NOTICE OF FY10 TARGET INCENTIVE BONUS AWARD UNDER PERFORMANCE BONUS PLAN
Exhibit 10(f)
| TO: | [Executive Name] |
[Notification Date]
NOTICE OF FY10
TARGET INCENTIVE BONUS AWARD
UNDER PERFORMANCE BONUS PLAN
On [HRCC Approval Date], the Human Resources and Compensation Committee of the Board of Directors (“Committee”) of Parker-Hannifin Corporation (“Company”) granted you a Target Incentive Bonus Award (“Award”) under the Company’s Performance Bonus Plan (“Plan”). Payments made under the Plan 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 promulgated thereunder. Your Award is in the target amount of $[Target Award] (“Target Amount”), subject to the following terms and conditions:
| 1. | Your payout under this Award will be based upon the Company’s actual operating cash flow less capital expenditures (free cash flow) expressed as a percent of the Company’s sales (“FCF Margin”) for fiscal year [Fiscal Year] (“Performance Period”). Discretionary pension contributions by the Company are not included in the calculation of the FCF Margin. You will receive a payout equal to 100% of your Target Amount if the Company achieves an FCF Margin of 6.5% for the Performance Period. If the Company’s FCF Margin is above or below 6.5% for the Performance Period, your payout will be a percentage of the Target Amount or the interpolated percentage between percentages in the table below. The minimum threshold for any payout under the Award is 4% FCF Margin during the Performance Period and the maximum is 9% FCF Margin. |
| FY[ ] FCF Margin: | < 4.00% | 4.00% | 4.83% | 5.67% | 6.50% | 7.13% | 7.75% | 8.38% | ³ 9.00% | |||||||||
| Payout %: | 0% | 25% | 50% | 75% | 100% | 125% | 150% | 175% | 200% |
| 2. | If you retire (at or after age 60, or earlier with the consent of the Committee), die or become disabled during the Performance Period or otherwise have not served in an eligible position during the full Performance Period, you will be entitled to receive a portion of the Payout based on the number of full months served during the Performance Period. Termination of your employment during the Performance Period for any reason other than death, disability or retirement at or after age 60, or earlier with the consent of the Committee, will result in forfeiture of your Award. |
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| 3. | Your 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, by filing a timely election under the EDP. |
| 4. | Your payout will be made following certification of the calculation of the FCF Margin by the Committee at the end of the Performance Period. The Committee may reduce your payout in its sole discretion. |
| 5. | Your Award is subject to all terms, conditions and provisions of the Plan. In the event of any conflict between the terms of the Bonus Plan and the Award, the Plan will control. |
Please acknowledge receipt of the Award, and indicate your agreement with the terms hereof, 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] | ||||||
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