Document:

Form of 2008-09-10 Long Term Incentive Award Letter

 Exhibit 10.4 
 

 
 TO: [Name] 
 August 15, 2007

 2008-09-10 
 LONG
TERM INCENTIVE (LTI) AWARD 
 UNDER PERFORMANCE BONUS PLAN 
 Dear
                                        :

 On August 15, 2007, the Human Resources and Compensation Committee of the Board of Directors (“Committee”) of Parker-Hannifin Corporation
(“Company”) authorized a Long-Term Incentive (“LTI”) award (“Award”) to you under the Company’s Performance Bonus Plan (“Plan”). Payments made pursuant to the Plan qualify as “performance-based
compensation” for purposes of Section 162(m) of the Internal Revenue Code of 1986 and Section 1.162-27 of the Treasury Regulations. Your Award is in the target amount of
                     (“Target Amount”) restricted shares of common stock of the Company (“Restricted Shares”), subject to
the following terms and conditions: 
 1. Your payout under the Award (“Payout”) will be based on the Company’s performance in
comparison to other companies in its peer group as listed on attached Exhibit A (“Peers”) for the performance measurements indicated below (“Performance Measures”) during fiscal years 2008, 2009 and 2010 (“Performance
Period”). The Target Amount will be weighted (“Weighted Target”) for each Performance Measure as follows: 
  

			
	 Performance Measure
	  	Weight
	 Revenue Growth
	  	20%
	 Earnings Per Share (EPS) Growth
	  	40%
	 Return on Capital (ROC)
	  	40%

 Revenue Growth, EPS Growth and ROC of the Company and the Peers is calculated by reference to sales and income
from continuing operations. 
 You will receive a payout of 100% of the Weighted Target for each
Performance Measure if the Company ranks in the 50th percentile among the Peers in the applicable Performance Measure. Percentile rankings above or below
the 50th percentile for the Performance Period among the Peers for any Performance Measure will result in a lesser or greater payout for each Weighted
Target in accordance with the following table: 
  

											
	 Percentile Ranking:
	  	£35	  	42.5	  	50	  	62.5	  	375
						
	 Payout %:
	  	0	  	50	  	100	  	150	  	200

 For each Performance Measure, the Company’s ranking
must be above the 35th percentile among the Peers for the Performance Period in order to receive any payout for the applicable Weighted Target. The total
Payout will be equal to the sum of the payouts earned under each of the Performance Measures. 

 Peers which do not publish stand-alone financial results for the entire Performance Period as a result of going private,
acquisition, or any similar transaction will be removed from the list of Peers. Peers which merge during the Performance Period will remain as Peers only if they are the surviving entity of the merger. Any Peer which has publicly announced the need
to restate its financial statements for any portion of the Performance Period, but has not yet published such restatement, will be excluded from the Peer comparisons for any Performance Metric in which its result is better than the Company’s
result. Any Peer which has not published financial statements for the entire Performance Period due to the publicly announced need to restate its financial statements will be removed from the list of Peers. 
 2. The Payout earned under the Award will be paid after the end of the Performance Period. 
 3. If you retire (at or after age 60, or earlier with the consent of the Committee), die or become disabled during the Performance Period, you will be
entitled to receive a portion of the Payout in proportion to the number of full calendar quarters worked in an eligible position during the Performance Period. Termination of employment for any other reason during the Performance Period will result
in full forfeiture of your Award. 
 4. Except as provided below, if you are actively employed by the Company at the time of the Payout, you
will receive the Payout in the form of Restricted Shares. The Restricted Shares will be subject to the terms and conditions imposed by the Committee at the time of issuance. 
 5. You may elect, in accordance with rules established by the Company, to receive your Payout in the form of a credit to your Executive Deferral Plan
(“EDP”) account. If such an election is timely made, you will receive your Payout in the form of a credit to your EDP account as of July 1, 2010 in a dollar amount equal to the number of Restricted Shares earned under the Award
multiplied by the closing price of the Company’s common stock on the New York Stock Exchange on June 30, 2010 (“Cash Equivalent”). 
 6. If you are not an active employee of the Company at the time of the Payout, it will be made in the form of cash equal to the Cash Equivalent, except where you have made a timely EDP election as provided in
Section 5. 
 7. In the event of a “Change in Control of the Company” (as defined in the Company’s Change in Control
Severance Agreements, and subject to good faith application of the requirements of Section 409A of the Internal Revenue Code), you will receive a cash payout under the Award within fifteen (15) days following the date of the Change in Control
equal to the greater of (a) amount equal to (i) the Target Amount of Restricted Shares multiplied by (ii) the Stock Price (as defined below); or (b) the amount equal to (i) what your Payout in Restricted Shares would have
been had the Company’s percentile ranking among the Peers for each of the Performance Measures during the Performance Period through the end of the fiscal quarter immediately preceding the date of the Change in Control continued throughout the
Performance Period at the same level, multiplied by (ii) the Stock Price. “Stock Price” means the closing price of the Company’s common stock on the New York Stock Exchange on July 1, 2007, or on the date of the Change in
Control, whichever is higher. 
 8. You will receive the Payout in the form described above following certification of the calculation of the
Performance Measures and the Payout by the Committee after the end of the Performance Period. The Committee may in its sole discretion reduce the Payout. The amount of your Payout is also subject to the payout limitations set forth in
Section 5(c) of the Plan. 
 9. Your Award is subject to all terms, conditions and provisions of the Plan and this award notification.
In the event of any conflict between the terms of the Plan and the Award, the Plan controls. 

 Please acknowledge receipt of this Award and indicate your agreement with its terms and the terms of the Plan by signing
below and returning a copy to me as soon as possible. 
  

	
	 Thomas A. Piraino, Jr.

	Vice President, General Counsel And Secretary

 Receipt Acknowledged and Agreed: 
  

							
	  
	 		 	Date:	 	  

 Exhibit A 
 to 
 2008-09-10 LONG TERM INCENTIVE (LTI) AWARD 
 UNDER PERFORMANCE BONUS PLAN 
 Peers 
  

					
		  	Caterpillar Inc.	  	
			
		  	Cooper Industries, Ltd.	  	
			
		  	Cummins Inc.	  	
			
		  	Danaher Corporation	  	
			
		  	Deere & Company	  	
			
		  	Dover Corporation	  	
			
		  	Eaton Corporation	  	
			
		  	Emerson Electric Co.	  	
			
		  	Flowserve Corporation	  	
			
		  	Goodrich Corporation	  	
			
		  	Honeywell International Inc.	  	
			
		  	Illinois Tool Works Inc.	  	
			
		  	Ingersoll-Rand Company Limited	  	
			
		  	ITT Industries, Inc.	  	
			
		  	Johnson Controls, Inc.	  	
			
		  	Pall Corporation	  	
			
		  	Rockwell Automation, Inc.	  	
			
		  	SPX Corporation	  	
			
		  	Textron Inc.Form of RONA Award Letter

 Exhibit 10.5 
 

 
 TO: [Name]  
 [Date]

 FY     NOTICE OF 
 RETURN ON NET ASSETS (“RONA”) BONUS AWARD 
 UNDER PERFORMANCE BONUS PLAN 

Dear                         : 
 On [date], the Human Resources and Compensation Committee of the Board of Directors ( “Committee”) of Parker-Hannifin Corporation
(“Company”) authorized the Company to make a RONA bonus award to you for fiscal year 20     (“FY    ”) under the Company’s Performance Bonus Plan (“Plan”). RONA
bonuses paid under the Plan are qualified as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code of 1986 and Section 1.162-27 of the Treasury Regulations. 
 Your RONA Bonus award is in the amount of
                     RONA Shares and is subject to the following terms and conditions: 
 1. Each RONA Share represents a percentage of your Base Pay earned during FY     (“RONA %”). 
 2. The RONA % is determined as follows: 
  

	 	a)	Earnings ÷ Average Assets = Return on Assets (ROA) 

  

	 	b)	If ROA is £ 35%: ROA x 0.1786 = RONA%

 —or— 
 if ROA is > 35%: 6.25% + ((ROA—35%) x 0.08928) = RONA% 
 where: 
 Earnings = the Company’s Segment Operating Income for FY    ; 
 Average Assets = the average of the Company’s RONA Assets at the beginning of FY     and at the end of each of the fiscal
quarters of FY    ; and 

 RONA Assets = inventory + accounts receivable + prepaid expenses + property, plant and equipment (net) +
goodwill + intangibles – trade accounts payable. 
 3. Your total RONA Bonus payout for FY     under this
award is determined as follows: 
 (Base Pay for FY     x RONA %) x # RONA Shares =
FY     RONA Bonus payout 
 4. Your RONA Bonus earned under this award will be paid after the end of
FY    . 
 5. If your employment with the Company is terminated for any reason other than retirement (at or after
age 60, or earlier with the consent of the Committee), death or long-term disability during FY    , you will forfeit your RONA Bonus award. 
 6. Your RONA Bonus will be paid to you either in cash or as a credit to your Executive Deferral Plan account (based on your election made in accordance with rules established by the Company) following the
Committee’s certification of the RONA% and payout amount at the end of FY    . The Committee retains the ability to reduce the RONA Bonus payout at its sole discretion. The amount of your RONA Bonus payout is also
subject to the limitations set forth in Section 5(c) of the Plan. 
 7. This award is subject to all terms, conditions and provisions of
the Plan to the extent not specifically addressed in this award. In the event of any conflict between the terms of the Plan and this award, the Plan will control. 
 Please acknowledge receipt of this award and indicate your agreement with its terms by signing and returning a copy to me as soon as possible. 
 Thomas A. Piraino, Jr. 
 Vice President, General Counsel And Secretary 
 Receipt Acknowledged and Agreed: 
  

							
	  
	 		 	Date:

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