1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 14a-11(c) or 14a-12
Dover Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
2
LOGO
------------------------------
Notice Of Annual Meeting Of Stockholders
------------------------------
March 15, 1996
TO THE STOCKHOLDERS:
Please take notice that the Annual Meeting of Stockholders of DOVER
CORPORATION will be held at the Wilmington Trust Company, 1100 North Market
Street, Rodney Square North, Wilmington, Delaware 19890, on April 30, 1996, at
10:00 A.M., for the following purposes:
1. To elect ten directors;
2. To ratify and approve the Non-Employee Directors' Stock Compensation
Plan;
3. To approve an amendment to the Certificate of Incorporation, increasing
the authorized common stock from 200,000,000 to 500,000,000 shares; and
4. To transact such other business as may properly come before the meeting.
Only holders of record of the outstanding common stock at the close of
business on March 4, 1996 are entitled to notice of and to vote at the meeting
or any adjournments thereof.
By authority of the Board of Directors,
ROBERT G. KUHBACH
Secretary
STOCKHOLDERS WHO DO NOT PLAN TO ATTEND THE MEETING ARE REQUESTED TO SIGN
AND DATE THE ENCLOSED PROXY AS SOON AS POSSIBLE AND MAIL IT IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
3
DOVER CORPORATION
PROXY STATEMENT
GENERAL
This statement is furnished to the stockholders of Dover Corporation
(hereinafter called the "Company" or "Dover"), whose principal executive offices
are at 280 Park Avenue, New York, NY 10017, in connection with the solicitation
of proxies by the Board of Directors for use at the Annual Meeting of
Stockholders (the "Meeting") to be held on April 30, 1996 or any adjournments
thereof, for the purposes set forth in the notice of meeting. Dover will pay the
reasonable and actual costs of soliciting proxies, but no amount will be paid to
any officer or employee of Dover or its subsidiaries as compensation for
soliciting proxies. In addition to solicitation by mail, Dover has retained
Morrow & Co. to solicit brokerage houses and other custodians, nominees or
fiduciaries and to send proxies and proxy material to the beneficial owners of
such shares, at a cost not to exceed $7,000. The approximate date on which this
statement and the proxy form are to be first sent to the stockholders will be
March 15, 1996.
As of the close of business on March 4, 1996, the record date for voting,
Dover had outstanding 113,786,101 shares of common stock. Each share of common
stock is entitled to one vote on all matters. To the best of Dover's knowledge,
no stockholder owns beneficially as much as 5% of the outstanding common stock
other than: (1) Magalen O. Bryant, Post Office Box 247, Middleburg, VA 22117,
who owns 6,800,632 shares (6.0%) including 597,876 shares held in a trust in
which she is a co-trustee sharing voting and investment powers and in which she
disclaims any beneficial interest, and (2) Cooke & Bieler, Inc., 1700 Market
Street, Philadelphia, PA 19103, which owned 5,694,448 shares (5.0%) as of
December 31, 1995. According to its Schedule 13G filed with the Securities and
Exchange Commission, Cooke & Bieler, Inc. has sole voting power over 4,549,300
of such shares and sole investment power over 5,571,748 of such shares.
DOVER WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED HEREIN, ON THE
WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF DOVER'S 1995 ANNUAL REPORT ON FORM
10-K INCLUDING THE SCHEDULES THERETO, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. A REQUEST THEREFOR SHOULD BE DIRECTED TO THE CORPORATE SECRETARY AT
DOVER'S OFFICE, 280 PARK AVENUE, NEW YORK, NY 10017.
The shares covered by each proxy will be voted for the election of the ten
(10) nominees or their substitutes as indicated below, for the ratification and
approval of the 1996 Non-Employee Directors' Stock Compensation Plan (the
"Directors' Plan"), and for approval of the amendment to the Company's
Certificate of Incorporation, unless directed otherwise in the proxy in which
case the shares will be voted as directed. The proxy also grants discretionary
authority to the proxies in connection with other matters that may properly come
before the Meeting.
Abstentions and broker non-votes will be included in determining whether a
quorum exists at the Meeting. Approval of each matter specified in the notice of
meeting requires the affirmative vote of a majority, or, in the case of the
election of directors, a plurality, of shares of common stock present in person
or by proxy at the Meeting and entitled to vote thereon. Stockholders may not
cumulate their votes. In determining whether a proposal specified in the notice
of meeting has received the requisite number of affirmative votes, abstentions
and broker non-votes will have the same effect as votes against the proposal,
except with respect to the election of directors where abstentions and broker
non-votes will result in the respective nominees receiving fewer votes but will
have no effect on the outcome of the vote.
1
4
A person giving a proxy may revoke it at any time before it is exercised by
written notice to the Secretary of Dover at the address referred to above or by
attending the Meeting and requesting in writing a return of the proxy.
SECURITY OWNERSHIP
The following table provides information as of March 4, 1996, as reported
to the Company by the persons and members of the group listed, as to the number
of shares and the percentage of Dover's common stock beneficially owned by: (i)
each Director and nominee for Director, (ii) each executive officer listed in
the compensation table and (iii) all Directors, nominees and executive officers
of Dover as a group.
NUMBER OF SHARES(1) PERCENTAGE
------------------- ----------
David H. Benson........................................ 2,000(2) *
Magalen O. Bryant...................................... 6,202,756(3) 5.5
597,876(4) .5
Lewis E. Burns......................................... 158,204 *
Jean-Pierre M. Ergas................................... 10,000 *
Roderick J. Fleming.................................... --
John F. Fort........................................... 46,000 *
Rudolf J. Herrmann..................................... 23,209 *
James L. Koley......................................... 11,000(5) *
John F. McNiff......................................... 159,449 *
Anthony J. Ormsby...................................... 58,000(6) *
John E. Pomeroy........................................ 85,473 *
Thomas L. Reece........................................ 171,528 *
Gary L. Roubos......................................... 327,925(7) *
Jerry W. Yochum........................................ 28,274 *
Directors and Officers as a Group...................... 8,227,602 6.7
* Less than one percent.
- ---------------
(1) Includes shares which are (a) owned by officers in the Company's Retirement
Savings Plan, totalling 64,330 shares and (b) subject to options exercisable
within 60 days for the following person(s): Mr. Burns, 81,027 shares; Mr.
Herrmann, 9,769 shares; Mr. McNiff, 106,086 shares; Mr. Pomeroy, 74,767
shares; Mr. Reece, 57,076 shares; Mr. Roubos, 68,261 shares; Mr. Yochum,
13,238 shares; and all directors and officers as a group, 554,853 shares.
(2) Includes 500 shares held by his spouse.
(3) Includes 152,480 shares held by a corporation over which she has control.
(4) Held in a trust of which she is a co-trustee sharing voting and investment
powers and in which she disclaims any beneficial interest.
(5) Includes 5,000 shares held in various retirement trusts for Mr. Koley and
his spouse and 2,000 shares held by a retirement plan as to which Mr. Koley
is a co-trustee and beneficiary.
(6) Includes 50,000 shares in a personal holding company as to which he
disclaims any beneficial interest.
(7) Includes 62,924 shares held by his spouse and 63,947 shares held by a
limited liability company as to which he disclaims any beneficial interest.
2
5
1. ELECTION OF DIRECTORS
The proxies will vote the shares covered by a proxy for the election as
directors of the ten (10) nominees listed below unless directed otherwise in the
proxy, in which case the shares will be voted as directed. If any such nominee
for election is not for any reason a candidate for election at the Meeting, an
event which management does not anticipate, the proxies will be voted for a
substitute nominee or nominees as may be designated by the Board of Directors
and for the others named below. All the nominees except Mr. McNiff are presently
directors. Each director elected at the annual meeting will serve until the
election and qualification of his successor.
Directors will be elected by a plurality of the votes cast. Only votes cast
for a nominee will be counted, except that the accompanying proxy will be voted
for the nominees in the absence of instructions to the contrary.
YEAR FIRST
BUSINESS EXPERIENCE FOR PAST FIVE YEARS, BECAME
NAME AND AGE POSITIONS WITH DOVER, AND OTHER DIRECTORSHIPS DIRECTOR
- ---------------------------- ------------------------------------------------------ ----------
David H. Benson............. Non-Executive Director and formerly Vice Chairman of 1995
58 Kleinwort-Benson Group Plc.; Chairman, Kleinwort
Charter Investment Trust Plc. (financial management);
Director of The Rouse Company (real estate
development); Director of Harrow Corporation
(industrial manufacturing); Non-Executive Director of
British Gas Plc. and Marshall Cavendish Ltd.; Trustee
of The Charities Official Investment Fund and The
Pilot Funds (financial management).
Magalen O. Bryant........... Director of Carlisle Companies Incorporated and 1979
67 O'Sullivan Corp. (industrial manufacturing).
Jean-Pierre M. Ergas........ Executive Vice President, Europe, Alcan Aluminum, Ltd. 1994
56 (aluminum manufacturer); previously Chairman and Chief
Executive Officer of American National Can Company
(beverage can manufacturer); Director of ABC Rail
Products Corporation (rail equipment manufacturer);
Brockway Standard Holdings Corporation (container
manufacturer).
Roderick J. Fleming......... Director, Robert Fleming Holdings Ltd. (financial 1995
42 management); previously International Portfolio
Director (through November 1991), Director, Capital
Markets (through July 1993), and Director of Corporate
Finance UK (through April 1994) at Robert Fleming;
also Director of Aurora Exploration and Development
Corporation Ltd. (natural resources); Updown
Investment Company Ltd. (financial management); and
West Rand Consolidated Mines Limited (natural
resources).
3
6
YEAR FIRST
BUSINESS EXPERIENCE FOR PAST FIVE YEARS, BECAME
NAME AND AGE POSITIONS WITH DOVER, AND OTHER DIRECTORSHIPS DIRECTOR
- ---------------------------- ------------------------------------------------------ ----------
John F. Fort................ Director of Tyco International Ltd. (fire protection 1989
54 systems and industrial products) and formerly Chairman
(through January 1993) and Chief Executive Officer
(through July 1992); Director, Kimberly Clark
Corporation (paper products); Roper Industries
(industrial products).
James L. Koley.............. Chairman, Koley, Jessen, Daubman & Rupiper, P.C. (law 1989
65 firm); Chairman of the Board of Directors of Arts-Way
Manufacturing Co., Inc. (agricultural manufacturing).
John F. McNiff.............. Vice President-Finance of Dover; Director, The Allen --
53 Group (telecommunications products); Director, The
Haven Fund (financial management).
Anthony J. Ormsby........... Private investor. 1971
69
Thomas L. Reece............. President (since May 1993) and Chief Executive Officer 1993
53 (since May 1994) of Dover; prior thereto Vice
President of Dover and President of Dover Resources,
Inc.
Gary L. Roubos.............. Chairman of the Board of Dover; previously Chief 1976
59 Executive Officer (through May 1994) and President
(through May 1993) of Dover for more than five years;
Director of Bell & Howell Company (information
management); DII Group, Inc. (contract manufacturing);
Omnicom Group, Inc. (advertising); Kimberly Clark
Corporation (paper products) and The Treasurers Fund
(financial management).
During 1995, the Board of Directors held four meetings. The Board has three
standing committees, namely an Audit Committee, a Compensation Committee and an
Executive Committee.
The Audit Committee is composed of four directors who are not employees of
the Company. The functions of the Audit Committee consist of annually
recommending to the Board of Directors the appointment of the independent
auditors; reviewing with management and such auditors the audit plan and results
of the auditing engagement; and reviewing management's program for ensuring the
adequacy of Dover's system of internal accounting controls. In 1995, the Audit
Committee held three meetings. Members of the Audit Committee are Anthony J.
Ormsby (Chairman), David H. Benson, Roderick J. Fleming, and James L. Koley.
The Compensation Committee is composed of three directors who are not
employees of the Company. It approves compensation for corporate executive
officers, grants, awards and payouts under the stock option plan and performance
program and minor compensation plan changes. In 1995, the Compensation Committee
held one meeting. Its current members consist of John F. Fort (Chairman),
Magalen O. Bryant and Jean-Pierre M. Ergas.
4
7
The Executive Committee is composed of six directors. The Executive
Committee is generally empowered to act unanimously on behalf of the Board and
meets or otherwise takes action on an as needed basis between the regularly
scheduled quarterly Board meetings. The Executive Committee held no meetings
during 1995. Members of the Executive Committee are Gary L. Roubos (Chairman),
Magalen O. Bryant, John F. Fort, James L. Koley, Anthony J. Ormsby and Thomas L.
Reece.
DIRECTORS' COMPENSATION
Management directors receive no compensation for services as a director or
as a member of any Committee. For 1995, each of the other directors received a
base fee of $27,000, plus an additional $10,000 a year if he or she was a member
of the Executive Committee and an additional $3,000 if he or she was a member of
the Audit Committee. Each of the other directors also received $1,500 for each
Board or Committee meeting attended.
Effective February 3, 1994, a non-contributory, unfunded retirement plan
for outside directors was adopted. Only outside directors with five or more
years of service as a Dover director were covered. The retirement benefit
commenced at age 70, Dover's mandatory retirement age for directors, and
continued for the lesser of such director's years of service on the Dover board
or life. The annual retirement benefit was equal to the base fee at retirement
($27,000 per year), payable monthly. A director could elect an actuarially
reduced joint and survivorship benefit. The benefit was reduced by any other
pension benefit received from Dover. This plan was terminated effective December
31, 1995 in connection with adoption of a new non-employee director Compensation
program.
For information concerning the proposed non-employee Director compensation
arrangements, see the discussion of the 1996 Non-Employee Directors' Stock
Compensation Plan on page 14.
James L. Koley is Chairman of Koley, Jessen, Daubman & Rupiper, P.C., a
Nebraska law firm which has performed legal services on behalf of Dover.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table below shows all remuneration paid by Dover
and its subsidiaries on an accrual basis to the Chief Executive Officer and the
four other most highly paid executive officers for services in all capacities
for each of the three calendar years ended December 31, 1995.
LONG-TERM
COMPENSATION
--------------------------
AWARDS PAYOUTS
---------- ---------
ANNUAL SECURITIES LONG-TERM
COMPENSATION(1)(2) UNDERLYING INCENTIVE ALL
NAME AND ------------------------ OPTIONS PLAN OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (#)(3) PAYOUTS COMPENSATION(4)
- ---------------------------------------- ---- -------- -------- ---------- --------- ---------------
Thomas L. Reece......................... 1995 $650,000 $650,000 60,794 $ 764,541 $ 7,392
CEO of Dover since May 1994; 1994 450,000 400,000 18,280 209,304 25,693
Director and President of Dover 1993 400,000 230,000 14,859 0 23,462
since May 1993; Director and President
of Dover Resources, Inc. until May
1993
[table continues on following page]
5
8
LONG-TERM
COMPENSATION
AWARDS PAYOUTS
SECURITIES LONG-TERM
ANNUAL UNDERLYING INCENTIVE ALL
NAME AND COMPENSATION(1)(2) OPTIONS PLAN OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (#)(3) PAYOUTS COMPENSATION(4)
- ---------------------------------------- ---- -------- -------- ------ -------- -------
Lewis E. Burns.......................... 1995 $450,000 $310,000 21,788 $ 670,320 $ 54,800
Vice President of Dover; 1994 405,000 235,000 14,300 390,947 42,200
Director and President of Dover 1993 355,000 235,000 13,977 0 165,572
Industries, Inc.
Rudolf J. Herrmann...................... 1995 400,000 230,000 19,880 274,968 7,392
Vice President of Dover; 1994 325,000 225,000 10,060 232,064 7,392
Director and President of Dover 1993 224,000 125,000 3,120 41,552 7,195
Resources, Inc. since May 1993
John E. Pomeroy......................... 1995 390,000 315,000 19,084 986,076 63,696
Vice President of Dover; 1994 340,000 210,000 11,960 432,818 35,292
Director and President of Dover 1993 295,000 195,000 11,801 19,916 43,556
Technologies, Inc
Jerry W. Yochum......................... 1995 395,000 240,000 19,562 458,790 12,962
Director and Vice President 1994 365,000 220,000 12,860 445,814 58,818
of Dover; Director and 1993 315,000 210,000 13,238 277,313 43,051
President of Dover Diversified, Inc.
- ---------------
(1) The bonus amount is determined as described in the Compensation Committee
Report on page 10 of this proxy statement. Cash bonuses for the calendar
years shown have been listed in the year earned, and were generally paid in
February of the following calendar year.
(2) Perquisites and other personal benefits paid to each officer in each
instance aggregated less than $50,000 and, accordingly, are omitted from the
table.
(3) Option share figures shown throughout this proxy statement are adjusted for
the 2 for 1 stock split in September 1995 and the May 1993 distribution of
shares of DII Group.
(4) Represents Company contributions to the Dover Retirement Savings Plan,
Company payments to other defined contribution plans and Company paid life
insurance premiums on split-dollar term life insurance. For 1995, these
amounts are detailed as follows:
OTHER
DOVER DEFINED
SAVINGS CONTRIBUTION INSURANCE
NAME PLAN PLANS PREMIUMS TOTAL
--------------------------------------------- ------------ ------------ --------- -------
T. L. Reece.................................. $7,392 $ -- $ -- $ 7,392
L. E. Burns.................................. 3,696 51,104 -- 54,800
R. J. Herrmann............................... 7,392 -- -- 7,392
J. E. Pomeroy................................ 3,696 60,000 -- 63,696
J. W. Yochum................................. 7,392 -- 5,570 12,962
6
9
STOCK OPTION PLAN AND CASH PERFORMANCE PROGRAM
The Company has an Incentive Stock Option Plan and Cash Performance
Program, adopted in 1995 (replacing a similar plan which expired in January
1995), which provides for stock options coordinated with performance awards. At
the time of grant, allocations are made such that of each combined award,
greater emphasis is given to cash performance awards at the operating level, and
greater emphasis is given to stock options at the corporate level. Information
on current grants and cash performance awards is given below. For payouts on
prior awards under the old program see the Summary Compensation Table on page 5.
OPTION GRANTS IN LAST CALENDAR YEAR
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#)(1) CALENDAR YEAR ($/SHARE) DATE VALUE($)(2)
- -------------------------------- ------------- ------------- --------- ----------------- -----------
Thomas L. Reece................. 60,794 19 $ 28.44 February 2, 2005 $ 367,196
Lewis E. Burns.................. 21,788 7 28.44 February 2, 2005 131,600
Rudolf J. Herrmann.............. 19,880 6 28.44 February 2, 2005 120,075
John E. Pomeroy................. 19,084 6 28.44 February 2, 2005 115,267
Jerry W. Yochum................. 19,562 6 28.44 February 2, 2005 118,154
- ---------------
(1) The options become exercisable on February 2, 1998.
(2) The Black-Scholes model used to calculate the hypothetical values at date of
grant considers the following factors to estimate the option's present
value: the stock's historic volatility calculated using the average daily
market price of the Company's common stock over a suitable current period,
the expected life of the option, risk-free interest rates and the stock's
expected dividend yield. The assumptions used in the model for this
valuation were: average stock price volatility .227869%; expected life 6
years; risk-free interest rate of 5.8%; and an expected dividend yield of
1.5%. This resulted in a discounted per share value of $8.42 (30% of the
option price). The Black-Scholes model assumes that an option is not
cancelable and that it can be sold at any time for cash. Since those
assumptions are not applicable here, the Company has reduced the above grant
date present values by 18% based upon its historical cancellation rates and
another 10% based upon the Company's expectation that, except in cases of
unusual need, shares acquired through the exercise of options are to be held
by participants for the duration of their employment with Dover. This
resulted in a final grant date present value of $6.06 per share.
7
10
AGGREGATED OPTION EXERCISES IN LAST CALENDAR YEAR AND YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE(1) OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT YEAR END(#) AT YEAR END($)
ACQUIRED ON VALUE(1) --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- ----------- ----------- ------------- ----------- -------------
Thomas L. Reece.............. -- $ -- 80,328 93,933 $ 1,618,859 $ 851,440
Lewis E. Burns............... -- -- 67,050 50,065 1,319,471 481,697
Rudolf J. Herrmann........... 4,022 57,864 10,200 33,060 186,172 283,123
John E. Pomeroy.............. -- -- 62,967 42,845 1,274,250 411,698
Jerry W. Yochum.............. 40,698 726,738 -- 45,660 -- 442,296
- ---------------
(1) Calculated by determining the difference between the exercise price and the
average of high and low market price of Dover common stock (as reported on
the New York Stock Exchange-Composite Transactions) for the exercise dates
or December 31, 1995, as the case may be.
LONG-TERM INCENTIVE PLAN AWARDS FOR CALENDAR YEAR 1996
PERFORMANCE OR ESTIMATED FUTURE
OTHER PERIOD PAYOUTS UNDER
FEBRUARY 1996 UNTIL MATURATION NON-STOCK PRICE
NAME AWARD OR PAYOUT BASED PLANS(1)
- ------------------------------------------------ ------------- ---------------- ----------------
Thomas L. Reece................................. $ 291,005 1996-1998 $291,000
Lewis E. Burns.................................. 347,490 1996-1998 347,000
Rudolf J. Herrmann.............................. 291,803 1996-1998 292,000
John E. Pomeroy................................. 340,808 1996-1998 341,000
Jerry W. Yochum................................. 298,485 1996-1998 298,000
- ---------------
(1) The actual cash payout at the end of the three year performance measurement
period will be equal to the award amount multiplied by a percentage which is
derived from a performance matrix, or table, which uses two performance
parameters, namely: (1.) (a) real (inflation adjusted) growth in earnings
per share, or (b) real growth in operating earnings; and (2.) (a) return on
equity, or (b) return on investment (ROI). Parameters (1) (a) and (2) (a)
apply to Mr. Reece and other Corporate officers and parameters (1) (b) and
(2) (b) apply to the other four listed officers and those participating
officers at independent subsidiaries and operating companies.
There is no payout if growth in earnings is not achieved; there is no
payout if return on equity or ROI is less than 10 percent. Moreover, the
earnings in the base year (the year preceding the award year) from which
earnings growth is measured may not be less than an amount equal to 10 percent
of equity or 10 percent of ROI.
There is a $2 million limit on the amount of any annual individual payout,
and the aggregate payout at each appropriate business unit may not exceed an
amount equal to 20% of average annual nominal earnings increase over the three
year performance period. The same plan is applied to three separate "Business
Units" as follows: (a) the entire company for corporate officers, (b) the market
segment subsidiaries for their respective officers, and (c) operating businesses
for their respective officers.
8
11
Given the foregoing, the range of payouts is large. For the past three
years, the amounts shown in the Payout Column of the Summary Compensation Table
represent percentage payouts from zero to 854% of the award given three years
prior to the year of the payout. Given this range, it is difficult to forecast
the required estimates called for by this column; the amounts shown above,
payable in February 1999, represent payouts at the 100% level on the
aforementioned matrix. This could be achieved with real average annual earnings
growth of 7% and a ROI/Return on Equity of 13% over the three-year performance
period, or various other similar combinations of growth and ROI. Actual payouts
for the three-year performance period ended December 31, 1995 (shown on the
Summary Compensation Table, pages 5 and 6) were: Mr. Reece 526%, Mr. Burns 490%,
Mr. Herrmann 402%, Mr. Pomeroy 854% and Mr. Yochum 354%.
RETIREMENT PLANS
Dover has many defined benefit and defined contribution pension plans
covering substantially all employees of the Company and its domestic and foreign
subsidiaries. Dover also has unfunded supplemental executive retirement plans
and other similar unfunded retirement programs ("SERPs") which provide
retirement benefits for eligible employees including certain officers of Dover
and its subsidiaries. Pursuant to those plans, payments will be made at the
appropriate time (e.g., retirement) to such officers and other plan
participants.
Benefits under various defined benefit plans and SERPs are based generally
upon (i) final average compensation, defined as the highest 60 months of
compensation out of the last 120 months and (ii) the years of benefit service.
Compensation for plan purposes includes salary and annual bonus but excludes any
payments under the cash performance award program or stock option awards.
Generally, vesting occurs after completion of five years of employment
subsequent to age 18. The following table shows the estimated annual benefits
payable upon retirement to persons in the specified remuneration and years of
service classifications. The years of covered employment for eligible persons
named in the Summary Compensation Table are: Mr. Reece 23, Mr. Herrmann 7, and
Mr. Yochum 13. All of these persons are vested. The benefit amounts listed in
the table do not include Social Security Benefits to which the covered employee
may be entitled.
PENSION PLAN TABLE
YEARS OF SERVICE
------------------------------------------------------------
FINAL AVERAGE COMPENSATION 15 20 25 30 35
- -------------------------- -------- -------- -------- -------- --------
$ 400,000 $ 87,000 $116,000 $144,900 $173,900 $202,900
500,000 109,500 146,000 182,400 218,900 255,400
600,000 132,000 176,000 219,900 263,900 307,900
700,000 154,500 206,000 257,400 308,900 360,400
800,000 177,000 236,000 294,900 353,900 412,900
900,000 199,500 266,000 332,400 398,900 465,400
1,000,000 222,000 296,000 369,900 443,900 517,900
1,100,000 244,500 326,000 407,400 488,900 570,400
1,200,000 267,000 356,000 444,900 533,900 622,900
1,300,000 289,500 386,000 482,400 578,900 675,400
9
12
TERMINATION ARRANGEMENTS
The Company has agreements with Mr. Roubos, Mr. Reece and other officers
including those shown on the Summary Compensation Table designed to encourage
each such officer to continue to carry out his duties with the Company in the
event of a potential change of control of the Company. For purposes of these
agreements, a "change of control" occurs generally when (a) a person becomes
beneficial owner of 20% or more of the Company's common stock, (b) as a result
of a business combination or tender offer, a majority of the Board of Directors
changes, or (c) the stockholders approve a merger or other business combination,
as a result of which the Company ceases to be an independent public company. The
agreements provide that if within eighteen (18) months following a change of
control of the Company the officer's employment is terminated either by the
Company for other than cause or disability or by such officer for good reason,
then such officer will receive a lump sum payment equal to: (1) the highest base
salary (but not bonus or any other compensation) received by such officer in any
of the most recent five years, or (2) if such officer is then more than 45 years
old and has been with the Company for more than three years the lump sum payment
will equal twice such base salary. Also, in the event of a change of control,
the present value of certain unfunded deferred compensation plans will be paid
immediately to such officers in a lump sum, and the exercisability of stock
options held for more than six months will be accelerated.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes certain
excise taxes on, and limits the deductibility of, certain compensatory payments
made by a corporation to or for the benefit of certain individuals if such
payments are contingent upon certain changes in the ownership or effective
control of the corporation or in the ownership of a substantial portion of the
assets of the corporation, and have an aggregate present value of at least three
times the individual's annualized includable compensation for the base period,
as defined in the Code. Although Dover payments would not be expected to reach
this amount, the agreements limit the compensation payments thereunder to
amounts which can be paid by the Company without adverse tax consequences.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors is
composed entirely of independent outside directors. The Committee approves
annual compensation for corporate executive officers, administers the Dover
incentive stock option and cash performance program and any minor changes in
other compensation programs. From time to time, but not less than once every
five years, the Committee reviews studies done by its independent compensation
consultant as to the competitiveness of the Company's overall executive
compensation program. This was last done in 1994 and the results of that review
are reflected in this report.
A. EXECUTIVE COMPENSATION POLICY
The Committee's basic overriding compensation principle is that
compensation at the corporate level, the independent subsidiary level, and at
the operating president level should be linked to total return to stockholders
generally and relative to other comparable companies. The Committee also
believes that all compensation, i.e., annual, medium-term and long-term, should
be closely aligned to the performance of the business over which the executive
has the most control. This is done annually with salaries and bonuses, on a
medium-term (three-year) basis with the cash performance program, and on a
long-term basis with stock options. The relative "mix" of medium-term and
long-term opportunity is also adjusted with increasingly larger percentages
allocated to long-term reward potential the higher the recipient is in the
organization.
10
13
Performance awards and stock option grants are annual, but payouts on cash
awards, if earned, occur three years later and options generally have a 10-year
term, but are not exercisable for three years. With respect to pensions and
other benefit type programs, the Committee has set a target at the median of
comparable companies. Substantially all compensation to be paid to the executive
officers for 1996 is expected to qualify for deductibility for federal income
tax purposes under Section 162(m) of the Code.
Annual Compensation: The Committee reviews the Company's performance
annually. The compensation programs of the Company are highly leveraged on the
basis of performance. The Company has for years performed in the top quartile as
measured by the Management Compensation Services Project 777 database (the
"Project 777 database"), which currently includes approximately 40% of the
Fortune 500 Industrials. The Project 777 database includes a substantially
larger number of companies than the peer index group referred to in connection
with the Stock Performance Graph below. The average rank in the Project 777
database, which determines the overall standing, is the average of the following
nine separate measurements: return on equity for one year and five years; return
on capital for one year and five years; return on sales for the current year;
return on assets for one year and five years; and total capital return for one
and five years. As a result of the 1994 compensation review mentioned above, the
Committee has determined that as long as the Company continues to perform in the
top quartile, salaries and bonuses will be targeted at the 60th to the 75th
percentile for all company executives. Should the Company's performance fall
below that level, compensation targets will be adjusted downward. Annual bonuses
vary with annual performance based upon earnings growth, return on investment
and achievement of special Company goals as well as the Committee's judgment of
overall performance.
Long-Term Compensation: Dover's management, the Committee and the Board of
Directors believe that tangible (cash) and intangible (stock) incentives should
be provided to key management at each of the three levels within the Company
over some longer period of time. Given the different levels and opportunities to
impact Dover's long-term growth, and hence benefit Dover's stockholders, Dover
has a long-term compensation program including both stock options and cash
incentive awards (the "Plan").
Only officers and executives who are in a position to affect materially the
profitability and growth of the Company are eligible for stock options and
incentive awards. The Plan basically provides a "mix" of the two incentives,
with operating management receiving a substantial percentage of their respective
gain opportunity in the form of cash incentive awards, and the executive
officers receiving a substantial portion of their opportunity in the form of
stock options. The basic calculation begins with the individual's base salary
and may include the most current annual cash bonus, which is then multiplied by
a factor to determine the size of the incentive award (100% payout case) and the
value of the stock option grant, which is then converted into shares. For the
officers identified in the Summary Compensation Tables above, the cash incentive
awards under the Plan were based on multiples ranging from .13 to .45, and the
number of shares granted was based on a multiple ranging from .90 to 1.65. In
all cases, the multiples were initially determined by an independent consultant,
and confirmed by the Committee. Cash incentive awards are annual and prior
awards are not considered by the Committee when current awards are made.
Likewise, the number of shares that may be granted to each participant is not
otherwise limited and prior grants are not considered by the Committee when
current grants are awarded. The number of optionees in each annual grant
averages just under one percent of the total number of Dover employees. The
annual shares granted has averaged about 1/3 of 1% of shares outstanding over
the past five years and was less than 1/2 of 1% in 1996. Dover expects that,
except in cases of unusual need, shares acquired through options will be held by
participants (including family members) for the duration of their employment
with the Company.
11
14
B. CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee awarded Mr. Thomas L. Reece, Chief Executive
Officer, a bonus of $650,000 for 1995, which was equal to his 1995 salary. His
1996 salary was increased 20% to $780,000. These determinations were based upon:
(a) outside independent compensation survey data, which places the compensation
of Mr. Reece at the median range of the comparative group for companies of
Dover's size; (b) the record sales and earnings achieved in 1995; (c) the 1995
earnings increase of 38%; (d) the general business environment during 1995; and
(e) a subjective judgment factor which is the prerogative of the Committee. The
first three factors were given the greatest weight by the Committee.
Compensation Committee: John F. Fort, Chairman
Magalen O. Bryant
Jean-Pierre M. Ergas
12
15
STOCK PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
DOVER CORPORATION, S&P 500 INDEX & PEER GROUP INDEX
TOTAL SHAREHOLDER RETURNS
MEASUREMENT PERIOD S&P 500 IN-
(FISCAL YEAR COVERED) DEX DOVER CORP. PEER GROUP
DEC-90 100 100 100
DEC-91 130.47 107.14 135.17
DEC-92 140.41 120.19 149.56
DEC-93 154.56 167.15 183.96
DEC-94 156.60 144.57 166.91
DEC-95 215.45 209.84 256.20
YEARS ENDING
This graph assumes $100 invested on December 31, 1990 in Dover Corporation
common stock, S&P 500 index and a peer group index. Each mark on the axis
displaying the years 1990 through 1995 represents December 31 of that year. The
peer index consists of the following: Ametek Inc., AMP Inc., Applied Power-CL A,
Carlisle Cos. Inc., Coltec Industries, Cooper Industries Inc., Crane Co.,
Danaher Corp., Eaton Corp., EG&G Inc., Emerson Electric Co., Federal Signal
Corp., General Electric Co., General Signal Corp., Harnischfeger Industries
Inc., Hubbell Inc., Illinois Tool Works, Ingersoll-Rand Co., ITT Industries
Inc., Keystone International, Parker-Hannifin Corp, Pentair Inc., Tecumseh
Products Co., TRW Inc., Tyco International Inc. and United Technologies Corp.
* Total return assumes reinvestment of dividends.
13
16
2. PROPOSAL TO RATIFY AND APPROVE THE 1996 NON-EMPLOYEE
DIRECTORS' STOCK COMPENSATION PLAN
On February 8, 1996, the Board of Directors adopted the Dover 1996
Non-Employee Directors' Stock Compensation Plan (the "Directors' Plan"), subject
to approval by Dover's stockholders at the Meeting. Under the Directors' Plan,
non-employee Directors will be granted 1,000 shares of Dover Common Stock per
year as their primary compensation for serving as directors. This grant will
replace the base fee of $27,000 currently paid to non-employee Directors, and
the fees of $10,000 per year for serving on the Executive Committee, while the
$3,000 per year for serving on the Audit Committee will be changed to $2,000 per
year for serving on any committee. In addition, the non-contributory, unfunded
retirement plan in effect since 1994 for non-employee directors who have served
a period of at least five years, providing for an annual retirement benefit
equal to the base fee at retirement (the "1994 Plan") was eliminated. Payments
under the 1994 Plan to the three Directors whose rights had vested and who
retired before January 1, 1996 was unaffected. Any Director whose rights have
vested under the 1994 Plan and who is still serving as a Director received a
cash payment equal to the actuarial value of such benefits under the 1994 Plan.
These Directors (and amounts paid) are: Magalen O. Bryant ($158,013), John F.
Fort ($34,379), James L. Koley ($81,125), and Anthony J. Ormsby ($191,803).
Non-employee Directors will continue to receive $1,500 for each meeting
attended, plus reasonable expenses incurred to attend meetings. Management
directors receive no compensation for services as a director or on any committee
and this will not change.
If approved by the stockholders at the Meeting, the Directors' Plan will
become effective retroactively as of January 1, 1996, and will have a term
expiring December 31, 2005.
DESCRIPTION OF THE DIRECTORS' PLAN
The following plan summary is qualified in its entirety by reference to the
full text of the Directors' Plan, which is attached to this Proxy Statement as
Exhibit A.
PURPOSE
The purpose of the Directors' Plan is to promote the interests of Dover and
its stockholders by attracting and retaining non-employee Directors capable of
furthering the future success of Dover and by aligning their economic interests
more closely with those of Dover's stockholders.
AUTOMATIC GRANTS OF SHARES
Each person who, (i) serves as a Director during any calendar year during
the term of the Directors' Plan and (ii) is not then, and has not been for a
period of six months prior to the beginning of such calendar year and the date
on which such person became a director, an employee of Dover or any subsidiary
of Dover, will be granted shares as primary compensation for regular services
performed as a Director during each such calendar year. The number of shares to
be granted to persons who are Directors for any full calendar year will be
1,000, subject to adjustment as provided below. Such shares will be granted on
December 15 of such calendar year. Any person who serves as a Director for less
than all of any calendar year will be granted a part of 1,000 shares
proportionate to the number of days such person served as Director during such
calendar year. The number of shares for which certificates are delivered to each
such Director will be automatically reduced by 30% to provide for the estimated
Federal income tax and/or withholding tax payment obligations of the Director,
with Dover remitting to the appropriate tax authorities the fair market value of
the shares for which certificates are not so delivered. Fractional shares will
be rounded to the nearest whole share.
14
17
The last sale price of Dover's shares, as reported on the New York Stock
Exchange-Composite Transactions, for March 4, 1996 was $45.625.
ADJUSTMENTS
The number and kind of shares granted to each non-employee Director will be
subject to automatic adjustment for any changes in the number or kind of
outstanding shares resulting from a merger, recapitalization, stock split, stock
dividend, or other extraordinary change in Dover's corporate or capital
structure.
AMENDMENT OF THE PLAN
The Board of Directors is permitted to amend, suspend or discontinue the
Directors' Plan, provided that stockholder approval is required (i) to increase
the number of shares to be granted for any calendar year (except for the
automatic adjustments described above), and (ii) if necessary to ensure
compliance with Rule 16b-3 under the Securities Exchange Act of 1934, as
amended.
RECOMMENDATION
To be effective, the Directors' Plan must be approved by a majority of the
total number of outstanding shares of stock present in person or by proxy and
entitled to vote at the meeting. The Board of Directors recommends a vote FOR
the adoption of the Directors' Plan. Proxies will be voted FOR approval of the
Directors' Plan unless otherwise specified in the proxy.
3. PROPOSED AMENDMENT TO THE CORPORATION'S
CERTIFICATE OF INCORPORATION
Dover's Certificate of Incorporation currently authorizes the issuance of
200,000,000 shares of common stock with a par value of $1 per share. At the
present time, approximately 126,500,000 of the 200,000,000 shares of authorized
common shares have been issued or are reserved for the exercise of stock options
under various Stock Option Plans of the Company The Certificate of Incorporation
also authorizes 100,000 shares of preferred stock with a par value of $100 per
share, with or without voting powers (not to exceed one vote per share) and in
such series and with such other designations, preferences and rights that may be
fixed by the Board of Directors pursuant to the authority vested in the Board of
Directors under the Certificate of Incorporation. Currently 45,000 shares of
preferred stock are designated "Series A Junior Participating Preferred Stock"
as part of the Preferred Stock Purchase Rights program adopted in November 1987,
as described below. The proposed amendment does not change any of the terms of
the preferred stock.
The Board of Directors of the Company has unanimously adopted a resolution
approving and recommending to its stockholders for their approval an amendment
to Article Fourth of the Certificate of Incorporation which would increase the
number of authorized shares of common stock from 200,000,000 shares to
500,000,000 shares.
If the amendment is approved by the stockholders, all such shares not
heretofore issued and outstanding would be issuable at any time or from time to
time by action of the Board of Directors without further authorization from the
stockholders unless required pursuant to the rules of the New York Stock
Exchange or applicable law. As in the past, no holder of common stock would have
any preemptive rights.
15
18
The Board of Directors believes that it is desirable to increase the number
of authorized common stock at this time. This action will provide the Company
with the necessary flexibility in the future by insuring that there will be
sufficient authorized but unissued shares of common stock available for general
corporate purposes including stock splits, stock dividends and/or acquisitions,
without the necessity of further stockholder action at any special or annual
meeting
Dover has no present plans, proposals, agreements or understandings to
issue any of the authorized common stock. Although Dover has no such intentions,
the additional authorized but unissued shares of common stock could be used to
make more difficult a change in control of the Company. Under certain
circumstances, such shares could be used to create voting impediments or to
discourage third parties seeking to effect a takeover or otherwise gain control
of the Company. Such shares could be placed with purchasers who might support
the Board of Directors in opposing a hostile takeover bid.
Dover's Certificate of Incorporation and certain other documents currently
contain the following provisions which may make more difficult or discourage
takeover attempts: (1) Article Fourteenth which requires, with certain
exceptions, a vote of the holders of 80% of the voting stock for business
combinations and other specified transactions with a 15% stockholder unless
certain minimum price and procedural requirements are met; (2) Article Fifteenth
which prohibits "greenmail" payments without stockholder approval to any person
or group that has held more than 5% of the stock and also requires cumulative
voting for election of directors at any time there is a stockholder or group of
affiliated stockholders who own 40% or more of the outstanding common stock; (3)
Article Sixteenth which requires that any stockholder action must be taken at a
meeting and may not be effected by a consent in writing; and (4) provisions in
the By-Laws that reserve to the Board of Directors and Executive Committee the
right to call a special meeting of stockholders and also require that the
Secretary of the Company be given advance notice of all stockholder proposals
and nominations for the election of directors. These provisions may also make
more difficult a change of management even when considered desirable by
stockholders.
Dover has outstanding Preferred Stock Purchase Rights which were
distributed as a dividend to shareholders of record of common stock as of
November 23, 1987. As a result, each outstanding share of common stock also
represents one quarter of a right (collectively, the "Rights"), each of which
Rights, when exercisable, entitles the holder thereof to purchase a unit
consisting of one-thousandth of a share of Dover's Series A Junior Participating
Preferred Stock (the "Series A Preferred Stock") at a purchase price of $175 per
unit, subject to certain antidilution adjustments. The Rights will become
exercisable only if a person or group acquires beneficial ownership of 20% or
more of the common stock or begins a tender offer or exchange offer that would
result in that person or group owning 20% or more of the common stock.
Additionally, upon the occurrence of similar events, each holder of a Right
shall have the right to receive upon exercise of such Right at its current
exercise price, in lieu of shares of the Series A Preferred Stock, the number of
shares of Dover common stock or the third party acquirer's common stock having a
market value of two times the exercise price of the Right. Until the Rights
become exercisable, the Company may redeem them at five cents per Right. The
Rights expire on November 23, 1997. The Series A Preferred Stock consists of
45,000 authorized shares that are reserved for issuance upon exercise of the
Rights. No such shares have been issued. The terms and conditions of the Rights
are governed by a Rights Agreement dated as of November 5, 1987 (the "Rights
Agreement") between Dover and Harris Trust Company of New York, as Rights Agent.
The Rights have certain anti-takeover effects. The Rights will cause
dilution to a person or group that attempts to acquire the Company without
conditioning the offer on the Rights being redeemed or a substantial number of
Rights being acquired. The Rights should not interfere with any merger of other
business combination approved by the Board of Directors of the Company.
16
19
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company.
The proposed amendment to Article Fourth requires the affirmative vote of
the holders of a majority of the shares of outstanding common stock. The
proposed amendment to the first sentence reads as follows:
"Fourth: The total number of shares of all classes of stock which the
corporation is authorized to issue is 500,100,000; of which 500,000,000 shares,
having a par value of $1 each, shall be Common Stock; and 100,000 shares, having
a par value of $100 each, shall be Preferred Stock, with or without voting
powers, full or limited, and in such series and with such designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions in respect to each class of stock or
series thereof as hereinafter provided:"
The Board of Directors recommends a vote FOR the adoption of the amendment.
Proxies will be voted FOR approval of the proposed amendment unless otherwise
specified in the proxy.
MISCELLANEOUS
OTHER MATTERS
Management does not know of any other business to be taken up at the annual
meeting. If, however, any other business properly comes before the meeting or
any adjournments thereof, the persons named as proxies will vote the shares
covered by a proxy in accordance with their best judgment on such matters.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The independent certified public accounting firm of Coopers & Lybrand
L.L.P. is the principal independent public accountant selected in August, 1995
to audit the annual accounts of Dover and its subsidiaries for the current year.
Representatives of Coopers & Lybrand L.L.P. are not expected to be present at
the Annual Meeting.
On August 7, 1995, KPMG Peat Marwick LLP ("Peat Marwick"), which had been
the independent certified public accountant for Dover for many years, was
terminated. The decision to change accountants was recommend by the Company's
management, and approved by both the Company's Audit Committee and Board of
Directors.
Peat Marwick's reports on the financial statements for the two years ended
December 31, 1993 and 1994 contained no adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles, other than to include a statement ". . . in 1992 the Company adopted
the provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 109, 'Accounting for Income Taxes,' and the
Financial Accounting Standards No. 106, 'Employers' Accounting for
Postretirement Benefits Other than Pensions."'
In connection with its audits for the years ended December 31, 1993 and
1994, and during the subsequent interim periods, there have been no
disagreements with Peat Marwick on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, nor
have any "reportable events" (as described in Item 304 (a)(1)(v) of Regulation
S-K) occurred.
17
20
The Company requested that Peat Marwick furnish it with a letter addressed
to the Securities and Exchange Commission ("SEC") stating whether it agrees with
the above statements, which was done and filed with the SEC.
During the two years ended December 31, 1993 and 1994 and through August 7,
1995, the Company did not consult with Coopers & Lybrand L.L.P. on items which
were subject to Statement on Auditing Standards No. 50 or which concerned a
disagreement or "reportable event" with the former accountants.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
In order for stockholder proposals to be included in Dover's proxy
statement for the 1997 Annual Meeting, they must be received by Dover at its
principal executive offices, 280 Park Avenue, New York, NY 10017 by November 15,
1996. All other stockholder proposals, including nominations for directors, must
be received by Dover not less than 60 days nor more than 90 days prior to the
Meeting, which is scheduled for April 30, 1997.
Dated: March 15, 1996
By authority of the Board of
Directors,
ROBERT G. KUHBACH
Secretary
18
21
EXHIBIT A
DOVER CORPORATION
1996 NON-EMPLOYEE DIRECTORS'
STOCK COMPENSATION PLAN
1. PURPOSE
The purpose of the Dover Corporation 1996 Non-Employee Directors' Stock
Compensation Plan (the "Plan") is to promote the interests of Dover Corporation
(the "Company") and its stockholders by attracting and retaining non-employee
Directors capable of furthering the future success of the Company and by
aligning their economic interests more closely with those of the Company's
stockholders.
2. DEFINITIONS
"Board of Directors" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations thereunder. References to any provision of
the Code or rule or regulation thereunder shall be deemed to include any amended
or successor provision, rule or regulation.
"Director" means a member of the Board of Directors.
"Grantee" means any person who has been granted Shares under Section 4.
"Rule 16b-3" means Rule 16b-3 under the Securities Exchange Act of 1934, as
amended from time to time, and any replacement or substitute therefor.
"Share" means a share of common stock of the Company and such other
securities as may be substituted for a Share or such other securities pursuant
to the adjustment provisions of Section 5.
3. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective only if it is approved by the affirmative
vote of the holders of a majority of the Shares present or represented and
entitled to vote at the annual meeting of the Company's stockholders to be held
on April 30, 1996 or at any adjournment thereof and, if so approved, shall be
deemed effective as of January 1, 1996.
The term during which Shares shall be granted under the Plan shall expire
on December 31, 2005.
4. GRANTS OF SHARES
Each person who (i) serves as a Director during any calendar year during
the term of the Plan and (ii) is not then, and has not been for a period of six
months prior to the later of the beginning of such calendar year and the date on
which such Person became a director, an employee of the Company or any
subsidiary of the Company shall be granted, without any further action or
authorization, Shares as his or her primary compensation for regular services
performed as a Director during each such calendar year. Persons who are
Directors on December 1 in any such calendar year shall be granted such Shares
on December 15 of such calendar year. Any person who serves as a Director during
any such calendar year but ceases to be a Director prior to December 1 of such
year shall be granted shares on the date he or she ceases to be a Director,
provided that the Board of Directors may decide that any Director removed for
cause at any time during any calendar year shall forfeit any Shares for such
calendar year. The number of Shares to be granted to each such Director for each
full calendar year shall be 1000. The number of Shares to be granted to each
such Director for any calendar year for less than all of which he or she serves
as a Director shall be 1000 multiplied by a fraction, the numerator of which
shall be the number of days he or she serves as a Director during such year
A-1
22
and the denominator of which shall be 365. There shall be no fractional shares
issued under this Plan; the number of Shares granted at any time to any Grantee
shall be rounded to the nearest whole Share.
Certificates for shares granted under the Plan shall be delivered on the
date of grant or as soon thereafter as reasonably practicable, provided that the
number of Shares for which certificates shall be delivered to each Grantee shall
be automatically reduced by 30% to provide for the Federal estimated income
and/or withholding tax payment obligations of the Grantee, with the Company
remitting to the appropriate tax authorities the fair market value of the Shares
for which certificates are not so delivered.
The Shares granted under the Plan may be treasury shares or newly-issued
shares. The obligation of the Company to deliver Shares shall be subject to all
applicable laws, rules and regulations, and to such approvals by governmental
agencies as may be deemed necessary or appropriate by the Company, including,
among others, such steps as counsel for the Company shall deem necessary or
appropriate to comply with requirements of relevant securities laws. This
obligation shall also be subject to the condition that any Shares reserved for
issuance under the Plan shall have been duly listed on any national securities
exchange which then constitutes the principal trading market for the Shares.
5. ADJUSTMENTS
The number and kind of Shares which shall be automatically granted to each
Grantee under Section 4 of the Plan shall be automatically adjusted to prevent
dilution or enlargement of the rights of Grantees in the event of any changes in
the number or kind of outstanding Shares resulting from a merger,
recapitalization, stock exchange, stock split, stock dividend, other
extraordinary dividend or distribution, corporate division or other change in
the Company's corporate or capital structure.
6. AMENDMENT, SUSPENSION AND DISCONTINUANCE
The Board of Directors may at any time amend, suspend or discontinue the
Plan, provided that (i) the number of Shares to be granted to any Director for
any calendar year shall not be increased from 1,000 (except pursuant to Section
5 of the Plan) without stockholder approval, and (ii) if stockholder approval of
such action is necessary in order to ensure compliance with Rule 16b-3, such
action shall be subject to approval by the holders of the Shares by the vote and
in the manner required by Rule 16b-3. In no event may the Board of Directors
amend any provision of the Plan that constitutes a "plan provision" referred to
in Rule 16b-3(c)(2)(ii)(B) more frequently than once every six months (other
than to comport with changes in the Code).
7. COMPLIANCE WITH RULE 16B-3
The Company intends that the Plan and all transactions hereunder meet all
of the requirements of Rule 16b-3, and that any Grantee shall not, as a result
of any grant hereunder, lose his or her status as a "disinterested person" as
defined in Rule 16b-3. Accordingly, if any provision of the Plan does not meet a
requirement of Rule 16b-3 as then applicable to any such transaction, or would
cause a Grantee not to be a "disinterested person," such provision shall be
construed or deemed amended to the extent necessary to meet such requirement and
to preserve such status.
8. GOVERNING LAW
The Plan shall be applied and construed in accordance with and governed by
the law of the State of Delaware and applicable Federal law.
A-2
23
PROXY PROXY
DOVER CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, APRIL 30, 1996
The undersigned hereby appoints Gary L. Roubos, Thomas L. Reece and
Robert G. Kuhbach, or any of them, as the undersigned's proxy or proxies, with
full power of substitution, to vote all shares of Common Stock of Dover
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held in Wilmington, Delaware, on April 30, 1996 at 10:00
A.M., local time, and any adjournments thereof, as fully as the undersigned
could if personally present, upon the proposals set forth on the reverse side
hereof revoking any proxy or proxies heretofore given.
IMPORTANT -- This Proxy must be signed and dated on the reverse side.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE
REVERSE SIDE, BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES AND FOR ITEMS 2 AND 3 LISTED ON THE REVERSE SIDE.
- --------------------------------------------------------------------------------
DOVER CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
[ ]
For All
1. Election of Directors -- For Withheld Except those whose name(s) appear below.
Nominees: D.H. Benson, / / / / / /
M.O. Bryant, J-P. M. Ergas, -----------------------------------
R.J. Fleming, J.F. Fort,
J.L. Koley, J.F. McNiff,
A.J. Ormsby, T.L. Reece,
and G.L. Roubos.
2. To ratify and approve the For Against Abstain
Non-Employee Directors' Stock / / / / / /
Compensation Plan.
3. To approve an amendment to the For Against Abstain
Corporation's Certificate of / / / / / /
Incorporation, increasing the
authorized common stock from
200,000,000 to 500,000,000 shares.
4. To transact such other business For Against Abstain
as may properly come before the / / / / / /
meeting.
The Board of Directors recommends a Vote FOR Items 1, 2 and 3.
Date 1996
----------------
-------------------------------------------
Signature
-------------------------------------------
Signature
Please sign exactly as your name or names appear above. For joint
accounts, each owner should sign. When signing as executor, administrator,
attorney, trustee or guardian, etc., please give your full title.
