Danaher 2009 Annual Report Download - page 96

Table of Contents
Stock options and RSUs have been issued to directors, officers and other employees under the Company’s 1998 Stock Option Plan and the 2007 Stock
Incentive Plan, and RSUs have been issued to the Company’s CEO pursuant to an award approved by shareholders in 2003. In addition, in connection with
the November 2007 Tektronix acquisition, the Company assumed the Tektronix 2005 Stock Incentive Plan and the Tektronix 2002 Stock Incentive Plan (the
“Tektronix Plans”) and assumed certain outstanding stock options, restricted stock and RSUs that had been awarded to Tektronix employees under the plans.
These plans operate in a similar manner to the Company’s 2007 Stock Incentive Plan and 1998 Stock Option Plan. No further equity awards will be issued
under the 1998 Stock Option Plan or the Tektronix Plans. The 2007 Stock Incentive Plan provides for the grant of stock options, stock appreciation rights,
RSUs, restricted stock or any other stock based award. In May 2009, the Company’s shareholders approved amendments to the 2007 Stock Incentive Plan
that, among other items, authorized the issuance of an additional 7 million shares pursuant to the plan bringing the total number of shares authorized for
issuance under the plan to 19 million. No more than 6 million of the 19 million authorized shares may be granted in any form other than stock options or
stock appreciation rights.
Stock options granted under the 2007 Stock Incentive Plan, the 1998 Stock Option Plan and the Tektronix Plans generally vest pro-rata over a five-year period
and terminate ten years from the grant date, though the specific terms of each grant are determined by the Compensation Committee of the Company’s Board
of Directors (Compensation Committee). The Company’s executive officers and certain other employees have been awarded options with different vesting
criteria. Option exercise prices for options granted by the Company under these plans equal the closing price on the NYSE of the Company’s common stock
on the date of grant. Option exercise prices for the options outstanding under the Tektronix Plans were based on the closing price of Tektronix common stock
on the date of grant. In connection with the Company’s assumption of these options, the number of shares underlying each option and exercise price of each
option were adjusted to reflect the substitution of Danaher stock for the Tektronix stock underlying these awards.
RSUs issued under the 2007 Stock Incentive Plan and the 1998 Stock Option Plan provide for the issuance of a share of the Company’s common stock at no
cost to the holder. Most RSU awards granted prior to the third quarter of 2009 are subject to performance criteria determined by the Compensation Committee
and vest (subject to satisfaction of the performance criteria) 50% on each of the fourth and fifth anniversaries of the grant date. Most RSU awards granted
during or after the third quarter of 2009 vest /3 on each of the third, fourth and fifth anniversaries of the grant date and, if the recipient is a member of the
senior management, are generally also subject to performance criteria determined by the Compensation Committee. Certain of the Company’s executive officers
and other employees have been awarded RSUs with different vesting criteria. Prior to vesting, RSUs do not have dividend equivalent rights, do not have
voting rights and the shares underlying the RSUs are not considered issued and outstanding.
Restricted shares issued under the Tektronix 2005 Stock Incentive Plan were granted subject to certain time-based vesting restrictions such that the restricted
share awards are fully vested after a period of five years. Holders of restricted shares have the right to vote such shares and receive dividends. The restricted
shares are considered issued and outstanding at the date the award is granted.
The options, RSUs and restricted shares generally vest only if the employee is employed by the Company on the vesting date or in other limited circumstances
and unvested options and RSUs are forfeited upon retirement before age 65 unless the Compensation Committee determines otherwise. To cover the exercise of
options and vesting of RSUs, the Company generally issues new shares from its authorized but unissued share pool. At December 31, 2009, approximately
11 million shares of the Company’s common stock were reserved for issuance under the 2007 Stock Incentive Plan.
The Company accounts for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted,
including stock options, RSUs and restricted shares, based on the fair value of the award as of the grant date. The estimated fair value of the options granted
was calculated using a Black-Scholes Merton option pricing model (Black-Scholes). The following summarizes the assumptions used in the Black-Scholes
models for the years ended December 31, 2009, 2008 and 2007:
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Source: DANAHER CORP /DE/, 10-K, February 24, 2010 Powered by Morningstar® Document Research℠
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