Summary
Dover Corporation (DOV) filed an 8-K on February 17, 2010, detailing executive compensation decisions made by its Compensation Committee and independent directors. The report primarily outlines annual bonus awards for 2009 and grants under the 2005 Equity and Cash Incentive Plan for the 2010-2012 performance period. Notably, salaries for named executive officers, which were reduced for most of 2009, were restored to previous levels at the beginning of 2010, but no increases were implemented for 2010. This filing provides insight into how the company is managing executive compensation in the post-2009 financial crisis environment.
Key Highlights
- 1CEO Robert Livingston received a 2009 annual bonus of $1,000,000.
- 2Other named executive officers also received 2009 bonuses: Brad Cerepak ($320,000), William Spurgeon ($475,000), and David Van Loan ($442,000).
- 3Brad Cerepak's bonus was discretionary as he joined after the 2009 bonus plan year began.
- 4No salary increases were granted to named executive officers for 2010; salaries were restored to prior levels as of January 1, 2010.
- 5Significant long-term incentive grants were awarded, including cash performance targets, stock appreciation rights (SSARs), and performance shares, all with a three-year performance period (2010-2012).
- 6SSARs have a base price of $42.88, are exercisable from February 11, 2013, and will be settled in company stock.
- 7Performance shares are tied to Dover's Total Shareholder Return (TSR) relative to its peer group, while cash performance awards are based on business unit internal TSR.
Frequently Asked Questions
The filing indicates that named executive officers experienced a salary reduction for most of 2009. However, their salaries were restored to their previous levels at the commencement of 2010. No further salary increases were granted for 2010.
The long-term incentives include cash performance awards, stock appreciation rights (SSARs), and performance shares. These awards have a three-year performance period from 2010 to 2012. The payout for cash awards is based on business unit performance (internal TSR), while performance shares are contingent on Dover's overall TSR relative to its peer group.
The SSARs awarded have a base price of $42.88 (the closing price on the grant date). They become exercisable on February 11, 2013, and have a ten-year term. The SSARs will be settled solely in Dover Corporation stock.
Brad Cerepak joined Dover Corporation after the first quarter of 2009, which is when the performance and personal objectives for the annual bonus plan were set. As he did not participate in the initial goal-setting for the 2009 bonus plan, the Compensation Committee awarded him a discretionary bonus.