or resulting corporation in any merger, acquisition of assets or stock, consolidation or reorganization, rights granted under the Plan shall survive, and the Board of Directors shall make any necessary determinations and adjustments to preserve the rights and benefits of participants. If the Company is not the surviving or resulting corporation in any such transaction, the successor corporation may, but shall not be required to, assume the rights and obligations of the Company under the Plan. AMENDMENT OF PLAN The Board of Directors may at any time and from any time alter, amend, suspend, or discontinue the Plan, except no such action may be taken without stockholder approval which materially increase the benefits to participants under the Plan, materially increases the number of shares to be issued, materially extends the period for granting awards, or materially modifies the requirements as to eligibility. In addition, no such action may be taken which adversely affects the rights of a participant under the Plan without his consent. 12 FEDERAL INCOME TAX CONSEQUENCES Under current law, there will be no federal income tax consequences to either the optionee or the Company upon the grant of a non-qualified stock option. An option holder who exercises a non-qualified stock option will generally realize compensation taxable as ordinary income in an amount equal to the difference between the option price and the fair market value of the shares on the date of the exercise. The option holder's basis in such shares will be their fair market value on the date of exercise, and when he disposes of the shares he will generally recognize capital gain or loss, either long-term or short-term, depending on the holding period of the shares. The grant of a stock appreciation right will not result in taxable income to the option holder or a deduction to the Company. An option holder who exercises a stock appreciation right will realize compensation taxable as ordinary income in an amount equal to the cash or the fair market value of the shares received on the date of exercise. The option holder's basis in any share received will be equal to the amount of compensation income recognized with respect to the exercise, and when he disposes of the shares he will generally recognize capital gain or loss, either long-term or short-term, depending on the holding period of the shares. Generally, the Company is entitled to a deduction in the amount of the income recognized by the option holder at the time an option or stock appreciation right is exercised. Beginning in 1994, the Company's deductions for an executive officer named in the proxy statement may be limited to the extent compensation paid to such officer for any year exceeds $1 million. However, an exception to this limit is provided with respect to options and stock appreciation rights granted at fair market value under a plan that is approved by shareholders and administered by outside directors who satisfy certain conditions imposed by proposed regulations issued by the Internal Revenue Service, provided the plan limits the maximum number of shares that may be issued to any individual. If the Company's shareholders approve the proposed amendment of the Plan, it is expected that the requirements of this exception will be satisfied for options and stock appreciation rights granted at fair market value under the Plan. The Internal Revenue Service has ruled that an employee who allows a stock appreciation right to expire, other than as a result of exercising the related option, will have taxable income in the year of expiration equal to the amount of cash or the fair value of stock which he would have received if he had exercised his stock appreciation right. THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE AMENDMENT TO THE 1987 STOCK OPTION PLAN. APPROVAL REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK OF THE COMPANY PRESENT, OR REPRESENTED, AND ENTITLED TO VOTE AT THE ANNUAL MEETING. PROPOSAL 4. APPROVAL OF OPTION GRANT TO PRESIDENT AND CHIEF EXECUTIVE OFFICER By Unanimous Written Consent dated as of April 8, 1993, the Board of Directors of the Company granted 200,000 non-qualified stock options to George M. Sherman under the Company's 1987 Stock Option Plan at fair market value at the close of business on that date ($27.00 per share), subject to approval of the Compensation Committee of the Board of Directors and by a vote of a majority of the Company's shareholders. The Compensation Committee approved this grant (see Report of Compensation Committee) on December 7, 1993. THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE OPTION GRANT TO THE PRESIDENT AND CHIEF EXECUTIVE OFFICER. APPROVAL REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK OF THE COMPANY PRESENT, OR REPRESENTED, AND ENTITLED TO VOTE AT THE ANNUAL MEETING. 13 OTHER MATTERS The management of the Company is not aware of any other business that may come before the meeting. However, if additional matters properly come before the meeting, proxies will be voted at the discretion of the proxy holders. SHAREHOLDER PROPOSALS Shareholder proposals intended to be presented at the 1995 Annual Meeting of Shareholders of the Company must be received by the Company at its principal executive offices, Danaher Corporation, 1250 24th Street, N.W., Washington, D.C. 20037, no later than November 27, 1994 for inclusion in the Proxy Statement and Proxy relating to the 1995 Annual Meeting of Shareholders. By Order of the Board of Directors /s/ Patrick W. Allender Patrick W. Allender Secretary Dated: March 30, 1994 COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1993 MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING TO THE COMPANY. 14 EXHIBIT A AMENDMENT TO DANAHER CORPORATION 1987 STOCK OPTION PLAN Resolved that, as recommended and declared advisable by the Board of Directors, the Company's 1987 Stock Option Plan be amended by striking out SECTION FIVE in its entirety and substituting in lieu thereof the following: SECTION FIVE. GRANT OF AWARDS AND LIMITATION OF NUMBER OF SHARES OF STOCK AWARDED. The Board or the Committee may, from time to time, grant Awards of Stock to one or more Eligible Employees; provided that (i) subject to any adjustment pursuant to Section Eleven or Twelve, the aggregate number of shares of Stock subject to awards under this Plan may not exceed 1,800,000 shares; (ii) to the extent that an Award lapses or the rights of the Participant to whom it was granted terminate, any shares of Stock subject to such Awards shall again be available for the grant of an award hereunder; and (iii) shares ceasing to be subject to an award because of the exercise of a Non-qualified Stock Option and Stock Appreciation Right shall no longer be available for the grant of an Award hereunder and (iv) no Eligible Employee shall receive an Award or Awards under this Plan for, in the aggregate, more than 500,000 shares. In determining the size of awards, the Board or the Committee may take into account a Participant's responsibility level, performance, potential, cash compensation level, the Fair Market Value of the Stock at the time of Awards and such other considerations as it deems appropriate. 15 DANAHER CORPORATION PROXY FOR 1994 ANNUAL MEETING OF SHAREHOLDERS--MAY 17, 1994 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DANAHER CORPORATION The undersigned acknowledges receipt of the Proxy Statement and Notice, dated March 30, 1994, of the Annual Meeting of Shareholders and hereby appoints Steven M. Rales and Mitchell P. Rales, and each of them, with full power of substitution, the attorneys, agents and proxies of the undersigned, to act for and in the name of the undersigned and to vote all the shares of Common Stock of the undersigned which the undersigned is entitled to vote at the Annual Meeting of Shareholders of Danaher Corporation (the "Company") to be held May 17, 1994, and at any adjournment or adjournments thereof, for the following matters: PLEASE SEE REVERSE SIDE Dated: , 1994 ------------------- -------------------------------- -------------------------------- Signature of Shareholder(s) Please sign, date and promptly return this proxy in the enclosed envelope. No postage is required if mailed in the United States. (Please sign exactly as your name appears in the space on the left. If stock is registered in more than one name, each holder should sign. When signing as an attorney, administrator, executor, guardian or trustee, please add your title as such. If executed by a corporation, the proxy must be signed by a duly authorized officer, and his title should appear next to his signature.) Proxies will be voted in the manner directed herein by the undersigned. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 and 4. (Please sign and date on the reverse side.) 1. ELECTION OF DIRECTORS Nominees Mortimer M. Caplin, Donald J. Ehrlich and Walter G. Lohr, Jr. to serve in the class of directors with a term expiring in 1997. WITHHOLD AUTHORITY for all FOR all Nominees Nominees [_] [_] To withhold authority to vote for an individual Nominee, write that Nominee's name on the line below. - -------------------------------------------------------------------------------- 2. APPROVAL OF AUDITORS For Against Abstain [_] [_] [_] 3. APPROVAL OF AMENDMENT TO 1987 STOCK OPTION PLAN For Against Abstain [_] [_] [_] 4. APPROVAL OF GRANT OF AN OPTION TO ACQUIRE COMPANY STOCK MADE TO PRESIDENT AND CEO For Against Abstain [_] [_] [_] 5. IN THEIR DISCRETION on any other matter which may properly come before the meeting, including any adjournment thereof. PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK LOGO DANAHER CORPORATION PROXY FOR 1994 ANNUAL MEETING OF SHAREHOLDERS--MAY 17, 1994 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DANAHER CORPORATION The undersigned acknowledges receipt of the Proxy Statement and Notice, dated March 30, 1994, of the Annual Meeting of Shareholders and hereby appoints Steven M. Rales and Mitchell P. Rales, and each of them, with full power of substitution, the attorneys, agents and proxies of the undersigned, to act for and in the name of the undersigned and to vote all the shares of Common Stock of the undersigned which the undersigned is entitled to vote at the Annual Meeting of Shareholders of Danaher Corporation (the "Company") to be held May 17, 1994, and at any adjournment or adjournments thereof, for the following matters: Proxies will be voted in the manner directed herein by the undersigned. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 and 4. PLEASE SIGN AND DATE ON THE REVERSE SIDE. 1. ELECTION OF DIRECTORS. Nominees Mortimer M. Caplin, Donald J. Ehrlich and Walter G. Lohr, Jr. to serve in the class of directors with a term expiring in 1997. [_] FOR Nominees [_] WITHHOLD AUTHORITY for Nominees To withhold authority to vote for an individual Nominee, write that Nominee's name on the line below. ----------------------------------------------------------- 2. APPROVAL OF AUDITORS [_] FOR [_] AGAINST [_] ABSTAIN 3. APPROVAL OF AMENDMENT TO 1987 STOCK OPTION PLAN [_] FOR [_] AGAINST [_] ABSTAIN 4. APPROVAL OF GRANT OF AN OPTION TO ACQUIRE COMPANY STOCK MADE TO THE PRESIDENT AND CEO [_] FOR [_] AGAINST [_] ABSTAIN 5. IN THEIR DISCRETION on any other matter which may properly come before the meeting, including any adjournment thereof. Dated: , 1994 ------------------- -------------------------------- -------------------------------- Signature of Shareholder(s) Please sign, date and promptly return this proxy in the enclosed envelope. No postage is required if mailed in the United States. Please sign exactly as your name appears in the space on the left. If stock is registered in more than one name, each holder should sign. When signing as an attorney, administrator, executor, guardian or trustee, please add your title as such. If executed by a corporation, the proxy must be signed by a duly authorized officer, and his title should appear next to his signature.) PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK -----END PRIVACY-ENHANCED MESSAGE-----