Parker-Hannifin Corporation 2004 Target Incentive Bonus Plan Description

Contract Categories: Human Resources › Bonus & Incentive Agreements
Summary

This agreement outlines the 2004 Target Incentive Bonus Plan for Parker-Hannifin Corporation. It covers executive officers and certain Group Presidents, setting bonus payments based on the company's Free Cash Flow (FCF) Margin compared to its 2004 operating plan. The Compensation and Management Development Committee determines target awards, with payouts ranging from 30% to 200% of the target based on performance. The plan specifies how FCF Margin is calculated and allows the Committee to exclude certain items from the calculation at its discretion.

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EX-10.A 3 dex10a.htm DESCRIPTION OF THE 2004 TARGET INCENTIVE BONUS PLAN Description of the 2004 Target Incentive Bonus Plan

Exhibit 10(a)

 

PARKER-HANNIFIN CORPORATION 2004 TARGET INCENTIVE BONUS PLAN DESCRIPTION

 

1. Definitions:

 

  (a) “Company” means Parker-Hannifin Corporation, an Ohio corporation.

 

  (b) “Committee” means the Compensation and Management Development Committee of the Board of Directors of the Company.

 

  (c) “Free Cash Flow” or “FCF” equals cash flow from operations less capital expenditures.

 

  (d) “FCF Margin” is FCF as a percent of sales.

 

2. Participants: All of the executive officers of the Company, plus Group Presidents who are not executive officers.

 

3. Payments earned under the Bonus Plan depend upon the Company’s FCF Margin as compared to the Company’s fiscal year 2004 operating plan for FCF Margin.

 

4. Target awards for each participant are determined by the Committee. The payout under the Plan ranges from 30% to 200% of each participant’s target award with 100% payout set at achievement of fiscal year 2004 planned FCF Margin.

 

5. Fiscal year 2004 planned FCF Margin: 5.12%

 

FCF Payout Schedule

FY04

FCF Margin

  

Percentage of Target

Award Paid

<2.00%

       0%

  2.00%

     30%

  2.45%

     40%

  3.34%

     60%

  4.23%

     80%

  5.12%

   100%

  5.63%

   120%

  6.14%

   140%

  6.66%

   160%

  7.17%

   180%

³7.68%

   200%

 

6. The Committee has determined that it is appropriate to exclude discretionary pension plan contributions from both the FY04 operating plan and actual results in calculating FCF Margin. The Committee retains discretion to exclude additional extraordinary items from actual results to the degree appropriate.