2018 Guide to Effective Proxies

2.17.5 Elements of pay tables | 365 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES Compensation Discussion and Analysis Elements of Compensation – At a Glance The Compensation Committee believes that, while fixed compensation is important to provide a stable source of income, the compensation for executive officers should primarily be performance-based compensation, with a bias toward long- term incentive compensation in the form of equity awards. As such, the Committee weighted the allocation of 2017 executive compensation, including allocation of incremental increases in total target compensation from 2016, primarily toward performance-based compensation, with a majority of the total target compensation for 2017 comprised of long- term equity compensation. The following table sets forth the four elements of our compensation program: ELEMENT FORMOF COMPENSATION PRIMARY OBJECTIVES COMPENSATION PHILOSOPHY Base Salary Cash • Help attract and retain executive talent. • Provide stable source of income. • Recognize day-to-day role and scope of responsibility. Annual Incentive Compensation Cash • Align compensation with business strategy. • Reward annual performance on key operational and financial measures. • Motivate and reward high individual performance. Long-Term Incentive Compensation • Stock Options • RSUs • PSUs • Drive sustainable performance that delivers long-term value to shareholders. • Help retain executive talent through an extended vesting schedule. • Align the interest of the executive with those of the shareholders. Other Compensation Employee Benefit Plans; Perquisites; Severance Benefits • Provide competitive compensation at an actual cost to the company lower than the perceived value to the executives. ATTRACT, RECRUIT&RETAIN COMPETITIVE ALIGNMENTWITH BUSINESSSTRATEGY PAYFOR PERFORMANCE ALIGNMENTWITH SHAREHOLDERS 44 2018 Proxy Statement FORTIVE CORPORATION FORTIVE CORPORATION