EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN
1. PURPOSE. The purposes of the Dover Corporation Executive Officer Annual
Incentive Plan (the "Plan") are to provide annual incentive compensation to
designated executive officers of Dover Corporation (the "Company") based on the
achievement of established performance goals, to encourage such executive
officers to remain in the employ of the Company, to assist the Company in
attracting and motivating new executive officers and to qualify the incentive
payments awarded under the Plan (the "Awards") as qualified "performance-based
compensation" so that all payments under the Plan shall be deductible in
accordance with Section 162(m) of the Internal Revenue Code of 1986, as amended
2. ELIGIBILITY. The Compensation Committee of the Board of Directors of
the Company (the "Committee") shall each year determine the Executive Officers
of the Company eligible to participate in the Plan (the "Participants"). For
purposes hereof, "Executive Officers" shall mean the Chief Executive Officer of
the Company and each executive of the Company or an Affiliate of the Company who
reports directly to the Chief Executive Officer of the Company. As used herein,
"Affiliate" shall mean (i) any entity that, directly or indirectly, is
controlled by or under common control with the Company and (ii) any entity in
which the Company has a significant equity interest, in either case as
determined by the Committee.
3. PERFORMANCE PERIODS. Each performance period for purposes of the Plan
shall have a duration of one calendar year, commencing January 1 and ending the
next December 31. The first Performance Period under the Plan shall commence on
January 1, 1998.
4. ADMINISTRATION. The Committee shall have the full power and authority
to administer and interpret the Plan and to establish rules for its
administration. Such power and authority shall include proration or adjustment
of awards in the case of retirement, termination, changes in base salary,
dismissal, death and other conditions as appropriate; provided, however, that
the discretion granted above with respect to an Award earned by a Participant
who is a "covered employee" within the meaning of Section 162(m) of the Code (a
"Covered Employee") may be used by the Committee only to reduce or eliminate
5. PERFORMANCE GOALS. On or before the 90th day of each Performance
Period, the Committee shall establish in writing one or more performance goals
and criteria for the Performance Period. The performance criteria shall in all
instances be determined on the basis of Dover Corporation net income, earnings
per share and/or return on investment with respect to Participants employed by
the Company and operating earnings and/or return on investment with respect to
Participants employed by an Affiliate, in each case as reflected in the
Company's audited financial statements for the relevant Performance Period.
6. INCENTIVE PAYOUT CALCULATION. As soon as practicable after the end of
each Performance Period, the Committee will certify in writing the Company's
attainment of the financial performance goals and criteria established for such
Performance Period pursuant to Section 5 and will calculate the possible payout
of incentive awards for each Participant.
7. REDUCTION OF CALCULATED PAYOUTS. The Committee shall have the power and
authority to reduce or eliminate for any reason the payout calculated pursuant
to Section 6 that would otherwise be payable to a Participant based on the
established target Award and payout schedule.
8. PAYOUTS. After calculation of incentive payouts pursuant to Section 6
and any reduction or elimination thereof pursuant to Section 7, the Committee
shall certify the amount of the payout to each Participant under the Plan for
the Performance Period. In no event shall the payout under the Plan to any
Participant for any Performance Period exceed one-half percent (.5%) of the
Dover Corporation net income for the relevant Performance Period. Payment of the
Award determined in accordance with the Plan for each Performance Period shall
be made to a Participant in cash.
9. MISCELLANEOUS PROVISIONS.
(a) The Board of Directors of the Company shall have the right to suspend
or terminate the Plan at any time and may amend or modify the Plan with respect
to future Performance Periods prior to the beginning of any Performance Period,
provided that no such amendment or modification which is expected to materially
increase benefits payable to Covered Employees who are Participants under the
Plan shall be made unless such measures as the Committee deems necessary for the
increased benefit to be deductible pursuant to Section 162(m) of the Code have
(b) Nothing contained in the Plan or any agreement related hereto shall
affect or be construed as affecting the terms of the employment of any
Participant except as specifically provided herein or therein. Nothing contained
in the Plan or any agreement related hereto shall impose or be construed as
imposing any obligation on (i) the Company or any Affiliate to continue the
employment of any Participant or (ii) any Participant to remain in the employ of
the Company or any Affiliate.
(c) No person shall have any claim to be granted an Award under the Plan
and there is no obligation of uniformity of treatment of eligible employees
under the Plan. Awards under the Plan may not be assigned or alienated.
(d) The Company or Affiliate, as applicable, shall have the right to deduct
from any Award to be paid under the Plan any federal, state or local taxes
required by law to be withheld with respect to such payment.
(e) If any provision of the Plan would cause the Awards granted to a
Covered Employee not to be qualified "performance-based compensation" under
Section 162(m), that provision, insofar as it pertains to such Covered Employee
shall be severed from, and shall be deemed not to be a part of, the Plan, but
the other provisions hereof shall remain in full force and effect.
10. ADOPTION. The Plan shall become effective as of January 1, 1998,
subject to approval by the stockholders of the Company.