Document:

Exhibit 10-B

DONALDSON COMPANY, INC.

COMPENSATION PLAN

FOR

NONEMPLOYEE DIRECTORS

As Amended on September 28, 2012,

but Effective January 1, 2013

 

	1.	Purpose

The purpose of this Compensation Plan
(the “Plan”) is to enable Directors of Donaldson, Company, Inc. (the “Company”) who are not employees of
the Company to elect to receive their compensation as members of the Board of Directors in a form most advantageous to them. The
Plan permits such Directors to elect to receive this compensation in one or more of the following methods:

		(a)	In cash on a current basis;

		(b)	In cash on a deferred basis (a “Deferred Cash Election”);
or 

		(c)	In Company stock on a deferred basis (a “Deferred Stock Election”).

Notwithstanding the foregoing, a portion
of each Director’s annual retainer for Board service shall be automatically deferred in Phantom Shares in accordance with
Section 7 below.

	2.	Effective Date

Effective as of January 1, 2013, the Company
hereby amends and restates the Plan in the manner hereinafter set forth.

	3.	Plan Year

The Plan shall operate on a calendar year
basis.

	4.	Eligibility

All members of the Board of Directors
who are not employees of the Company (“Participants”) are eligible for the Plan.

	5.	Compensation Covered by
the Plan

For 2013 and thereafter, Director compensation
covered by this Plan includes annual retainers (including committee retainers) generally payable on January 1 of each year. With
respect to an individual who becomes a Director during a Plan Year, the Director shall be entitled to a prorated retainer for the
Plan Year as of the date the individual becomes a Director.

    	 

    	 

    

The Director compensation (hereinafter
“Eligible Fees”) covered by the Plan which is eligible to be deferred pursuant to an Annual Deferral Election is as
follows:

		(a)	For an Annual Deferred Cash Election: the cash portion of the annual
retainer (including committee chair retainers);

		(b)	For an Annual Deferred Stock Election: the stock portion of the annual
retainer (including committee chair retainers).

No other compensation or fees otherwise
payable to a Director shall be eligible for an election under this Plan.

	6.	Election to Defer

A Participant may elect to defer payment
of Eligible Fees under Section 7 or 8 of this Plan by filing, no later than the last day of a Plan Year (or by such earlier date
as the Administrator shall determine), an irrevocable election with the Administrator on a form provided for that purpose. The
Annual Deferral Election shall be effective with respect to the Eligible Fees payable during the following Plan Year. The Deferral
Election Form shall specify an amount to be deferred expressed as a percentage of the Participant’s annual retainer, as provided
in the form attached hereto as Exhibit A.

That portion of Eligible Fees for which
a valid form has not been timely received by the Company (other than the portion of the annual retainer subject to an automatic
exchange election, as provided in Section 7) will be paid in cash in accordance with the Company’s customary practice
of paying such Eligible Fees. Once a Plan Year has commenced, all Deferral Elections under this Plan for such Plan Year shall be
irrevocable.

	7.	Automatic Receipt of Phantom
Shares

In addition to a Director’s voluntary
exchange election provided under Section 8(b), if any, a portion of each Director’s annual retainer payable to each Director
for service on the Board shall be automatically exchanged for Phantom Shares in accordance with the provisions of Section 8(b).
The retainer amount automatically exchanged for Phantom Shares shall be $15,000, unless otherwise determined by the Board from
time to time but in all events prior to the first day of the Plan Year for which the annual retainer is awarded.

	8.	Voluntary Deferral Election

		(a)	Deferred Cash Election

For Directors who make an Annual Deferred
Cash Election, the Company will establish a bookkeeping account for cash deferred for that Plan Year (an “Annual Deferred
Cash Account”) and will credit to the Annual Deferred Cash Account the amount of the Eligible Fees earned and deferred by
him/her as of the date such fees would normally be payable by the Company (the “Credit Date”). Amounts credited to
a Participant’s Annual Deferred Cash Account will be adjusted for gains and/or losses to the same extent that equal amounts
would have been adjusted if they had been invested in one or more notional investments designated by the Company. The use of notional
investments in this Section 8 is solely as a device for computing the amount of benefits to be paid under the Plan, and the Company
shall not be required to purchase such investments.

    	 

    	 

    

		(b)	Deferred Stock Election

Eligible Participants may elect to exchange
part or all of their Eligible Fees for a Plan Year for the Company’s commitment to issue to such Participants a fixed number
of shares of common stock of the Company at a future date. The Company’s commitment to issue shares shall be referred to
as “Phantom Shares” held in an “Annual Deferred Stock Account”.

As of the Credit Date, a Participant shall
receive a credit to his or her Annual Deferred Stock Account. The amount of the credit shall be the number of Phantom Shares (rounded
to the nearest onehundredth of a Share) determined by dividing (i) an amount equal to Eligible Fees payable to the Participant
on the Credit Date and specified for deferral, by (ii) the Fair Market Value of one share of common stock of the Company on such
date.

For purposes of this paragraph (b), the
following rules shall apply:

		(i)	Fair Market Value

For purposes of converting dollar amounts
into shares of common stock of the Company, the Fair Market Value of each share of common stock shall be equal to the closing price
of one share of the Company’s common stock on the New York Stock ExchangeComposite Transactions on the last business day
as of which Phantom Shares are credited to the Participant’s Deferred Stock Account.

		(ii)	No Actual Shares Prior to Distribution

No actual shares of common stock shall
be issued until the distribution date described in Section 9 hereof. The Phantom Shares shall not be considered issued and outstanding
shares for purposes of shareholder voting rights.

		(iii)	Dividend Credit

Each time a dividend is paid on common
stock of the Company, a Participant shall receive a credit to his or her Deferred Stock Account equal to that number of shares
of common stock (rounded to the nearest onehundredth of a share) having a Fair Market Value on the dividend payment date equal
to the amount of the dividend payable on the number of Phantom Shares credited to the Participant’s Deferred Stock Account
on the dividend record date.

    	 

    	 

    

		(iv)	Fractional Shares

The Company shall not issue fractional
shares; provided, however, that fractional shares will be credited to the Annual Deferred Stock Accounts (rounded to the nearest
onehundredth share). Whenever, under the terms of this Plan, a fractional share would be required to be issued, an amount in lieu
thereof shall be paid in cash for such fractional share based upon the same Fair Market Value as was utilized to determine the
number of shares of common stock of the Company to be issued on the relevant issue date.

		(v)	Restrictions on Phantom Shares

All Phantom Shares issued under and subject
to the terms of this Plan will be issued under the Donaldson Company, Inc. 2010 Master Stock Incentive Plan (and/or its successor
plans) if they are credited on or after November 19, 2010, or the Donaldson Company, Inc. 2001 Master Stock Incentive Plan if they
are credited before November 19, 2010, and shall be deemed to be “other stock-based awards” for purposes of such plan.

	9.	Distributions of Annual
Deferred Accounts

		(a)	Timing of Distributions

At the time a Participant’s Annual
Deferral Election is made for a Plan Year, each Participant shall specify the time and manner in which his/her Annual Deferred
Cash Account and/or Annual Deferred Stock Account shall be distributed. If a Participant does not specify an election for the timing
and manner of a distribution, the balance of a Participant’s Annual Deferred Accounts shall be distributed in a lump sum
in accordance with option (i) below. The Participant shall be entitled to receive, or to commence receiving, his/her Annual Deferred
Accounts as soon as practicable after the following:

		(i)	the first anniversary of his/her separation from service (as that
term is defined under Section 409A of the Code) with the Company; or

		(ii)	a specified date or specified age set by him/her.

		(b)	Manner of Distribution

Each Participant shall be entitled to receive
the balance in his/her Annual Deferred Accounts in any one of the following manners:

    	 

    	 

    

		(i)	in a lump sum; or

		(ii)	in annual installments over a period of years stipulated by him/her
not to exceed ten (10). The amount of the installments will be determined by annually dividing the value of the benefits in the
Account by the number of installments remaining to be paid.

Each Participant’s Annual Deferred
Stock Account shall be distributed in common stock of the Company, plus cash in lieu of any fractional share.

		(c)	Amendments to Timing or Form of Distribution

A Participant may rescind the initial designation
of the timing and manner of distribution made pursuant to this Section 9 by making a new designation on the form attached hereto
as Exhibit B, subject to the following limitations:

		(i)	Such election must be submitted to and accepted by the Company at
least twelve (12) months prior to the date a distribution to the Participant would otherwise have been made or commenced;

		(ii)	The election shall have no effect until at least twelve (12) months
after the date on which the election is made;

		(iii)	The election may change the time when payment shall commence but
only if the new date selected by the Participant for commencement shall be a date that is at least five (5) years from the prior
date of distribution selected by the Participant;

		(iv)	The election may reduce or extend the number of installment payments
(subject to the limitations in Section 9(b)) so long as the initial installment is delayed at least five (5) years from the date
distribution would have otherwise commenced; and

		(v)	If the participant changes the time and/or form of payment under
this Section 9(c), payment shall commence as soon as administratively feasible after the earlier of the new date selected by the
Participant for commencement or the date of the Participant’s death.

		(d)	Distribution in Event of Death

In the event of the Participant’s
death, either before or after commencement of payments, distribution of the Participant’s entire Account balance will be
made in a single lump sum to the Beneficiary named by the Participant or to that person who would have a right to receive such
distribution by will or by the applicable laws of descent and distribution.

    	 

    	 

    

		(e)	Distribution to Key Employees

Notwithstanding any other provision in this
Plan, in the event that a Participant in this Plan is determined to be a “key employee” (as that term is defined under
Section 409A of the Code), any distribution to the Participant on account of the Participant’s separation from service shall
be delayed as necessary to comply with the requirements of Section 409A of the Code.

		(f)	Distribution in Event of Change of Control

Notwithstanding any other provision of this
Plan, in the event of a Change of Control (as defined below), each Participant who separates from service with the Company for
any reason during the two (2) year period following such Change of Control shall receive within ten (10) business days after the
date of separation the following:

		(i)	If a Participant has a balance in an Annual Deferred Cash Account,
a lump sum payment of the entire balance contained in his/her Annual Deferred Cash Account, together with applicable earnings adjustment,
on the average daily balance in such Deferral Account for the period since the last earnings adjustment through the date of separation;
and

		(ii)	If a Participant has a balance in an Annual Deferred Stock Account,
a distribution of the number of shares represented by the Phantom Shares issued pursuant to such election; and

Notwithstanding paragraph (f)(i) above,
with respect to any Participant who separated from service before the date of a Change of Control, the balance of the Annual Deferred
Accounts shall be paid at the time and in the manner as elected by the Participant under Section 9 hereof (and shall not be commuted
to a lump sum or otherwise accelerated by the Change of Control). For purposes of this Section 9(f), a “Change of Control”
shall have the meaning given to such phrase in the Company’s 401(k) Excess Plan, as may be amended from time to time.

	10.	General Provisions

		(a)	Unsecured Obligation

The amounts credited to each Participant’s
Account shall not be held by the Company in a trust, escrow or similar fiduciary capacity, and neither the Participant, nor any
legal representative, shall have any right against the Company with respect to any portion of the Account except as a general unsecured
creditor of the Company.

		(b)	Administration of the Plan

The Plan shall be administered by the Corporate
Governance Committee of the Board of Directors.

    	 

    	 

    

		(c)	Amendment or Termination

This Plan may be amended or terminated at
any time by the Board of Directors or the Corporate Governance Committee of the Board of Directors.

		(d)	Cautionary Statement

Participants should be aware that their
participation in the Plan involves the following risks, among others:

		(i)	Balances in the Accounts represent unfunded, unsecured general obligations
of the Company. If the Company is unable to pay its debts as they become due, Participants may not be able to collect the balances
in their Accounts.

		(ii)	The value of the Phantom Shares credited pursuant to the Plan will
depend on the value of the Company’s common stock. An investment in the Company’s common stock involves risk. Participants
are encouraged to review the Company’s filings with the U.S. Securities and Exchange Commission for a description of some
of the risk factors associated with an investment in the Company’s common stock.

 

 

 

 

 

 

    	 

    	 

    

 

EXHIBIT A

 

DONALDSON COMPANY, INC. COMPENSATION PLAN FOR

NONEMPLOYEE DIRECTORS

 

ANNUAL RETAINER ELECTION FORM

 

Name: __________________________________

 

	Election:
	
         

        Annual Retainer: I understand that a portion of my annual retainer
        for Board service is automatically deferred into a deferred stock account. I elect to receive the remaining balance for calendar
        year _____ as follows (total must add up to 100%):

         

	 %
    in Cash:	_____________%
	%
    in Additional Deferred Stock:	_____________%
	%
    in Deferred Cash:	_____________%
	

	
         

        Committee Retainers (including Committee Chair retainers): I elect
        to receive my Committee retainer as follows (total must add up to 100%):

         

	 %
    in Cash:	_____________%
	% in Deferred Stock:	_____________%
	%
    in Deferred Cash:	_____________%

 

	Deferred Stock Payment Election:                         
	
         

        I elect to receive my deferred stock account of shares of company stock
        beginning on (choose one):

         

        £  One year after I cease to be a director

         

        £  A Specified Date:__________________

         

        £  Specified Age: ____________________

         

	
        I elect to receive my deferred stock account of shares of company stock
        in the following form of payment:

         

        £  Lump Sum           £  Annual Installments for ______ years
        (maximum of 10 years)

         

	Deferred Cash Payment Election:                          
	
         

        I elect to receive my deferred cash account beginning on (choose one):

         

        £  One year after I cease to be a director

         

        £  A Specified Date:_________________

         

        £  Specified Age: ___________________

         

	
        I elect to receive my deferred cash account in the following form of
        payment:

         

        £  Lump Sum           £  Annual Installments for ______ years
        (maximum of 10 years)

         

 

NOTE: Changes to this election may only
be made under certain specific circumstances described in the Plan document.

 

Payments pursuant to this agreement shall be reduced for the amount of any
applicable tax withholdings. I understand that this Agreement is covered by the terms of the Company’s Deferred Compensation
Plan for Non-Employee Directors and the 2010 Master Stock Incentive Plan. I understand that this Agreement form must be returned
to the Company before the beginning of the calendar year in which I wish the Agreement to take effect. I understand that the deferral
account shall not be held by the Company in a fiduciary capacity and that I or my representative has no right with respect to such
account, except as a general unsecured creditor of the Company.

 

By:________________________________________________Date:
_______________________

Signature

 

 

    	 

    	 

    

EXHIBIT B

DISTRIBUTION AMENDMENT FORM

I.Rescission

I, the undersigned, a Director of Donaldson Company,
Inc. hereby rescind the distribution election dated __________________ relating to:

_____
Deferred Stock Payment

_____
Deferred Cash Payment

_____
Both Deferred Stock Payment and Deferral Cash Payment

 

II.Deferred Stock

A. Deferred Stock
Payout Date

I elect to receive my deferred stock account
distribution of Company shares on the following date [choose one]:

_____
One year after I cease to be a director

_____
Specified Date 

_____
Specified Age 

B. Deferred Stock
Method of Payment

I elect to receive my deferred stock account
distribution of Company shares in the following form [choose one]:

_____
Lump Sum 

_____
Annual Installments of shares for ___ years (maximum of 10 years)

 

III.Deferred Cash

A. Deferred Cash
Compensation Payout Date

I elect to receive the deferred cash compensation
on (deferral must be for a minimum of one year) [choose one]:

_____
One year after I cease to be a Director

_____
Specified Date _________________

_____
Specified Age _________

B. Deferred Cash
Compensation Method of Payment

I elect to receive the deferred cash compensation
in the following form [choose one]:

_____
Lump sum

_____
Equal Annual Installments for _____ years (maximum of 10 years)

    	 

    	 

    
 

I understand that this amendment
is only effective for distributions to be made or commence at least 12 months after the date of this Distribution Amendment, and
such new distribution must be made or commence at least 5 years after the date of the originally scheduled payment.

 

	Date:  __________________________	 By	 
	 	 
 (Print Name)Exhibit 10-C

NON-EMPLOYEE DIRECTOR

AUTOMATIC STOCK OPTION GRANT

PROGRAM

The following provisions set forth the terms
of the Non-Employee Director Automatic Stock Option Grant Program (the “Program”) for eligible directors of
Donaldson Company, Inc. (the “Company”) under the Company’s 2010 Master Stock Incentive Plan (the “Plan”).
Options granted under this Program are subject to the terms, conditions, and restrictions set forth in the Plan. In the event of
any inconsistency between the terms contained herein and in the Plan, the Plan shall govern. All capitalized terms that are not
defined herein have the meanings set forth in the Plan.

SECTION 1. ELIGIBILITY

Each member of the Board of Directors of the
Company elected or appointed to the Board who is not otherwise an employee or officer of the Company (an “Eligible Director”)
shall be eligible to receive the grant of Options set forth in the Program, subject to the terms of the Program.

SECTION 2. OPTION
GRANTS

2.1                   
Option Grants and Timing of Grants

		(a)	Annual Option Grants. On the first day following January 1
that the New York Stock Exchange is open for trading (a “First Trading Day”) of 2012 and each First Trading
Day thereafter, each Eligible Director shall automatically be granted a Nonqualified Stock Option to purchase 14,400 shares of
Common Stock (the “Annual Option Grant”).

		(b)	Prorated Grant. With
respect to an individual who becomes an Eligible Director after the First Trading Day of a calendar year, such Eligible Director’s
Annual Option Grant for that year shall equal that number of shares of Common Stock obtained by multiplying 14,400 by a fraction,
the numerator of which is the number of whole calendar months remaining in the calendar year and the denominator of which is twelve.
Such grant shall be made upon the first day of the calendar month next following the date such individual becomes an Eligible
Director.

2.2                    
Exercise Price of Options

Options shall be granted under the Program with
a per share exercise price equal to the closing price of the Common Stock on the First Trading Day on which such options are granted.

    	 

    	 

    

 

 

2.3                    
Option Vesting 

Each Annual Option Grant may be exercised by the Eligible
Director under the following schedule except as otherwise provided in this Agreement. The Option may not be exercised for a period
of one (1) year from the date of grant. Following that one-year period, the Option vests in equal one-third increments:

 

		-	one-third of the shares vest on the one-year anniversary
date from the date of grant; 

		-	one-third of the shares vest on the two-year anniversary
date from the date of grant; 

		-	one-third of the shares vest on the three-year anniversary
date from the date of grant. 

 

The Option may be exercised as to any or all of the
shares that are vested. An unvested portion of the Option shall only vest so long as:

 

		(1)	the Eligible Director remains a Director of the Company on the date that the applicable shares
vest,

 

		(2)	the Eligible Director retires or resigns from service as a Director of the Company in accordance
with the age and term limits of the Corporate Governance Guidelines of the Company, or

 

		(3)	the Eligible Director’s service as a Director of the Company is terminated for any other
reason and a majority of the members of the Board of Directors other than the Eligible Director consent to the continued vesting
of such portion of the Option in accordance with the original vesting schedule.

 

The vesting of the Option also is subject to
acceleration in the event of a Change in Control of Donaldson as defined in the Non-Employee Director Non-Qualified Stock Option
Agreement.

2.4                    
Term of Options 

Annual Option Grants shall remain exercisable
until the date that is ten years from the grant date (the “Option Expiration Date”), unless sooner terminated
in accordance with the terms below. In the event that an Eligible Director separates from service due to death, the Options must
be exercised on or before the earlier of (i) three years after the date of such termination and (ii) the Option Expiration Date.
If an Eligible Director dies after he separates from service, but while the Option is still exercisable, the Option may be exercised
until the earlier of (x) three years after the date of death and (y) the Option Expiration Date.

2.5                    
Payment of Exercise Price

Options granted under the Program shall be exercised
by giving notice to the Company (or a brokerage firm designated or approved by the Company) in such form as required by the Company,
stating the number of shares of Common Stock with respect to which the Option is being exercised, accompanied by payment in full
for such Common Stock, which payment may be, to the extent permitted by applicable laws and regulations, in whole or in part:

		(a)	in cash or by check or wire
transfer;

		(b)	by having the Company withhold
shares of Common Stock that would otherwise be issued on exercise of the Option that have an aggregate Fair Market Value equal
to the aggregate exercise price of the shares being purchased under the Option; or

    	 

    	 

    

 

		(c)	by tendering (either actually
or by attestation) shares of Common Stock owned by the Eligible Director that have an aggregate Fair Market Value equal to the
aggregate exercise price of the shares being purchased under the Option.

 

SECTION 3. AMENDMENT,
SUSPENSION OR TERMINATION

The Board, or the Human Resources Committee
of the Board, may amend, suspend or terminate the Program or any portion of it at any time and in such respects as it deems advisable.
Except as provided in the Plan, any such amendment, suspension or termination shall not, without the consent of the Eligible Director,
impair or diminish any rights of an Eligible Director under an outstanding Option.

SECTION 4. TRANSFERABILITY
OF OPTIONS

Options shall not be transferable otherwise
than by will or the laws of descent and distribution and may be exercised during the lifetime of the Eligible Director to whom
they are granted only by such Eligible Director; provided, however, that notwithstanding the above, Options shall be transferable
by the Eligible Director to family members and related estate planning entities as designated in a transfer document in such form
as required by the Company, and to the extent permitted under the Plan.

SECTION 5. EFFECTIVE
DATE

The Program shall become effective on the Effective
Date of the Plan, and any amendment to this Program shall become effective on the date specified by the Board or the Human Resources
Committee of the Board. Provisions of the Plan (including any amendments) that are not discussed above, to the extent applicable
to Eligible Directors, shall continue to govern the terms and conditions of Options granted to Eligible Directors.

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