2018 Guide to Effective Proxies

2.17.3 Business strategy | 295 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES Compensation Discussion and Analysis 2017 Compensation Enhancements The Compensation Committee made the following enhancements to our 2017 executive compensation program consistent with our compensation philosophy: Added Free Cash Flow and ROIC to supplement Adjusted EPS as financial performance measures for the 2017 annual incentive awards to better align the compensation performance measures with our overall strategy and internal core value drivers Increased minimum stock ownership requirements for each of the non-CEO executive officers to a multiple of three times base salary while maintaining the requirement for Mr. Lico to a multiple of five times base salary Revised the vesting schedule for the equity awards that we granted to the executive officers (other than our CEO) so that one-third of such awards vest on each of the 3rd, 4th and 5th anniversaries of the grant date rather than having them vest in 5 equal installments beginning on the first anniversary of the grant date, while the equity awards for our CEO will continue to vest 50% per year on the 4th and 5th anniversaries of the grant date Adopted a change in control plan that provides for a “double trigger” (an executive is entitled to benefits only if there is both a change in control and a termination of employment), includes a limited definition of “change in control,” and prohibits a tax gross up, to ensure that our executive officers remain focused on our businesses during periods of uncertainty and pursue transactions in the best interest of the shareholders Aligning Compensation with Our Business Strategy Aligning compensation with our business strategy is an essential consideration in the design of our executive compensation program, with the success of our business strategy grounded on the execution of the Fortive Formula. The Fortive Formula COREREVENUEGROWTH GDP/GDP+ ACQUISITIONGROWTH ~$1BFCFannuallyspent primarilyonM&A MARGINEXPANSION ~50bpscoreOMX TopQuartile Earnings Growth AND... Investmentgradecreditrating FBSat thecoreofwhatwedo As a result, we based the financial performance measures for our 2017 incentive compensation program primarily on the key elements of the Fortive Formula, including core revenue growth, operating margin expansion, free cash flow, return on invested capital, and earnings per share. 40 2018 Proxy Statement FORTIVE CORPORATION Total of 02 pages in section FORTIVE CORPORATION