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                                Eaton Corporation
                         2003 Annual Report on Form 10-K
                                   Item 15 (c)
                                 Exhibit 10 (l)

                                EATON CORPORATION
                      EXECUTIVE INCENTIVE COMPENSATION PLAN

I. Purpose

The purpose of the Plan is to provide an annual incentive compensation
opportunity for eligible employees in executive, administrative, professional,
technical, or advisory positions whose actions are considered to have a
significant impact on corporate performance.

II. Effective Date

This restatement of the Plan is effective beginning with the 2003 Executive
Incentive Compensation Plan year and shall remain in effect until its terms are
changed by the Board of Directors of Eaton Corporation.

III. Administration

The Plan is adopted by the Board of Directors of the Company and may be amended,
modified or discontinued, as the Board, in its sole discretion, may deem
necessary.

The Plan is administered by the Management Compensation Committee (the
"Committee"), which shall consist of the Chief Executive Officer and up to four
officers designated by the Chief Executive Officer. The Committee shall have
complete authority to interpret all provisions of the Plan consistent with the
law.

IV. Concept

The Plan is intended to support the Company's Pay-for-Performance culture. It is
based on the concept that those individuals in positions that have an
opportunity to significantly affect company results should have a significant
portion of their total compensation at risk and linked to business and
individual results.

V. Eligibility

Any salaried employee of the Company or any of its subsidiaries (including any
subsidiary acquired after adoption of this Plan) who in the judgment of the
Committee meets the criteria described in Article I may be selected for
participation in the Plan. The Committee will have final authority for
designating participants in the Plan, but may delegate this authority, as it
deems advisable.

An employee may be designated as a participant on the first of any month
following the approval of the Committee or its designee.

VI. Calculation of Incentive Compensation Payments

Plan participants will be placed into one of three (3) Incentive Compensation
Programs within the overall Plan. These three Programs are:

 - Operations Program - which will include participants who are assigned to
   operating units.

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 - Corporate Staff Program - which will include participants who are members of
   corporate staff functional departments.

 - Executive Management Program - which will include senior elected officers.

Beginning with the 2003 plan year, the total Corporate Incentive pool will be
created by multiplying the participants' base salaries (as in effect as of March
1 of each year) by Target Percentage Incentive Factors which are either (a) the
standard percentage Incentive Factor appropriate to their level of
responsibility or (b) an alternative individual Percentage Incentive Factor
approved by the Company's Chief Executive Officer or designee. The aggregate
pool amount will then be multiplied by the Corporate Performance Factor to
determine the Initial Adjusted Corporate Incentive Pool.

The Corporate Performance Factor raises or lowers the Initial Corporate
Incentive Pool based on Eaton's performance as measured by a matrix of Cash Flow
Return on Gross Capital (CFR) and Earnings per Share (EPS). A philosophical
cornerstone of the Plan is the belief that consistently high performance against
this Matrix will result in increases in shareholder value. The Compensation and
Organization Committee of the Board will establish the Corporate Performance
Factor Schedule. This schedule will define the threshold, target, and maximum
CFR/EPS matrix goals and pool adjustment levels for the designated year. This
process determines the maximum amount of the Initial Adjusted Corporate
Incentive Pool but is not linked to the incentive distribution process.

The Compensation and Organization Committee of the Board of Directors, in its
sole discretion, will determine the Final Adjusted Corporate Incentive Pool by
multiplying the Initial Adjusted Corporate Incentive Pool by a Corporate
Performance Incentive Pool Modifier which can affect the initial pool by as much
as plus or minus twenty (20%) percent. In applying the Corporate Performance
Incentive Pool Modifier, the Compensation and Organization Committee of the
Board of Directors will take into consideration such other performance factors
as it deems appropriate which may include, but are not limited to: performance
versus Profit Plan goals; performance versus that reported for Eaton's peer
companies and progress toward the execution of the corporation's growth
strategies.

The process of allocating the incentive funds is based upon performance ratings.
In the Operations Program, each appropriate operating unit will be given a
rating on a scale from zero (0) to 150 percent. Participants in each program
will be given individual ratings based on the same scale. These ratings will be
established by a senior officer, subject to final review and approval by the
Chief Executive Officer, and will be based primarily upon the success of the
unit and/or individual in meeting pre-established objectives. Individual Ratings
for elected officers will be recommended by the Chief Executive Officer and must
be approved by the Compensation and Organization Committee of the Board of
Directors. It is intended that the ratings process should allow maximum
flexibility for the recognition of unanticipated challenges and opportunities,
which may not have been contemplated at the time the original objectives were
established.

While it is not necessary that the entire Final Adjusted Corporate Incentive
Pool be allocated to participants, the total of all awards made to participants
throughout the Corporation cannot be greater than the sum of the pools of all
three programs. Excepted from this provision are the awards made to designated
employees by the Compensation and Organization Committee of the Board of
Directors, which shall be calculated in a manner consistent with the Plan, but
which shall be paid from the Corporation's General Funds rather than the
Corporate Incentive Pool. At the sole discretion of the

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Chief Executive Officer, money not distributed from one program may be
reallocated to another program.

VII. Other Provisions

The Plan provides for a Special Award Fund which will allow the Compensation and
Organization Committee of the Board of Directors, on an exception basis, to
award special payments to individual participants who, in that Committee's
judgment, have made extraordinary contributions to the Corporation in a year
when there would normally be no incentive compensation payment due to below
threshold corporate performance. The maximum amount of such awards is defined in
Article X of this Plan.

Note: When assigning individual ratings, a specific effort is made to
differentiate in order to reward extraordinary job performance. To accomplish
this, senior officers are expected to allocate ratings above 100 based on
clearly demonstrated and exceptional job performance, leadership and initiative.
The remainder of that business unit and/or department incentive pool will be
allocated, again by job performance, to the remaining participants. As a natural
consequence of this process the individual rating will generally average 100.
However, because the Plan is designed to reward exceptional performance with
ratings well above 100, fully competent performers can expect individual ratings
that may average below 100. To insure that incentive pool funds are made
available to support effective Pay-for-Performance objective, the Compensation
and Organization Committee may, as it deems necessary for selected organizations
or groups of incentive participants, require an alternative process for applying
the Corporate Performance Factor and (if applicable) the Unit Rating in the
individual award calculations. In this alternative award calculation process,
the Lowest Ten Percent (10%) of Plan participants, as determined by final
Individual Ratings Percentages, will receive the application of eighty percent
(80%) of the final approved Corporate performance Factor and, if appropriate,
the Unit Rating approved for their organization. The Next Lowest Ten Percent
(10%) will receive the application of ninety percent (90%) of the Corporate
Performance Factor and, if appropriate, the Unit Ratings approved for their
organization. Incentive dollars made available by the application of these rules
may be allocated to those Plan participants who are deemed to have made the
greatest value contributions during the Plan award period.

In the sole discretion of the Compensation and Organization Committee: (a) the
percentages cited in the above paragraphs may be adjusted from time to time to
insure effective Plan processes and (b) a process will be established for
determining the organization levels at which the Lowest and Next Lowest Ten
Percent of Individual Ratings will be identified.

VIII. Payment

Incentive compensation will be paid in the year subsequent to the year in which
it is earned at the earliest feasible date following the determination of final
corporate performance and the calculation of individual incentive payments.

IX. Service for Part of Year

A participant must be employed by the Company or one of its subsidiaries at the
end of an Award Period; provided, however, that a payment, prorated for the
participant's months of participation during the Award Period, may be authorized
by the Committee, in its sole discretion, in the event the employment of a
participant terminates before the end of an Award Period due to death, permanent
disability, normal or early retirement, closure or divestiture of an Eaton
facility or any other reason. Notwithstanding the

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foregoing, upon any termination of the Plan during any Award Period, payments to
all participants will be made, prorated for each participant's length of service
during the Award Period prior to the date of Plan termination.

X. Accounting Provisions and Defined Terms

Awards paid out under the provisions of the Plan to participants in the
Operations Program will be accrued for and charged to the appropriate units.
Awards to participants in the Executive management and Corporate Staff Programs
will be accrued for and charged as a corporate administrative expense.

Initial Adjusted Corporate Incentive Pool - The sum of the Incentive Potential
for all participants in each of the three programs multiplied by the Corporate
Performance Factor.

Final Adjusted Corporate Incentive Pool - The result obtained by multiplying the
Initial Adjusted Corporate Incentive Pool by the Corporate Performance Factor as
described in Section VI.

Corporate Performance Factor - Adjustment percentages, which raise or lower the
Corporate Incentive Pool, based on Eaton's performance. The following schedule
will be applied to the 2003 incentive pool adjustment and subsequent Plan years
unless adjusted by the Compensation and Organization Committee of the Board of
Directors in its sole discretion. Performance that falls between the points on
the matrix will be interpolated to arrive at the appropriate Corporate
Performance Factor to the closest 1%.

CFROGC/Earnings Per Share Matrix  -

                          Corporate Performance Factor

<TABLE>
<CAPTION>
                             CFR         EPS
Cash Flow Return          Threshold   Threshold            Target           Maximum
----------------          ---------   ---------    -----   ------   -----   -------
<S>                      <C>         <C>         <C>     <C>      <C>       <C>
13.0%                           40%         40%
14.3%                                                75%
16.4%                                                        100%
17.0%                                                                150%
17.6%                                                                          200%
Earnings per                  less
Share (EPS)             than $2.70       $2.70    $3.68    $5.00   $5.40     $5.80
</TABLE>

  Cash Flow Return on Gross Capital (CFR) - Net income plus depreciation, and
  after-tax net interest divided by capital plus accumulated depreciation minus
  goodwill and short-term investments.

  Earnings per Share - Fully diluted Earnings per Share excluding Unusual Items
  as reported externally (also reported as "Operating Earnings Per Share")

  Special Award Fund - An amount not greater than twenty (20%) percent of the
  sum of the Corporate Incentive Pool. The Compensation and Organization
  Committee of the Board of Directors will have sole authority to grant up to
  the maximum of this Fund to recognize extraordinary contributions to the
  Corporation in a year when the CFR/EPS Matrix threshold was not met and the
  Plan did not generate payments for participants.

Percentage Incentive Factor Schedule - A schedule outlining the percentage to be
applied against the base salary of each level of participant in order to
determine the participant's Incentive Potential. The target incentive factor

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will vary according to level of responsibility, and may be changed from time to
time to reflect the competitive practices for companies comparable to Eaton. The
target incentive factor can be further adjusted at the beginning of the Plan
year to reflect the participant's level of performance and other factors. The
individual adjusted target incentive factors will be set at the beginning of the
Plan year. The schedule of standard incentive percentages will be established by
the Compensation Department subject to review and approval of the Compensation
and Organization Committee of the Board of Directors.<PAGE>

                                Eaton Corporation
                         2003 Annual Report on Form 10-K
                                   Item 15(c)
                                  Exhibit 10(u)

                                EATON CORPORATION
                        VEHICLE ALLOWANCE PROGRAM POLICY
                               TIER I and TIER II

Program Overview

Eaton Corporation's Vehicle Allowance Program (Program) is designed to provide
eligible senior executives with a taxable monthly allowance to assist with the
purchase or lease of a vehicle. However, participants, in their sole discretion,
may utilize the allowance for any pur-pose they deem appropriate. No
confirmation or documentation of any kind is required with respect to the
purchase or lease of a vehicle. The Program is effective January 1, 2003 and is
subject to termination or amendment at any time at the sole discretion of Eaton
Corporation.

Program Administration

The Vehicle Allowance Program will be administered by the Fleet Administration
Department at World Headquarters.

Program Structure

The Program is comprised of Tiers I, II, and III. A specified monthly allowance,
established by the Company and subject to change from time to time, shall be
provided to participants according to their designated tier.

Eligibility

The Vice President - Human Resources and the Chief Executive Officer will
determine participant eligibility and will also determine when such eligibility
ceases.

Calculation of Allowance

The amount of the monthly allowance generally will be equal to: (1) an amount
equivalent to the cost of purchasing a vehicle once every 36 months (adjusted by
tier); (2) average interest for a 36-month loan on that amount; and (3) a fixed
monthly maintenance allowance and will vary depending on the participant's
designated tier. The actual amount of the monthly allowances will be calculated
by the Vice President of Compensation & Benefits and approved by the Chief
Executive Officer for non-executive officer participants and by the Compensation
and Organization Committee for executive officer participants.

The Vice President of Compensation & Benefits will periodically review the
allowance to determine whether it is market competitive and is consistent with
similar programs offered by other premier diversified companies. If vehicle
M.S.R.P. prices have increased sufficiently in each tier to warrant an increase
in the allowance amounts, such adjustments may be recommended. It is anticipated
that adjustments shall not be made more frequently than once every three years.

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In the event that it is determined that there will be an adjustment to the
amounts of the allowances, then it is anticipated that it will be implemented at
the same time for each of the participants.

The monthly allowance is comprehensive. Therefore, participants shall assume all
costs related to the purchase or lease of a vehicle, including acquisition cost,
sales tax, luxury tax, interest charges, aftermarket-installed equipment,
maintenance and repair expenses, car washes, gasoline, and all other incidental
costs. The Company will, however, reimburse participating executives for the
cost of annual vehicle titling and registration in excess of a certain limit.

Since participants will be provided with an allowance to cover the above costs,
no other vehicle-related charges, with the exception of business-related mileage
and tolls, and vehicle titling and registration fees in excess of a certain
limit, should be submitted on an expense report for reimbursement by the
Company.

Mileage for business use of a personal vehicle, tolls, and annual titling and
registration fees in excess of a certain limit should be submitted on an expense
report and shall be reimbursed based on current Company policy for reimbursement
of business use of a personal vehicle. If the Company reimburses a participant
for annual license and titling fees, the participant must provide the Program
Administrator with documentation of the expense because it qualifies for imputed
income tax.

Transition and Enrollment Procedures

Tier I and Tier II participants in the former Executive Car Purchase Program
will be transitioned to the Vehicle Allowance Program in the month following the
final imputed charge of their current 36-month test car loan. If participants
elect to retain ownership of vehicles under the previous Program, the vehicles
will immediately be transferred from the previous Program to the Executive
Vehicle Program. Insurance coverage under the latter will continue as usual.
Vehicles under the previous Program will be eligible for maintenance
reimbursement through the last day of the month prior to the month in which the
monthly allowance begins.

Tier I and Tier II participants in the Company-Provided Leased Vehicle Program
will be transitioned to the Vehicle Allowance Program in the month following the
month in which their current company cars are disposed of, either through
purchase, resale, or reassignment. Such disposition is indicated through
completion of a "Turn-In Vehicle Final Disposition" form. If participants elect
to purchase vehicles and want to enroll them in the Executive Vehicle Program
for insurance coverage, a "Procedure for Including a Personally Owned/Leased
Vehicle on the Executive Vehicle Program" form must be completed and forwarded
to the Program Administrator (see Exhibit B of the Executive Vehicle Program
Guidelines).

The World Headquarters Compensation Department shall inform the Fleet
Administration Department when a participant becomes eligible; his or her
designated tier; and the amount of his or her monthly vehicle allowance.

Termination

The World Headquarters Compensation Department shall inform the Fleet
Administration Department if a participant's eligibility ceases and will provide
the date upon which the monthly allowance should be discontinued.

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Retirement

Participants will continue to receive the monthly allowance as long as they are
actively employed by Eaton Corporation. As is the case with other Terminations,
upon retirement, the monthly allowance shall cease. However, participants may
continue to replace executive vehicles, at their discretion, subject to the
following restrictions:

- The primary user of the replacement vehicles shall be the participant or his
or her spouse;

- The total number of replacement vehicles assigned to both the participant and
his or her spouse shall not exceed three during the life of both the participant
and his or her spouse, and two during the life of the surviving spouse;

- Eligible replacement vehicles include any vehicle (i.e., any automobile,
light-duty truck, and van) available for sale in North America; and

- Participants will have the right to retain all executive vehicles under the
Executive Vehicle Program on the date of termination of employment for as long
as they choose.

Fees; Insurance Coverage

Any vehicle purchased or leased by a participating executive will be eligible to
participate in the Company's Executive Vehicle Program insurance arrangements
and shall be subject to the program fees and insurance coverage limitations as
they may change from time to time (see Sections VII.G. and VIII. of the
Executive Vehicle Program Guidelines for details).

Responsibility

Responsibility for periodically reviewing this policy for potential changes from
time to time resides with the Vice President - Compensation & Benefits. The
Manager, Corporate Travel & Fleet will be responsible for implementing the
provisions of this policy and for providing participants with any necessary
support and explanations.

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