Document:

Form of Notice of 2009-10-11 Long Term Incentive Award

 Exhibit 10(f) 
 

 
 TO:     [Executive Name] 
 August     , 2008 
 NOTICE OF 2009-10-11 
 LONG TERM INCENTIVE (LTI) AWARD 
 UNDER PERFORMANCE BONUS PLAN 
 On August 13, 2008, the Human Resources and Compensation Committee of the Board of
Directors (“Committee”) of Parker-Hannifin Corporation (“Company”) granted you a Long Term Incentive (“LTI”) award (“Award”) under the Company’s Performance Bonus Plan (the “Bonus 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”), to be issued under, and subject to, the
Parker-Hannifin Corporation 2003 Stock Incentive Plan (“SIP”), and 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 measures indicated below (“Performance
Measures”) during fiscal years 2009, 2010 and 2011 (“Performance Period”). The Target Amount will be weighted (“Weighted Target”) for each Performance Measure as follows: 
  

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

 Compound Annual Revenue Growth, Compound Annual EPS Growth and ROC of the Company and the Peers
are calculated by reference to sales and income from continuing operations. All Performance Measures shall be computed under, or reconciled to, US GAAP. 
 Your Payout will be made in the form of Restricted Shares 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

  

 1 

 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 Measure 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. Except as otherwise provided below, you will receive the Payout in the form of
Restricted Shares within 30 days following certification of the calculation of the Performance Measures and the Payout by the Committee after the end of the Performance Period, but in no event later than two and a half months from the end of the
Performance Period. In certain circumstances, the Committee may in its discretion reduce the Payout. 
 3. The Restricted Shares will be
subject to the terms and conditions, if any, imposed by the Committee upon issuance at Payout. 
 4. 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 under this Award based on the number of full calendar quarters you worked in an eligible
position during the Performance Period. 
 5. Termination of employment for any other reason during the Performance Period will result in
forfeiture of your Award. 
 6. In the event of a “Change in Control” of the Company (as defined in the SIP), you will receive the
Payout under the Award within fifteen (15) days following the date of the Change in Control equal to the greater of (a) the Target Amount of Restricted Shares; or (b) the number of Restricted Shares that would have been issued 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. 
 7. Your Award is subject to all terms, conditions and provisions of the Bonus Plan, the SIP and this Award. In
the event of any conflict between their respective terms, conditions and provisions the Bonus Plan shall control. 
  

 2 

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

	
	Sincerely yours,
	
	  
	Thomas A. Piraino, Jr.
	Vice President, General Counsel and Secretary

  

							
	Receipt Acknowledged and Agreed:	 		 		 	
				
	 	 		 	Date: 	 	 
	[Executive Name]	 		 		 	

  

 3 

 

 
 EXHIBIT A 
 TO 
 2009-10-11 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.
	 	

  

 4Form of Notice of FY09 RONA Bonus Award

 Exhibit 10(g) 
 

 
 TO:    [Executive Name] 
 August     , 2008 
 NOTICE OF FY09 
 RETURN ON NET ASSETS (“RONA”) BONUS AWARD 
 UNDER PERFORMANCE BONUS PLAN 
 On August 13, 2008, the Human Resources and Compensation
Committee of the Board of Directors (“Committee”) of Parker-Hannifin Corporation (“Company”) granted you a RONA Bonus Award for fiscal year 2009 (“FY09”) 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 terms of the Plan and the following terms and conditions: 
 1. Each RONA Share represents a percentage of your Base Pay
earned during FY09 (“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 FY09; 
 Average Assets = the average of the Company’s RONA Assets at the beginning of FY09 and at the end of each of the fiscal quarters of FY09; and 
 RONA Assets = inventory + accounts receivable + prepaid expenses + property, plant and equipment (net) + goodwill + intangibles – trade accounts
payable. 
  

 1 

 3. Your RONA Bonus Payout for FY09 under this award is calculated as follows: 
 (Base Pay for FY09 x RONA %) x # RONA Shares = FY09 RONA Bonus payout 
 4. Your RONA Bonus earned under this Award will be paid after the end of FY09. 
 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 FY09, you will forfeit your RONA Bonus Award. 
 6. Your RONA Bonus Payout will be paid in
cash, or you may elect to receive the Payout in the form of a credit to your Executive Deferral Plan (“EDP”) account in accordance with the terms of the EDP and rules established by the Committee or the Company, as the case may be.

 7. Your RONA Bonus Payout will be made following certification of the calculation of the RONA% and Payout by the Committee at the end of
the Performance Period. The Committee may reduce the RONA Bonus Payout in its sole discretion. 
 8. In the event of any conflict between the
terms of the Plan and your Award, the Plan will control. 
 Please acknowledge receipt of your Award, and indicate your agreement with its
terms, by signing and returning a copy to me as soon as possible. 
  

	
	Sincerely yours,
	
	  
	Thomas A. Piraino, Jr.
	Vice President, General Counsel and Secretary

  

							
	Receipt Acknowledged and Agreed:	 		 		 	
				
	 	 		 	Date: 	 	 
	[Executive Name]	 		 		 	

  

 2Summary of RONA Bonus Awards in Lieu of Certain Executive Perquisites

 Exhibit 10(h) 
 PARKER-HANNIFIN CORPORATION 
 SUMMARY OF RONA BONUS AWARDS IN LIEU OF 
 CERTAIN EXECUTIVE PERQUISITES 
 Effective January 1, 2008, the Human Resources and Compensation Committee (the “Committee”) of the Board of Directors of Parker-Hannifin Corporation (the “Corporation”) eliminated certain executive perquisites,
replacing them with a performance based form of compensation designed to approximate the value of the eliminated perquisites. The perquisites that were eliminated are: 1) reimbursement or payment for home security system or services, 2) annual
allowance for financial planning, tax preparation and estate planning, 3) tax gross-ups on the value of permitted spousal travel which is included in the recipient’s taxable income 4) reimbursement of monthly dues or assessments associated with
private social club membership, 5) tax gross-ups on amounts reimbursed for initiation fee for private club membership which is included in the recipient’s taxable income, and 6) reimbursement of fees or dues related to membership at health and
fitness clubs. These eliminated perquisites were replaced by a separate form of RONA Bonus opportunity that is distinct from the Corporation’s general RONA Bonus program. It is referred to as Converted RONA Bonuses. 
 Converted RONA Bonuses are paid in four installments after the end of each fiscal quarter, in October, January, April and August. The first three
installments are based on actual year-to-date financial results, reduced by an amount equal to 25% of the projected year-end RONA results. The fourth/final installment in August is an amount equal to the remaining Converted RONA Bonus earned based
on the Corporation’s actual year-end results, as certified by the Controller and approved by the Committee. All Converted RONA Bonuses are paid in cash and are not subject to elective deferral. 
 Converted RONA Bonus awards are a performance based bonus opportunity with payout equaling a percentage of the mid-point of the recipient’s base
salary range, depending on the Corporation’s return on average net assets for all divisions, compared with the established incentive benchmarks. Converted RONA Bonuses are calculated as follows: 
  

	 	•	 	 Return on Net Assets = earnings (segment operating income for the fiscal year) divided by average assets (average of inventory, accounts receivable, prepaid
expenses, property, plant and equipment, goodwill and intangibles, less trade accounts payable and contract reserves). 

  

	 	•	 	 The incentive is expressed in terms of a multiple for purposes of determining the percentage of mid-point earned as a bonus for each Converted RONA Bonus Share,
calculated as follows: 

  

	 	(a)	For that portion of return on net assets which is less than or equal to 35%, the incentive is .1786% for every 1% of return; 

  

	 	(b)	For that portion of return on net assets in excess of 35%, the incentive is .08928% for every 1% of the excess. 

  

	 	•	 	 The amount of the Converted RONA Bonus payment is calculated by multiplying the recipient’s number of Converted RONA Shares by the multiple, and multiplying
that total by the midpoint of the recipient’s base salary range by comparable position within a group of comparison companies selected by the Committee’s independent consultant. 

 Converted RONA Bonuses are different than general RONA Bonuses in that the amount of any Converted RONA
Bonus is not included in the benefit calculations under any benefit or retirement plan sponsored by the Corporation, including the: Executive Long-Term Disability Plan, Consolidated Pension Plan, Pension Restoration Plan, Supplemental Executive
Retirement Benefits Program and Change in Control Severance Agreements. In addition, Converted RONA Bonuses are not eligible for deferral under the Corporation’s Retirement Savings Plan, Savings Restoration Plan or Executive Deferral Plan.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}]]