DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

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Notice of 2022 Annual Meeting of Shareholders

May 6, 2022

9:00 a.m. Central Time

Dover Corporation Headquarters

3005 Highland Parkway

Downers Grove, Illinois 60515

Dear Fellow Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders (the “Annual Meeting”) of Dover Corporation (“Dover” or the “Company”) at our headquarters on May 6, 2022 at 9:00 a.m., Central Time, to be held for the following purposes:

 

  1.

To elect ten directors.

 

  2.

To ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for 2022.

 

  3.

To approve, on an advisory basis, named executive officer (“NEO”) compensation.

 

  4.

To consider a shareholder proposal regarding the right to allow shareholders to act by written consent, if properly presented.

 

  5.

To consider such other business as may properly come before the Annual Meeting, including any adjournments or postponements thereof.

All holders of record at the close of business on March 9, 2022 are entitled to notice of and to vote at the Annual Meeting or any adjournments or postponements thereof. Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares as soon as possible.

March 17, 2022

By authority of the Board of Directors,

Ivonne M. Cabrera

Secretary


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TABLE OF CONTENTS

 

Notice of 2022 Annual Meeting of Shareholders   
Proxy Statement Summary      1  

Annual Meeting Information

     1  

Items of Business

     1  

How to Submit Your Proxy

     1  

Company Overview

     2  

2021 Performance Overview

     4  

Governance Highlights

     7  

Shareholder Engagement

     7  

Executive Compensation

     8  

Director Nominees

     9  

Board Composition

     10  
Proposal 1 — Election of Directors      11  

Criteria for Director Nominees

     11  

Director Nomination Process

     12  

2022 Director Nominees

     13  

Board Oversight and Governance Practices

     23  

Shareholder Engagement and History of Board Responsiveness

     31  

Environmental, Social, and Governance Oversight (ESG)

     33  

Directors’ Compensation

     35  

Proposal 2 —  Ratification of Appointment of Independent Registered Public Accounting Firm

     37  

Audit Committee Report

     38  

Fees Paid to Independent Registered Public Accounting Firm

     39  

Pre-Approval of Services Provided by Independent Registered Public Accounting Firm

     39  
Compensation Discussion and Analysis      40  

Executive Summary

     40  

Say on Pay Vote Results and Shareholder Engagement

     42  

Dover’s Alignment with Leading Compensation Governance Practices

     43  

Compensation Principles

     44  

Compensation Process

     45  

Elements of Executive Compensation

     49  

Other Benefits

     58  

Other Elements of Compensation

     60  

Compensation Committee Report

     61  

Executive Compensation Tables

     62  

Summary Compensation Table

     62  

Grants of Plan-Based Awards in 2021

     64  

Outstanding Equity Awards at Fiscal Year-End 2021

     66  

Option Exercises and Stock Vested in 2021

     67  

Pension Benefits through 2021

     68  

 

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Nonqualified Deferred Compensation in 2021

     69  

Potential Payments upon Termination or Change in Control

     70  
Proposal 3 — Advisory Resolution to Approve Named Executive Officer Compensation      76  
Shareholder Proposal      77  

Proposal 4 – Shareholder Proposal Regarding the Right to Act by Written Consent

     77  
Share Ownership Information      80  

Security Ownership of Certain Beneficial Owners and Management

     80  
General Information About the Annual Meeting      82  

 

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PROXY STATEMENT SUMMARY

Annual Meeting Information

 

Date:   May 6, 2022
Time:   9:00 a.m., Central Time
Record Date:           March 9, 2022
Location:  

Dover Corporation Headquarters

3005 Highland Parkway

Downers Grove, Illinois 60515

  For additional information about our Annual Meeting, please see “General Information About the Annual Meeting”. We are first mailing this Notice of Annual Meeting and Proxy Statement beginning on or about March 17, 2022.

Items of Business

There are four proposals to be voted on at the Annual Meeting:

 

       

ITEM

 

  

Proposal

 

  

 

Board Voting
Recommendation

 

  

Page  

Reference  

 

 
 

 

ITEM 1

 

  

 

The election of ten nominees for director

 

  

 

FOR each director
nominee

 

  

 

 

 

 

11  

 

 

 

 

 

ITEM 2  

 

  

 

The ratification of the appointment of PwC as our independent registered public accounting firm for 2022

 

  

 

FOR

 

  

 

 

 

 

37  

 

 

 

 

 

ITEM 3

 

  

 

An advisory resolution to approve NEO compensation

 

  

 

FOR

 

  

 

 

 

 

76  

 

 

 

 

 

ITEM 4

 

  

 

A shareholder proposal regarding the right to allow shareholders to act by written consent, if properly presented

 

  

 

AGAINST

 

  

 

 

 

 

77  

 

 

 

How to Submit Your Proxy

Even if you plan to attend the Annual Meeting in person, please submit your proxy as soon as possible using one of the following methods:

 

   

Via internet by visiting www.proxyvote.com

 

   

Via telephone by calling 1-800-690-6903

 

   

Via mail by marking, signing and dating your proxy card or voting instruction form (if you received proxy materials by mail) and returning it to the address listed therein

 

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PROXY STATEMENT SUMMARY

 

Company Overview

Dover is a diversified global manufacturer and solutions provider delivering innovative equipment and components, consumable supplies, aftermarket parts, software and digital solutions, and support services through five operating segments: Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions, and Climate & Sustainability Technologies. We combine global scale, operational agility, world-class engineering capability, and customer intimacy to lead the markets we serve. Recognized for our entrepreneurial approach for over 60 years, our team of over 25,000 employees takes an ownership mindset, collaborating with customers to redefine what’s possible.

 

 

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Management Philosophy

 

   

Our executive management team is committed to steadily creating shareholder value through a combination of sustained long-term profitable growth, operational excellence, superior free cash flow generation, and productive capital re-deployment while adhering to a conservative financial policy.

 

   

Our businesses seek to be leaders in a diverse set of growing markets where customers are loyal to trusted partners and suppliers, and value product performance and differentiation driven by superior engineering, manufacturing precision, total solution development, and excellent supply chain performance.

 

   

Our companies are long-time leaders in their respective markets and are known for their innovation, engineering capability, and customer service excellence.

 

   

Our sustainable business practices are focused on reducing environmental impact and developing products that help our customers meet their sustainability goals.

 

   

Our operating structure of five business segments allows for differentiated acquisition focus consistent with our portfolio and capital allocation priorities which, coupled with functional expertise at our corporate center, presents opportunities to identify and capture operating synergies, such as global sourcing and supply chain integration, shared services, and manufacturing practices.

 

   

Our executive management team sets strategic direction, initiatives and goals, provides oversight of strategy execution and achievement of these goals for our business segments, and with oversight from our Board of Directors (our “Board”), makes capital allocation decisions, including organic investment initiatives, major capital projects, acquisitions, and the return of capital to our shareholders.

 

   

Our operating culture fosters high ethical and performance standards, values accountability, rigor, trust, inclusion, respect, and open communications, and is designed to encourage individual growth and operational effectiveness.

 

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PROXY STATEMENT SUMMARY

 

Company Goals

We are committed to driving superior shareholder return through three key tenets of our corporate strategy.

 

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  We are committed to achieving organic sales growth above global gross domestic product growth (greater than GDP or 3% to 5% annually on average) over a long-term business cycle, absent prolonged adverse economic conditions, complemented by growth through strategic acquisitions.

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  We are focused on improving returns on capital, as well as segment and corporate earnings margins by enhancing our operational capabilities and making investments across the organization in digital capabilities, automation, operations management, information technology, shared services, and talent. We also focus on continuous, effective cost management and productivity initiatives, including automation and digitally-supported manufacturing, supply chain optimization, e-commerce and digital go-to-market, restructuring activities, improved footprint utilization, strategic pricing and portfolio management.

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  We aim to generate strong and growing free cash flow and earnings per share (“EPS”) through strong earnings performance, productivity improvements, and active working capital management.

We support achievement of these goals by aligning management compensation with strategic and financial objectives, actively managing our portfolio to increase enterprise scale, improve business mix over time, and pursuing acquisitions that fit the characteristics of an ideal Dover business, and investing in talent development programs.

2021 Financial Results

In 2021, we continued our long track record of delivering value to our shareholders, despite an operational environment that continues to present challenges due to the COVID-19 pandemic.

 

       

US GAAP

   FY2021        FY2020        Δ     

        Revenue ($M)

     7,907          6,684          18%

        Net earnings ($M)(1)

     1,124          683          64%

        Diluted EPS ($)

     7.74          4.70          65%

Non-GAAP(2)

                           

        Organic revenue change

               15%

        Adjusted net earnings ($M)(3)

     1,109          824          35%

        Adjusted diluted EPS ($)

     7.63          5.67          35%

(1)Full year 2021 and 2020 net earnings include rightsizing and other costs of $31.1 million and $40.7 million, respectively. Full year 2020 also includes a $3.9 million non-cash gain on the sale of AMS Chino, and full year 2021 also includes a $135.1 million gain on the sale of Unified Brands and a $18.0 million gain related to the sale of our Race Winning Brands equity method investment.

(2)Definitions and reconciliations of non-GAAP measures are included at the end of this proxy statement.

(3)Full year 2021 and 2020 adjusted net earnings exclude acquisition-related amortization costs of $107.2 million and $104.1 million, respectively, and rightsizing and other costs of $31.1 million and $40.7 million, respectively. Full year 2020 also excludes a $3.9 million non-cash gain on the sale of AMS Chino, and full year 2021 also excludes a $135.1 million gain on the sale of Unified Brands and a $18.0 million gain related to the sale of our Race Winning Brands equity method investment.

 

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PROXY STATEMENT SUMMARY

 

2021 Performance Overview

 

Portfolio & Strategic Actions

 

 

•   In 2021, we completed 9 acquisitions. The acquisitions of Acme Cryogenics, Inc. (“Acme Cryogenics”), Engineered Controls International, LLC (“RegO”) and LIQAL B.V. (“LIQAL”) within the Clean Energy & Fueling segment complement our existing operations and expand our evolving fueling portfolio toward clean energy.

 

•   As part of the regular review of our portfolio and the fit of our businesses, we completed the sale of Unified Brands within the Climate & Sustainability Technologies segment and our Race Winning Brands equity method investment within the Engineered Products segment.

 

•   In recognition of recent portfolio changes, we recently changed the name of the Fueling Solutions segment to “Clean Energy & Fueling,” and the Refrigeration & Food Equipment segment to “Climate & Sustainability Technologies” to better reflect the markets and customers served by the businesses within these segments.

 

   

Strong Operational Execution and

Profitability

 

 

•   Increased revenue, profitability, and earnings per share despite a challenging global business environment caused by COVID-19.

 

•   We continued to execute on our broad-based multi-year efficiency and margin expansion program, designed to reduce our selling, general and administrative cost base and rationalize our manufacturing and supply chain footprint across the portfolio.

 

•   Continuing to build upon our four enterprise capabilities in support of margin expansion initiatives.

 

-   We are continuing to (1) leverage our Digital Labs team to improve our internal and market-facing digital capabilities, (2) improve utilization and optimization of our manufacturing footprint through centralized resources and investment, (3) further centralize shared services under Dover Business Services, and (4) invest in our India Innovation Center shared services with a focus on engineering capabilities.

 

•   Synergy capture from recent acquisitions presents additional margin upside.

 

Disciplined
Capital
Allocation
 

 

•   We made 9 strategic bolt-on acquisitions — the most since 2016 — for an aggregate consideration of $1,125.1 million, net of cash acquired and including contingent consideration, that enhance our businesses with new capabilities and attractive end-market exposures.

 

•   We continued our history of providing regular capital returns to shareholders by increasing our quarterly dividend, marking our 66th consecutive year of dividend increases.

 

•   We made $171.5 million in capital expenditures in 2021, representing 2.2% of revenue, in line with our priority of organic reinvestment to grow and strengthen our existing businesses.

 

 

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PROXY STATEMENT SUMMARY

 

2021 Performance Overview, cont.

 

Cash Flow
Generation
 

 

•   We generated free cash flow(1) of $944 million, representing 11.9% of revenue and 84.0% of net earnings as a result of broad-based cost-control efforts and proactive working capital management. Cash flow provided by operating activities was $1,115.9 million.

 

ESG
Initiative
 

 

•   We made progress on several fronts in line with our three-year plan to expand the scope and robustness of our environmental, social, and governance (“ESG”) practices and disclosures.

 

-   We announced science-based targets to reduce our greenhouse gas (“GHG”) emissions, including an absolute reduction of scope 1 and scope 2 market-based GHG emissions of 30 percent by 2030 (from a 2019 baseline year), and an absolute reduction of scope 3 GHG emissions of 15 percent by 2030 (from a 2019 baseline year).

 

-   Given the increasing focus on climate risk, we conducted a climate risk assessment and scenario analysis aligned with the Task Force on Climate-related Financial Disclosures (“TCFD”) reporting framework and published a summary of the results to further improve transparency regarding our ESG areas of focus.

 

•   We established a working group with four of our largest operating companies by emissions designed to embed sustainability considerations into product development in 2021.

 

•   We announced a goal of reducing Total Recordable Injury Rate (“TRIR”) by 40% by 2025 (from a 2019 baseline year).

 

(1) Definitions and reconciliations of non-GAAP measures are included at the end of this proxy statement.

 

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PROXY STATEMENT SUMMARY

 

Total Shareholder Return

In 2021, we continued our long track record of delivering superior value-creation to our shareholders.

 

 

Total Shareholder Return1,2

 

 

 

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Note : These figures represent annualized returns.

1)   End date for returns periods is December 31, 2021.

2)   Annualized Total Shareholder Return including dividends and spin-offs. Fortive Corporation went public in July 2016 and Ingersoll-Rand merged with Gardner Denver in March 2020. Both stocks are excluded from periods prior to go public / merger dates. Source: Capital IQ

 

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PROXY STATEMENT SUMMARY

 

Governance Highlights

Our Board is committed to sound governance practices designed to promote the long-term interests of shareholders and strengthen Board and management accountability. Highlights include:

 

     

BOARD OF DIRECTORS

  

GOVERNANCE HIGHLIGHTS

 

  

 

 Independent Board leadership

 

 In 2020, adopted a diversity search policy for external director and Chief Executive Officer (“CEO”) searches conducted by third-party search firms

 

 All directors are independent, other than the CEO

 

 Annual election of directors

 

 Majority voting for directors and director resignation policy in uncontested elections

 

 Comprehensive annual individual evaluations of one-third of the directors

 

 Regular executive sessions of independent directors

 

 Robust succession planning

 

  

 

 In 2019, achieved removal of all remaining supermajority voting provisions in our charter

 

 In February 2020, reduced ownership threshold required to call a special meeting of shareholders to 15% from 25%

 

 Proxy access right at 3%/3 years/2 or 20% of Board/20 shareholder aggregation allowance

 

 Strong share retention guidelines for directors and executive officers

 

 Executive compensation driven by pay-for-performance philosophy

 

 Executive officers not permitted to hedge or pledge company shares

   

Shareholder Engagement

We encourage feedback from shareholders and have a strong history of engaging with investors on a range of topics, including our executive compensation program, evolving trends and best practices. In 2021, we continued our focus on regularly engaging with shareholders. We reached out to holders of approximately 60% of our shares outstanding, and engaged with governance professionals and/or portfolio managers at investors holding approximately 31% of our shares outstanding. During these discussions, we discussed many key topics, including our commitment to diversity and inclusion, progress on our ESG program and disclosures, our executive compensation program, and our corporate governance practices. Investors continued to express broad support for our governance structures and executive compensation program, including the changes implemented in 2020 in response to shareholder feedback, and shared their views on matters related to diversity and inclusion and our independent, well-qualified Board. Further, investors highlighted the importance of continuing our ongoing engagement with them in the future on long-term corporate strategy and ESG initiatives. For more detailed information regarding these discussions, please see “Shareholder Engagement and History of Board Responsiveness” on page 31.

 

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PROXY STATEMENT SUMMARY

 

Executive Compensation

Our compensation program for executive officers is designed to emphasize performance-based compensation in alignment with our business strategy.

2021 Executive Compensation

The following table summarizes pay mix for our CEO and other NEOs, which is highly performance-based.

 

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EXECUTIVE COMPENSATION PROGRAM HIGHLIGHTS

 

 

 Pay-for-performance philosophy — a substantial majority of NEO pay is performance-based and tied to Dover’s stock price performance

 

 Significant portion of long-term compensation is performance-based, with long-term incentives vesting over three years subject to rigorous three-year performance period

 

 Strong share ownership guidelines for NEOs

 

 Equity awards with anti-hedging and anti-pledging provisions

 

 Investors provided with clear disclosure regarding the individual strategic objectives and financial metrics in our Executive Officer Annual Incentive Plan (“AIP”)

 

 ESG oversight incorporated into our CEO’s individual strategic objectives in the AIP

 

 Robust clawback structure

 

 

 

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PROXY STATEMENT SUMMARY

 

Director Nominees

Our Governance and Nominating Committee maintains an active and engaged Board through a robust refreshment process, which focuses on ensuring our Board has a diverse skill set that benefits from both the industry- and company-specific knowledge of our longer-tenured directors, as well as the fresh perspectives brought by our newer directors.

 

           
     NAME   OCCUPATION   INDEPENDENT   

COMMITTEES

MEMBERSHIPS*

  

OTHER PUBLIC  

COMPANY

BOARDS

 

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Deborah L. DeHaas

Age: 62

Director Since: 2021

  CEO of the Corporate Leadership Center; Former Vice Chairman of Deloitte and Managing Partner of the Center for Board Effectiveness      A    1

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H. John Gilbertson, Jr.

Age: 65

Director Since: 2018

  Retired Managing Director at Goldman Sachs      A, F    1

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Kristiane C. Graham

Age: 64

Director Since: 1999

  Private Investor      C, G    0

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Michael F. Johnston

Chair of the Board

Age: 74

Director Since: 2013

  Retired CEO of Visteon Corporation      C, G    1

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Eric A. Spiegel

Age: 64

Director Since: 2017

  Former President and CEO of Siemens USA; Special Advisor at Brighton Park Capital      A, F (Chair)    1

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Richard J. Tobin

Age: 58

Director Since: 2016

  President and CEO of Dover   No

(CEO of Dover)

      1

LOGO

 

 

 

Stephen M. Todd

Age: 73

Director Since: 2010

  Former Global Vice Chairman of Assurance Professional Practice of Ernst & Young Global Limited      A (Chair)    1

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Stephen K. Wagner

Age: 74

Director Since: 2010

  Former Senior Adviser, Center for Corporate Governance, Deloitte & Touche LLP      A, G (Chair)    1

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Keith E. Wandell

Age: 72

Director Since: 2015

  Former President and CEO of Harley-Davidson, Inc.      C (Chair), F    1

 

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Mary A. Winston

Age: 60

Director Since: 2005

 

 

President of WinsCo Enterprises Inc.; Former Executive Vice President and Chief Financial Officer (“CFO”) of Family Dollar Stores, Inc.

 

     C, F    3

*A = Audit Committee; C = Compensation Committee; G = Governance and Nominating Committee; F = Finance Committee

 

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PROXY STATEMENT SUMMARY

 

Board Composition

Our Board has the following composition:

 

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Proposal 1 — Election of Directors

Criteria for Director Nominees

The Board seeks to recommend qualified director nominees who, in the opinion of the Board, demonstrate the highest personal and professional integrity as well as exceptional ability and judgment, who can serve as a sounding board for our CEO on planning and policy, and who will be most effective, together with the other nominees to the Board, in collectively serving the long-term interests of all our shareholders.

Key areas of expertise for director nominees, which are reflected in our current director nominees, include:

 

 

 

 Strategic M&A

 

 

 

Experience with international acquisitions, post-merger integration, and portfolio restructuring

 

   
 

 

 Global Operations & Management

 

 

 

Experience with cross-border transactions, global market entry and expansion, and implementation of operational efficiency

 

   
 

 

 Capital Markets
Expertise

 

 

 

Experience with capital markets and complex financing transactions

 

   
 

 

 Strategy Development
& Execution

 

 

 

Experience with diversified manufacturing in many of the markets and product areas relevant to Dover’s businesses

 

   
 

 

 Risk Management Expertise

 

 

 

Experience evaluating risk management policies and procedures

 

   
 

 

 Audit & Corporate Governance Matters

 

 

 

Experience with assurance and audit, regulation, and financial reporting

 

   
 

 

 Human Capital Management

 

 

 

Experience attracting, developing and retaining talent and building strong cultures

 

   
 

 

 Sustainability

 

 

 

Experience creating long-term value by embracing opportunities and managing risks deriving from ESG developments

 

   
 

 

 Executive Leadership Experience

 

 

 

Leadership experience as former CEOs and CFOs of global public companies

 

Diversity. In considering diversity in selecting director nominees, the Governance and Nominating Committee gives weight to the extent to which candidates would increase the effectiveness of the Board by broadening the mix of experience, knowledge, backgrounds, skills, ages, and tenures represented among its members. In 2020, our Board adopted a policy reflected in our Corporate Governance Guidelines requiring that the initial list of potential director and external CEO candidates presented by third-party search firms include qualified candidates who reflect diverse backgrounds, including diversity of gender and race or ethnicity. Our Board believes that diverse perspectives enhance its decision-making and contribute to the success of Dover.

Skills Aligned with Dover’s Strategy. The Governance and Nominating Committee also considers our current Board composition and the projected retirement date of current directors, as well as such other factors it may deem to be in the best interests of Dover and its shareholders, including a director nominee’s leadership and operating experience (particularly as a CEO), financial and investment expertise, and strategic planning experience. We believe that our current director nominees possess the right mix of skills and backgrounds to enable us to achieve our strategic goals.

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

 

Independence & Depth of Experience. The Board prefers nominees to be independent but believes it is desirable to have our CEO on the Board as a representative of current management. Given the global reach and broad array of the types of businesses operated by Dover, the Governance and Nominating Committee highly values director nominees with multi-industry and multi-geographic experience.

Director Nomination Process

Whenever the Governance and Nominating Committee concludes that a new nominee to our Board is required or advisable, it will consider recommendations from directors, management, shareholders and, if it deems appropriate, consultants retained for that purpose. In such circumstances, it will evaluate individuals recommended by shareholders in the same manner as nominees recommended from other sources.

Shareholder Nominations for Director

Shareholders who wish to recommend an individual for nomination should send that person’s name and supporting information to the Governance and Nominating Committee, in care of the Corporate Secretary at our principal executive offices, 3005 Highland Parkway, Downers Grove, Illinois, 60515, or through our communications coordinator. Shareholders who wish to directly nominate an individual for election as a director, without going through the Governance and Nominating Committee, must comply with the procedures in our by-laws. Please see “General Information About the Annual Meeting” for nomination deadlines.

Proxy Access Shareholder Right

Following extensive engagement with our shareholders, our Board determined to adopt proxy access in February 2016, permitting a shareholder or group of up to 20 shareholders holding 3% of our outstanding shares of common stock for at least three years to nominate a number of directors constituting the greater of two directors or 20% of the number of directors on our Board, as set forth in detail in our by-laws.

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

 

2022 Director Nominees

There are ten nominees for election to our Board at this Annual Meeting, each to serve until the next annual meeting of shareholders or his or her earlier removal, resignation or retirement. All of the nominees currently serve on our Board and are being proposed for re-election by our Board.

If any nominee for election becomes unavailable or unwilling to serve as a director before the Annual Meeting, an event which we do not anticipate, the persons named as proxies will vote for a substitute nominee or nominees as may be designated by our Board, or the Board may reduce the number of directors. Directors will be elected by a majority of the votes cast in connection with their election.

 

 

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Deborah L. DeHaas

 

 

 

 

 

Independent Director Nominee

Director since: 2021

Age: 62

 

Committees:   Audit

 

 

    

 

Skills and Qualifications:

 

 

Significant leadership, financial and corporate governance expertise garnered from her nearly 40 years of experience at major audit, assurance and consulting firms

 

 

Certified public accountant (“CPA”) and has extensive experience with financial, accounting, internal controls, and enterprise risk management

 

 

Has deep expertise on governance, both as a topic and discipline, developed during her career at Deloitte

 

 

As a member of the Value Reporting Foundation Board (formerly the SASB Foundation Board), contributes valuable and well-informed insights on a variety of ESG matters

 

 

Brings relevant public company board service, serving on the board of CF Industries Holdings, Inc.

 

 

Brings experience and perspective on matters regarding human capital and culture, including diversity and inclusion

 

 

Holds a bachelor’s degree in management science and accounting from Duke University

 

 

Included in the National Association of Corporate Directors (“NACD”) Directorship 100 from 2015-2020, recognizing influential leaders in corporate governance and is also an NACD Board Leadership Fellow

 

Business Experience:

 

 

CEO of the Corporate Leadership Center, a non-profit leadership development forum

 

 

Former Vice Chairman and National Managing Partner of the Center for Board Effectiveness at Deloitte

 

   

Former member of the U.S. Executive Committee

 

   

Former Vice Chairman and Chief Inclusion Officer

 

   

Former member of the U.S. Board of Directors

 

   

Former Vice Chairman and Central Region Managing Partner

 

   

Former Vice Chairman and Midwest Regional Managing Partner

 

   

Former Regional Managing Partner, Strategic Clients

 

 

Former positions of increasing responsibility at Arthur Andersen, an audit, financial advisory, tax and consulting firm, most recently as Managing Partner & Business Advisory Assurance, Central Region

 

Other Board Experience:

 

 

CF Industries Holdings, Inc.

 

DOVER CORPORATION2022 Proxy Statement 13


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

   LOGO

      

H. John Gilbertson, Jr.

 

 

 

 

 

Independent Director Nominee

Director since: 2018

Age: 65

 

Committees:   Audit, Finance

 

 

 

Skills and Qualifications:

 

 

Extensive experience in corporate finance, capital markets, and mergers and acquisitions

 

 

Served as a strategic and financial advisor to his clients, forming deep relationships with companies in a range of industries

 

 

Has nearly four decades of experience in the professional and financial services industry

 

 

Deep expertise in financial management, coupled with his analytical and collaborative mindset, allows him to make invaluable contributions to our Board

 

 

Strong background in senior leadership development, succession planning, and organizational culture development

 

 

Brings to the Board considerable expertise in financial risk oversight and capital allocation

 

 

Bachelor’s degree in political economy from Dartmouth College and an MBA from Harvard University

 

Business Experience:

 

 

Retired Managing Director at Goldman Sachs

 

 

Served as Advisory Director and Partner-in-Charge, Midwest Region Investment Banking Services

 

 

Served as Managing Director at Travelers Group Inc.

 

 

Former Associate, Mergers and Acquisitions at Morgan Stanley

 

 

Former Consultant, Corporate Strategy at Bain & Company

 

 

Former Assistant Treasurer, Corporate Banking at Chase Manhattan Bank

 

 

Former News Reporter at The Providence Journal Company

 

Other Board Experience:

 

 

Director and Chair of Audit Committee of Meijer, Inc. (“Meijer”)

 

 

Director of AAR Corp.

 

 

DOVER CORPORATION2022 Proxy Statement 14


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

   LOGO

 

      

Kristiane C. Graham

 

 

 

 

 

Independent Director Nominee

Director since: 1999

Age: 64

 

Committees:   Compensation, Governance and Nominating

 

 

 

Skills and Qualifications:

 

 

Experience as a private investor with substantial holdings of Dover stock and her shared interests in Dover, including interests through charitable organizations of which she is a director, makes her a good surrogate for our individual and retail investors

 

 

Experience with a commercial bank, primarily as a loan officer; founded and operated an advisory company and a publication regarding international thoroughbred racing and now co-manages her family’s investments

 

 

Actively works with and has served on the boards of various organizations to support the objectives of local communities, affordable housing, education, and health

 

 

Currently serves on the Board of Directors for the Walter N. Ridley Scholarship Fund at the University of Virginia

 

 

Serves as an Emeritus Trustee of the College Foundation of the University of Virginia and has previously served on the Advisory Board of the University of Virginia School of Nursing

 

 

Brings valuable insights on the development of our policies and strategies relating to talent, leadership, and culture, with a focus on diversity and inclusion

 

 

Devoted substantial time to monitoring the development of Dover operating company leaders, enabling her to provide the Board valuable insights regarding management succession

 

 

As a member of one of the founding families of Dover, Ms. Graham also brings to the Board a sense of Dover’s historical values, culture and strategic vision which the Board believes is beneficial as it considers various strategic planning alternatives for shaping Dover’s future

 

Business Experience:

 

 

Private Investor

 

DOVER CORPORATION2022 Proxy Statement 15


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

   LOGO

 

      

Michael F. Johnston

 

 

 

 

 

Independent Board Chair; Independent Director Nominee

Director since: 2013

Age: 74

 

Committees:   Compensation, Governance and Nominating

 

 

 

Skills and Qualifications:

 

 

Brings industry insight, financial expertise and leadership experience garnered from his 17 years on the boards of global companies

 

 

Served as CEO of an $18 billion global manufacturer

 

 

Mr. Johnston also brings valuable corporate governance perspectives from his prior board service, including as a lead Director and Chair of other major public companies

 

 

Brings deep operations experience has helped him gain knowledge and a deep understanding in manufacturing, design, innovation, engineering, accounting and finance and capital structure

 

 

Brings nearly two decades of experience in building businesses in emerging economies

 

 

Bachelor’s degree in industrial management from the University of Massachusetts and an MBA from Michigan State University

 

Business Experience:

 

 

Former CEO and President of Visteon Corporation (“Visteon”)

 

 

Former Chief Operating Officer of Visteon

 

 

Former President of North America/Asia Pacific, Automotive Systems Group, of Johnson Controls, Inc. (“Johnson Controls”)

 

 

Former President of Americas Automotive Group of Johnson Controls

 

Other Board Experience:

 

 

Director of Armstrong Flooring, Inc.

 

 

Former Chairman and Director of Visteon

 

 

Former Director of Armstrong World Industries, Flowserve Corporation, and Whirlpool Corporation

 

DOVER CORPORATION2022 Proxy Statement 16


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

   LOGO

 

      

Eric A. Spiegel

 

 

 

 

 

Independent Director Nominee

Director since: 2017

Age: 64

 

Committees:   Audit, Finance (Chair)

 

 

Skills and Qualifications:

 

 

Experienced business leader with diversified, global experience who brings deep and valuable expertise in strategy development, corporate restructuring, portfolio management and M&A to our Board

 

 

40+ years of experience working with large, global companies in the energy and industrial markets, mostly recently as President & CEO of Siemens USA

 

 

At Siemens, he led strategic reviews across a portfolio of ~45 businesses in the company’s largest market with over $22 billion in revenue, 50,000 employees and over 60 manufacturing facilities

 

 

Led the acquisition, divestiture, joint venture and carve-out of over 30 business units and segments

 

 

Executed Siemens’ “Vision 2020” initiative to optimize growth and margins in the U.S., across all sectors

 

 

Prior to Siemens, Mr. Spiegel was a global consultant at Booz Allen Hamilton focused on complex organizations in the energy, power, chemical, water, industrial and automotive fields

 

 

At Booz, he worked with major energy clients globally on projects around corporate strategy, M&A, major capital projects, cost restructuring, margin enhancement and supply chain re-design and was also closely involved with the government sector

 

 

An expert on the global energy industry, Mr. Spiegel co-authored the book Energy Shift: Game-changing Options for Fueling the Future

 

 

Holds a bachelor’s degree in economics from Harvard University and an MBA from the Tuck School of Business at Dartmouth College

 

Business Experience:

 

 

Special Advisor at Brighton Park Capital, a private equity firm, where he supports the firm’s sector investment teams and portfolio companies by providing strategic counsel on industry trends and growth strategies

 

 

Former President and CEO of Siemens USA

 

 

Former Managing Partner, Global Energy, Chemicals, and Power, and Managing Partner, Washington, D.C. office, and other roles at Booz & Company, Inc. (now known as Strategy&) and Booz Allen Hamilton, Inc., global consulting firms

 

 

Former Associate, Energy and Industrials Practice, at Temple, Barker & Sloane, Inc. (now known as Oliver Wyman)

 

 

Former Marketing and Strategy Manager at Brown Boveri & Cie (now known as ABB), a Swiss group of electrical engineering companies

 

 

In connection with his position at Brighton Park Capital, Mr. Spiegel serves as Chair of Relatient, Inc.

 

Other Board Experience:

 

 

Director and Audit Committee Chair of Liberty Mutual Holding Company, Inc.

 

 

Director and Audit Committee Chair of Project Energy Reimagined Acquisition Corp.

 

DOVER CORPORATION2022 Proxy Statement 17


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

   LOGO

      

Richard J. Tobin

 

 

 

 

 

Chief Executive Officer

Director since: 2016

Age: 58

 

Committees:   None

 

 

 

Skills and Qualifications:

 

 

Mr. Tobin is Dover’s current CEO. The Board believes it is desirable to have one active management representative on the Board to facilitate its access to timely and relevant information and its oversight of management’s long-term strategy, planning, and performance

 

 

Has a broad range of industry and functional experiences acquired through regional and global leadership positions

 

 

Former CEO of CNH Industrial, a complex international industrial company, where he led efforts to increase efficiencies, innovate through new technologies, expand geographically, and maximize the company’s portfolio of businesses

 

 

Gained extensive experience in international finance, operations, management, and information technology in his prior roles

 

 

Developed deep expertise with global capital markets through his international finance leadership roles

 

 

Prior to beginning his business career, Mr. Tobin was an officer in the United States Army

 

 

Member of the Board of Trustees of the John G. Shedd Aquarium in Chicago

 

 

Formerly served on the U.S. Chamber of Commerce Board of Directors, and is a former member of the Business Roundtable

 

 

Holds a bachelor of arts from Norwich University and an MBA from Drexel University

 

Business Experience:

 

 

President and CEO of Dover

 

 

Former CEO of CNH Industrial NV (“CNH Industrial”)

 

 

Former Group Chief Operating Officer of Fiat Industrial S.p.A

 

 

Former President and CEO of CNH Global NV

 

 

Former CFO of CNH Global NV

 

 

Former Chief Finance Officer & Head of Information Technology of SGS Group

 

 

Former Chief Operating Officer for North America of SGS Group

 

Other Board Experience:

 

 

Director of KeyCorp.

 

 

Former director of CNH Industrial

 

DOVER CORPORATION2022 Proxy Statement 18


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

   LOGO

      

Stephen M. Todd

 

 

 

 

 

Independent Director Nominee

Director since: 2010

Age: 73

 

Committees:   Audit (Chair)

 

 

 

Skills and Qualifications:

 

 

Extensive accounting and financial experience in both domestic and international business developed during a four decade career at Ernst & Young where he specialized in assurance and audit

 

 

Brings unique insights into accounting and financial issues relevant to multinational companies like Dover

 

 

Brings the perspective of an outside auditor to the Audit Committee

 

 

Brings leadership and financial strategy experience as developer and director of Ernst & Young’s Global Capital Markets Centers, which provides accounting, regulatory, internal control and financial reporting services to multinational companies in connection with cross-border debt and equity securities transactions and acquisitions

 

Business Experience:

 

 

Former Global Vice of Assurance Professional Practice of Ernst & Young Global Limited, London, UK; and prior thereto, various positions with Ernst & Young

 

Other Board Experience:

 

 

Director and Audit Committee member of ChampionX Corporation (formerly known as Apergy Corporation)

 

 

Former member of the Board of Trustees of PNC Funds

 

DOVER CORPORATION2022 Proxy Statement 19


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

   LOGO

      

Stephen K. Wagner

 

 

 

 

 

Independent Director Nominee

Director since: 2010

Age: 74

 

Committees:   Audit, Governance and Nominating (Chair)

 

 

 

Skills and Qualifications:

 

 

Mr. Wagner’s over 30 years of experience in accounting make him a valuable resource for the Board and the Audit Committee

 

 

His work with Sarbanes-Oxley and other corporate governance regulations, including his years as Managing Partner at Deloitte & Touche’s Center for Corporate Governance, makes him well suited to advise the Board on financial, auditing and finance-related corporate governance matters as well as risk management

 

 

Expert in risk oversight and co-authored a book on risk management entitled Surviving and Thriving in Uncertainty: Creating the Risk Intelligent Enterprise

 

 

Brings to the Board an outside auditor’s perspective on matters involving audit committee procedures, internal control and accounting and financial reporting matters

 

Business Experience:

 

 

Former Senior Advisor, Center for Corporate Governance, of Deloitte & Touche LLP (“Deloitte”)

 

 

Former Managing Partner, Center for Corporate Governance of Deloitte

 

 

Former Deputy Managing Partner, Innovation, Audit and Enterprise Risk, United States of Deloitte

 

 

Former Co-Leader, Sarbanes-Oxley Services, of Deloitte

 

Other Board Experience:

 

 

Director and Audit Committee member of ChampionX Corporation (formerly known as Apergy Corporation)

 

DOVER CORPORATION2022 Proxy Statement 20


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

   LOGO

      

Keith E. Wandell

 

 

 

 

 

Independent Director Nominee

Director since: 2015

Age: 72

 

Committees:   Compensation (Chair), Finance

 

 

 

Skills and Qualifications:

 

 

Mr. Wandell brings to the Board the valuable perspective of a strategic, experienced leader with a strong record focused on growth, profitability, international expansion and innovation.

 

 

Has over 30 years of experience in diversified manufacturing businesses, most recently as the former Chairman and CEO of Harley-Davidson, Inc. (“Harley-Davidson”) where he led transformation efforts across the company’s product development, manufacturing and retail functions, focused on international expansion and implemented a restructuring plan

 

 

Prior to joining Harley-Davidson, Mr. Wandell served as President and Chief Operating Officer of Johnson Controls, Inc. (“Johnson Controls”) and helped manage the company’s entry into the Chinese car-battery market as well as its subsequent joint venture with China’s largest battery manufacturer

 

 

Gained valuable insights into the effective development of executive leadership capabilities and strong corporate cultures through his experience as a senior leader at various companies

 

 

Served on the boards of four other public companies, including the two on which he currently serves

 

 

Holds a bachelor’s degree in business administration from Ohio University and an MBA from the University of Dayton

 

Business Experience:

 

 

Former President and CEO of Harley-Davidson

 

 

Former President and Chief Operating Officer of Johnson Controls

 

 

Former Executive Vice President of Johnson Controls

 

 

Former Corporate Vice President of Johnson Controls

 

 

Former President of the Automotive Experience business of Johnson Controls

 

 

Former President of the Power Solutions business of Johnson Controls

 

Other Board Experience:

 

 

Director of Dana Incorporated. Former Chairman of Harley-Davidson

 

 

Former Director of Constellation Brands, Inc. and Clarcor, Inc.

 

DOVER CORPORATION2022 Proxy Statement 21


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

   LOGO

      

Mary A. Winston

 

 

 

 

 

Independent Director Nominee

Director since: 2005

Age: 60

 

Committees: Compensation, Finance

 

 

 

Skills and Qualifications:

 

 

Ms. Winston brings to the Board valuable experience and expertise based on her years of broad financial management and broad executive leadership experience.

 

 

Started her career as a CPA with Arthur Andersen & Co, and has extensive experience with financial, accounting and internal control matters for large public companies.

 

 

Served as CFO of three large companies: Family Dollar Stores, Inc., Giant Eagle, Inc. and Scholastic, Inc., as well as prior global finance leadership roles (prior to 2004) at Visteon Corporation and Pfizer, Inc.

 

   

Developed deep expertise in capital markets, M&A, capital structure matters, capital allocation, financial risk management, real estate financing transactions, dividend and stock repurchase programs, and investor relations

 

 

Ms. Winston’s background and experience make her a valuable contributor to the Board on matters involving risk oversight and capital allocation, as well as executive compensation and general corporate governance matters

 

 

Holds a bachelor’s degree in accounting from the University of Wisconsin and an MBA from Northwestern University’s Kellogg School of Management

 

 

Designated as a Board Leadership Fellow by the NACD and serves on the national board of the NACD

 

Business Experience:

 

 

President of WinsCo Enterprises Inc

 

 

Former Interim CEO, Bed Bath & Beyond Inc.

 

 

Former Executive Vice President and CFO of Family Dollar Stores, Inc.

 

 

Former Senior Vice President and CFO of Giant Eagle, Inc.

 

 

Former President of WinsCo Financial LLC

 

 

Former Executive Vice President and CFO of Scholastic Corporation

 

Other Board Experience:

 

 

Director of Bed Bath & Beyond, Inc., Chipotle Mexican Grill, and Acuity Brands, Inc.

 

 

Former Director of Domtar Corporation, SUPERVALU INC., and Plexus Corporation

THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH

OF THE NOMINEES NAMED ABOVE.

 

DOVER CORPORATION2022 Proxy Statement 22


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

Board Oversight and Governance Practices

Our Board is responsible for, and committed to, overseeing our long-term strategic development as well as managing the principal and most significant risks that we face. In carrying out this duty, our Board advises senior management to help drive long-term value creation for our shareholders. The Board delegates specific areas of responsibility to relevant Board committees, as detailed below under the heading “Overview of Committee Responsibilities”, who report on their deliberations to the Board. The following summarizes our Board’s key areas of oversight responsibility.

Board Oversight

 

 
KEY AREAS OF BOARD OVERSIGHT

Long-Term

Business Strategy

 

 

•   One of the primary responsibilities of our Board is the oversight of management’s long-term strategy and planning. Accordingly, our Board maintains a deep level of engagement with management in setting and overseeing Dover’s long-term business strategy.

 

Capital Allocation  

 

•   Our Board is focused on the efficient allocation of capital to drive growth and provide returns to our shareholders. Our capital allocation priorities are organic investments, strategic acquisitions, and the return of capital to our shareholders.

 

•   We consistently return cash to shareholders by paying dividends, which have increased annually over each of the last 66 years.

 

•   We also undertake opportunistic share repurchases as part of our capital allocation strategy, completing $21.6 million of share repurchases in 2021 and $106.3 million in 2020.

 

•   We made $171.5 million in capital expenditures in 2021, representing 2.2% of revenue, and $165.7 million in capital expenditures in 2020, representing 2.5% of revenue, in line with our priority of organic reinvestment to grow and strengthen our existing businesses.

 

•   We employ a prudent financial policy to support our capital allocation strategy, which includes maintaining an investment grade credit rating.

 

Portfolio

Management

 

 

•   Businesses in our portfolio are continually evaluated for strategic fit.

 

•   We seek to deploy capital in acquisitions in attractive growth areas across our five segments. We focus primarily on bolt-on acquisitions, applying strict selection criteria of market attractiveness (including growth, market landscape, and performance-based competition), business fit (including sustained leading position, revenue visibility, and favorable customer value-add versus switching cost or risk) and financial return profile (accretive growth and margins and double-digit return on invested capital).

 

•   We have sold or divested some of our businesses based on changes in specific market outlook, structural changes in financial performance, value-creation potential, or for other strategic considerations, which included an effort to reduce our exposure to cyclical markets or focus on our higher margin growth spaces.

 

•   In recognition of recent portfolio changes, we recently changed the name of the Fueling Solutions segment to “Clean Energy & Fueling,” and the Refrigeration & Food Equipment segment to “Climate & Sustainability Technologies” to better reflect the markets and customers served by the businesses within these segments.

 

 

DOVER CORPORATION2022 Proxy Statement 23


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

 
KEY AREAS OF BOARD OVERSIGHT

Risk
Management

 

 

•   Our Board has established a comprehensive enterprise risk management process to identify and manage risks, and periodically reviews the processes established by management to identify and manage risks and communicates with management about these processes.

 

•   We have established a risk assessment team consisting of senior executives, which annually, with the assistance of a consultant, oversees a risk assessment made at the corporate center, segment and operating company levels and, with that information in mind, performs an assessment of the overall risks our company may face and reports to the Board on that assessment. Each quarter, this team reassesses the risks, the severity of these risks, and the status of efforts to mitigate them.

 

ESG

 

 

•   The full Board has oversight of ESG matters and is regularly briefed on strategic planning, risks, and opportunities related to ESG by senior management, including our CEO.

 

•   Our Compensation Committee has integrated ESG oversight responsibility into our CEO’s individual strategic objectives within the AIP.

 

Culture & Human
Capital
Management
 

 

•   Our entrepreneurial culture depends upon an inclusive approach that values employees’ diversity and contributions.

 

•   We foster an operating culture with high ethical standards that values accountability, rigor, trust, inclusion, respect, and open communication and is designed to encourage individual growth and operational effectiveness. We continue to make significant investments in talent development, including in the areas of digital applications and operational management, and recognize that the growth and development of our employees is essential for our continued success.

 

•   As part of our commitment to strong corporate governance practices, we maintain an active and robust ethics program. Our Code of Business Conduct & Ethics (“Code of Conduct”) applies to all employees and directors of Dover and its subsidiaries. We enforce our Code of Conduct fairly and consistently, regardless of one’s position in Dover, and will not tolerate retaliation against those who report suspected misconduct in good faith.

 

Succession
Planning
 

 

•   Another of the Board’s primary responsibilities is overseeing a sound Board and management succession process. The Board has developed a comprehensive plan to address management succession — both over the long term and for emergency purposes. The framework for the long-term plan includes thoughtful, deliberate monitoring of management beyond our top executives to ensure Dover continues to build a deep internal bench of talent.

 

•   Our Board is also focused on its own succession plan, which drives not only our director selection efforts, but also how we approach Board and committee leadership structure and membership, with a focus on critical board skills, diversity, and independence.

 

Cybersecurity  

 

•   The full Board is briefed on enterprise-wide cybersecurity risk management and the overall cybersecurity risk environment, and oversees major tasks related to cybersecurity risk management, periodically reviews our response capabilities, and meets with the Chief Information Security Officer on at least an annual basis.

 

•   Dover employs the National Institute of Standards & Technology Framework for Improving Critical Infrastructure Cybersecurity (The NIST Framework). This voluntary guidance developed with much private sector input provides a framework and a toolkit for organizations to manage cybersecurity risk.

 

 

DOVER CORPORATION2022 Proxy Statement 24


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

Board Committees

Our Board has four standing committees — the Audit Committee, the Compensation Committee, the Governance and Nominating Committee, and the Finance Committee. The table below sets forth a summary of our committee structure and membership information.

 

         

 DIRECTOR

   Audit
Committee
  Compensation
Committee
  Governance

and

Nominating
Committee

  Finance

Committee

 DEBORAH L. DEHAAS

        

 H. JOHN GILBERTSON, JR.

  

     

 KRISTIANE C. GRAHAM

    

 

 

 MICHAEL F. JOHNSTON

        

 ERIC A. SPIEGEL

          (Chair)

 RICHARD J. TOBIN

        

 STEPHEN M. TODD

  

 (Chair)

     

 STEPHEN K. WAGNER

        (Chair)  

 KEITH E. WANDELL

    

 (Chair)

   

 MARY A. WINSTON

    

   

 MEETINGS HELD IN 2021

   8  

5

  4  

9

 

DOVER CORPORATION2022 Proxy Statement 25


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

Overview of Committee Responsibilities

 

 

Audit Committee

 

    Stephen M. Todd (Chair)    

 

    Deborah L. DeHaas

    H. John Gilbertson, Jr.

    Eric A. Spiegel

    Stephen K. Wagner

 

 

Key Responsibilities

 

•  Selecting and engaging our independent registered public accounting firm (“independent auditors”)

 

•  Overseeing the work of our independent auditors and our internal audit function

 

•  Approving in advance all services to be provided by, and all fees to be paid to, our independent auditors, who report directly to the committee

 

•  Reviewing with management and the independent auditors the audit plan and results of the auditing engagement

 

•  Reviewing with management and our independent auditors the quality and adequacy of our internal control over financial reporting

 

The Audit Committee holds regular quarterly meetings at which it meets separately with each of our independent registered public accounting firm, PwC, our internal audit function, financial management and our general counsel to assess certain matters including the status of the independent audit process, management’s assessment of the effectiveness of internal control over financial reporting and the operation and effectiveness of our compliance program. In addition, the Audit Committee, as a whole, reviews and meets to discuss the contents of each Form 10-Q and Form 10-K (including the financial statements) prior to its filing with the SEC.

 

Our Board has determined that all members of the Audit Committee qualify as “audit committee financial experts” as defined in the SEC rules.

 

The Audit Committee’s responsibilities and authority are described in greater detail in its written charter.

 

 

 

Compensation Committee

 

    Keith E. Wandell (Chair)     

 

    Kristiane C. Graham

    Michael F. Johnston

    Mary A. Winston

 

 

 

Key Responsibilities

 

The Compensation Committee, together with our independent directors, approves compensation for the CEO of Dover. The functions of the Compensation Committee also include:

 

•  Approving compensation for executive officers who report directly to the CEO (together with the CEO, “senior executive officers”)

 

•  Granting awards and approving payouts under our 2012 Equity and Cash Incentive Plan (the “2012 LTIP”), our 2021 Omnibus Incentive Plan (the “2021 LTIP”). and our AIP

 

•  Approving changes to our executive compensation plans

 

•  Reviewing and recommending compensation for the Board

 

•  Overseeing succession planning and management development programs

 

The Compensation Committee’s responsibilities and authority are described in greater detail in its written charter.

 

 

DOVER CORPORATION2022 Proxy Statement 26


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

 

Governance and Nominating Committee

 

    Stephen K. Wagner (Chair)

 

    Kristiane C. Graham

    Michael F. Johnston

 

 

Key Responsibilities

 

•  Developing and recommending corporate governance principles to our Board

 

•  Annually reviewing the requisite skills and characteristics of board members as well as the size, composition, functioning and needs of our Board as a whole

 

•  Considering and recommending to the Board nominees for election to, or for filling any vacancy on, our Board in accordance with our by-laws, our governance guidelines, and the committee’s charter

 

•  Identifying and recommending to our Board any changes it believes desirable in the size and composition of our Board

 

•  Recommending to our Board any changes it believes desirable in structure and membership of our Board’s committees

 

•  Providing oversight of Dover’s practices on political contributions and lobbying expenses and reviewing annually Dover’s political contributions and lobbying expenses

 

The Governance and Nominating Committee’s responsibilities and authority are described in greater detail in its written charter.

 

 

 

Finance Committee

 

    Eric A. Spiegel (Chair)       

 

    H. John Gilbertson, Jr.

    Keith E. Wandell

    Mary A. Winston

 

 

Key Responsibilities

 

•  Reviewing and recommending for approval by the Board proposed changes to dividend policies, stock splits, and repurchase programs

 

•  Reviewing our capital structure, liquidity, and financing plans

 

•  Reviewing and approving the registration and issuance of debt or equity securities

 

•  Subject to thresholds determined from time to time by the Board, reviewing and approving, or reviewing and recommending for Board approval, capital expenditures

 

•  Subject to thresholds determined from time to time by the Board, reviewing and approving, or reviewing and recommending for Board approval, M&A transactions

 

•  Oversight of treasury, insurance, and tax planning matters

 

The Finance Committee’s responsibilities and authority are described in greater detail in its written charter.

 

 

DOVER CORPORATION2022 Proxy Statement 27


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PROPOSAL 1 — ELECTION OF DIRECTORS

 

Corporate Governance

Our Board is committed to sound governance practices and regularly reviews and refines our profile to reflect evolving best practices and matters raised by our shareholders. The following summarizes key aspects of our governance framework.

 

 

GOVERNANCE HIGHLIGHTS

 

Independent

Board of Directors

 

 

• All directors are independent, other than our CEO, and our Board has leadership that is independent from management, by way of an independent Chair.

Commitment to Diversity  

 

• In 2020, our Board adopted a policy reflected in our Corporate Governance Guidelines requiring that the initial list of potential director and external CEO candidates presented by third-party search firms include qualified candidates who reflect diverse backgrounds, including diversity of gender and race or ethnicity.

Special
Shareholder
Meetings
 

 

• In 2020, we amended our by-laws to reduce the ownership threshold required to call a special meeting of shareholders to 15% or more of the voting power of our outstanding stock from 25%.

 

Elimination of
Super-majority Provisions

 

 

• All of the supermajority voting provisions in our charter were eliminated in 2019.

Board Committee Refreshment  

 

• Our Board periodically reviews committee composition and chair positions, seeking the appropriate blend of continuity and fresh perspectives on committees.

Annual Majority
Vote Director
Elections &
Mandatory
Resignation Policy
 

 

• All of our directors are elected annually by our shareholders.

 

• Our directors must receive a majority of the votes cast in uncontested elections to be elected.

 

• We have a director resignation policy that requires a director to tender an irrevocable resignation letter to the Board prior to being nominated, contingent on the director not receiving a majority of the votes cast in an uncontested election and the Board’s acceptance of the resignation. The Governance and Nominating Committee will recommend to the full Board whether to accept the resignation or whether to take other action.

Proxy Access  

 

• Our by-laws permit a shareholder or a group of up to 20 shareholders owning 3% or more of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials director candidates constituting up to the greater of two individuals or 20% of the Board, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in our by-laws.

 

Board Leadership Structure

We believe that having an independent leader of the Board is important to the Board’s oversight role and decision-making involving corporate strategy, performance, succession, and other critical matters. Under our current Board leadership structure, our Board has leadership that is independent from management by way of an independent Chair. Our CEO is also a member of the Board as a management representative. We believe this is important to make information and insight directly available to the directors in their deliberations. In our view, this board leadership structure gives us an appropriate, well-functioning balance between non-management and management directors that combines experience, accountability and effective risk oversight.

Board, Committee and Individual Director Evaluations

Our Board and its committees conduct robust annual self-evaluations of their performance. In addition, our Board evaluates one-third of our directors on a rotating individual basis each year with the purpose of assisting each director to be a more effective member of the Board. New directors undergo the evaluation process in each of their first two years on the Board. Our directors believe the rotational nature of our evaluation process enables a more in-depth, comprehensive evaluation for each of our directors.

 

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Directors’ Meetings and Attendance

During 2021, the Board met seven times. No director attended less than 75% of the board and standing committee meetings held while he or she was a member of the Board and relevant standing committee. Average board attendance was over 97% in 2021. Our independent directors meet at regularly scheduled executive sessions at least quarterly without management representatives or non-independent directors present. The Chair of the Board presides at these sessions. We expect our directors to attend the Annual Meeting. All directors attended the 2021 Annual Meeting.

Our directors also regularly engage with management and outside subject matter experts outside of formal meetings. Examples include developing agendas and reviewing the content of materials in advance of meetings, calls, or in-person meetings with members of management to prepare for meetings, receiving periodic updates from management on significant operational or strategic developments between meetings, and, from time to time, engaging with shareholders.

Management Meetings and Site Visits

We encourage our directors to meet with senior managers throughout the enterprise and attend management’s strategic planning sessions. When considering businesses to visit, priority goes to those businesses identified as strategically important as well as those that were recently acquired. From time to time, the Board makes on-site visits to our businesses to tour the manufacturing facilities and meet face-to-face with company management and employees. These visits serve as an important tool in the Board’s succession planning process for our senior leadership team and enable a deeper understanding of our businesses and our culture. In 2021, these types of opportunities for engagement were largely conducted virtually rather than in-person.

Director Orientation and Education

All new directors participate in our director orientation program. New directors meet with senior corporate leaders to review and discuss our businesses, operations, strategy, end markets, governance, internal controls, and culture. We believe that our on-boarding approach, coupled with participation in regular Board and committee meetings, as well as additional exposure to our business through participation in management meetings and site visits, whether virtually or in-person, provides new directors a strong foundation in our businesses and accelerates their effectiveness to fully engage in Board deliberations.

Our Board also encourages directors to participate annually in continuing director education programs outside of the Boardroom, and we reimburse directors for their expenses associated with this participation.

Director Independence

Our Board has determined that each of the current members of the Board, except for Richard J. Tobin, who is our CEO, has no material relationship with Dover and satisfies all the criteria for being “independent” members of our Board. This includes the criteria established by the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”) listing standards, as well as our standards for classification as an independent director which are available on our website at www.dovercorporation.com. Our Board makes an annual determination of the independence of each nominee for director prior to his or her nomination for re-election. No director may be deemed independent unless the Board determines that he or she has no material relationship with Dover, directly or as an officer, shareholder or partner of an organization that has a material relationship with Dover.

Majority Standard for Election of Directors and Mandatory Resignation Policy

Under our by-laws and corporate governance guidelines, the voting standard in director elections is a majority of the votes cast. Under this majority of the votes cast standard, a director must receive more votes in favor of his or her election than votes against his or her election. Abstentions and broker non-votes do not count as votes cast with respect to a director’s election. In contested director elections (where there are more nominees than available seats on the board), the plurality standard will apply. Under the plurality standard, the nominees who receive the most “for” votes are elected to the Board until all seats are filled.

For an incumbent director to be nominated for re-election, he or she must submit an irrevocable resignation letter. The resignation will be contingent on the nominee not receiving a majority of the votes cast in an uncontested election and on the Board’s acceptance of the resignation. If an incumbent director fails to receive a majority of the votes cast in an uncontested

 

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election, the Governance and Nominating Committee will make a recommendation to our Board concerning whether to accept or reject the resignation or whether other action should be taken. Our Board will act on the resignation within 90 days following certification of the election results, taking into account the committee’s recommendation. The Board will publicly announce its decision and, if the resignation is rejected, the rationale for its decision.

Governance Guidelines and Code of Ethics

Our Board long ago adopted written corporate governance guidelines that set forth the responsibilities of our Board and the qualifications and independence of its members and the members of its standing committees. The Board reviews these guidelines at least annually, in light of evolving best practices, shareholder feedback and the evolution of our business. In 2020, the Board amended the guidelines to require that initial lists of potential director and external CEO candidates presented by third-party search firms include qualified candidates who reflect diverse backgrounds, including diversity of gender and race or ethnicity. In addition, our Board has a long-standing Code of Conduct setting forth standards applicable to all of our companies and their employees, a code of ethics for our CEO and senior financial officers, and charters for each of its standing committees. All of these documents (referred to collectively as “governance materials”) are available on our website at www.dovercorporation.com.

Procedures for Approval of Related Person Transactions

We generally do not engage in transactions in which our senior executive officers or directors, any of their immediate family members or any of our 5% shareholders have a material interest. Should a proposed transaction or series of similar transactions involve any such persons and an amount that exceeds $120,000, it would be subject to review and approval by the Governance and Nominating Committee in accordance with a written policy and the procedures adopted by our Board, which are available with the governance materials on our website.

Under the procedures, management determines whether a proposed transaction requires review under the policy and, if so, presents the transaction to the Governance and Nominating Committee. The Governance and Nominating Committee reviews the relevant facts and circumstances of the transaction and approves or rejects the transaction. If the proposed transaction is immaterial or it is impractical or undesirable to defer the proposed transaction until the next committee meeting, the Chair of the committee decides whether to (i) approve the transaction and report the transaction at the next meeting or (ii) call a special meeting of the committee to review and approve the transaction. Should the proposed transaction involve the CEO or enough members of the Governance and Nominating Committee to prevent a quorum, the disinterested members of the committee will review the transaction and make a recommendation to the Board, and the disinterested members of the Board will then approve or reject the transaction. No director may participate in the review of any transaction in which he or she is a related person.

Communication with Directors

The Audit Committee has established procedures for (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters (“accounting matters”) and (ii) the confidential, anonymous submission by employees of concerns regarding questionable accounting matters. Such complaints or concerns may be submitted to Dover, care of our Corporate Secretary or through the communications coordinator, an external service provider, by mail, fax, telephone, or via the internet as published on our website. The communications coordinator forwards such communications to Dover without disclosing the identity of the sender if anonymity is requested.

Shareholders and other interested persons may also communicate with our Board and the non-management directors in any of these same manners. Such communications are forwarded to the Chair of the Governance and Nominating Committee.

 

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Shareholder Engagement and History of Board Responsiveness

Shareholder Engagement

In 2021, we continued our focus on regularly engaging with our shareholders. We reached out to holders of approximately 60% of our shares outstanding, and engaged with governance professionals and/or portfolio managers at investors holding approximately 31% of our shares outstanding. Our shareholder engagement team consists of senior management and has also included our Chair from time to time. We also participate in various governance forums with our shareholders and regularly engage with shareholders through industry conferences and meetings.

We received feedback from investors on a range of topics, including corporate governance topics such as the right of shareholders to act by written consent. We are pleased with the feedback we received with investors on the topics we discussed, and look forward to ongoing engagement with our shareholders in order to continue to incorporate their views into our Board’s decision-making process. We aim to have best-in-class governance and compensation structures at Dover.

 

 

KEY ITEMS OF DISCUSSION AND FEEDBACK

   

 

Performance &

Long-Term

Strategy

  

•   We reviewed our portfolio of businesses, performance, strategic priorities, and focus on continuing to deliver long-term value to shareholders despite a challenging operating environment caused by the COVID-19 pandemic.

   

Capital Allocation

  

•   We discussed how our balance sheet strength and history of prudent capital allocation served as differentiating factors that allowed us to remain flexible during the market dislocation caused by the COVID-19 pandemic.

   

Diversity &

Inclusion

  

•   We discussed how we are taking a thoughtful approach to developing a center-led approach to human capital management and diversity and inclusion.

 

•   Shareholders expressed appreciation for the new transparency on the sustainability portion of our website regarding workforce demographics (gender, ethnicity, age).

 

•   We also discussed the diversity & inclusion goals we set in 2021 related to conducting an engagement survey to establish a baseline measure of inclusivity, and implementing unconscious bias training for employees with direct reports.

   

ESG

  

•   We discussed ESG program, including our recently announced goals to reduce our GHG emissions by 2030, the results of our climate risk assessment and scenario analysis aligned with the TCFD reporting framework, the extensive disclosures available on the sustainability portion of our website, and our SASB and GRI-aligned disclosures.

 

•   We also discussed that, in 2022, we plan to continue to make progress in several key priority areas in line with our three-year plan to expand the scope and robustness of our ESG practices and disclosures.

   

Executive

Compensation

  

•   Shareholders expressed strong support for the meaningful changes implemented to our executive compensation program in 2020. They expressed appreciation for the additional detail presented in our proxy statement regarding the weighting, nature and performance outcomes for the individual strategic objectives in our AIP, as well as improved disclosure regarding the threshold, target and maximum levels for the financial goals in our AIP. For LTIP awards made in 2020, they also supported the increase in the proportion of awards dedicated to performance shares and the shift to relative TSR from internal TSR as the performance metric for performance shares. In addition, shareholders expressed support for continuing to include the effective oversight and management of ESG matters as a strategic objective for our CEO under the AIP and welcomed our recent adoption of a comprehensive clawback policy.

   

Corporate

Governance

  

•   Our shareholders continued to express their broad support for our governance practices and shareholder rights, including special meeting right, use of annual director elections, and independent Board leadership structure, and thoughtful and active refreshment process.

 

•   Many of our shareholders continued to express the view that the right to act by written consent is unnecessary in light of our shareholders’ existing right to call special meetings. Moreover, to the extent some shareholders desired greater rights, the feedback was that our adoption of a 15% ownership threshold in 2020 for special meetings was preferable to a written consent right.

 

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History of Board Responsiveness

We are committed to being responsive to our shareholders as demonstrated by the number of changes we have made over the years based on their input. In direct response to shareholder feedback, over the past 8 years, Dover has adopted and amended our special meeting right, adopted proxy access, implemented meaningful changes to our executive compensation program, removed all our super-majority voting provisions in our charter, adopted a robust clawback policy, and enhanced our disclosures to investors. The table below highlights many of the changes to our governance structures and compensation program that have been implemented over the past several years informed by shareholder feedback. These changes specifically address shareholders’ areas of focus and input gathered through our extensive shareholder engagements and outreach efforts.

 

        Year   

 

% of Outstanding Shares
Outreached /Engaged

 

   Actions in Response to Shareholder Feedback

 

  LOGO       2022       

Lead-up to 2022 AGM:

Ongoing

  

  Currently engaging with shareholders on corporate governance, executive compensation and sustainability ahead of the 2022 Annual Meeting

  2021    59% / 31%   

 

  Continued to maintain a refreshed and diverse board by appointing an additional female director

  Made several ESG accomplishments including:

  Announcing goals to reduce our GHG emissions by 2030

  Undertaking a climate risk assessment aligned with the TCFD reporting framework

  Setting new diversity & inclusion goals

  Establishing a working group of operating companies with a goal of embedding sustainability considerations into product development

  2020   

Winter: 65% / 15%

 

Lead-up to 2020 AGM:

51% / 12%

 

Fall: 59% / 38%

  

 

  Implemented for 2020 executive compensation program:

  Increased proportion of LTIP dedicated to performance shares and shifted from internal TSR to relative TSR as metric for performance shares

  Reduced maximum payout ceiling from 400% to 300% in LTIP

  Reduced ownership threshold required to call a special meeting of shareholders to 15% from 25%

  Adopted a diversity search policy for external director and CEO searches conducted by third-party search firms

  Made several ESG accomplishments including:

  A robust materiality assessment to help identify go-forward focus areas

  The launch of the sustainability portion of our website

  Publication of SASB and GRI indices

  Release of an “investor tear sheet” covering key ESG highlights

  Increased transparency into workforce demographics

  2019   

Lead-up to 2019 AGM:

63% / 37%

 

Fall: 63% / 41%

  

 

  Achieved removal of all supermajority provisions through submission of management proposal and comprehensive retail investor campaign

  Enhanced disclosure regarding individual strategic objectives and financial metrics in AIP

  Adopted comprehensive clawback policy

  Incorporated ESG oversight into CEO’s individual strategic objectives in AIP

  2018    51% / 32%   

 

  Put forth management proposal to remove supermajority voting provisions alongside comprehensive campaign with retail investors to build support – did not pass

  2017    53% / 33%   

 

  Updated AIP to 60% financial metrics / 40% strategic objectives from 50% / 50%

  Put forth management proposal to remove supermajority voting provisions – did not pass

  2016    60% / 28%   

 

  Adoption of proxy access

  Put forth management proposal to provide shareholders with written consent right – did not pass

 

  2015    39% / 24%   

 

  Launch of governance-focused shareholder engagement program

 

  2014    - / -   

 

  Adoption of special meeting right

 

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Environmental, Social, and Governance Oversight (ESG)

Throughout our history, our commitment to corporate responsibility and sustainability has created significant value for our shareholders and stakeholders. Across our portfolio of businesses and our team of employees, we remain focused on operating and innovating sustainably to help meet the goals of our customers, realize the full potential of our employees through a culture that supports and values their efforts, and make the communities in which we operate stronger. For more information on our initiatives and accomplishments, please visit https://www.dovercorporation.com/sustainability/overview.

Materiality Analysis

We conducted a materiality analysis in 2020 to identify the ESG issues most important to our business and stakeholders. Please see below for the specific areas of focus identified through the analysis. The findings from the materiality analysis were used by our Sustainability Steering Committee, comprised of our corporate and business leaders, to identify the ESG topics that are most critical to the company. These ESG areas of focus will guide our sustainability strategy moving forward as we implement a three-year ESG plan. For each sustainability topic, we are applying our resources, expertise, and innovation to improve outcomes and drive results.

 

LOGO

 

*   Dover progress information to be provided on these topics in 2022

Governance Oversight of ESG

Our governance framework serves as a strong foundation to promote the long-term interests of our shareholders. Our Board oversees our long-term strategic development and enterprise risk, including ESG risks. The Board’s oversight spans a wide array of ESG issues, including those related to climate change, health and safety, diversity and inclusion, ethics and compliance, and long-term environmental protection. As part of its continued focus on sustainability, our Board incorporates ESG oversight into the CEO’s annual performance and compensation evaluation as one of the CEO’s strategic objectives. The Board also has established a comprehensive enterprise risk management process to identify and manage risks, including any risks related to environmental and social issues.

Additionally, our cross-functional Sustainability Steering Committee was established in 2020 to manage ESG issues, meets at least four times per year, and provides an update to the Board at least annually. The Committee is responsible for guiding our sustainability strategy, initiatives, target-setting, performance, and reporting.

 

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Progress Toward Goals

In 2021, we made progress on a number of fronts in line with our three-year ESG plan. We formalized our commitment to science-based emissions targets by announcing a goal of reducing scope 1 and scope 2 market-based GHG emissions of 30 percent by 2030 (from a 2019 baseline year) and reducing scope 3 GHG emissions of 15 percent by 2030 (from a 2019 baseline year). We also conducted a TCFD-aligned climate risk assessment and scenario analysis and recently published a summary of the results on our website to further improve transparency regarding our ESG areas of focus. Also, as part of our efforts around increasing our focus on developing products that help our customers meet their sustainability goals, we engaged with some of our operating companies during 2021 regarding innovation for sustainable products. Finally, we announced new goals regarding diversity & inclusion and TRIR reduction.

 

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Directors’ Compensation

Our non-employee directors’ annual compensation is payable partly in cash and partly in common stock in an allocation our Board may adjust from time to time. If any director serves for less than a full calendar year, the compensation to be paid to that director for the year will be pro-rated as deemed appropriate by our Compensation Committee.

Our Board has adopted a policy that directors are expected to hold at any time a number of shares at least equal to the aggregate number of shares they received as the stock portion of their annual retainer during the past five years, net of an assumed 30% tax rate.

 

 

FOR 2021, NON-EMPLOYEE DIRECTOR COMPENSATION WAS AS FOLLOWS:

Annual retainer of $270,000, payable $150,000 in common stock and $120,000 in cash

Audit Committee Chair — additional annual cash retainer of $30,000

Compensation Committee Chair — additional annual cash retainer of $20,000

Governance and Nominating Committee Chair and Finance Committee Chair — additional annual cash retainer of $15,000

Board Chair — additional annual retainer of $170,000, payable $130,000 in cash and $40,000 in common stock

Under our 2021 LTIP, each non-employee director can elect to defer the receipt of 0%, 50%, or 100% of the equity compensation payable in a year until termination of services as a non-employee director. Shares deferred are converted into deferred stock units representing the right to receive one share of our common stock for each unit held at the end of the deferral period. Dividend equivalents are credited on deferred stock units and will be distributed in cash at the time that shares are distributed in settlement of deferred stock units. Messrs. Johnston, Spiegel, Todd, and Wagner and Mses. Graham and DeHaas elected to defer receipt of their 2021 equity compensation and received deferred stock units.

The table below sets forth the compensation paid to our directors for services in 2021.

 

       

NAME

    

FEES EARNED

OR PAID

IN CASH ($)(1)

      

STOCK

AWARDS ($)(2)

      

TOTAL

($)

 

DEBORAH L. DEHAAS(3)

    

 

106,521

 

    

 

133,075

 

    

 

239,595

 

H. JOHN GILBERTSON, JR

    

 

120,000

 

    

 

150,078

 

    

 

270,078

 

KRISTIANE C. GRAHAM

    

 

120,000

 

    

 

150,078

 

    

 

270,078

 

MICHAEL F. JOHNSTON

    

 

250,000

 

    

 

189,983

 

    

 

439,983

 

ERIC A. SPIEGEL

    

 

135,000

 

    

 

150,078

 

    

 

285,078

 

STEPHEN M. TODD

    

 

150,000

 

    

 

150,078

 

    

 

300,078

 

STEPHEN K. WAGNER

    

 

135,000

 

    

 

150,078

 

    

 

285,078

 

KEITH E. WANDELL

    

 

140,000

 

    

 

150,078

 

    

 

290,078

 

MARY A. WINSTON

    

 

120,000

 

    

 

150,078

 

    

 

270,078

 

  (1)

Amounts include the standard annual cash retainer, the Chair’s additional cash retainer, and the additional annual cash retainer for committee Chairs.

  (2)

On November 15, 2021, each of Messrs. Gilbertson and Wandell and Ms. Winston received 865 shares of common stock with an aggregate grant date fair market value of $150,078, Messrs. Spiegel, Todd and Wagner and Ms. Graham each received 865 deferred stock units with an aggregate grant date fair market value of $150,078, and Mr. Johnston received 1,095 deferred stock units with an aggregate grant date fair market value of $189,983, which included his additional compensation as Board Chair.

  (3)

Ms. DeHaas was first elected to the Board on February 11, 2021 and accordingly received pro-rata cash and equity in 2021. Ms. DeHaas received 767 deferred stock units on November 15, 2021 with an aggregate grant date fair market value of $133,075.

Our Compensation Committee reviews our non-employee director compensation policy biennially and proposes changes to the Board, as appropriate. In reviewing the non-employee director compensation policy in 2022, our Compensation Committee

 

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worked with its independent compensation consultant to assess the competitiveness of our non-employee director compensation policy based on benchmark information from peer companies and relevant compensation surveys. Based on its review, our Compensation Committee proposed and the Board adopted the following change to our non-employee director compensation policy to be effective in 2022: an increase by $15,000 of the annual retainer for non-employee directors, payable in common stock.

 

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Proposal 2 — Ratification of Appointment of Independent Registered Public Accounting Firm

The Audit Committee has appointed the independent registered public accounting firm of PwC to audit the annual accounts of Dover and its subsidiaries for 2022. PwC has audited the financial statements for the Company since 1995. Representatives of PwC are not expected to be present at the Annual Meeting.

Although shareholder ratification of PwC’s appointment is not required by Dover’s by-laws or otherwise, our Board is submitting the ratification of PwC’s appointment for the year 2022 to Dover’s shareholders. If the shareholders do not ratify the appointment of PwC, the Audit Committee will reconsider whether or not to retain PwC as Dover’s independent registered public accounting firm for the year 2022 but will not be obligated to terminate the appointment. Even if the shareholders ratify the appointment of PwC, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in Dover’s interests.

THE BOARD RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT

OF PWC AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR 2022.

 

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PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Audit Committee Report

 

 

The Audit Committee is composed of directors who, in the opinion of the Board, are independent and financially literate under NYSE rules and qualify as audit committee financial experts as defined by the SEC. Information concerning the credentials of the Audit Committee members can be found in the section of this proxy statement entitled “Proposal 1 — Election of Directors”.

 

The Audit Committee operates under a written charter adopted by the Board and available on Dover’s website. The Audit Committee assists the Board in overseeing the quality and integrity of Dover’s financial statements, compliance with legal and regulatory requirements, the qualifications, performance and independence of the independent auditors, and the performance of the internal audit function.

 

Among other things, the Audit Committee appoints the Company’s independent auditors and is directly involved in the selection of the lead audit engagement partner, discusses with the internal audit function and independent auditors the overall scope and plans for their respective audits, reviews the Company’s accounting policies and system of internal controls, reviews significant financial transactions, discusses with management and with the Board processes relating to risk management, pre-approves audit and permissible non-audit services provided by the independent auditors, and approves all fees paid to the independent auditors for such services.

 

For 2021, the Audit Committee engaged the independent registered public accounting firm PwC as Dover’s independent auditor. In selecting PwC, the Audit Committee considered, among other things: the experience and qualifications of the lead audit partner and other senior members of the PwC team; PwC’s historical performance on Dover’s audit and the quality of its communications with the Audit Committee; the results of the most recent internal quality control review or Public Company Accounting Oversight Board (“PCAOB”) inspection; PwC’s independence; its reputation for integrity and competence in the fields of accounting and auditing; the appropriateness of its fees; and its tenure as Dover’s independent auditors, including its understanding of the Company’s global businesses, accounting policies and practices, and internal control over financial reporting.

 

The Audit Committee discussed with PwC the overall scope and plans for the audit of Dover’s 2021 financial statements. The Audit Committee met with PwC, with and without management present, to discuss the results of PwC’s examination, their assessment of internal controls and the overall quality of financial reporting.

 

The Audit Committee reviewed and discussed, with both the management of Dover and PwC, Dover’s 2021 audited financial statements, including a discussion of critical accounting policies, the quality, not just the acceptability, of the accounting principles followed, the reasonableness of significant judgments reflected in such financial statements and the clarity of disclosures in the financial statements. The Audit Committee met a total of eight times in 2021 and 2022 to discuss 2021 quarterly and full-year financial results and related disclosures.

 

The Audit Committee has received the written disclosures and the Rule 3526 letter from PwC required by the applicable requirements of PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence, and discussed with PwC its independence, including the impact of any relationships or permitted non-auditing services on PwC’s independence. The Audit Committee also discussed with PwC the matters required to be discussed under PCAOB Auditing Standard No. 1301. The Audit Committee has also received written materials addressing PwC’s internal control procedures and other matters required by NYSE listing standards.

 

Based upon the review and discussions referred to above, the Audit Committee recommended that the audited financial statements for the year ended December 31, 2021 be included in Dover’s Annual Report on Form 10-K.

 

Audit Committee:

 

Stephen M. Todd (Chair)

Deborah L. DeHaas

H. John Gilbertson, Jr.

Eric A. Spiegel

Stephen K. Wagner

 

This report does not constitute “soliciting material” and shall not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent we specifically incorporate this report by reference, and shall not otherwise be deemed filed under such Acts.

 

 

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Fees Paid to Independent Registered Public Accounting Firm

Fees paid to, or accrued for, PwC for services to us and our subsidiaries for 2021 and 2020 (including reimbursable expenses) were as follows:

 

     
    

2021

   

2020

 

AUDIT FEES

 

$

7,487,600      

 

$

7,697,324      

AUDIT-RELATED FEES

 

$

55,870      

 

$

41,880      

TAX FEES

 

$

182,323      

 

$

173,305      

ALL OTHER FEES

 

$

900      

 

$

12,476      

 

 

 

   

 

 

 

TOTAL

 

$

                7,726,693       

 

$

                7,924,985       

Audit Fees. Audit fees include fees for audit or review services in accordance with generally accepted auditing standards of our consolidated financial statements (including internal control over financial reporting), statutory and subsidiary audits and review of documents filed with the SEC.

Audit-Related Fees. Audit-related fees include fees for assurance and related services that are reasonably related to the audit of our financial statements, including system implementation assessments.

Tax Fees. Tax fees include fees for services that are performed by professional tax staff other than in connection with the audit. These services include tax compliance, consulting and advisory services.

All Other Fees. Other fees include fees for non-audit services not listed above that do not impair the independence of the auditor and are not prohibited by the SEC or PCAOB.

Pre-Approval of Services Provided by Independent Registered Public Accounting Firm

Consistent with its charter and applicable SEC rules, our Audit Committee pre-approves all audit and permissible non-audit services provided by PwC to us and our subsidiaries. With respect to certain services which PwC has traditionally provided, the Audit Committee has adopted specific pre-approval policies and procedures. In developing these policies and procedures, the Audit Committee considered the need to ensure the independence of PwC while recognizing that, in certain situations, PwC may possess the expertise and be in the best position to advise us and our subsidiaries on issues and matters other than accounting and auditing.

The policies and procedures adopted by the Audit Committee allow the pre-approval by the Audit Committee of permissible audit-related services, non-audit-related services and tax services. Under the policies and procedures, pre-approval is generally provided for up to one year and any general pre-approval is detailed as to the particular services or category of services and is subject to a specific budget for each of them. The policies and procedures require that any other services be expressly and separately approved by the Audit Committee prior to such services being performed by the independent auditors. In addition, pre-approved services which are expected to exceed the budgeted amount included in a general pre-approval require separate, specific pre-approval. For each proposed service, the independent auditors and management are required to provide detailed information to the Audit Committee at the time of approval. The Audit Committee considers whether each pre-approved service is consistent with the SEC’s rules and regulations on auditor independence.

All audit-related and non-audit-related services of PwC during 2021 listed above under “Fees Paid to Independent Registered Public Accounting Firm” were pre-approved specifically or pursuant to the procedures outlined above. With respect to any tax services provided by PwC, PwC provided to the Audit Committee the communications required under PCAOB Rule 3524.

 

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Compensation Discussion and Analysis

This Compensation Discussion and Analysis (“CD&A”) describes our compensation program and how it operates for our NEOs. Our NEOs for 2021 are:

 

   
      NAMED EXECUTIVE OFFICERS

RICHARD J. TOBIN

  

President & CEO

BRAD M. CEREPAK

  

Senior Vice President & CFO

GIRISH JUNEJA

  

Senior Vice President & Chief Digital Officer

IVONNE M. CABRERA

  

Senior Vice President & General Counsel

KIMBERLY K. BORS

  

Senior Vice President & Chief Human Resource Officer

Executive Summary

Our compensation program is based on a pay-for-performance philosophy and is designed to incent executives to achieve financial and strategic goals that are aligned with the Company’s long-term business strategy and the creation of sustained, long-term value for our shareholders.

2021 Performance & Results

In 2021, despite the COVID-related challenges we continued to face, including increased material, labor and logistics costs, we delivered strong financial results, made advancements in organic investments and productivity initiatives, and deployed capital in a disciplined manner, in keeping with our return-seeking strategic priorities.

 

 

Generated revenue of $7.9 billion, up 18% (+15% organic) compared to the prior year

 

 

Increased GAAP earnings by 64% and adjusted earnings by 35%

 

 

Increased GAAP earnings per share by 65% and adjusted earnings per share by 35%

 

 

Generated free cash flow of $944.4 million, an increase of $5.3 million compared to the prior year, representing 11.9% of revenue. Cash flow provided by operating activities was $1,115.9 million.

 

 

Continued to evolve our operating model to include center-led value capture from digital opportunities, and continued to invest in growth and productivity initiatives, including automation, capacity expansion, and the implementation of common corporate systems and measurement tools.

 

 

Increased our quarterly dividend, marking our 66th consecutive year of dividend increases

 

 

Acquired nine businesses for total consideration of $1,125.1 million, net of cash acquired and including contingent consideration

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Success on Key Metrics (2019-2021)

 

LOGO

 

(1)

Definitions and reconciliations of non-GAAP measures are included at the end of this proxy statement.

(2)

Source: Capital IQ

2021 Pay Decisions Align with Dover’s Performance

Our compensation program structure is designed to align pay outcomes with our shareholders’ experience by emphasizing variable, at-risk pay for our management team, including the NEOs, through our AIP and long-term incentive program.

For 2021, our pay decisions and outcomes were consistent with our pay-for-performance philosophy. Our financial performance was strong in 2021, and we exceeded the financial performance target under our AIP. In addition, our NEOs made significant progress against their pre-defined individual strategic objectives as evaluated by our Compensation Committee under our AIP. Consistent with our value creation over the three-year performance period of 2019-2021, the performance shares for that period, which vested at the end of 2021 and were based on our historic internal TSR metric, had a payout percentage of 300% for our NEOs.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Say on Pay Vote Results and Shareholder Engagement

 

   
93% Say on Pay support            60% Shares Outstanding Contacted            31% Shares Engaged

Our Board has a strong history of engaging with shareholders and soliciting feedback on a range of topics, including our executive compensation program. Historically, our program has received strong shareholder support as expressed during our one-on-one engagement discussions with shareholders and through our Say on Pay vote levels.

At our 2021 annual meeting, approximately 93% of the voting shareholders approved the compensation of the NEOs. At our 2020 annual meeting, over approximately 96% of the voting shareholders approved the compensation of the NEOs. In 2021, we continued our shareholder engagement program. We reached out to holders of approximately 60% of our outstanding shares and engaged with governance professionals and/or portfolio managers of investors holding approximately 31% of our outstanding shares. In addition to the governance topics detailed earlier in this proxy statement, we had thoughtful discussions with our shareholders regarding our compensation program. Shareholders told us they believe our pay practices are aligned with our pay-for-performance philosophy. The Compensation Committee will continue to consider feedback from shareholders, as well as the results from future shareholder advisory votes, in its ongoing evaluation of executive compensation programs and practices at Dover.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Dover’s Alignment with Leading Compensation Governance Practices

 

 

WHAT WE DO

 

  The majority of target NEO pay opportunity is performance based (74% for the CEO; 62% for the other NEOs)

 

  A significant portion of target NEO pay opportunity is tied to Dover stock performance (73% for the CEO; 50% for the other NEOs)

 

  Robust engagement with shareholders to seek feedback on executive compensation programs

 

  Compensation program includes ESG objectives

 

  All long-term incentives are paid in stock, not cash

 

  Executives must hold significant amounts of Dover stock: five-times salary for the CEO, three-times for other NEOs

 

  All long-term incentives are earned or vest over three years

 

  Change in control provisions require double trigger

 

  Comprehensive clawback policy

 

  Executives participate in benefit and employee programs on the same basis as other Dover employees

 

  Our Compensation Committee retains its own independent consultant

 

  Annual compensation risk assessment

 

 

WHAT WE DON’T DO

 

   No tax gross ups

 

   No repricing, reloads, or exchanges of SSARs

 

   No SSARs granted below fair market value

 

   No hedging or pledging of Dover securities by executives, including margin loans

 

   No dividends are paid on performance shares or RSUs during the earning or vesting period. Dividend equivalents are accrued on RSUs, but are only paid if the RSUs vest

 

   No special executive retirement arrangements

 

   No substantial executive perquisites, nor do we own or operate any corporate aircraft

 

 

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Compensation Principles

Guiding Principles for Dover’s Executive Compensation Program

 

LOGO

Based on these principles, these were the key elements of our program in 2021:

 

 

Financial metrics that are clearly linked to the creation of shareholder value: adjusted earnings and three-year relative TSR.

 

 

A focus on our business strategy to ensure our long-term compensation program aligns the interests of our executives with those of our shareholders by placing an emphasis on performance-based stock compensation.

 

 

An annual review by our Compensation Committee of executive compensation levels and the components of our program.

 

 

A reference to the median of our peer group for total direct compensation, with consideration for internal pay equity, sustained performance, specific responsibilities, and experience with comparable market talent.

 

 

Total compensation opportunities designed so that the large majority of compensation is variable and at-risk based on financial, strategic, operational, and share price performance.

 

 

An annual cash bonus plan (the AIP) designed to reward annual financial performance and the attainment of well-defined strategic objectives that the Board believes will assure the long-term success of Dover.

 

 

Executive benefits and programs that are consistent with those offered to other employees. We provide substantially no executive perquisites, nor do we own or operate any corporate aircraft.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Compensation Process

Setting Executive Compensation — Roles

The process for determining our compensation program structure and payouts involves the dedicated participation of our Compensation Committee, the independent directors of the Board, the CEO, and our Compensation Committee’s independent consultant. The roles of each in making compensation decisions are:

 

 

LOGO

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Setting Executive Compensation – Timeline

The process for making executive compensation decisions for 2021 began with goal setting at the beginning of the year and concluded with the actual compensation payout decisions in early 2022. As described below, this year-long process integrates key factors, such as Dover’s business strategy, our annual budget, and market compensation data.

 

 

LOGO

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Executive Compensation Program Peer Group

For assessing executive pay programs and levels, the Compensation Committee selected a group of companies that are similar to Dover in terms of end markets, complexity, revenues and market capitalization. In 2021, with the help of its independent consultant, the Compensation Committee reviewed the peer group and made no changes to the group.

 

     FINANCIAL CONSIDERATIONS
(IN USD MILLIONS)
  QUALITATIVE CONSIDERATIONS
 

COMPANY

  2021
REVENUE
    2021
MARKET
CAP(1)
   

INDUSTRY

  >20%
GLOBAL
REVENUES
  DOVER-LIKE
STRUCTURE
  SAME ANALYST
COVERAGE(2)
 

CARLISLE COMPANIES

  $ 4,810     $ 12,932     Industrial
Conglomerates
     
 

COLFAX CORPORATION

  $ 3,854     $ 7,115     Industrial
Machinery
     
 

CORNING INCORPORATED

  $ 14,082     $ 31,772     Electrical
Equipment
     
 

EATON CORPORATION

  $ 19,628     $ 68,886     Electrical
Equipment
     
 

EMERSON ELECTRIC CO.

  $ 18,236     $ 55,308     Electrical
Equipment
     
 

FLOWSERVE CORPORATION

 

$

3,541

 

 

$

3,986

 

 

Machinery

     
 

FORTIVE CORPORATION

  $ 5,255     $ 27,356     Industrial
Machinery
     
 

ILLINOIS TOOL WORKS INC.

 

$

 14,455

 

 

$

 77,466

 

 

Machinery

   

 
 

INGERSOLL-RAND PLC

 

$

5,152

 

 

$

25,217

 

 

Machinery

   

 
 

PARKER-HANNIFIN CORPORATION

 

$

14,348

 

 

$

40,883

 

 

Machinery

     
 

ROCKWELL AUTOMATION INC.

  $ 6,997     $ 40,471     Electrical
Equipment
     
 

ROPER INDUSTRIES INC.

  $ 5,778     $ 51,884     Industrial
Conglomerates
     
 

SNAP-ON INCORPORATED

  $ 4,602     $ 11,530     Industrial
Machinery
     
 

STANLEY BLACK & DECKER, INC.

  $ 15,617     $ 30,751     Industrial
Machinery
     
 

TEXTRON INC.

  $ 12,382     $ 17,017     Aerospace &
Defense
     
 

XYLEM, INC.

  $ 5,195     $ 21,625     Industrial
Machinery
     
 

75TH PERCENTILE

 

$

14,374

 

 

$

43,633

 

       
 

MEDIAN

 

$

6,388

 

 

$

29,054

 

       
 

25TH PERCENTILE

 

$

5,067

 

 

$

15,996

 

       
 

DOVER

 

$

7,907

 

 

$

26,148

 

               

 

  (1)

As of 12/31/2021.

  (2)

“Same analyst coverage” means company is covered by at least five of the analysts that cover Dover.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Role of Internal Equity in Setting Executive Compensation

Management and our Compensation Committee consider both market benchmarks (i.e., external competitiveness), as well as the impact each executive role has relative to internal peers (i.e., internal equity), in establishing the executive pay structures used to govern pay.

Role of the Independent Compensation Consultant

Our Compensation Committee has the authority and discretion to retain external compensation consultants as it deems appropriate. Our Compensation Committee has adopted a policy to ensure the continuing independence and accountability to the committee of any advisor hired to assist the committee in the discharge of its duties. The policy formalizes the independent relationship between the Compensation Committee’s advisor and Dover, while permitting management limited ability to access the advisor’s knowledge of Dover for compensation matters. Under the policy, our Compensation Committee will annually review and pre-approve the services that may be provided to management by the independent advisor without further Compensation Committee approval. Compensation Committee approval is required prior to Dover retaining the independent advisor for any executive compensation services or other consulting services or products above an aggregate annual limit of $50,000.

Since September 2020, our Compensation Committee has retained Meridian Compensation Partners, LLC (“Meridian”) to serve as its independent compensation consultant. Meridian does no other work for and has no other relationships with Dover. Meridian is focused on executive compensation and does not have departments, groups, or affiliates that provide services other than those related to executive compensation and benefits.

Our Compensation Committee looks to its consultant to periodically review and advise regarding the adequacy and appropriateness of our overall executive compensation plans, programs, and practices and, from time to time, to answer specific questions raised by our Compensation Committee or management. Compensation decisions are made by, and are the responsibility of, our Compensation Committee and our Board, and may reflect factors and considerations other than the information and recommendations provided by our Compensation Committee’s consultant.

To ensure independence of the compensation consultant, the consultant reports directly to the Chair of our Compensation Committee and works specifically for the Compensation Committee solely on compensation and benefits.

Meridian did not engage in any projects for management in 2021. Our Compensation Committee has assessed the independence of Meridian and concluded that its work for the Compensation Committee does not raise any conflict of interest.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Elements of Executive Compensation

Variable, Performance-Based Compensation Program Structure Drives Pay-For-Performance Alignment

The pay packages of Dover executives consist predominantly of incentive-based pay, both annual and long-term. Each of the compensation components has a specific role in the overall design of our executive pay program. While the components are designed to be mutually reinforcing, care is taken to minimize overlap between them. The following table provides an overview of the 2021 compensation program structure.

 

Component

  Pay Element       2021 Metrics & Weighting       Objectives

 

Base Salary

 

 

 

Cash

 

 

 

 n/a

 

 

 

 Attract and retain qualified executives

 

 Benchmarked to peer group median while also considering additional factors such as experience and performance in role

 

Annual Incentive Plan (AIP)

  Cash  

 

 60% Financial Results:

 

   Adj. Earnings (100%)

 

 40% Individual Strategic Objectives

 

   ESG oversight included in CEO and select NEO individual strategic objectives

 

 

 Intended to drive profitability, growth, and progress against strategy

 

 Individual objectives are focused on a limited and measurable set of goals to benefit shareholders over the long-term

 

 Including ESG oversight in objectives establishes clear tone at the top regarding the importance of ESG

 

Long-Term Incentive

Plan

  Performance Shares  

 

 40% LTIP weighting

 

 Performance Criteria: 3-Year relative TSR with the S&P 500 Industrials index companies as the comparator group

 

 

 Focus executives on shareholder value creation

 

 Relative TSR closely aligns our executive-level measurement system with the experience of shareholders

 

  SSARs  

 

 40% LTIP Weighting

 

 Performance Criteria: Dover stock price, exercisable three years after grant date and remain exercisable for another seven years (subject to 10-year stock price movement)

 

 

 Focus executives on share price appreciation

 

 SSARs are an important component of our program, reflecting input from investors, many of whom acknowledge the role SSARs play in emphasizing growth and go-forward value creation

 

  RSUs  

 

 20% LTIP weighting

 

 Performance Criteria: Dover stock price; awards vest ratably over three years

 

 

 Retention, ownership, and full alignment with the shareholder experience

 

Benefits

 

 

 

Consistent with other similarly situated employees

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

2021 Target Pay Mix

The ratio between fixed and variable pay varies by executive level, but for the CEO and his direct reports, including the NEOs, we believe it is appropriate that the vast majority of the compensation should be “at risk” incentive-based pay as shown in the chart below. Additionally, we believe that incentive pay should be heavily weighted toward long-term performance and tied to share performance, with the annual incentives focused on key short-term drivers and progress on strategy.

 

LOGO

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Pay-for-Performance Philosophy

Our Compensation Committee remains fully committed to its pay-for-performance philosophy. Dover’s record of long-term value creation is shown in the graphs below.

 

 

Total Shareholder Return1,2

 

 

 

LOGO

 

Note: These figures are annualized returns.

(1)   End date for returns period is December 31, 2021.

(2)   Annualized Total Shareholder Return including dividends and spin-offs. Fortive Corporation went public in July 2016 and Ingersoll Rand merged with Gardner Denver in March 2020. Both stocks are excluded from periods prior to go public / merger dates. Source: Capital IQ

 

 

DOV TSR vs. Proxy Peer Group (12/31/18 – 12/31/21)1

 

 

 

LOGO

 

Note: These figures are annualized returns. Source: Capital IQ.

(1)   Ingersoll Rand merged with Gardner Denver in March 2020 and is excluded from this analysis.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Annual Incentive Plan Compensation

An annual bonus may be earned each year based on an NEO’s performance against objectives tied to our financial performance as well as individual strategic goals. Each NEO’s bonus target amount is determined in reference to market benchmarking and according to the scope and complexity of the NEO’s functional responsibilities, overall impact on our results, strategic leadership, and managerial responsibility. We believe that balancing the measurement of performance for the annual bonus between financial and strategic objectives is important in mitigating risk and executing on our long-term strategy for value creation.

Each executive officer is eligible for a bonus equal to his or her base salary multiplied by his or her target award percentage multiplied by the Overall Payout Factor (which is the sum of the Financial Objective Factor (weighted 60%) and the Strategic Objectives Factor (weighted 40%)).

 

 

LOGO

2021 AIP Financial Objective Factor – Target

The Financial Objective Factor in the 2021 AIP was calculated based on Adjusted Earnings. In setting the financial objective, our Compensation Committee considered our annual budget, operational priorities, plans for capital allocation, historical performance, and external factors, among other items. The target performance level for the financial objective was established at the beginning of the fiscal year and provided for appropriate adjustments for acquisitions and dispositions occurring during the year. For this measure, our Compensation Committee established threshold, target, and maximum levels of performance, as well as a payout percentage curve that relates each level of performance to a payout percentage.

Threshold and maximum performance levels are set at 85% and 107%, respectively, of target. The threshold and maximum performance levels were narrowed around target in 2021 to increase the performance sensitivity of the AIP. There is no payout on the Financial Objective Factor if performance is below the threshold. At threshold, the payout percentage curve begins at 50%. If performance is at the target level, the payout percentage is 100%. For performance at or above the maximum level of achievement, the payout percentage is capped at 200%.

The financial objective measure as originally established was adjusted to exclude forecasted performance contributions from Unified Brands following its sale on December 1, 2021, and to include forecasted contributions from the acquisitions of Innovative Control Systems, Inc. on December 30, 2020, AvaLAN Wireless Systems, Incorporated on April 19, 2021, Quantex Arc Limited on June 23, 2021, Blue Bite LLC on June 24, 2021, CDS Visual, Inc. on July 23, 2021, The Espy Corporation on September 15, 2021, LIQAL B.V. on October 15, 2021, Acme Cryogenics, Inc. on December 16, 2021, and Engineered Controls International, LLC on December 28, 2021.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

2021 AIP Financial Objective Factor – Results

Following the end of 2021, we calculated the Financial Objective Factor as follows:

 

   

2021 AIP FINANCIAL OBJECTIVE RESULTS (in millions)

  

 

  TARGET
PERFORMANCE
LEVEL
  ACTUAL
PERFORMANCE
LEVEL
  PAYOUT%
(BEFORE
WEIGHTING)
 

WEIGHTING

OF MEASURE

  WEIGHTED
PAYOUT%

Adjusted Earnings(1)

 

$902

 

$1,109

 

200%(2)

 

60%

 

 120%

Financial Objective Factor                    

 

120%

Performance Payout Curve

 

 

   

 

   

 

   

 

  PERFORMANCE
LEVEL
  PAYOUT

PERCENTAGE  

           

Threshold

 

85%

 

50%

           

Target

 

100%

 

100%

           

Maximum

 

107%

 

200%

 

  (1)

Definitions and reconciliations of non-GAAP measures are included at the end of this proxy statement.

 

  (2)

The payout percentage for the Adjusted Earnings Financial Objective Factor would also have been at the maximum performance level using the performance levels in effect in 2020.

2021 AIP Individual Strategic Objectives Factor

The Strategic Objectives Factor is based on the achievement of individual strategic objectives designed to create long-term value for our shareholders. The strategic objectives for the CEO were developed by our Compensation Committee at the beginning of the year, approved by our independent directors, and communicated to the CEO in February. The individual strategic objectives were based on specific strategic initiatives that the Board and management agreed were important to achieve in 2021. These objectives were cascaded to the CEO’s direct reports, as appropriate, based on their responsibilities or business portfolio. The Board monitored progress on the CEO’s strategic objectives and, following the end of the year, reviewed the CEO’s performance against these objectives when determining his annual bonus.

Following the end of 2021, our Compensation Committee determined for each NEO a Strategic Objectives Factor between 0% and 200%. Our Compensation Committee believes such judgment is an important risk-mitigating element to our compensation program and provides an opportunity to further align executive compensation with long-term value creation. To make this determination, our Compensation Committee took into account each executive’s execution against his or her personal strategic objectives for the year and the executive’s overall performance for the year.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Strategic Objectives Factor — CEO

The table below summarizes the individual strategic objectives, weightings, and results the Compensation Committee considered for our CEO in determining his Strategic Objectives Factor for 2021.

 

 

Strategic Objectives & Accomplishments – Richard J. Tobin (President & CEO)

 

 Capital Markets (16.67%)

 

 Pursued active engagement with investors regarding our long-term strategy execution and value-creation priorities

 

 

 Portfolio Management (16.67%)

 

 

 Continued to effectively deploy capital to increase the value of our portfolio including through acquisitions and investments in organic growth

 Successfully oversaw the integration of several recent acquisitions

 

 

 Organic Investment and Capital Spending Program (16.67%)

 

 

 Made progress on three-year capital structure plan to support our capital allocation priorities (organic investments, strategic acquisitions, and the return of capital to our shareholders) including in presentations to investors regarding our long-term strategy execution and value-creation priorities

 

 

 Talent, Succession Planning & Workforce Diversity (16.67%)

 

 

 Completed several objectives in the multi-year strategy to help ensure that our culture continues to take an inclusive approach that values diversity

 Completed talent and succession planning review

 

 

 ESG (16.67%)

 

 

 Successfully implemented the second year of a multi-year ESG strategic plan by further improving transparency and setting public facing goals on ESG topics, including GHG emissions.

 

 

 Three Pillars Progression (16.67%)

 

 

 Continued to make progress on margin expansion initiatives.

 

 

Our Compensation Committee evaluated Mr. Tobin’s achievements against his strategic objectives and assigned him a Strategic Objectives Factor of 100%.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Strategic Objectives Factor — Other NEOs

The following table summarizes the individual strategic objectives the Compensation Committee considered for our other NEOs in determining their respective Strategic Objectives Factors for 2021.

 

 

Brad M. Cerepak (Senior Vice President & CFO)

 

Mr. Cerepak’s strategic objectives were focused on corporate strategy (25% weighting), capital structure analysis (25%), finance transformation and control environment (25% weighting), and audit plan initiatives (25% weighting). Our Compensation Committee considered his: (1) role in assessing our portfolio of businesses and evaluating options for capital deployment; (2) support on aligning key metrics and market positions to drive shareholder communications; (3) efforts to support the preparation of our three-year capital structure plan; (4) continued commitment to optimizing the structure of our finance team and improving process efficiency of shared services; and (5) enhancements to our internal controls environment; and (6) role in improving our audit plan structure.

 

 

Girish Juneja (Senior Vice President & Chief Digital Officer)

 

Mr. Juneja’s strategic objectives were focused on strategic digital initiatives (35% weighting), digital customer experience (25% weighting), data security (25% weighting), and product development (15% weighting). Our Compensation Committee considered his: (1) role in supporting our strategic initiatives and priorities by assessing the digital capabilities of acquisition targets and driving adoption of shared services; (2) continued support in building common platforms to enhance the customer experience and in delivering efficiencies by enabling automated transactions; (3) efforts related to our enterprise-wide strategy to improve data and identity security; (4) progress on our information technology centralization initiatives; and (5) expansion of connected software and machine learning augmented solutions built to integrate and work with our equipment and component offerings.

 

 

Ivonne M. Cabrera (Senior Vice President, General Counsel & Secretary)

 

Ms. Cabrera’s strategic objectives were focused on ESG (34% weighting), legal spend optimization (33% weighting), and intellectual property (33% weighting). Our Compensation Committee considered her: (1) participation on our Sustainability Steering Committee and key role in driving initiatives and communications aligned with our three-year plan to expand the scope of our ESG practices and disclosures; (2) continuing guidance on legal issues related to the COVID-19 pandemic, including regulatory and legislative developments, government relief measures, and matters impacting our employees and customers; (3) progress in expanding the use of technology to collect and leverage data to drive optimization initiatives and maximize the value of strategic legal advice and counseling provided to the business; and (4) efforts to improve how we capture and protect intellectual property across the enterprise.

 

 

Kimberly K. Bors (Senior Vice President & Chief Human Resource Officer)

 

Ms. Bors’ strategic objectives were focused on the global HR operating model (25% weighting), enterprise talent management (25% weighting), strategic HR project initiatives (25% weighting), and ESG/Diversity & Inclusion (25%). Our Compensation Committee considered her: (1) role in developing the global operating model designed to expand shared services and centers of expertise, and improve operational effectiveness of the human resources function; (2) continuing progress to enhance talent management processes, capabilities and succession depth across the enterprise; (3) efforts to develop and launch a global career architecture and compensation structure, and a comprehensive Diversity & Inclusion roadmap; (4) successfully streamlining, outsourcing, and offshoring several HR processes to achieve cost reductions; (5) continuing role in the COVID-19 pandemic response and guidance for employee protocols; and (6) membership on the Sustainability Steering Committee and, in connection therewith, role in establishing goals and execution plans related to both an employee engagement survey with inclusivity index and unconscious bias training for employees with direct reports.

 

Our Compensation Committee assigned an average Strategic Objectives Factor of 100% to the non-CEO NEOs.

The Overall Payout Factors resulting from the above Financial Objective Factors and the Strategic Objectives Factors resulted in the payouts set forth in the 2021 Summary Compensation Table.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Long-Term Incentive Compensation

The following table summarizes the components of awards under our LTIP and the related performance criteria for awards granted in 2021. Note that all components are paid in stock rather than cash to encourage shareholder alignment through stock ownership.

 

     
Pay Element    2021 Weighting & Performance Criteria   Objectives
   

Performance Shares

  

 

  40% LTIP weighting

 

  Performance Criteria: 3-Year relative TSR with the S&P 500 Industrials index companies as the comparator group

 

  Focus executives on shareholder value creation

   

Stock Settled Stock Appreciation Rights

  

   40% LTIP weighting

  Performance Criteria: Dover stock price, exercisable three years after grant date and remain exercisable for seven years (subject to 10-year stock price movement)

 

  Focus executives on share price appreciation

   

Restricted Stock Units

  

   20% LTIP weighting

  Performance Criteria: Dover stock price; awards vest ratably over three years

 

  Retention and full alignment with the shareholder experience

Performance Shares Granted in 2020 and 2021 – Relative TSR Metric

Beginning with grants made in 2020, performance shares are earned based on our relative TSR performance against the S&P 500 Industrials index companies. The relative TSR metric provides shareholders with a transparent and simple measure to gauge our performance against companies in our industry, and aligns the interests of our executives with our shareholders. The relative TSR targets for our performance shares are highly competitive. Awards are earned three years after the grant, provided relative TSR exceeds a threshold level with a maximum payout capped at 300% of target. Performance share payouts will be capped at 100% if absolute TSR is negative over the performance period.

For performance share grants made in 2020 and after, payouts will be made on a sliding scale using the following formula based on our relative TSR performance:

 

LOGO

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Performance Shares Granted Prior to 2020 – Internal TSR Metric

The performance shares that vested in 2021 are based on the three-year performance period of 2019-2021, and the performance is based on our historic internal TSR metric, which is described below. Consistent with our value creation over the three-year performance period, the performance shares that vested in 2021 had a payout percentage of 300% for our NEOs.

 

       
     

Target # of Shares

 

      

Actual Shares Awarded

 

         

Richard J. Tobin

     15,351          46,053       

Brad M. Cerepak

     4,386          13,158       

Girish Juneja

     987          2,961       

Ivonne M. Cabrera

     1,754          5,262       

Kimberly K. Bors

     N/A          0         

Definition of Internal TSR. The performance shares granted to NEOs for the performance period of 2019-2021 are measured based on internal TSR, which, by definition, is a measure of value creation for our business segments and operating companies. The key components of internal TSR are EBITDA Growth and Free Cash Flow. Based on rigorous testing over time, internal TSR is:

 

   

highly correlated with long-term shareholder value creation for a multi-industry company such as Dover,

 

   

highly correlated with the combination of return on invested capital and organic growth, and

 

   

effective in driving behaviors because it measures outcomes that are more within management’s control, such as revenue growth (organic and acquisition), and margin improvements.

Internal TSR measures the change in enterprise value over a three-year period. EBITDA is assigned a multiple based on prevailing market multiples among industrial companies. Internal TSR tracks the change in that EBITDA-based value, along with Free Cash Flow generated during the three-year performance period. The two together work similarly to an external TSR measure: the EBITDA-based value becomes a proxy for share price, and Free Cash Flow becomes a proxy for dividends. Further, EBITDA Growth and Free Cash Flow together focus our business leaders on growing our business, investing in continuing operations, and shaping our portfolio with capital-effective acquisitions and dispositions.

 

 

LOGO

 

   

EBITDA Growth — We believe that EBITDA is useful for purposes of evaluating our ongoing operating profitability as it excludes the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating our operating performance in relation to our competitors.

 

   

Free Cash Flow — Free Cash Flow is operating cash flow less capital spending, less cash used for acquisitions, plus cash received from divestitures. We believe that Free Cash Flow is an important measure of our operating performance as it provides a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.

 

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Safeguards. Since internal TSR is an absolute measure of value creation, we have implemented safeguards to substantially eliminate large payouts resulting solely from economic cycles. Further, payouts under the program are in shares, and our shareholding requirements ensure that executives are exposed to the same stock price changes as our shareholders, including external stock market factors. Dividends are not accrued or paid on performance shares during the performance period.

Rigorous Internal TSR Targets, Threshold and Cap Levels. Internal TSR targets for our performance shares are demanding and were rigorously back-tested to confirm that they are set to tie performance share payouts with comparable relative TSR performance levels. Awards are earned three years after the grant, provided internal TSR exceeds a threshold level. No payouts will be made unless internal TSR equals or exceeds 5%. The payout to any individual may not exceed 500,000 shares.

For performance share grants made in 2019, payouts were made on a sliding scale using the following formula with a maximum payout at 300% of target:

 

 

LOGO

Stock Settled Stock Appreciation Rights

Stock Settled Stock Appreciation Rights (SSARs) give our NEOs the ability to participate in the price appreciation of a set number of shares of Company stock. Once SSARs vest, an NEO may exercise them any time prior to the expiration date and the proceeds from the exercise are paid to the NEO in the form of shares of Dover common stock to encourage continued share ownership and shareholder alignment. SSARs vest and are exercisable 3 years after grant date and remain exercisable for seven years, which means the awards are subject to 10-year stock price movement thus aligning executive interests with shareholder interests over the long term. Importantly, in light of our active acquisition program, SSARs’ forward-looking orientation is effective for incentivizing our newly-acquired companies and employees, who must create new value in order to realize gains. Furthermore, SSARs’ 10-year life cycle is essential to managing value creation with a business that has a portfolio of industrial companies whose economic cycles vary.

Restricted Stock Units

RSU grants attract and retain NEOs by providing them with some of the benefits associated with stock ownership during the vesting period. Executives do not actually own the shares underlying the units, nor do they enjoy the benefits of ownership such as dividends and voting, until the vesting conditions are satisfied. Once vested, the NEO receives shares of Dover stock equivalent in number to the vested units and receives a cash amount equal to accrued dividends during the vesting period, net of withholding taxes.

Other Benefits

401(k), Pension Plan and Health & Wellness Plans

Our executive officers are able to participate in retirement and benefit plans generally available to our employees on the same terms as other employees. Dover and most of our businesses offer a 401(k) plan to substantially all U.S.-based employees

 

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and provide a Company matching contribution denominated as a percentage of the amount of salary deferred into the plan by a participant during the course of the year. Some of our U.S.-based employees also participate in a tax-qualified defined benefit pension plan. Effective December 31, 2013, we closed both our qualified and non-qualified defined benefit retirement plans to new employees. We intend to freeze any future benefit accruals in both plans effective December 31, 2023. All of our U.S.-based employees are offered a health and wellness plan (including health, term life and disability insurance). NEOs do not receive enhanced health and wellness benefits.

Non-Qualified Retirement Plans

We offer two non-qualified plans with participation generally limited to individuals whose annual salary and bonus earnings exceed the Internal Revenue Service (“IRS”) limits applicable to our qualified plans: our Pension Replacement Plan (“PRP”) and our deferred compensation plan. Participation in the deferred compensation plan is open to employees with an annual salary equal to or greater than $175,000 for 2021 deferral elections and $250,000 for 2022 deferral elections.

After December 31, 2009, benefits under the PRP before offsets are determined using the benefit calculation and eligibility criteria as under the pension plan, except that IRS limits on compensation and benefits do not apply. Prior to December 31, 2009, the participants in the PRP accrued benefits greater than those offered in the pension plan. Effective January 1, 2010, we modified this plan so that executives subject to IRS compensation limits will accrue future benefits that are substantially the same as benefits under the pension plan. Individuals who participated in the PRP prior to January 1, 2010 will receive benefits calculated under the prior benefit formula through December 31, 2009 and benefits calculated under the lower PRP benefit formula on and after January 1, 2010. Amounts receivable by the executives under the PRP are reduced by any amounts receivable by them under the pension plan, any qualifying profit sharing plan, Company-paid portion of social security benefits, and the amounts of the Company match in the 401(k) plan.

Effective December 31, 2013, the PRP was closed to new employees. All eligible employees as of December 31, 2013 will continue to earn PRP benefits through December 31, 2023 as long as they remain employed by Dover and its affiliates. Effective December 31, 2023, Dover intends to eliminate any future benefit accruals consistent with the freezing of benefit accruals under the pension plan.

We offer a deferred compensation plan to allow participants to elect to defer their receipt of some or all of their salary, bonuses and any payout of a cash performance award. The plan permits executive officers to defer receipt of part of their compensation to later periods and facilitates tax planning for the participants. Effective January 1, 2022, the deferred compensation plan was amended to also provide for automatic Company contributions for participants who do not also participate in the PRP or have a present value benefit under the PRP of less than $100,000.

Executive Severance

All of our NEOs are eligible to participate in our severance plan. Under the plan, if we terminate an NEO’s employment without cause (as defined in the severance plan), the NEO will generally be entitled to receive twelve months of salary plus target annual cash bonus, outplacement services, and healthcare benefits continuation, and a prorated annual cash bonus and a prorated performance share award for time worked during the year. In addition, Mr. Tobin is entitled to receive certain severance payments and benefits under his employment agreement in the event his employment is terminated by Dover without cause or by him for good reason. See “Potential Payments Upon Termination or Change in Control.”

Senior Executive Change in Control Severance Plan

Our Senior Executive Change in Control Severance Plan (the “CIC Severance Plan”) establishes the severance benefits payable to eligible executives if they are involuntarily terminated following a change in control. All of our NEOs are eligible to participate in the CIC Severance Plan. An executive eligible to participate in the CIC Severance Plan as of the date of a change in control will be entitled to receive severance payments under the plan if, within 24 months after the change in control, either the executive’s employment is terminated by the Company without “cause” or he or she terminates employment for “good reason” (as such terms are defined in the plan). The severance payments and benefits will consist of: a lump sum payment equal to 2.0 times their annual salary and target bonus, a prorated annual cash bonus at target, full acceleration of all unvested SSARs and RSUs, performance share payout at target for all in-cycle awards, outplacement services, and a lump sum payment equal to the cost of Consolidated Omnibus Budget Reconciliation Act (COBRA) health care benefit continuation of the executive and covered family members for 24 months. See “Potential Payments Upon Termination or Change in Control.”

 

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No executive may receive severance benefits under more than one plan or arrangement. Dover does not provide tax gross-ups in the CIC Severance Plan.

Other Elements of Compensation

Clawback Policy

In 2019, we adopted a formal clawback and recoupment policy applicable to our executive officers. If our Board determines, in its sole discretion acting in good faith, that any executive officer has engaged in fraud or intentional misconduct that caused or was a significant contributing factor to a material restatement of all or a portion of our consolidated financial statements, the Board may, to the extent permitted by law, and to the extent it determines that it is in Dover’s best interest, require reimbursement to Dover for, or reduce or cancel, any incentive compensation paid, granted or credited to such executive officer on or after November 7, 2019. We may effect any such recoupment by requiring the executive officer to pay Dover the relevant amount, by set-off, by reducing future compensation or by such other means or combination of means as the Board determines to be appropriate.

Apart from the clawback policy described above, our PRP includes clawback provisions for termination for cause and the severance plan and CIC Severance Plan provide for clawback of benefits for breaches of the plan.

Anti-hedging and Anti-pledging Policy

Our Securities Trading and Confidentiality Policy prohibits directors, executive officers and any employee who has previously received or receives any type of long-term incentive plan award, and certain persons and entities related to any such persons, from engaging in short-sales, transactions in derivative securities or any other form of hedging transaction designed to hedge or offset any decrease in the market value of Dover securities granted to or held by such persons. In addition, such persons may not hold Dover securities in a margin account or pledge securities as collateral for a loan or any other obligation.

Perquisites

We provide substantially no executive perquisites, nor does the Company own or operate any corporate aircraft. Management and our Compensation Committee believe that providing significant perquisites to executive officers would not be consistent with our overall compensation philosophy. As a result, we do not provide executive officers with perquisites such as social club memberships, company cars or car allowances, or financial counseling. Except for executive physicals, our NEOs participate only in programs generally available to Dover employees.

Shareholding Guidelines

We believe that our executives will most effectively pursue the long-term interests of our shareholders if they are shareholders themselves. As a result, share ownership guidelines are in place for all NEOs (subject to exceptions that may be granted by our Compensation Committee for significant personal events or retirement planning). Our CEO is required to hold shares equal in value to five-times salary and our other NEOs are required to hold shares equal in value to three-times salary. Our policy requires that NEOs hold/retain all equity grants until the share ownership guidelines are met. Based on current share ownership, all executives serving as NEOs are currently in compliance with the guidelines. Our Compensation Committee reserves the right to provide a portion of annual bonus in stock for any officer who fails to meet or make satisfactory progress toward satisfying the guidelines.

Risk Assessment

In 2021, Dover, with the assistance of Willis Towers Watson, updated the formal risk assessment that was conducted in 2020 for all our incentive compensation programs that have material impact on our financial statements. Willis Towers Watson inventoried incentive compensation programs at the corporate and operating company levels globally and conducted in-depth reviews of financially material plans, identified based on expected spend and income statement accounts tied to the program. The reviews focused on both the plan design features as well as internal risk mitigation controls in place. Based on this assessment, we have concluded that Dover’s compensation practices and policies do not create risks that are reasonably likely to have a material adverse effect on the Company.

 

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Compensation Committee Report

 

 

We reviewed and discussed with management the Compensation Discussion and Analysis for the year ended December 31, 2021.

 

Based on the review and discussions referred to above, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in Dover’s Annual Report on Form 10-K for the year ended December 31, 2021.

 

Compensation Committee:

    

Keith E. Wandell (Chair)

Kristiane C. Graham

Michael F. Johnston

Mary A. Winston

    

 

This report does not constitute “soliciting material” and shall not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this report by reference, and shall not otherwise be deemed filed under such Acts.

 

 

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Executive Compensation Tables

Summary Compensation Table

The Summary Compensation Table and notes show all remuneration for 2021 provided to our NEOs, consisting of the following officers:

 

   

Our President & CEO;

 

   

Our Senior Vice President & CFO; and

 

   

Our three other most highly compensated executive officers as of the end of 2021.

The determination of the most highly compensated executive officers is based on total compensation paid or accrued for 2021, excluding changes in the actuarial value of defined benefit plans and earnings on nonqualified deferred compensation balances.

 

  Name and Principal Position   Year     Salary
($)
    Bonus
($)(1)
    Stock
Awards
($)(2)
    Option
Awards
($)(3)
    Non-Equity
Incentive Plan
Compensation
($)(4)
    Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(5)
    All Other
Compensation
($)(6)
   

Total

($)

 

  Richard J. Tobin

  President & Chief

  Executive Officer

    2021       1,235,000       2,964,000       5,808,134       3,580,475       0       0       498,251       14,085,860  
    2020       1,217,500       1,722,825       6,024,137       2,674,529       0       0       343,347       11,982,338  
    2019       1,200,000       1,665,000       2,800,022       3,232,903       0       0       251,150       9,149,075  

  Brad M. Cerepak

  Senior Vice President &

  Chief Financial Officer

    2021       731,000       1,169,600       1,452,071       895,111       0       182,670       29,577       4,460,029  
 

 

2020

 

 

 

718,000

 

 

 

679,830

 

 

 

1,505,922

 

 

 

668,627

 

 

 

0

 

 

 

649,315

 

 

 

35,329

 

 

 

4,257,023

 

 

 

2019

 

 

 

705,000

 

 

 

740,250

 

 

 

800,006

 

 

 

923,692

 

 

 

0

 

 

 

553,203

 

 

 

37,166

 

 

 

3,759,317

 

  Girish Juneja

  Senior Vice President &

  Chief Digital Officer

   
2021
2020
 
 
   
500,000
491,404
 
 
   
560,000
325,500
 
 
   
341,738
376,533
 
 
   
210,626
167,157
 
 
   
0
0
 
 
   

0

0

 

 

   
51,884
38,967
 
 
   
1,664,248
1,399,561
 
 

  Ivonne M. Cabrera

  Senior Vice President &

  General Counsel

 

 

2021

 

 

 

560,000

 

 

 

627,200

 

 

 

546,632

 

 

 

336,979

 

 

 

0

 

 

 

0

 

 

 

17,922

 

 

 

2,088,733

 

 

 

2020

 

 

 

550,000

 

 

 

364,560

 

 

 

602,459

 

 

 

267,460

 

 

 

0

 

 

 

648,534

 

 

 

21,616

 

 

 

2,454,629

 

 

 

2019

 

 

 

540,000

 

 

 

396,900

 

 

 

319,930

 

 

 

369,480

 

 

 

0

 

 

 

408,519

 

 

 

23,238

 

 

 

2,058,067

 

  Kimberly K. Bors

  Senior Vice President &

  Chief Human Resource Officer

    2021       450,000       504,000       362,136       223,247       0       0       43,615       1,582,998  

 

  (1)

Bonus amounts generally represent payments under our AIP for the year indicated, for which payments are made in the first quarter of the following year. The AIP constitutes a non-equity incentive plan under FASB ASC Topic 718. Although they are based on the satisfaction of pre-established performance targets, AIP amounts are reported in the bonus column rather than the non-equity incentive plan compensation column to make clear that they are annual bonus payments for the year indicated.

 

  (2)

The amounts generally represent (a) the aggregate grant date fair value of performance shares granted during the year indicated, and (b) the aggregate grant date fair value of restricted stock unit awards granted during the year, in each case, calculated in accordance with FASB ASC Topic 718. The amounts set forth in the table do not correspond to the actual value that might be realized by the named executives. The grant date fair value of the performance share awards granted in 2020 and 2021 is higher than the grant date fair values of the awards granted in 2019 because of the transition from attainment based on internal TSR to attainment based on relative TSR. As market condition awards, the performance share awards granted in 2020 and 2021 were valued using the Monte Carlo simulation model. For a discussion of the assumptions relating to calculation of the cost of equity awards, see Note 15 to the Notes to the Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

 

    

Under FASB ASC Topic 718, the 2019, 2020 and 2021 performance share awards are considered performance and service conditioned. The grant date fair value for the 2019 performance share awards was $91.20, the grant date fair value for the 2020 performance share awards was $165.71 and the grant date fair value for the 2021 performance share awards was $148.29. The grant date fair value of 2021 RSU awards was $122.73. All RSU grants are eligible for dividend equivalent payments which are paid upon vesting.

 

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EXECUTIVE COMPENSATION TABLES

 

  (3)

The amounts represent the aggregate grant date fair value of SSAR awards granted during the year indicated, calculated in accordance with FASB ASC Topic 718, and do not correspond to the actual value that may be realized by the named executives. The grant date fair value for the 2021 SSAR awards was calculated using a Black-Scholes value of $29.08 per SSAR.

 

  (4)

See Note (1) for a discussion of annual bonuses under the AIP as non-equity incentive plan compensation.

 

  (5)

Amounts represent changes in present value of accumulated benefits under the pension plan and/or PRP during the year indicated. For more information, see “Executive Compensation Tables — Pension Benefits through 2021.”

 

  (6)

Amounts for 2021 represent: (i) 401(k) matching contributions of $10,150 for Mr. Cerepak and Ms. Cabrera and $13,050 for Messrs. Tobin and Juneja, and Ms. Bors, (ii) dividends received on RSUs in the amount of $309,296, $19,427, $4,184 and $7,772 and $685 for Messrs. Tobin, Cerepak, Juneja and Mses. Cabrera and Bors respectively, and (iii) for Messrs. Tobin and Juneja, and Ms. Bors, respectively, $136,815 of nonqualified deferred compensation match and $39,090 of 1% automatic contributions in the nonqualified deferred compensation plan; $26,950 of nonqualified deferred compensation match and $7,700 of 1% automatic contributions in the nonqualified deferred compensation plan; and $23,240 of nonqualified deferred compensation match and $6,640 of 1% automatic contributions in the nonqualified deferred compensation plan, since they do not participate in the PRP.

CEO Employment Agreement

In connection with the hiring of Mr. Tobin as our CEO, Mr. Tobin and Dover entered into a three-year employment agreement commencing May 1, 2018. In recognition of Mr. Tobin’s outstanding leadership and contributions to value creation, the agreement was renewed for a three-year period ending May 1, 2024. Under the terms of the agreement, Mr. Tobin is entitled to a minimum annual base salary of $1.2 million and a minimum target annual bonus equal to 125% of his base salary, and the receipt of an annual equity grant for each of Dover’s fiscal years ending during the term of the agreement with a grant date fair value of not less than $7 million. During the term of the agreement, Mr. Tobin will also be entitled to employee benefits on the same basis as those generally available to executive officers of Dover.

In connection with his hiring, Mr. Tobin received a one-time make-whole equity grant consisting of 75,971 performance shares, and 164,603 RSUs. Mr. Tobin also received a one-time make-whole cash payment of $1,000,000.

Mr. Tobin is entitled to receive certain severance payments and benefits in the event his employment is terminated by Dover without cause or by him for good reason. See “Potential Payments upon Termination or Change in Control”.

At the end of the term of the agreement, Mr. Tobin will continue to be employed by Dover as an at-will employee and participate in severance and other benefit plans on the same terms as other executives.

CEO Pay Ratio

We are providing the following information about the relationship of the annual total compensation of our Chief Executive Officer and our median employee. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.

Under the rules, we are permitted to use the same median employee in calculating the pay ratio as the median employee we identified in fiscal year 2020 for up to three years if there have been no changes that we reasonably believe would significantly affect this pay ratio disclosure and are permitted to substitute another employee for the median employee in certain circumstances. We believe that there have been no changes to our employee population or compensation arrangements that would result in a significant change to the pay ratio disclosure. However, in fiscal year 2021, there were significant changes in the circumstances of the median employee identified in fiscal year 2020 that we reasonably believe would result in a significant change in our pay ratio disclosure. Therefore, to calculate the pay ratio disclosure for fiscal year 2021, we are using another employee whose compensation is substantially similar to last year’s median employee using the same compensation measure we used to determine the fiscal year 2020 median employee. The date chosen for identifying the median employee was December 31, 2021.

For purposes of this analysis, our global headcount was 24,946 employees (12,984 U.S. and 11,962 non-U.S) as of our December 31, 2021 determination date. Eleven countries were excluded (2.1% of the total workforce) under the permissible

 

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EXECUTIVE COMPENSATION TABLES

 

5% exclusion, with employee counts as follows: Argentina (22), Colombia (4), Costa Rica (4), Dominican Republic (53), Indonesia (6), Malaysia (125), Mexico (102), Russian Federation (39), Taiwan (19), Thailand (134), and Turkey (10). After country exclusions, our total headcount was 24,428 employees (12,984 U.S. and 11,444 non-U.S.). As permitted under SEC rules, the global headcount does not include employees from the following companies acquired in December 2021: Acme Cryogenics, Inc. (205 employees) and Engineered Controls International, LLC (725 employees). As is permitted under the rules, to determine our median employee, we chose “base salary” as our consistently applied compensation measure. We estimated annual base salary for hourly workers employed for the entire year using their hourly rate and a reasonable estimate of hours worked for the year. For employees who commenced work during 2021, we annualized their annual base salary. We then produced a sample of employees who were paid within a 0.5% range of that median and selected an employee from within that group as our median employee. We determined that employee’s (Summary Compensation Table) total compensation was $48,794 for 2021.

We calculated 2021 annual total compensation for both our median employee and Mr. Tobin using the same methodology that we use to determine our named executive officers’ annual total compensation for the Summary Compensation Table. Mr. Tobin’s total compensation was $14,085,860 resulting in an estimated ratio of 289:1 for CEO pay to median worker pay.

Grants of Plan-Based Awards in 2021

All awards listed in the table below have a grant date of February 12, 2021 for all executive officers. For a discussion of the awards, see “Compensation Discussion and Analysis – Elements of Executive Compensation”.

 

  Name

 

Type

  Estimated Future Payouts 
Under Non-Equity
Incentive Plan Awards
    Estimated Future Payouts
Under Equity
Incentive Plan Awards
   

All Other
Stock
Awards:
Number
of

Share of
Stock or
Units

(#)

   

All Other
Stock
Awards:
Number of

Securities
Underlying
Options
(#)

   

Exercise

Price of
Option
Awards
($/Sh)

   

Grant
Date Fair
Value of

Stock
and
Option
Awards
($)

 
  Threshold
($)(1)
    Target
($)
    Maximum
($)
    Threshold
(#)(1)
    Target
(#)
    Maximum
(#)
 

  Richard J. Tobin

 

AIP (2)

 

 

926,250

 

 

 

1,852,500

 

 

 

3,705,000

 

                                                       
  SSAR (3)                                                          

 

123,125

 

 

 

122.73

 

 

 

3,580,475

 

 

Performance
Shares (4)

                                 

 

27,703

 

 

 

83,109

 

                         

 

4,108,078

 

 

RSU (5)

             

 

13,852

 

     

 

1,700,056

 

  Brad M. Cerepak

 

AIP (2)

 

 

365,500

 

 

731,000

 

 

 

1,462,000

 

                                                       
 

SSAR (3)

                                                         

 

30,781

 

 

 

122.73

 

 

 

895,111

 

 

Performance
Shares (4)

                                 

 

6,926

 

 

 

20,778

 

                         

 

1,027,057

 

 

RSU (5)

             

 

3,463

 

     

 

425,014

 

  Girish Juneja

 

AIP (2)

 

 

175,000

 

 

350,000

 

 

 

700,000

 

                                                       
  SSAR (3)                                                          

 

7,243

 

 

 

122.73

 

 

 

210,626

 

 

Performance
Shares (4)

                                 

 

1,630

 

 

 

4,890

 

                         

 

241,713

 

 

RSU (5)

             

 

815

 

     

 

100,025

 

  Ivonne M. Cabrera

 

AIP (2)

 

 

196,000

 

 

392,000

 

 

 

784,000

 

                                                       
 

SSAR (3)

                                                         

 

11,588

 

 

 

122.73

 

 

 

336,979

 

 

Performance
Shares (4)

                                 

 

2,607

 

 

 

7,821

 

                         

 

386,592

 

 

RSU (5)

                                                 

 

1,304

 

                 

 

160,040

 

 

DOVER CORPORATION2022 Proxy Statement 64


Table of Contents

EXECUTIVE COMPENSATION TABLES

 

  Name

 

Type

  Estimated Future Payouts 
Under Non-Equity
Incentive Plan Awards
    Estimated Future Payouts
Under Equity
Incentive Plan Awards
   

All Other
Stock
Awards:
Number
of

Share of
Stock or
Units

(#)

   

All Other
Stock
Awards:
Number of

Securities
Underlying
Options
(#)

   

Exercise

Price of
Option
Awards
($/Sh)

   

Grant
Date
Fair
Value
of

Stock
and
Option
Awards
($)

 
  Thresh-old
($)(1)
    Target
($)
    Maximum
($)
    Thresh-old
(#)(1)
    Target
(#)
    Maximum
(#)
 

  Kimberly K. Bors

 

AIP (2)

 

 

157,500

 

 

315,000

 

 

 

630,000

 

                                                       
  SSAR (3)                                                          

 

7,677

 

 

 

122.73

 

 

 

223,247

 

 

Performance
Shares (4)

                                 

 

1,727

 

 

 

5,181

 

                         

 

256,097

 

   

RSU (5)

                                                 

 

864

 

                 

 

106,039

 

 

  (1)

Represents the minimum amount payable for a certain level of performance. Under each of our plans, there is no guaranteed minimum payment.

 

  (2)

The amounts shown in this row reflect the potential payouts in February 2022 for 2021 under the AIP. The bonus amount actually paid in February 2022 is disclosed in the Summary Compensation Table in the column “Bonus” for 2021 for the executive officer.

 

  (3)

Represents an award of SSARs under the 2012 LTIP that will not be exercisable until February 12, 2024. The grant date fair value was calculated in accordance with FASB ASC 718, using a Black-Scholes value of $29.08 per SSAR.

 

  (4)

Represents an award of performance shares under the 2012 LTIP. The performance shares vest and become payable after the three-year performance period ending December 31, 2023 subject to the achievement of the applicable performance goal. The performance share awards are considered market condition awards per FASB ASC 718 and the grant date fair value for the awards was $148.29 per share, calculated using the Monte Carlo simulation model in accordance with FASB ASC 718.

 

  (5)

Represents an award of RSUs under the 2012 LTIP made on February 12, 2021. The grant vests in three equal annual installments beginning on March 15, 2022. The grant date fair value for the awards were calculated in accordance with FASB ASC 718, using a value of $122.73 per share.

 

DOVER CORPORATION2022 Proxy Statement 65


Table of Contents

EXECUTIVE COMPENSATION TABLES

 

Outstanding Equity Awards at Fiscal Year-End 2021

Awards listed below with grant dates beginning in 2013 were made under the 2012 LTIP. All equity awards outstanding as of May 9, 2018 were adjusted as a result of the spin-off of Apergy to preserve the value of the awards in accordance with the Employee Matters Agreement, dated May 9, 2018, between Dover and Apergy.

Effective May 7, 2021, we adopted the 2021 LTIP. All future grants of equity awards will be made under the 2021 LTIP.

 

     Option Awards            Stock Awards  
  Name   Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
    Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
    Option
Exercise
Prices
($)
    Option
Expiration
Date
           Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
    Market Value of
Shares or Units
of Stock That
Have Not
Vested ($)
    Equity
Incentive Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
not Vested (#)
    Equity
Incentive Plan
Awards: Market
or Payout
Value of
Unearned
Shares, Units
or Other Rights
That Have not
Vested ($)
 

  Richard J. Tobin

            123,125 (1)       122.73       2/12/2031                                          
            118,657 (2)       119.86       2/14/2030                                          
            184,211 (3)       91.20       2/15/2029                                          
    210,658 (4)               79.75       5/23/2028                                          
                                            13,852 (11)       2,515,523 (15)       27,703 (16)       5,030,865 (18)  
                                            8,900 (12)       1,616,240 (15)       26,698 (17)       4,848,357 (18)  
                                            5,117 (13)       929,247 (15)                  
              32,923 (14)       5,978,817 (15)      

  Brad M. Cerepak

            30,781 (1)       122.73       2/12/2031                                          
            29,664 (2)       119.86       2/14/2030                                          
            52,632 (3)       91.20       2/15/2029                                          
    58,478 (5)               82.09       2/9/2028                                          
    71,806 (6)               66.85       2/10/2027                                          
    91,981 (7)               48.28       2/11/2026                                          
    71,860 (8)               61.79       2/12/2025                                          
                                            3,463 (11)       628,881 (15)       6,926 (16)       1,257,762 (18)  
                                            2,225 (12)       404,060 (15)       6,674 (17)       1,211,998 (18)  
              1,462 (13)       265,499 (15)      

  Girish Juneja

            7,243 (1)       122.73       2/12/2031                                          
            7,416 (2)       119.86       2/14/2030                                          
            11,842 (3)       91.20       2/15/2029                                          
    11,695 (5)               82.09       2/9/2028                                          
                                            815 (11)       148,004 (15)       1,630 (16)       296,008 (18)  
                                            556 (12)       100,970 (15)       1,669 (17)       303,090 (18)  
              329 (13)       59,746 (15)      

  Ivonne M. Cabrera

         

 

11,588 (1

 

 

122.73

 

 

 

2/12/2031

 

                                       
         

 

11,866 (2

 

 

119.86

 

 

 

2/14/2030

 

                                       
         

 

21,053 (3

 

 

91.20

 

 

 

2/15/2029

 

                                       
 

 

23,391 (5

         

 

82.09

 

 

 

2/9/2028

 

                                       
 

 

28,722 (6

         

 

66.85

 

 

 

2/10/2027

 

                                       
 

 

39,775 (7

         

 

48.28

 

 

 

2/11/2026

 

                                       
 

 

31,074 (8

         

 

61.79

 

 

 

2/12/2025

 

                                       
 

 

25,873 (9

         

 

69.57

 

 

 

3/10/2024

 

                                       
 

 

28,841 (10

         

 

53.40

 

 

 

2/14/2023

 

                                       
                                         

 

1,304 (11

 

 

236,806 (15

 

 

2,607 (16

 

 

473,431 (18

                                         

 

890 (12

 

 

161,624 (15

 

 

2,670 (17

 

 

484,872 (18

                                         

 

585 (13

 

 

106,236 (15

               

  Kimberly K. Bors

         

 

7,677 (1

 

 

122.73

 

 

 

2/12/2031

 

                                       
         

 

7,416 (2

 

 

119.86

 

 

 

2/14/2030

 

                                       
                                         

 

864 (11

 

 

156,902 (15

 

 

1,727 (16

 

 

313,623 (18

                                           

 

556 (12

 

 

100,970 (15

 

 

1,669 (17

 

 

303,090 (18

 

DOVER CORPORATION2022 Proxy Statement 66


Table of Contents

EXECUTIVE COMPENSATION TABLES

 

  (1)

SSARs granted on February 12, 2021 that are not exercisable until February 12, 2024.

  (2)

SSARs granted on February 14, 2020 that are not exercisable until February 14, 2023.

  (3)

SSARs granted on February 15, 2019 that became exercisable on February 15, 2022.

  (4)

SSARs granted on May 23, 2018 that became exercisable on May 23, 2021.

  (5)

SSARs granted on February 9, 2018 that became exercisable on February 9, 2021.

  (6)

SSARs granted on February 10, 2017 that became exercisable on February 10, 2020.

  (7)

SSARs granted on February 11, 2016 that became exercisable on February 11, 2019.

  (8)

SSARs granted on February 12, 2015 that became exercisable on February 12, 2018.

  (9)

SSARs granted on March 10, 2014 that became exercisable on March 10, 2017.

  (10)

SSARs granted on February 14, 2013 that became exercisable on February 14, 2016.

  (11)

Unvested RSUs granted on February 12, 2021. The units vest in three equal annual installments beginning on March 15, 2022

  (12)

Unvested portion of RSUs granted on February 14, 2020. The units vest in three equal annual installments beginning on March 15, 2021

  (13)

Unvested portion of RSUs granted on February 15, 2019. The units vest in three equal annual installments beginning on March 15, 2020.

  (14)

Unvested portion of RSUs granted on May 23, 2018. The units vest in five equal annual installments beginning on December 15, 2018.

  (15)

The amount reflects the number of units granted multiplied by $181.60, the closing price of our common stock on December 31, 2021.

  (16)

Performance shares granted on February 12, 2021 become payable after December 31, 2023 subject to the achievement of the applicable performance goal. The amount reflected in the table represents the number of shares payable based on achievement of the target level of performance (100%).

  (17)

Performance shares granted on February 14, 2020 become payable after December 31, 2022 subject to the achievement of the applicable performance goal. The amount reflected in the table represents the number of shares payable based on achievement of the target level of performance (100%).

  (18)

The amount reflects the number of performance shares payable based on achievement of the target level of performance multiplied by $181.60, the closing price of our common stock on December 31, 2021.

Option Exercises and Stock Vested in 2021

 

Name    Number of Shares
Acquired on
Exercise (#)(1)
    

Value Realized
on Exercise
($)(2)

            

Number of Shares
Acquired on
Vesting (#)(3)

    

Value Realized
on Vesting
($)(4)

 

Richard J. Tobin

           

 

94,449

 

  

 

16,041,842

 

Brad M. Cerepak

  

 

60,371

 

  

 

6,409,891

 

     

 

  17,357

 

  

 

  2,954,804

 

Girish Juneja

           

 

    3,893

 

  

 

     663,193

 

Ivonne M. Cabrera

  

 

9,880

 

  

 

784,423

 

     

 

    6,942

 

  

 

     1,181,758

 

Kimberly K. Bors

                             

 

278

 

  

 

37,427

 

 

  (1)

Represents exercise of SSARs; number of shares reported as acquired is the total number of shares underlying the SSAR, rather than the net number of shares received by the NEO.

  (2)

The “value realized on exercise” provided in the table represents the difference between the average of the high and low trading price on the exercise date and the exercise or base price, multiplied by the number of shares acquired upon exercise of the award.

  (3)

This column represents the vesting of a portion of the 2018, 2019, and 2020 grants of RSUs for Messrs. Tobin, Cerepak, and Juneja, and Ms. Cabrera as well as a performance share payout for the performance period ended December 31, 2021. This column also represents the vesting of a portion of the 2020 grants of RSUs for Ms. Bors. For Mr. Tobin, this column also represents the vesting of a portion of the May 23, 2018 one-time make-whole grant of RSUs. The number of shares reported as acquired is the full number of RSUs vested or performance shares paid out, not the net number of shares received by the NEO after withholding shares for satisfaction of taxes.

  (4)

This value represents the average of the high and low trading price on the date of vesting multiplied by the number of RSUs vesting plus the number of performance shares paid for the period ended December 31, 2021 multiplied by $181.60, the closing price of our stock on December 31, 2021.

 

DOVER CORPORATION2022 Proxy Statement 67


Table of Contents

EXECUTIVE COMPENSATION TABLES

 

Pension Benefits through 2021

 

  Name    Plan Name    Number of
Years Credited
Service (#)
     Normal
Retirement
Age (#)
     Present Value
of Accumulated
Benefit ($)(1)
     Payments
During Last
Fiscal Year ($)
 

Richard J. Tobin (2)

  

Pension Plan

  

 

N/A

 

  

 

N/A

 

  

 

N/A

 

  

 

N/A

 

  

PRP

 &nb