Document:

Form of Notice of Long Term Incentive Performance Award

 

 

 Exhibit 10(w) 
  

	TO:	[Executive Name] 

 NOTICE OF

 LONG TERM INCENTIVE PERFORMANCE (LTIP) AWARD 

UNDER PERFORMANCE BONUS PLAN 

The Human Resources and Compensation Committee of the Board of Directors (“Committee”) of Parker-Hannifin Corporation
(“Company”) has granted you a Long Term Incentive Performance (“LTIP”) Award (“Award”) under the Company’s Performance Bonus Plan (the “Plan”) as follows: 

 

			
	Grant Date:	  	XX/XX/XXXX
		
	 Performance Period: 

(stated in calendar years)
	  	CY 20XX-20XX-20XX
		
	Target Shares Granted:	  	[Number granted]
		
	Performance Multiplier:	  	As determined at the end of the Performance Period as provided below.

Your Award provides an incentive compensation opportunity based on the Company’s long-term performance against its peers, as
provided below. 
 Target Shares Granted 

Your Target Shares Granted is based on your grade level at the Grant Date and your expected service in your position through the end of
the Performance Period. Your Target Shares Granted is subject to adjustment in the event of a change in your grade level or your employment status with the Company during the Performance Period, as more fully described in Section 1(b)
below. 
 Company Performance & Shares Attained 

The number of Shares actually earned upon completion of the Performance Period (“Shares Attained”) will be based on your Target
Shares Granted (adjusted as provided herein) and the applicable payout percentage (“Performance Multiplier”), in accordance with the Company’s performance for the following weighted performance measures (“Performance
Measures”), determined for the Company at the conclusion of the three calendar year Performance Period, in comparison to the performance of the members of the Company’s peer group as listed on the attached Exhibit A (“Peers” or
“Peer Group”), determined for each Peer based on its performance at the conclusion of the three fiscal year period of the Peer ending with or immediately prior to the conclusion of the Performance Period: 

 

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

 Each Performance Measure is calculated for each of the Company and the Peers by reference to
sales and income from continuing operations and is computed under, or reconciled to, U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). The number of Shares earned at the end of the Performance Period is determined based on a
sliding scale with the maximum payout at 200% of Target and the minimum payout at 0% of Target. The total number of Shares Attained will be equal to the sum of the payouts determined under each of the Performance Measures, subject, however, to the
Committee’s exercise of negative discretion on payout. All calculations of results will be subject to Peer Group adjustments as provided below. 

To earn 100% of your Target Shares allocable to each Weighted Performance Measure, the Company must rank in the 50
th percentile among the Peers. Percentile rankings above
or below the 50th percentile for the Performance Period
among the Peers will result in a lesser or greater number of Shares Attained for that Performance Measure in accordance with the following table, or the interpolated percentage between the percentages in the table below: 

 

																		
	 Percentile Ranking:
	  	£	 35	  	 	42.5	  	 	50	  	 	62.5	  	 	3	 75	  
	 Performance Multiplier:
	  	 	0	% 	 	50	% 	 	100	% 	 	150	% 	 	 	200	% 

 Peer Group Adjustments 

Certain events affecting Peer Group performance data will result in changes to the Peer Group, or Peer Group company rankings, in
accordance with the rules adopted by the Committee (“Peer Group Calculation Procedures”) as set forth on the attached Exhibit B. 

Payout of Your Award 

Payments made pursuant to the Plan and this Award are intended to 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. 
 All amounts
earned under your Award will be paid in the form of common shares of stock in the Company (“Shares”) to be issued as of the date the Committee certifies performance results and authorizes payment of your Award. Shares issued pursuant to
this Award shall be issued under, and subject to, the Parker-Hannifin Corporation 2009 Omnibus Stock Incentive Plan (“2009 SIP”) and the terms and conditions of this Award as an “Unrestricted Stock Award” (as defined in the 2009
SIP). 
 Except as otherwise provided below, you will receive notification of the number of Shares Attained from this Award
within 30 days following certification by the Committee of the calculation of the Performance Measures, and you will receive the Shares Attained after the end of the Performance Period, but in no event later than the last day of the Company’s
fiscal year ending immediately following the Performance Period. The Committee may not increase your Shares Attained above the number determined under the terms of this Award. However, the Committee may, in its discretion, reduce the number of
Shares Attained. Further, this Award is subject to reduction, cancellation, forfeiture, or recoupment, in the Committee’s discretion, as 

 

 L02 

 
provided under the Company’s Claw-back Policy, as established by the Committee, or the Board of Directors, as it now exists, or as it may be amended from time to time. Any payment pursuant
to this Award is also subject to all applicable income or employment tax withholding requirements. 
 Additional Terms & Conditions

 1. Change in Employment Status. 

(a) If you voluntarily terminate your employment (except retirement), or your employment is terminated for cause at any
time prior to the issuance of Shares under your Award, you will forfeit your Award. 
 (b) If your employment is
terminated for any other reason, such as death, disability or retirement, during the Performance Period, or you otherwise have not served in an eligible position during the full Performance Period, your Target Shares Granted will be adjusted to
result in your receipt of a pro-rated payout based on the number of full quarters served during the Performance Period. 
 2.
Change in Control of the Company. In the event of a “Change in Control” (as defined in the 2009 SIP) of the Company during the Performance Period, you will receive full payment of the Award within fifteen (15) days following
the date of the Change in Control in Shares equal to the greater of (a) the Target Shares Granted; or (b) the number of Shares that would have been issued as Shares Attained 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. Notwithstanding the
foregoing, in the event a Change in Control is deemed to occur during the Performance Period under the 2009 SIP as a result of your termination of employment prior to a Change in Control at the request of a third party who has indicated an intention
or taken steps reasonably calculated to effect a Change in Control (“Anticipatory Termination”), you will receive full payment of the Award within 30 days following certification of the calculation of the Performance Measures by the
Committee in Shares equal to Shares Attained based on Company performance through the end of the Performance Period; provided, however, that if a Change in Control occurs after such Anticipatory Termination and prior to such payment, you will
receive full payment of the Award within fifteen (15) days following such Change in Control in Shares equal to the greater of (a) the Target Shares Granted, (b) the number of Shares that would have been issued as Shares Attained 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 Anticipatory Termination continued throughout the
Performance Period at the same level, or (c) the number of Shares that would have been issued as Shares Attained 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 subsequent Change in Control continued throughout the Performance Period at the same level. 

3. Terms of Other Plans Govern. Your Award is subject to all terms, conditions and provisions of the Plan, the 2009 SIP, and this
Award. In the event of any conflict between their respective terms, conditions and provisions the Plan shall control. 
  

 L02 

 4. Modifications. This Award is subject to modification in the discretion of the
Committee as may be necessary to comply with Internal Revenue Code provisions affecting the Award, such as Sections 409A and 457A, or as may be needed in consideration of International Financial Reporting Standards (“IFRS”) if and when
adopted by the Company. Notwithstanding the foregoing, no such modification shall be made that will cause the Award to fail to qualify as performance based compensation under Code Section 162(m). 

Please acknowledge receipt of this Award, and indicate your agreement with its terms, by clicking on the “OK” button below.

  

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

  

 L02 

 

 

 LONG TERM INCENTIVE PERFORMANCE (LTIP) AWARD 

UNDER PERFORMANCE BONUS PLAN 

EXHIBIT A 

Peer Group 

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.

  

 L02 

 

 

 LONG TERM INCENTIVE PERFORMANCE (LTIP) AWARD 

UNDER PERFORMANCE BONUS PLAN 

EXHIBIT B 

Peer Group Calculation Procedures 
  

	 	•	 	 Member of the peer group begins the cycle with positive EPS in the base year and ends with negative EPS: 

 

	 	¡
	Calculate results for Parker and all peer group companies using a straight percentage change and rank accordingly. Those moving from positive EPS to negative EPS will
have a percentage change of less than -100% and will rank at the bottom of the peer group. 

  

	 	•	 	 Member of the peer group has negative EPS in the base year: 

 

	 	¡
	Move to the bottom ranking for growth in EPS results. 

  

	 	¡
	Evaluate company at the beginning of the next cycle to determine if it is appropriate to continue in the peer group. 

 

	 	¡
	If more than 20% of the peer group companies have negative EPS in the base year, consider other alternatives such as widening the payout range or using an average of
multiple-year EPS for the base EPS. 

  

	 	•	 	 Member of the peer group has very low positive EPS in the base year: 

 

	 	¡
	Leave this company in the peer group and rank in accordance with actual results. Small movements in EPS will generate large percentage changes, positive or negative.

  

	 	¡
	Evaluate magnitude of the issue as we set goals and consider other alternatives if more than 20% of the peer group companies have very low positive EPS in the base
year. 

  

	 	•	 	 Mergers and acquisitions of peer group companies: 

  

	 	¡
	If peer group company is the surviving company of a merger, leave in for existing cycles and re-evaluate for inclusion in future cycles. 

 

	 	¡
	If peer group company is not the survivor, remove from the peer group for purposes of determining results for all outstanding performance awards.

  

	 	•	 	 Peer group company files for bankruptcy: 

  

	 	¡
	Move company to the bottom of the peer group for purposes of determining results for all cycles in which it was included in the peer group. 

 

 L02 

	 	•	 	 Peer group company announces restatement of earnings. 

 

	 	¡
	If restated results available at the end of the performance period, use restated numbers for ranking. 

 

	 	¡
	If restated results are not available at the end of the performance period, remove the company’s results for any metric in which company was ranked higher than
Parker. 

  

	 	•	 	 Peer group company is early adopter of IFRS and US GAAP reconciliation numbers are not available at the end of the performance period:

  

	 	¡
	Remove company from peer group for purposes of determining results. 

 

 L02Amendment to Amended and Restated Pension Restoration Plan

 Exhibit 10(bb) 

PARKER-HANNIFIN CORPORATION 

AMENDMENT TO THE 

AMENDED AND RESTATED PENSION RESTORATION PLAN 

Adopted: 04/15/2010 

Effective: 01/01/2010 

WHEREAS, by instrument effective as of January 1, 1995, the Pension Restoration Plan (the “Plan”) was
established for the benefit of certain employees of Parker-Hannifin Corporation; and 
 WHEREAS, the Plan has been
amended and restated from time to time; and 
 WHEREAS, upon recommendation of the Human Resources &
Compensation Committee of the Board, the Board of Directors desires to amend the terms, provisions, and conditions of the Plan; 

NOW, THEREFORE, the Plan is hereby amended effective as of January 1, 2010 as follows: 

Section 1.10 of the Plan is hereby amended in its entirety to read as follows: 

 

	 	1.10	Eligible Executive shall mean an employee of the Company or any of its subsidiaries who: 

 

	 	(a)	is designated by the Administrator as eligible to participate in the Plan; and 

 

	 	(b)	qualifies as a member of the “select group of management or highly compensated employees” under ERISA. 

Article 2 of the Plan is hereby amended in its entirety to read as follows: 

ARTICLE 2 PARTICIPATION 

An Eligible Executive shall become a Participant in the Plan as of the earlier of: 

 

	 	(a)	the date the Eligible Executive’s retirement benefits under the Qualified Plan first become limited by any Statutory Limit; 

 

	 	(b)	the date the Eligible Executive first elects to defer compensation under the SRP or EDP; 

	 	(c)	the date of a Change in Control of the Company; or 

  

	 	(d)	the date designated by the Administrator in a written agreement. 

Section 3.3 of the Plan is hereby amended in its entirety to correct the scrivener’s errors and to read as follows: 

 

	 	3.3	Form of Retirement Benefits. 

(a) Termination of Employment Before Early Retirement Date. Upon Termination of Employment before his Early
Retirement Date, a Participant’s retirement benefit shall be paid in the form of a single lump sum payment. 

(b) Termination of Employment On or After Early Retirement Date. Except as otherwise provided pursuant to Sections
3.3(b)(i) to 3.3(b)(vi), upon Termination of Employment on or after his Early Retirement Date, a Participant’s retirement benefit shall be paid in the form of a single life annuity. 

(i) Initial Payment Elections by Participants. To the extent permitted by Section 409A of the Code and
Section 1.409A-2(a)(5) of the Regulations, within 30 days following the date an Eligible Executive becomes a Participant, the Participant may elect for retirement benefits under this Plan to be paid in the form of (A) a single lump sum
payment equal to the Actuarial Value of the Participant’s retirement benefits under this Plan, or (B) a single life annuity. In the event that the vesting requirement of Section 3.2 is accelerated for any Participant on account of
death, Disability or a Change of Control, any election made by such Participant under this Section 3.3(b)(ii) will be disregarded. 

(ii) Changes Between Actuarially Equivalent Forms of Annuity. A Participant may elect at any time prior to
Termination of Employment to convert his retirement benefit from a single life annuity to any of the actuarially equivalent forms of annuity offered under the Qualified Plan. 

(iii) Changes by SERP Participants. To the extent required by Section 409A of the Code, if any SERP
Participant elects under the SERP to receive payment of his SERP benefit in a form different from that previously in effect for such Participant’s retirement benefit under this Plan, the Company shall change the form of payment of such SERP
Participant’s retirement benefit under this Plan to the form of payment elected by such SERP Participant under the SERP. Any change in the form of payment of a Participant’s retirement benefit pursuant to this Section 3.3(b)(iii)
shall cause the payment of such Participant’s retirement benefit under this Plan to be delayed for five years from the date payment would otherwise commence or be made (taking into account any delay in payment or commencement of payment under
Section 3.4 on account of a Participant’s status as a Specified Employee). 

 (iv) Transitional Rule. Notwithstanding any other elections made
hereunder and only to the extent permitted by the Company and transitional rules issued under Section 409A of the Code, through such date as specified by the Company pursuant to transitional guidance issued under Section 409A of the Code,
a Participant may make one or more elections as to time and form of payment of his retirement benefit under this Plan, provided that (a) any such election(s) made during 2006 shall be available only for amounts that are payable after the 2006
calendar year and cannot accelerate any payment into the 2006 calendar year, (b) any such election(s) made during 2007 shall be available only for amounts that are payable after the 2007 calendar year and cannot accelerate any payment into the
2007 calendar year, and (c) any such election(s) made during 2008 shall be available only for amounts that are payable after the 2008 calendar year and cannot accelerate any payment into the 2008 calendar year. Any such election(s) must be made
by the date specified by the Company consistent with guidance pursuant to Section 409A of the Code. 
 (v)
One-Time Change by Participants. In addition to any election permitted by Sections 3.3(b)(i) – (iv), to the extent permitted by Section 409A of the Code, a Participant may make a one-time election to change the form of payment at
any time up to 12 months before the first scheduled payment; provided, however, that (a) any such election shall not be effective for at least 12 months following the date made; and (b) to the extent required by Section 409A of the
Code, as a result of any such change, payment or commencement of payment shall be delayed for 5 years from the date the first payment was scheduled to have been paid (taking into account any delay in payment or commencement of payment under
Section 3.4 of the Plan on account of a Participant’s status as a Specified Employee). 
 (vi)
Small Benefit Exception. 
 (A) Benefits Payable Prior to January 1, 2008. Notwithstanding
the foregoing provisions of this Section 3.3(b), with respect to a Participant’s retirement benefit under the Plan that would otherwise be paid as an annuity prior to January 1, 2008, if the Actuarial Value of the benefit payable to
the Participant under the Plan as of the date payment is scheduled to commence is less than fifteen thousand dollars ($15,000), the Company shall pay such benefit in a single lump sum; provided, however, that payment of a retirement benefit to any
Specified Employee pursuant to this Section 3.3(b)(vi)(A) will be made on the first day of the seventh month following the Participant’s Termination of Employment. 

 (B) Benefits Payable After December 31, 2007. Notwithstanding
the foregoing provisions of this Section 3.3(b), effective December 31, 2007 with respect to a Participant’s benefit under the Plan that would otherwise be paid as an annuity after December 31, 2007, if the aggregate of the
Actuarial Value of all remaining benefits payable to the Participant under the Plan and the present value of all other remaining benefits under the SERP and any other nonqualified deferred compensation arrangement that is aggregated with the Plan
and the SERP under Section 1.409A-1(c) of the Regulations as of the date payment is scheduled to commence is not greater than the applicable dollar amount in effect on such date under Section 402(g)(1)(B) of the Code, the Company shall pay
the retirement benefit under the Plan in a single lump sum; provided, however, that payment of a retirement benefit to any Specified Employee pursuant to this Section 3.3(b)(vi)(B) will be made on the first day of the seventh month following
the Participant’s Termination of Employment. 
 Adopted April 15, 2010 by resolution of the Board of Directors of Parker-Hannifin
Corporation. 
  

	
	/s/ Thomas A. Piraino, Jr.
	Thomas A. Piraino, Jr., Secretary

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