ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
OHIO
|
|
34-0451060
|
(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer
Identification No.)
|
|
|
|
6035 Parkland Blvd., Cleveland, Ohio
|
|
44124-4141
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
|
ý
|
|
Accelerated filer
|
|
¨
|
|
|
|
|
|||
Non-accelerated filer
|
|
¨
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
¨
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net sales
|
$
|
2,705,590
|
|
|
$
|
3,134,993
|
|
|
$
|
5,574,938
|
|
|
$
|
6,404,925
|
|
Cost of sales
|
2,140,624
|
|
|
2,401,584
|
|
|
4,341,528
|
|
|
4,861,449
|
|
||||
Gross profit
|
564,966
|
|
|
733,409
|
|
|
1,233,410
|
|
|
1,543,476
|
|
||||
Selling, general and administrative expenses
|
314,666
|
|
|
379,804
|
|
|
684,880
|
|
|
780,644
|
|
||||
Interest expense
|
34,297
|
|
|
27,645
|
|
|
70,057
|
|
|
48,606
|
|
||||
Other (income), net
|
(13,877
|
)
|
|
(17,306
|
)
|
|
(27,056
|
)
|
|
(25,675
|
)
|
||||
Income before income taxes
|
229,880
|
|
|
343,266
|
|
|
505,529
|
|
|
739,901
|
|
||||
Income taxes
|
46,743
|
|
|
75,931
|
|
|
127,366
|
|
|
192,395
|
|
||||
Net income
|
183,137
|
|
|
267,335
|
|
|
378,163
|
|
|
547,506
|
|
||||
Less: Noncontrolling interest in subsidiaries' earnings
|
155
|
|
|
83
|
|
|
203
|
|
|
165
|
|
||||
Net income attributable to common shareholders
|
$
|
182,982
|
|
|
$
|
267,252
|
|
|
$
|
377,960
|
|
|
$
|
547,341
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share attributable to common shareholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.35
|
|
|
$
|
1.84
|
|
|
$
|
2.78
|
|
|
$
|
3.72
|
|
Diluted
|
$
|
1.33
|
|
|
$
|
1.80
|
|
|
$
|
2.74
|
|
|
$
|
3.66
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends per common share
|
$
|
0.63
|
|
|
$
|
0.63
|
|
|
$
|
1.26
|
|
|
$
|
1.11
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net income
|
$
|
183,137
|
|
|
$
|
267,335
|
|
|
$
|
378,163
|
|
|
$
|
547,506
|
|
Less: Noncontrolling interests in subsidiaries' earnings
|
155
|
|
|
83
|
|
|
203
|
|
|
165
|
|
||||
Net income attributable to common shareholders
|
182,982
|
|
|
267,252
|
|
|
377,960
|
|
|
547,341
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment and other
|
(91,177
|
)
|
|
(216,913
|
)
|
|
(203,357
|
)
|
|
(518,940
|
)
|
||||
Retirement benefits plan activity
|
28,221
|
|
|
25,064
|
|
|
57,117
|
|
|
51,922
|
|
||||
Other comprehensive (loss)
|
(62,956
|
)
|
|
(191,849
|
)
|
|
(146,240
|
)
|
|
(467,018
|
)
|
||||
Less: Other comprehensive (loss) for noncontrolling interests
|
(34
|
)
|
|
(52
|
)
|
|
(131
|
)
|
|
(153
|
)
|
||||
Other comprehensive (loss) attributable to common shareholders
|
(62,922
|
)
|
|
(191,797
|
)
|
|
(146,109
|
)
|
|
(466,865
|
)
|
||||
Total comprehensive income attributable to common shareholders
|
$
|
120,060
|
|
|
$
|
75,455
|
|
|
$
|
231,851
|
|
|
$
|
80,476
|
|
|
(Unaudited)
|
|
|
||||
|
December 31,
2015 |
|
June 30,
2015 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,047,494
|
|
|
$
|
1,180,584
|
|
Marketable securities and other investments
|
820,682
|
|
|
733,490
|
|
||
Trade accounts receivable, net
|
1,419,934
|
|
|
1,620,194
|
|
||
Non-trade and notes receivable
|
293,913
|
|
|
364,534
|
|
||
Inventories
|
1,279,760
|
|
|
1,300,459
|
|
||
Prepaid expenses
|
141,030
|
|
|
241,684
|
|
||
Deferred income taxes
|
148,198
|
|
|
142,147
|
|
||
Total current assets
|
5,151,011
|
|
|
5,583,092
|
|
||
Plant and equipment
|
4,775,462
|
|
|
4,862,611
|
|
||
Less: Accumulated depreciation
|
3,177,277
|
|
|
3,198,589
|
|
||
|
1,598,185
|
|
|
1,664,022
|
|
||
Other assets
|
1,116,315
|
|
|
1,091,805
|
|
||
Intangible assets, net
|
975,515
|
|
|
1,013,439
|
|
||
Goodwill
|
2,913,065
|
|
|
2,942,679
|
|
||
Total assets
|
$
|
11,754,091
|
|
|
$
|
12,295,037
|
|
LIABILITIES
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Notes payable and long-term debt payable within one year
|
$
|
574,302
|
|
|
$
|
223,142
|
|
Accounts payable, trade
|
948,157
|
|
|
1,092,138
|
|
||
Accrued payrolls and other compensation
|
279,119
|
|
|
409,762
|
|
||
Accrued domestic and foreign taxes
|
109,495
|
|
|
140,295
|
|
||
Other accrued liabilities
|
457,026
|
|
|
484,793
|
|
||
Total current liabilities
|
2,368,099
|
|
|
2,350,130
|
|
||
Long-term debt
|
2,724,860
|
|
|
2,723,960
|
|
||
Pensions and other postretirement benefits
|
1,475,351
|
|
|
1,699,197
|
|
||
Deferred income taxes
|
76,405
|
|
|
77,967
|
|
||
Other liabilities
|
306,655
|
|
|
336,214
|
|
||
Total liabilities
|
6,951,370
|
|
|
7,187,468
|
|
||
EQUITY
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Serial preferred stock, $.50 par value; authorized 3,000,000 shares; none issued
|
—
|
|
|
—
|
|
||
Common stock, $.50 par value; authorized 600,000,000 shares; issued 181,046,128 shares at December 31 and June 30
|
90,523
|
|
|
90,523
|
|
||
Additional capital
|
639,921
|
|
|
622,729
|
|
||
Retained earnings
|
10,047,759
|
|
|
9,841,885
|
|
||
Accumulated other comprehensive (loss)
|
(1,884,727
|
)
|
|
(1,738,618
|
)
|
||
Treasury shares, at cost; 45,943,552 shares at December 31 and 42,487,389 shares at June 30
|
(4,094,070
|
)
|
|
(3,712,232
|
)
|
||
Total shareholders’ equity
|
4,799,406
|
|
|
5,104,287
|
|
||
Noncontrolling interests
|
3,315
|
|
|
3,282
|
|
||
Total equity
|
4,802,721
|
|
|
5,107,569
|
|
||
Total liabilities and equity
|
$
|
11,754,091
|
|
|
$
|
12,295,037
|
|
|
Six Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
378,163
|
|
|
$
|
547,506
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
||||
Depreciation
|
96,675
|
|
|
103,671
|
|
||
Amortization
|
59,418
|
|
|
56,954
|
|
||
Share incentive plan compensation
|
39,026
|
|
|
52,217
|
|
||
Deferred income taxes
|
(20,899
|
)
|
|
(35,253
|
)
|
||
Foreign currency transaction loss (gain)
|
8,169
|
|
|
(23,186
|
)
|
||
(Gain) loss on sale of plant and equipment
|
(336
|
)
|
|
8,092
|
|
||
Gain on sale of businesses
|
—
|
|
|
(5,791
|
)
|
||
Gain on sale of marketable securities
|
(158
|
)
|
|
—
|
|
||
Changes in assets and liabilities, net of effect of acquisitions:
|
|
|
|
||||
Accounts receivable, net
|
173,590
|
|
|
211,530
|
|
||
Inventories
|
3,346
|
|
|
(155,335
|
)
|
||
Prepaid expenses
|
99,511
|
|
|
(33,655
|
)
|
||
Other assets
|
(20,673
|
)
|
|
(4,175
|
)
|
||
Accounts payable, trade
|
(135,070
|
)
|
|
(53,990
|
)
|
||
Accrued payrolls and other compensation
|
(124,866
|
)
|
|
(113,482
|
)
|
||
Accrued domestic and foreign taxes
|
(31,962
|
)
|
|
(81,483
|
)
|
||
Other accrued liabilities
|
(31,669
|
)
|
|
(826
|
)
|
||
Pensions and other postretirement benefits
|
(120,488
|
)
|
|
79,332
|
|
||
Other liabilities
|
(25,149
|
)
|
|
(13,629
|
)
|
||
Net cash provided by operating activities
|
346,628
|
|
|
538,497
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Acquisitions (net of cash of $3,814 in 2015 and $3,979 in 2014)
|
(67,552
|
)
|
|
(18,640
|
)
|
||
Capital expenditures
|
(75,419
|
)
|
|
(109,781
|
)
|
||
Proceeds from sale of plant and equipment
|
8,506
|
|
|
3,902
|
|
||
Proceeds from sale of businesses
|
—
|
|
|
22,779
|
|
||
Purchases of marketable securities and other investments
|
(575,183
|
)
|
|
(971,606
|
)
|
||
Maturities of marketable securities and other investments
|
527,819
|
|
|
475,851
|
|
||
Other
|
(41,450
|
)
|
|
(43,239
|
)
|
||
Net cash (used in) investing activities
|
(223,279
|
)
|
|
(640,734
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from exercise of stock options
|
80
|
|
|
2,724
|
|
||
Payments for common shares
|
(400,070
|
)
|
|
(871,567
|
)
|
||
Tax benefit from share incentive plan compensation
|
5,960
|
|
|
16,319
|
|
||
Proceeds from (payments for) notes payable, net
|
574,299
|
|
|
(815,172
|
)
|
||
Proceeds from long-term borrowings
|
1,689
|
|
|
1,485,505
|
|
||
Payments for long-term borrowings
|
(219,397
|
)
|
|
(358
|
)
|
||
Dividends
|
(171,707
|
)
|
|
(164,758
|
)
|
||
Net cash (used in) financing activities
|
(209,146
|
)
|
|
(347,307
|
)
|
||
Effect of exchange rate changes on cash
|
(47,293
|
)
|
|
(88,704
|
)
|
||
Net (decrease) in cash and cash equivalents
|
(133,090
|
)
|
|
(538,248
|
)
|
||
Cash and cash equivalents at beginning of year
|
1,180,584
|
|
|
1,613,555
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,047,494
|
|
|
$
|
1,075,307
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
December 31,
|
|
December 31,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net sales
|
|
|
|
|
|
|
|
|
||||||||
Diversified Industrial:
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
1,160,774
|
|
|
$
|
1,389,207
|
|
|
$
|
2,447,104
|
|
|
$
|
2,861,019
|
|
International
|
|
992,464
|
|
|
1,187,400
|
|
|
2,030,911
|
|
|
2,450,897
|
|
||||
Aerospace Systems
|
|
552,352
|
|
|
558,386
|
|
|
1,096,923
|
|
|
1,093,009
|
|
||||
Total net sales
|
|
$
|
2,705,590
|
|
|
$
|
3,134,993
|
|
|
$
|
5,574,938
|
|
|
$
|
6,404,925
|
|
Segment operating income
|
|
|
|
|
|
|
|
|
||||||||
Diversified Industrial:
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
153,581
|
|
|
$
|
226,888
|
|
|
$
|
366,329
|
|
|
$
|
491,124
|
|
International
|
|
95,367
|
|
|
136,525
|
|
|
224,662
|
|
|
326,330
|
|
||||
Aerospace Systems
|
|
81,764
|
|
|
66,817
|
|
|
155,767
|
|
|
132,166
|
|
||||
Total segment operating income
|
|
330,712
|
|
|
430,230
|
|
|
746,758
|
|
|
949,620
|
|
||||
Corporate general and administrative expenses
|
|
31,210
|
|
|
51,360
|
|
|
84,261
|
|
|
106,804
|
|
||||
Income before interest expense and other expense
|
|
299,502
|
|
|
378,870
|
|
|
662,497
|
|
|
842,816
|
|
||||
Interest expense
|
|
34,297
|
|
|
27,645
|
|
|
70,057
|
|
|
48,606
|
|
||||
Other expense
|
|
35,325
|
|
|
7,959
|
|
|
86,911
|
|
|
54,309
|
|
||||
Income before income taxes
|
|
$
|
229,880
|
|
|
$
|
343,266
|
|
|
$
|
505,529
|
|
|
$
|
739,901
|
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||||
|
December 31,
|
December 31,
|
||||||||||||
|
2015
|
|
2014
|
2015
|
|
2014
|
||||||||
Numerator:
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
$
|
182,982
|
|
|
$
|
267,252
|
|
$
|
377,960
|
|
|
$
|
547,341
|
|
Denominator:
|
|
|
|
|
|
|
||||||||
Basic - weighted average common shares
|
135,373,356
|
|
|
145,493,247
|
|
136,108,930
|
|
|
147,116,038
|
|
||||
Increase in weighted average common shares from dilutive effect of equity-based awards
|
1,692,091
|
|
|
2,689,530
|
|
1,679,289
|
|
|
2,347,242
|
|
||||
Diluted - weighted average common shares, assuming exercise of equity-based awards
|
137,065,447
|
|
|
148,182,777
|
|
137,788,219
|
|
|
149,463,280
|
|
||||
Basic earnings per share
|
$
|
1.35
|
|
|
$
|
1.84
|
|
$
|
2.78
|
|
|
$
|
3.72
|
|
Diluted earnings per share
|
$
|
1.33
|
|
|
$
|
1.80
|
|
$
|
2.74
|
|
|
$
|
3.66
|
|
|
|
December 31,
2015 |
|
June 30,
2015 |
||||
Notes receivable
|
|
$
|
101,675
|
|
|
$
|
90,470
|
|
Reverse repurchase agreements
|
|
48,874
|
|
|
113,558
|
|
||
Accounts receivable, other
|
|
143,364
|
|
|
160,506
|
|
||
Total
|
|
$
|
293,913
|
|
|
$
|
364,534
|
|
|
|
December 31,
2015 |
|
June 30,
2015 |
||||
Finished products
|
|
$
|
514,415
|
|
|
$
|
526,708
|
|
Work in process
|
|
681,699
|
|
|
688,727
|
|
||
Raw materials
|
|
83,646
|
|
|
85,024
|
|
||
Total
|
|
$
|
1,279,760
|
|
|
$
|
1,300,459
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Diversified Industrial
|
$
|
22,956
|
|
|
$
|
9,084
|
|
|
$
|
42,999
|
|
|
$
|
14,933
|
|
Aerospace Systems
|
235
|
|
|
—
|
|
|
1,980
|
|
|
—
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
December 31,
|
|
December 31,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Diversified Industrial
|
890
|
|
|
72
|
|
|
2,054
|
|
|
174
|
|
Aerospace Systems
|
9
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cost of sales
|
$
|
18,258
|
|
|
$
|
5,489
|
|
|
$
|
32,931
|
|
|
$
|
10,607
|
|
Selling, general and administrative expenses
|
5,013
|
|
|
3,595
|
|
|
12,128
|
|
|
4,326
|
|
||||
Other (income), net
|
—
|
|
|
—
|
|
|
116
|
|
|
1,915
|
|
|
Shareholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total Equity
|
||||||
September 30, 2015
|
$
|
4,851,518
|
|
|
$
|
3,233
|
|
|
$
|
4,854,751
|
|
Net income
|
182,982
|
|
|
155
|
|
|
183,137
|
|
|||
Other comprehensive (loss)
|
(62,922
|
)
|
|
(34
|
)
|
|
(62,956
|
)
|
|||
Dividends paid
|
(85,681
|
)
|
|
(39
|
)
|
|
(85,720
|
)
|
|||
Stock incentive plan activity
|
3,509
|
|
|
—
|
|
|
3,509
|
|
|||
Shares purchased at cost
|
(90,000
|
)
|
|
—
|
|
|
(90,000
|
)
|
|||
Balance at December 31, 2015
|
$
|
4,799,406
|
|
|
$
|
3,315
|
|
|
$
|
4,802,721
|
|
|
|
|
|
|
|
||||||
|
Shareholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total Equity
|
||||||
September 30, 2014
|
$
|
6,579,003
|
|
|
$
|
3,361
|
|
|
$
|
6,582,364
|
|
Net income
|
267,252
|
|
|
83
|
|
|
267,335
|
|
|||
Other comprehensive (loss)
|
(191,797
|
)
|
|
(52
|
)
|
|
(191,849
|
)
|
|||
Dividends paid
|
(93,151
|
)
|
|
—
|
|
|
(93,151
|
)
|
|||
Stock incentive plan activity
|
12,141
|
|
|
—
|
|
|
12,141
|
|
|||
Shares purchased at cost
|
(816,699
|
)
|
|
—
|
|
|
(816,699
|
)
|
|||
Balance at December 31, 2014
|
$
|
5,756,749
|
|
|
$
|
3,392
|
|
|
$
|
5,760,141
|
|
|
Shareholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total Equity
|
||||||
Balance at June 30, 2015
|
$
|
5,104,287
|
|
|
$
|
3,282
|
|
|
$
|
5,107,569
|
|
Net income
|
377,960
|
|
|
203
|
|
|
378,163
|
|
|||
Other comprehensive (loss)
|
(146,109
|
)
|
|
(131
|
)
|
|
(146,240
|
)
|
|||
Dividends paid
|
(171,668
|
)
|
|
(39
|
)
|
|
(171,707
|
)
|
|||
Stock incentive plan activity
|
34,936
|
|
|
—
|
|
|
34,936
|
|
|||
Shares purchased at cost
|
(400,000
|
)
|
|
—
|
|
|
(400,000
|
)
|
|||
Balance at December 31, 2015
|
$
|
4,799,406
|
|
|
$
|
3,315
|
|
|
$
|
4,802,721
|
|
|
|
|
|
|
|
||||||
|
Shareholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total Equity
|
||||||
Balance at June 30, 2014
|
$
|
6,659,428
|
|
|
$
|
3,380
|
|
|
$
|
6,662,808
|
|
Net income
|
547,341
|
|
|
165
|
|
|
547,506
|
|
|||
Other comprehensive income (loss)
|
(466,865
|
)
|
|
(153
|
)
|
|
(467,018
|
)
|
|||
Dividends paid
|
(164,758
|
)
|
|
—
|
|
|
(164,758
|
)
|
|||
Stock incentive plan activity
|
48,302
|
|
|
—
|
|
|
48,302
|
|
|||
Shares purchased at cost
|
(866,699
|
)
|
|
—
|
|
|
(866,699
|
)
|
|||
Balance at December 31, 2014
|
$
|
5,756,749
|
|
|
$
|
3,392
|
|
|
$
|
5,760,141
|
|
|
Foreign Currency Translation Adjustment and Other
|
|
Retirement Benefit Plans
|
|
Total
|
||||||
Balance at June 30, 2015
|
$
|
(641,018
|
)
|
|
$
|
(1,097,600
|
)
|
|
$
|
(1,738,618
|
)
|
Other comprehensive (loss) income before reclassifications
|
(203,133
|
)
|
|
—
|
|
|
(203,133
|
)
|
|||
Amounts reclassified from accumulated other comprehensive (loss)
|
(93
|
)
|
|
57,117
|
|
|
57,024
|
|
|||
Balance at December 31, 2015
|
$
|
(844,244
|
)
|
|
$
|
(1,040,483
|
)
|
|
$
|
(1,884,727
|
)
|
|
Foreign Currency Translation Adjustment and Other
|
|
Retirement Benefit Plans
|
|
Total
|
||||||
Balance at June 30, 2014
|
$
|
124,392
|
|
|
$
|
(947,890
|
)
|
|
$
|
(823,498
|
)
|
Other comprehensive (loss) before reclassifications
|
(518,889
|
)
|
|
—
|
|
|
(518,889
|
)
|
|||
Amounts reclassified from accumulated other comprehensive (loss)
|
102
|
|
|
51,922
|
|
|
52,024
|
|
|||
Balance at December 31, 2014
|
$
|
(394,395
|
)
|
|
$
|
(895,968
|
)
|
|
$
|
(1,290,363
|
)
|
Details about Accumulated Other Comprehensive (Loss) Components
|
|
Income (Expense) Reclassified from Accumulated Other Comprehensive (Loss)
|
|
Consolidated Statement of Income Classification
|
||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
||||
|
|
December 31, 2015
|
|
December 31, 2015
|
|
|
||||
Retirement benefit plans
|
|
|
|
|
|
|
||||
Amortization of prior service cost and initial net obligation
|
|
$
|
(1,643
|
)
|
|
$
|
(3,686
|
)
|
|
See Note 11
|
Recognized actuarial loss
|
|
(42,577
|
)
|
|
(85,824
|
)
|
|
See Note 11
|
||
Total before tax
|
|
(44,220
|
)
|
|
(89,510
|
)
|
|
|
||
Tax benefit
|
|
15,999
|
|
|
32,393
|
|
|
Income taxes
|
||
Net of tax
|
|
$
|
(28,221
|
)
|
|
$
|
(57,117
|
)
|
|
|
Details about Accumulated Other Comprehensive (Loss) Components
|
|
Income (Expense) Reclassified from Accumulated Other Comprehensive (Loss)
|
|
Consolidated Statement of Income Classification
|
||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
||||
|
|
December 31, 2014
|
|
December 31, 2014
|
|
|
||||
Retirement benefit plans
|
|
|
|
|
|
|
||||
Amortization of prior service cost and initial net obligation
|
|
$
|
(1,900
|
)
|
|
$
|
(4,544
|
)
|
|
See Note 11
|
Recognized actuarial loss
|
|
(37,548
|
)
|
|
(77,227
|
)
|
|
See Note 11
|
||
Total before tax
|
|
(39,448
|
)
|
|
(81,771
|
)
|
|
|
||
Tax benefit
|
|
14,384
|
|
|
29,849
|
|
|
Income taxes
|
||
Net of tax
|
|
$
|
(25,064
|
)
|
|
$
|
(51,922
|
)
|
|
|
|
Diversified Industrial
Segment
|
|
Aerospace
Systems
Segment
|
|
Total
|
||||||
Balance at June 30, 2015
|
$
|
2,844,045
|
|
|
$
|
98,634
|
|
|
$
|
2,942,679
|
|
Acquisitions
|
31,134
|
|
|
—
|
|
|
31,134
|
|
|||
Foreign currency translation and other
|
(60,741
|
)
|
|
(7
|
)
|
|
(60,748
|
)
|
|||
Balance at December 31, 2015
|
$
|
2,814,438
|
|
|
$
|
98,627
|
|
|
$
|
2,913,065
|
|
|
December 31, 2015
|
|
June 30, 2015
|
||||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Patents
|
$
|
150,579
|
|
|
$
|
91,131
|
|
|
$
|
149,066
|
|
|
$
|
88,540
|
|
Trademarks
|
341,997
|
|
|
171,325
|
|
|
355,108
|
|
|
172,187
|
|
||||
Customer lists and other
|
1,361,048
|
|
|
615,653
|
|
|
1,369,380
|
|
|
599,388
|
|
||||
Total
|
$
|
1,853,624
|
|
|
$
|
878,109
|
|
|
$
|
1,873,554
|
|
|
$
|
860,115
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Service cost
|
$
|
23,406
|
|
|
$
|
24,583
|
|
|
$
|
47,519
|
|
|
$
|
49,657
|
|
Interest cost
|
45,663
|
|
|
44,305
|
|
|
91,734
|
|
|
90,798
|
|
||||
Special termination cost
|
7,088
|
|
|
—
|
|
|
7,088
|
|
|
—
|
|
||||
Expected return on plan assets
|
(55,566
|
)
|
|
(54,961
|
)
|
|
(111,215
|
)
|
|
(110,189
|
)
|
||||
Amortization of prior service cost
|
1,669
|
|
|
1,927
|
|
|
3,738
|
|
|
4,597
|
|
||||
Amortization of net actuarial loss
|
42,299
|
|
|
37,297
|
|
|
85,268
|
|
|
76,725
|
|
||||
Amortization of initial net obligation
|
4
|
|
|
4
|
|
|
8
|
|
|
9
|
|
||||
Net pension benefit cost
|
$
|
64,563
|
|
|
$
|
53,155
|
|
|
$
|
124,140
|
|
|
$
|
111,597
|
|
|
December 31, 2015
|
|
June 30, 2015
|
||||||||||||
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost |
|
Fair
Value |
||||||||
Less than one year
|
$
|
14,141
|
|
|
$
|
14,141
|
|
|
$
|
13,561
|
|
|
$
|
13,555
|
|
One to three years
|
184,281
|
|
|
184,115
|
|
|
188,539
|
|
|
188,057
|
|
||||
Above three years
|
11,696
|
|
|
11,598
|
|
|
15,673
|
|
|
15,587
|
|
|
|
December 31,
2015 |
|
June 30,
2015 |
||||
Carrying value of long-term debt
|
|
$
|
2,724,862
|
|
|
$
|
2,947,102
|
|
Estimated fair value of long-term debt
|
|
2,892,998
|
|
|
3,107,735
|
|
|
|
Balance Sheet Caption
|
|
December 31,
2015 |
|
June 30,
2015 |
||||
Net investment hedges
|
|
|
|
|
|
|
||||
Cross-currency swap contracts
|
|
Other assets
|
|
$
|
25,695
|
|
|
$
|
17,994
|
|
Cash flow hedges
|
|
|
|
|
|
|
||||
Costless collar contracts
|
|
Non-trade and notes receivable
|
|
4,354
|
|
|
5,627
|
|
||
Costless collar contracts
|
|
Other accrued liabilities
|
|
2,887
|
|
|
1,970
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
December 31,
|
|
December 31,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Cross-currency swap contracts
|
$
|
4,630
|
|
|
$
|
10,233
|
|
|
$
|
7,793
|
|
|
$
|
22,128
|
|
Foreign denominated debt
|
5,407
|
|
|
9,255
|
|
|
4,273
|
|
|
25,145
|
|
|
|
|
|
Quoted Prices
|
|
|
Significant Other
|
|
|
Significant
|
|
|||||
|
|
Fair
|
|
|
In Active
|
|
|
Observable
|
|
|
Unobservable
|
|
||||
|
|
Value at
|
|
|
Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
||||
|
|
December 31, 2015
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
|
$
|
1,618
|
|
|
$
|
1,618
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government bonds
|
|
16,667
|
|
|
16,667
|
|
|
—
|
|
|
—
|
|
||||
Corporate bonds
|
|
185,837
|
|
|
185,837
|
|
|
—
|
|
|
—
|
|
||||
Asset-backed and mortgage-backed securities
|
|
7,350
|
|
|
—
|
|
|
7,350
|
|
|
—
|
|
||||
Derivatives
|
|
28,886
|
|
|
—
|
|
|
28,886
|
|
|
—
|
|
||||
Investments measured at net asset value
|
|
246,042
|
|
|
|
|
|
|
|
|||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
2,887
|
|
|
—
|
|
|
2,887
|
|
|
—
|
|
|
|
|
|
Quoted Prices
|
|
|
Significant Other
|
|
|
Significant
|
|
|||||
|
|
Fair
|
|
|
In Active
|
|
|
Observable
|
|
|
Unobservable
|
|
||||
|
|
Value at
|
|
|
Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
||||
|
|
June 30, 2015
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Government bonds
|
|
$
|
60,512
|
|
|
$
|
60,512
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate bonds
|
|
145,717
|
|
|
145,717
|
|
|
—
|
|
|
—
|
|
||||
Asset-backed and mortgage-backed securities
|
|
10,970
|
|
|
—
|
|
|
10,970
|
|
|
—
|
|
||||
Derivatives
|
|
23,598
|
|
|
—
|
|
|
23,598
|
|
|
—
|
|
||||
Investments measured at net asset value
|
|
187,534
|
|
|
|
|
|
|
|
|||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
1,970
|
|
|
—
|
|
|
1,970
|
|
|
—
|
|
•
|
Purchasing Managers Index (PMI) on manufacturing activity specific to regions around the world with respect to most mobile and industrial markets;
|
•
|
Global aircraft miles flown and global revenue passenger miles for commercial aerospace markets and Department of Defense spending for military aerospace markets; and
|
•
|
Housing starts with respect to the North American residential air conditioning market and certain mobile construction markets.
|
|
December 31, 2015
|
|
|
September 30, 2015
|
|
|
June 30, 2015
|
|
United States
|
48.2
|
|
|
50.2
|
|
|
53.5
|
|
Eurozone countries
|
53.2
|
|
|
52.0
|
|
|
52.5
|
|
China
|
48.2
|
|
|
47.2
|
|
|
49.4
|
|
Brazil
|
45.6
|
|
|
47.0
|
|
|
46.5
|
|
•
|
Successfully executing its Win Strategy initiatives relating to engaged people, premier customer experience, profitable growth and financial performance;
|
•
|
Successfully executing its Simplification initiative which is aimed at reducing organizational and process complexity;
|
•
|
Serving the customer and continuously enhancing its experience with the Company;
|
•
|
Maintaining its decentralized division and sales company structure;
|
•
|
Fostering a safety first and entrepreneurial culture;
|
•
|
Engineering innovative systems and products to provide superior customer value through improved service, efficiency and productivity;
|
•
|
Delivering products, systems and services that have demonstrable savings to customers and are priced by the value they deliver;
|
•
|
Acquiring strategic businesses;
|
•
|
Organizing around targeted regions, technologies and markets;
|
•
|
Driving efficiency by implementing lean enterprise principles; and
|
•
|
Creating a culture of empowerment through its values, inclusion and diversity, accountability and teamwork.
|
|
|
Three Months Ended
December 31,
|
Six Months Ended
December 31,
|
||||||||||||
(dollars in millions)
|
|
2015
|
|
2014
|
2015
|
|
2014
|
||||||||
Net sales
|
|
$
|
2,705.6
|
|
|
$
|
3,135.0
|
|
$
|
5,574.9
|
|
|
$
|
6,404.9
|
|
Gross profit
|
|
$
|
565.0
|
|
|
$
|
733.4
|
|
$
|
1,233.4
|
|
|
$
|
1,543.5
|
|
Gross profit margin
|
|
20.9
|
%
|
|
23.4
|
%
|
22.1
|
%
|
|
24.1
|
%
|
||||
Selling, general and administrative expenses
|
|
$
|
314.7
|
|
|
$
|
379.8
|
|
$
|
684.9
|
|
|
$
|
780.6
|
|
Selling, general and administrative expenses, as a percent of sales
|
|
11.6
|
%
|
|
12.1
|
%
|
12.3
|
%
|
|
12.2
|
%
|
||||
Interest expense
|
|
34.3
|
|
|
27.6
|
|
70.1
|
|
|
48.6
|
|
||||
Other (income), net
|
|
$
|
(13.9
|
)
|
|
$
|
(17.3
|
)
|
$
|
(27.1
|
)
|
|
$
|
(25.7
|
)
|
Effective tax rate
|
|
20.3
|
%
|
|
22.1
|
%
|
25.2
|
%
|
|
26.0
|
%
|
||||
Net income
|
|
$
|
183.1
|
|
|
$
|
267.3
|
|
$
|
378.2
|
|
|
$
|
547.5
|
|
Net income, as a percent of sales
|
|
6.8
|
%
|
|
8.5
|
%
|
6.8
|
%
|
|
8.5
|
%
|
|
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31,
|
||||||||||||
(dollars in millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net sales
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
1,160.8
|
|
|
$
|
1,389.2
|
|
|
$
|
2,447.1
|
|
|
$
|
2,861.0
|
|
International
|
|
992.5
|
|
|
1,187.4
|
|
|
2,030.9
|
|
|
2,450.9
|
|
||||
Operating income
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
153.6
|
|
|
226.9
|
|
|
366.3
|
|
|
491.1
|
|
||||
International
|
|
$
|
95.4
|
|
|
$
|
136.5
|
|
|
$
|
224.7
|
|
|
$
|
326.3
|
|
Operating margin
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
13.2
|
%
|
|
16.3
|
%
|
|
15.0
|
%
|
|
17.2
|
%
|
||||
International
|
|
9.6
|
%
|
|
11.5
|
%
|
|
11.1
|
%
|
|
13.3
|
%
|
||||
Backlog
|
|
$
|
1,448.0
|
|
|
$
|
1,761.3
|
|
|
$
|
1,448.0
|
|
|
$
|
1,761.3
|
|
|
|
Period Ending December 31,
|
||||
|
|
Three Months
|
|
Six Months
|
||
Diversified Industrial North America – as reported
|
|
(16.4
|
)%
|
|
(14.5
|
)%
|
Acquisitions
|
|
0.1
|
%
|
|
0.2
|
%
|
Currency
|
|
(1.3
|
)%
|
|
(1.4
|
)%
|
Diversified Industrial North America – without acquisitions and currency
|
|
(15.2
|
)%
|
|
(13.3
|
)%
|
|
|
|
|
|
||
Diversified Industrial International – as reported
|
|
(16.4
|
)%
|
|
(17.1
|
)%
|
Acquisitions
|
|
0.7
|
%
|
|
0.7
|
%
|
Currency
|
|
(10.0
|
)%
|
|
(11.4
|
)%
|
Diversified Industrial International – without acquisitions and currency
|
|
(7.1
|
)%
|
|
(6.4
|
)%
|
|
|
|
|
|
||
Total Diversified Industrial Segment – as reported
|
|
(16.4
|
)%
|
|
(15.7
|
)%
|
Acquisitions
|
|
0.4
|
%
|
|
0.4
|
%
|
Currency
|
|
(5.3
|
)%
|
|
(6.0
|
)%
|
Total Diversified Industrial Segment – without acquisitions and currency
|
|
(11.5
|
)%
|
|
(10.1
|
)%
|
|
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
(dollars in millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Diversified Industrial North America
|
|
$
|
8.8
|
|
|
$
|
0.1
|
|
|
$
|
17.0
|
|
|
$
|
0.3
|
|
Diversified Industrial International
|
|
14.1
|
|
|
9.0
|
|
|
26.0
|
|
|
14.6
|
|
|
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
(dollars in millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net sales
|
|
$
|
552.4
|
|
|
$
|
558.4
|
|
|
$
|
1,096.9
|
|
|
$
|
1,093.0
|
|
Operating income
|
|
$
|
81.8
|
|
|
$
|
66.8
|
|
|
$
|
155.8
|
|
|
$
|
132.2
|
|
Operating margin
|
|
14.8
|
%
|
|
12.0
|
%
|
|
14.2
|
%
|
|
12.1
|
%
|
||||
Backlog
|
|
$
|
1,720.6
|
|
|
$
|
1,916.5
|
|
|
$
|
1,720.6
|
|
|
$
|
1,916.5
|
|
(dollars in millions)
|
|
Three Months Ended
December 31, |
|
Six Months Ended
December 31, |
||||||||||||
Expense (income)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Foreign currency transaction
|
|
$
|
13.4
|
|
|
$
|
(10.5
|
)
|
|
$
|
8.2
|
|
|
$
|
(23.2
|
)
|
Stock-based compensation
|
|
8.2
|
|
|
9.9
|
|
|
32.7
|
|
|
39.4
|
|
||||
Pensions
|
|
27.1
|
|
|
23.0
|
|
|
57.0
|
|
|
49.5
|
|
||||
Divestitures and asset sales and writedowns
|
|
(1.1
|
)
|
|
(1.0
|
)
|
|
(1.8
|
)
|
|
0.4
|
|
||||
Other items, net
|
|
(12.3
|
)
|
|
(13.4
|
)
|
|
(9.2
|
)
|
|
(11.8
|
)
|
||||
|
|
$
|
35.3
|
|
|
$
|
8.0
|
|
|
$
|
86.9
|
|
|
$
|
54.3
|
|
(dollars in millions)
|
|
December 31, 2015
|
|
June 30,
2015
|
||||
Cash
|
|
$
|
1,868.2
|
|
|
$
|
1,914.1
|
|
Trade accounts receivable, net
|
|
1,419.9
|
|
|
1,620.2
|
|
||
Inventories
|
|
1,279.8
|
|
|
1,300.5
|
|
||
Notes payable and long-term debt payable within one year
|
|
574.3
|
|
|
233.1
|
|
||
Shareholders’ equity
|
|
4,799.4
|
|
|
5,104.3
|
|
||
Working capital
|
|
$
|
2,782.9
|
|
|
$
|
3,233.0
|
|
Current ratio
|
|
2.18
|
|
|
2.38
|
|
|
|
Six Months Ended
December 31,
|
||||||
(dollars in millions)
|
|
2015
|
|
2014
|
||||
Cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
346.6
|
|
|
$
|
538.5
|
|
Investing activities
|
|
(223.3
|
)
|
|
(640.7
|
)
|
||
Financing activities
|
|
(209.1
|
)
|
|
(347.3
|
)
|
||
Effect of exchange rates
|
|
(47.3
|
)
|
|
(88.7
|
)
|
||
Net (decrease) in cash and cash equivalents
|
|
$
|
(133.1
|
)
|
|
$
|
(538.2
|
)
|
(dollars in millions)
Debt to Debt-Shareholders’ Equity Ratio
|
|
December 31,
2015
|
|
June 30,
2015
|
||||
Debt
|
|
$
|
3,299
|
|
|
$
|
2,947
|
|
Debt & Shareholders’ equity
|
|
$
|
8,099
|
|
|
$
|
8,051
|
|
Ratio
|
|
40.7
|
%
|
|
36.6
|
%
|
•
|
changes in business relationships with and purchases by or from major customers, suppliers or distributors, including delays or cancellations in shipments, disputes regarding contract terms or significant changes in financial condition, changes in contract cost and revenue estimates for new development programs, and changes in product mix;
|
•
|
uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions;
|
•
|
the ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures;
|
•
|
the determination to undertake business realignment activities and the expected costs thereof and, if undertaken, the ability to complete such activities and realize the anticipated cost savings from such activities;
|
•
|
ability to implement successfully the Company's capital allocation initiatives, including timing, price and execution of share repurchases;
|
•
|
increases in raw material costs that cannot be recovered in product pricing;
|
•
|
the Company’s ability to manage costs related to insurance and employee retirement and health care benefits;
|
•
|
threats associated with and efforts to combat terrorism and cyber-security risks;
|
•
|
uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals;
|
•
|
competitive market conditions and resulting effects on sales and pricing; and
|
•
|
global economic factors, including manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and general economic conditions such as inflation, deflation, interest rates and credit availability.
|
(a)
|
Unregistered Sales of Equity Securities.
Not applicable.
|
(b)
|
Use of Proceeds.
Not applicable.
|
(c)
|
Issuer Purchases of Equity Securities.
|
Period
|
|
(a) Total
Number of
Shares
Purchased
|
|
(b) Average
Price Paid
Per Share
|
|
(c) Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (1)
|
|
(d) Maximum Number
(or Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs (1)
|
||||||
October 1, 2015 through October 31, 2015
|
|
255,195
|
|
(2
|
)
|
$
|
100.89
|
|
|
254,501
|
|
|
21,413,031
|
|
November 1, 2015 through November 30, 2015
|
|
447,340
|
|
|
$
|
101.39
|
|
|
447,340
|
|
|
20,965,691
|
|
|
December 1, 2015 through December 31, 2015
|
|
191,169
|
|
|
$
|
99.13
|
|
|
191,169
|
|
|
20,774,522
|
|
|
Total:
|
|
893,704
|
|
|
$
|
100.76
|
|
|
893,010
|
|
|
20,774,522
|
|
(1)
|
On August 16, 1990, the Company publicly announced that its Board of Directors authorized the repurchase by the Company of up to 3 million shares of its common stock. From time to time thereafter, the Board of Directors has adjusted the overall maximum number of shares authorized for repurchase under this program. On October 22, 2014, the Company publicly announced that the Board of Directors increased the overall maximum number of shares authorized for repurchase under this program so that, beginning on such date, the aggregate number of shares authorized for repurchase was 35 million shares. There is no limitation on the amount of shares that can be repurchased in a fiscal year. There is no expiration date for this program.
|
(2)
|
Includes 694 shares surrendered to the Company by certain non-employee directors to satisfy tax withholding obligations on restricted stock issued under the Company's non-employee directors' stock incentive plan.
|
Exhibit
No.
|
|
Description of Exhibit
|
|
|
|
10(a)
|
|
Parker-Hannifin Corporation 2015 Performance Bonus Plan incorporated by reference to Appendix B to the Registrant's Definitive Proxy Statement filed with the Securities and Exchange Commission on September 28, 2015 (Commission File No. 1-4982).
|
|
|
|
10(b)
|
|
Parker-Hannifin Corporation Amended and Restated Supplemental Executive Retirement Benefits Program.*
|
|
|
|
10(c)
|
|
Parker-Hannifin Corporation Amended and Restated Defined Contribution Supplemental Executive Retirement Program.*
|
|
|
|
10(d)
|
|
Parker-Hannifin Corporation Amended and Restated Savings Restoration Plan.*
|
|
|
|
10(e)
|
|
Parker-Hannifin Corporation Amended and Restated Pension Restoration Plan.*
|
|
|
|
10(f)
|
|
Parker-Hannifin Corporation Amended and Restated Executive Deferral Plan.*
|
|
|
|
10(g)
|
|
Form of Parker-Hannifin Corporation Non-Employee Directors' Restricted Stock Unit Award Agreement.*
|
|
|
|
10(h)
|
|
Parker-Hannifin Corporation Non-Employee Directors' Restricted Stock Unit Award Terms and Conditions.*
|
|
|
|
10(i)
|
|
Amended and Restated Deferred Compensation Plan for Directors of Parker-Hannifin Corporation.*
|
|
|
|
12
|
|
Computation of Ratio of Earnings to Fixed Charges as of December 31, 2015.*
|
|
|
|
31(a)
|
|
Certification of the Principal Executive Officer Pursuant to 17 CFR 240.13a-14(a), as Adopted Pursuant to §302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
31(b)
|
|
Certification of the Principal Financial Officer Pursuant to 17 CFR 240.13a-14(a), as Adopted Pursuant to §302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
32
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to §906 of the Sarbanes-Oxley Act of 2002. *
|
|
|
|
101.INS
|
|
XBRL Instance Document.*
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.*
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.*
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document. *
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.*
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.*
|
*
|
Submitted electronically herewith.
|
|
|
|
PARKER-HANNIFIN CORPORATION
|
|
(Registrant)
|
|
|
|
/s/ Jon. P. Marten
|
|
Jon P. Marten
|
|
Executive Vice President - Finance & Administration and Chief Financial Officer
|
|
|
|
|
|
|
Date: February 3, 2016
|
|
Exhibit
No. |
|
Description of Exhibit
|
|
|
|
10(a)
|
|
Parker-Hannifin Corporation 2015 Performance Bonus Plan incorporated by reference to Appendix B to the Registrant's Definitive Proxy Statement filed with the Securities and Exchange Commission on September 28, 2015 (Commission File No. 1-4982).
|
|
|
|
10(b)
|
|
Parker-Hannifin Corporation Amended and Restated Supplemental Executive Retirement Benefits Program.*
|
|
|
|
10(c)
|
|
Parker-Hannifin Corporation Amended and Restated Defined Contribution Supplemental Executive Retirement Program.*
|
|
|
|
10(d)
|
|
Parker-Hannifin Corporation Amended and Restated Savings Restoration Plan.*
|
|
|
|
10(e)
|
|
Parker-Hannifin Corporation Amended and Restated Pension Restoration Plan.*
|
|
|
|
10(f)
|
|
Parker-Hannifin Corporation Amended and Restated Executive Deferral Plan.*
|
|
|
|
10(g)
|
|
Form of Parker-Hannifin Corporation Non-Employee Directors' Restricted Stock Unit Award Agreement.*
|
|
|
|
10(h)
|
|
Parker-Hannifin Corporation Non-Employee Directors' Restricted Stock Unit Award Terms and Conditions.*
|
|
|
|
10(i)
|
|
Amended and Restated Deferred Compensation Plan for Directors of Parker-Hannifin Corporation.*
|
|
|
|
12
|
|
Computation of Ratio of Earnings to Fixed Charges as of December 31, 2015.*
|
|
|
|
31(a)
|
|
Certification of the Principal Executive Officer Pursuant to 17 CFR 240.13a-14(a), as Adopted Pursuant to §302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
31(b)
|
|
Certification of the Principal Financial Officer Pursuant to 17 CFR 240.13a-14(a), as Adopted Pursuant to §302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
|
32
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to §906 of the Sarbanes-Oxley Act of 2002. *
|
|
|
|
101.INS
|
|
XBRL Instance Document.*
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.*
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.*
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document. *
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.*
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.*
|
*
|
Submitted electronically herewith.
|
(2)
|
A change in effective control of the Company, which occurs on either of the following dates:
|
(ii)
|
The date that a majority of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election was not endorsed by a majority of the members of the board prior to the date of such appointment or election.
|
(3)
|
A change in the ownership of a substantial portion of the Company’s assets, which occurs on the date that any one person or more than one person acting as a group (within the meaning of the Regulations under Section 409A of the Code) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) assets that have a total gross fair market value equal to or more than
65% of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. The gross fair market value of assets shall be determined without regard to liabilities associated with such assets. Notwithstanding the foregoing, a transfer of assets shall not result in a change in ownership of a substantial portion of the Company's assets if such transfer is to:
|
(ii)
|
an entity 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;
|
(iii)
|
a person or group (within the meaning of the Regulations under Section 409A of the Code) that owns, directly or indirectly, 50% or more of the total value or voting power of the stock of the Company; or
|
(iv)
|
an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly by a person or group described in
Section 1(h)(3)(iii)
of this Program.
|
(j)
|
Change in Control Severance Agreement
: The agreement between an Eligible Executive and the Company that provides for certain benefits if the Eligible Executive’s employment terminates following a Corporate Change Vesting Event; provided, that in the case of a former Participant who is receiving benefits under the Program, Change in Control Severance Agreement shall mean the change in control severance agreement that was in effect between the Participant and the Company at the time of his or her retirement.
|
(k)
|
Code
: The Internal Revenue Code of 1986, as amended, or any successor statute, and regulations and guidance issued thereunder.
|
(l)
|
Committee
: The Administrator, the Investment Committee or the Compensation Committee, as applicable.
|
(m)
|
Company
: Parker‑Hannifin Corporation, an Ohio corporation, its corporate successors, and the surviving corporation resulting from any merger of Parker‑Hannifin Corporation with any other corporation or corporations.
|
(n)
|
Company Voting Securities
: Securities of the Company eligible to vote for the election of the Board.
|
(o)
|
Compensation Committee
: The Human Resources and Compensation Committee of the Board.
|
(p)
|
Consolidated Plan
: The Parker-Hannifin Consolidated Pension Plan as it currently exists and as it may subsequently be amended.
|
(q)
|
Contingent Annuitant
: In the event of a Participant's election of an annuity (other than a single life annuity) under
Section 4.02(c)
or the Participant’s deemed election of an annuity under
Section 6.02(a)
, the person designated by such Participant or deemed designated by such Participant as a contingent annuitant.
|
(1)
|
any "person" (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding Company Voting Securities; provided, however, that the event described in this paragraph shall not be deemed to be a Corporate Change Vesting Event by virtue of any of the following situations:
|
(v)
|
as pertains to a Participant, any acquisition by the Participant or any group of persons (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act) including the Participant (or any entity in which the Participant or a group of persons including the Participant, directly or indirectly, holds a majority of the voting power of such entity's outstanding voting interests); or
|
(3)
|
the consummation of a Business Combination, unless:
|
(A)
|
more than 50% of the total voting power of the Surviving Corporation resulting from such Business Combination or, if applicable, the Parent Corporation of such Surviving Corporation, is represented by Company Voting Securities that were outstanding immediately prior to the Business Combination (or, if applicable, shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination;
|
(B)
|
no person (other than any employee benefit plan sponsored or maintained by the Surviving Corporation or the Parent Corporation) is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation); and
|
(C)
|
at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation), following the Business Combination, were members of the Incumbent Board at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination (a "Non-Control Transaction"); or
|
(ii)
|
the Business Combination is effected by means of the acquisition of Company Voting Securities from the Company, and a majority of the Board approves a resolution providing expressly that such Business Combination does not constitute a Corporate Change Vesting Event under this paragraph (3); or
|
(4)
|
the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company and its Subsidiaries.
|
(2)
|
by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under the Executive Long-Term Disability Plan or any other accident and health plan covering employees of the Company.
|
(t)
|
Executive Long-Term Disability Plan
: Parker-Hannifin Corporation Executive Long-Term Disability Plan, as it may be amended from time to time.
|
(u)
|
Highest Average Three‑Year Compensation
: One‑third of the aggregate amount of compensation paid to a Participant from the Affiliated Group during the
three
calendar years of the Participant's employment which were the three highest years of annual compensation, including base salary, bonuses payable under the Company’s Return on Net Assets (RONA) Plan (except to the extent determined by the Compensation Committee to be extraordinary) and Target Incentive Bonus Program, any amounts which would otherwise be paid as compensation during a calendar year but which are deferred by a Participant pursuant to any qualified or nonqualified deferred compensation program sponsored by the Affiliated Group, and any amounts that would otherwise be paid as compensation during a calendar year but which are deferred under Section 125, 127, or 129 of the Code, but excluding:
|
(1)
|
any deferred compensation received during any such year but credited under the Program to the Participant for a prior year;
|
(2)
|
any income realized due to the exercise of stock options or stock appreciation rights;
|
(3)
|
any payments, in cash, deferred or otherwise, payable to the Participant under the Company's Long-Term Incentive bonus program, under any extraordinary bonus arrangements, under any severance agreement (other than as may be required under
Section 4.03(b)
), or as an executive perquisite; and
|
(4)
|
such items as fringe benefits includible in income as compensation for federal tax purposes, moving and educational reimbursement expenses, overseas allowances received by the Participant from the Affiliated Group, and any other irregular payments.
|
(v)
|
Investment Committee
: The Parker Total Rewards Investment Committee of the Company or, if applicable, the investment subcommittee appointed by the Parker Total Rewards Investment Committee with respect to the Program.
|
(w)
|
Life Expectancy
: The expected remaining lifetime (to the nearest integer) based on the Mortality Table and the age at the nearest birthday of the Participant or Recipient at the date the Lump Sum Payment or Change in Control Lump Sum Payment is made (unless otherwise specified herein). If a joint and contingent survivor annuity has been elected, then Life Expectancy shall reflect the joint Life Expectancy of the Participant or Recipient and Contingent Annuitant.
|
(x)
|
Lump Sum Payment
: The Lump Sum Payment provided in
Section 4.02
with the amount determined as set forth in
Section 4.03(a)
.
|
(y)
|
Mortality Table
: For Participants who entered the Program before July 1, 2006 and commenced payment prior to August 12, 2015, eighty percent (80%) of the 1983 Group Annuity Mortality factor (male only); for all other Participants, the “applicable mortality table” prescribed under Section 417(e) of the Code for qualified plans.
|
(aa)
|
Parent Corporation
: The ultimate parent corporation which directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of a Surviving Corporation.
|
(bb)
|
Participant
: An employee of the Company designated to participate in the Program pursuant to
Article 2
who has timely submitted a Participation Agreement to the Company, while so employed;
provided
,
however
, that any employee of the Company who, as of the date of a Corporate Change Vesting Event, has entered into a Change in Control Severance Agreement with the Company shall automatically be a Participant in the Program.
|
(cc)
|
Participation Agreement
: An employee's written or electronic agreement to participate in the Program and, to the extent permitted under Section 409A of the Code, initial election of the form of payment of retirement benefits pursuant to
Section 4.02(a)
.
|
(ee)
|
Program
: The Parker-Hannifin Corporation Amended and Restated Supplemental Executive Retirement Benefits Program set forth herein as it may subsequently be amended.
|
(ff)
|
PRP
: The Parker-Hannifin Corporation Amended and Restated Pension Restoration Plan as it currently exists and as it may subsequently be amended.
|
(gg)
|
Qualified Plan Death Benefit
: The death benefit payable to the surviving spouse under the Consolidated Plan (and/or any death benefit payable to a surviving spouse under any other defined benefit arrangement described in
Sections 3.03(c)
,
(d)
, or
(h)
),
multiplied by
a factor equal to 1 plus (0.025 multiplied by each year of Service less than 35 but equal to or greater than 15). Thus, the factor will range from 1.5 at 15 years of Service to 1 at 35 or more years of Service, as illustrated by the following examples:
|
(hh)
|
Recipient
: A retiree, Contingent Annuitant, or Beneficiary, who is currently receiving benefits or is entitled to receive benefits under the Program.
|
(ii)
|
Regulations
: The regulations issued under Section 409A of the Code. Reference to any section of the Regulations shall be read to include any amendment or revision of such Regulation.
|
(jj)
|
RIA Balance
: The total contributions to the Participant’s Retirement Income Account under the Savings Plan (or any successor thereto) and the Participant’s Nonqualified Retirement Income Account under the Parker-Hannifin Corporation Amended and Restated Savings Restoration Plan (or any successor thereto), plus hypothetical earnings/losses calculated as if the accounts had been invested from the time of the first contribution 60% in the securities represented in the Standard & Poor’s 500 Index (in the proportions represented therein) and 40% in the securities represented in the Lehman Brothers Intermediate Government/ Corporate Bond Fund Index (in the proportions represented therein).
|
(kk)
|
Savings Plan
: The Parker Retirement Savings Plan as it currently exists and as it may subsequently be amended.
|
(ll)
|
Service
: Employment as an employee by any member of the Affiliated Group, as well as employment by a corporation, trade or business, that is now part of the Affiliated Group at a time prior to its becoming part of the Affiliated Group, but in such case only if and to the extent that the Compensation Committee shall so direct at any time prior to retirement. For purposes of determining a Participant’s eligibility to receive a benefit hereunder, Service shall include any additional years credited to a Participant under
Section 2.06
.
|
(nn)
|
Specified Rate
:
|
(oo)
|
Subsidiary
: Any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity.
|
(qq)
|
Termination of Employment
: A Participant's "separation from service" with the Affiliated Group, within the meaning of Section 1.409A-1(h) of the Regulations; provided, that in applying Section 1.409A-1(h)(ii) of the Regulations, a separation from service shall be deemed to occur if the Company and the Participant reasonably anticipate that the level of bona fide services the Participant will perform for the Affiliated Group after a certain date (whether as an employee or as an independent contractor) will permanently decrease to less than 50% of the average level of bona fide services performed by the Participant for the Affiliated Group (whether as an employee or as an independent contractor) over the immediately preceding 36-month period (or the full period of services performed for the Affiliated Group if the Participant has been providing services to the Affiliated Group for less than 36 months). In the event of a disposition of assets by the Company to an unrelated person, the Administrator reserves the discretion to specify (in accordance with Section 1.409A-1(h)(4) of the Regulations) whether a Participant, who would otherwise experience a separation from service with the Affiliated Group as part of the disposition of assets, will be considered to experience a separation from service for purposes of Section 1.409A-1(h) of the Regulations.
|
(a)
|
such officers and other key executives of the Company as shall be designated as Participants from time to time by the Compensation Committee, and who have submitted to the Company, within 30
days after such designation, a Participation Agreement evidencing agreement to the terms of the Program, including, but not limited to, the non-competition provisions of
Article 7
; and
|
(b)
|
upon a Corporate Change Vesting Event, those individuals who have entered into a Change in Control Severance Agreement with the Company as of the date of such Corporate Change Vesting Event.
|
(a)
|
such Participant (but not a Recipient) shall be treated as having been employed, for purposes of determining age and service under this Program, for the lesser of:
|
(1)
|
the duration of the "Termination Period", if any, under the Participant's Change in Control Severance Agreement; or
|
(2)
|
the period of time remaining until Normal Retirement Date; and
|
(b)
|
such Participant's Highest Average Three-Year Compensation shall be the greater of:
|
(1)
|
the amount that would otherwise be taken into account in determining the Participant's benefit under the Program; or
|
(2)
|
the lump sum severance payment that would be made under Section 2(a)(ii) of the Participant's (but not the Recipient's) Change in Control Severance Agreement (as if he had been terminated immediately following the Corporate Change Vesting Event) divided by the multiple used under such section of the Change in Control Severance Agreement to determine severance pay.
|
(a)
|
who Terminates his or her Employment with the Affiliated Group with the consent of the Compensation Committee after attainment of age 55; or
|
(c)
|
whose Employment with the Affiliated Group is Terminated by the Company for reasons other than for cause (as determined solely by the Compensation Committee) after attainment of age 55 but prior to the expiration of the requisite period of employment established by the Compensation Committee with respect to the Participant pursuant to
Section 2.04
; or
|
(d)
|
who Terminates the Participant's Employment with the Affiliated Group prior to his or her Normal Retirement Date due to Disability or with entitlement to any benefits under the Executive Long-Term Disability Plan; or
|
(e)
|
who Terminates his or her Employment with the Affiliated Group after attainment of age 60 (and after completion of the requisite period of employment established by the Compensation Committee with respect to him or her pursuant to
Section 2.04
) but prior to his or her Normal Retirement Date; shall be eligible for a monthly supplemental retirement benefit as set forth in
Section 3.04
.
|
(a)
|
Initial Election of Payment Form
. To the extent permitted by Section 1.409A-2(a)(5) of the Regulations, within 30 days of the time an individual is designated as a Participant under this Program, he may elect, on his or her initial Participation Agreement, to receive payment of his or her supplemental retirement benefit under this Program in the form of a single Lump Sum Payment, or in the form of a single life annuity. In the event that a Participant fails to make a valid election, the Participant’s supplemental retirement benefit under this Program shall be paid in the form of a single life annuity.
|
(b)
|
One-Time Change by Participant
. In addition to any election pursuant to
Section 4.02(c)
or
4.02(d)
, a Participant shall be allowed a one-time election to change the form of payment of his or her supplemental retirement benefit; provided, however, that:
|
(1)
|
any such election shall not be effective for at least 12 months following the date made; and
|
(2)
|
as a result of any such election, payment shall be delayed for 5 years from the date the payment was scheduled to commence or to be made (taking into account any delay in payment or commencement of payment under
Section 4.01
on account of a Participant's status as a Specified Employee).
|
(c)
|
Changes Between Actuarially Equivalent Forms of Annuity
. A Participant may elect at any time prior to Termination of Employment to convert his or her supplemental retirement benefit payable as an annuity to any of the Actuarially Equivalent forms of annuity offered under the Consolidated Plan.
|
(d)
|
Transitional Rule
. Notwithstanding any other elections under this Program 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 Committee 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 or her supplemental retirement benefit under this Program, provided that:
|
(1)
|
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;
|
(2)
|
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
|
(3)
|
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 election(s) must be made by the date specified by the Committee consistent with guidance pursuant to Section 409A of the Code.
|
(e)
|
Payment Upon a Change in Control
. 30 days after a Change in Control, in lieu of any other payments due with respect to benefits earned under the Program to the date of the Change in Control, each Participant and each Recipient shall receive a Change in Control Lump Sum Payment, as calculated under
Section 4.03(b)
.
|
(f)
|
Special Rule Applicable to Specified Employees
. If a Specified Employee dies after Termination of Employment but prior to commencement of benefits, the Specified Employee’s Beneficiary shall receive a payment as of the first of the month following the Specified Employee’s date of death equal to the aggregate of the monthly payments that would have been made to the Specified Employee in accordance with
Section 4.01
but substituting the Specified Employee’s date of death for the actual commencement of payment; provided however that if the Specified Employee’s supplemental retirement benefit is payable in the form of a lump sum, such amount shall be calculated in accordance with
Section 4.03
but substituting the Specified Employee’s date of death for the first day of the seventh month following the Participant’s Termination of Employment. Any additional amounts payable to the Specified Employee’s Beneficiary shall be determined as of the Specified Employee’s date of death in accordance with the form of payment applicable to the Specified Employee as of the Specified Employee’s Termination of Employment.
|
4.03
|
Determination of the Lump Sum Payment
.
|
(a)
|
If the Participant is a Specified Employee immediately prior to Termination of Employment, the Lump Sum Payment referred to in
Section 4.02(a)
shall be equal to the sum of:
|
(1)
|
the aggregate monthly benefits the Participant would have received under the Single Life Annuity form of payment prior to the first day of the seventh month following the Participant's Termination of Employment if the Participant were not a Specified Employee; plus
|
(2)
|
the excess of:
|
(i)
|
the present value (using the Specified Rate and Mortality Table in effect on the first day of the month following the Participant's Termination of Employment), determined as of the first day of the seventh month following the Participant's Termination of Employment, of the monthly benefit determined under
Section 3.03
or
3.04
, as applicable, disregarding
Section 3.03(d)
and the monthly "add-on" benefit as set forth on Addendum XV of the Consolidated Plan (if applicable) included in
Section 3.03(b)
, over
|
(ii)
|
the sum of:
|
(A)
|
the present value (as defined in the Consolidated Plan) of the "add-on" benefit set forth on Addendum XV of the Consolidated Plan if applicable) included in
Section 3.03(b)
, plus
|
(B)
|
the Actuarial Value of the monthly benefit described in
Section 3.03(d)
, provided that if the Participant's PRP benefit will be paid 5 years later than the Participant's SERP benefit in accordance with Section 3.3(b)(iii) of the PRP, the amount referred to in (B) above shall equal the lump sum Actuarial Value of the monthly benefit described in
Section 3.03(d)
, discounted (using the Specified Rate in effect on the first day of the month following the Participant's Termination of Employment) from the scheduled date of payment of such benefit to the scheduled date of payment of the SERP Lump Sum Payment.
|
(b)
|
The Change in Control Lump Sum Payment referred to in
Section 4.02(e)
shall be equal to the amount determined under
Section 4.03(a)
using the following assumptions:
|
(1)
|
present value is determined using the Specified Rate and Mortality Table;
|
(2)
|
for purposes of determining present value for a Participant who entered the Program before July 1, 2006 and commenced payment prior to August 12, 2015, the Participant (or, if applicable, Recipient) lives the number of years equal to his or her Life Expectancy (calculated as of the date which includes any additional Service credited hereunder);
|
(3)
|
Actuarial Value shall be determined as provided under the PRP; and
|
(4)
|
with respect to any benefit to be deducted as an offset as described in
Section 3.03(b) through (h)
, the Participant terminated employment with the Company on the date of the Change in Control and began to receive such benefits at the earliest date thereafter permitted under the applicable plan, agreement or statute.
|
4.04
|
Certain Matters Following a Lump Sum Payment
.
|
(a)
|
A Participant who has received a Change in Control Lump Sum Payment pursuant to
Section 4.02(e)
shall thereafter:
|
(1)
|
while in the employ of the Company, continue to accrue benefits under the Program; and
|
(2)
|
be eligible for further benefits under
Section 4.01
or
4.02
. The amount of such benefit shall be determined by:
|
(i)
|
calculating the benefit that would be payable to the Participant if there had been no previous Change in Control Lump Sum Payment;
|
(ii)
|
determining the present lump sum value of such benefit, using the Specified Rate and the Mortality Table and, for a Participant who entered the Program before July 1, 2006 and commenced payment prior to August 12, 2015, assuming the Participant lives the number of years equal to his or her Life Expectancy on the date of the Participant's Termination of Employment;
|
(iii)
|
determining the present lump sum value of the Change in Control Lump Sum Payment, assuming the Change in Control Lump Sum Payment had earned interest at the average Specified Rate in effect from the time of payment of the Change in Control Lump Sum Payment until the date of Termination of Employment;
|
(iv)
|
reducing the amount determined in (ii) by the amount determined in (iii); and
|
(v)
|
if applicable, converting the amount determined in (iv) to an Actuarially Equivalent single life only form of payment.
|
(a)
|
The amount of the benefit payable under this
Article 6
to a deceased Participant's Beneficiary shall be equal to the present value (using the Specified Rate and Mortality Table in effect on the first day of the month following the Participant's death) of the total monthly payments the Beneficiary would have received had the Participant retired on the day before his or her death after having effectively elected to receive payment in the form of a Joint and 100% Survivor Annuity under the Program, with his or her Beneficiary as Contingent Annuitant under such option; provided, that:
|
(1)
|
in lieu of the offset for the Participant’s primary Social Security benefit under
Section 3.03(g)
, the benefit to the Beneficiary shall be offset by 50% of the primary or survivor Social Security benefit to which the Beneficiary is entitled at the earliest date as of which such payments become payable; and
|
(2)
|
in lieu of the offset for the Consolidated Plan benefit set forth in
Section 3.03(b)
(and/or any other retirement benefit under any defined benefit arrangement described in
Sections 3.03(c), (d), or (h)
), the benefit to the Beneficiary shall be offset by the Qualified Plan Death Benefit. For purposes of this
Section 6.02(a)
, present value for the Beneficiary of a deceased Participant who entered the Program before July 1, 2006 and commenced payment prior to August 12, 2015,shall be determined assuming that the Beneficiary lives the number of years equal to his or her Life Expectancy on the date of death of the Participant.
|
(b)
|
If the estate is the death beneficiary as a result of the Participant not having a Beneficiary, the Participant's estate shall receive a lump sum payment equal to the present value (using the Specified Rate and Mortality Table in effect on the first day of the month following the Participant's death) of the total monthly payments that would have been paid to the Participant assuming the Participant had not died but rather:
|
(1)
|
retired on the day before the date of his or her death (or the first day of the month following the time he would have reached age 55, if later);
|
(2)
|
elected a 10-Year Certain Annuity; and
|
(3)
|
received 120 monthly payments. For purposes of this
Section 6.02(b)
, present value for the estate of a deceased Participant who entered the Program before July 1, 2006 and commenced payment prior to August 12, 2015, shall be determined assuming that the Participant had lived the number of years equal to his or her Life Expectancy on the date of his or her death.
|
(c)
|
If the Participant dies before reaching the age that is ten years prior to the Participant’s Normal Retirement Date, then the monthly payments used to determine the death benefit under
Section 6.02(a)
or
Section 6.02(b)
, as applicable, shall be further reduced by .3030 for each month that the Participant’s death preceded his or her Normal Retirement Date.
|
(a)
|
the Secretary of the Company shall have given written notice to the Participant or retiree‑Recipient that, in the opinion of the Compensation Committee, the Participant or retiree-Recipient is engaged in Competition within the meaning of the foregoing provisions of this
Section 7.02
, specifying the details;
|
(b)
|
the Participant or retiree‑Recipient shall have been given a reasonable opportunity, upon receipt of such notice, to appear before and to be heard by the Compensation Committee with respect to his or her views regarding the Compensation Committee’s opinion that the Participant or retiree‑Recipient engaged in Competition;
|
(c)
|
following any hearing pursuant to
Section 7.02(b)
, the Secretary of the Company shall have given written notice to the Participant or retiree‑Recipient that the Compensation Committee determined that the Participant or retiree-Recipient is engaged in Competition; and
|
(d)
|
the Participant or retiree‑Recipient shall neither have ceased to engage in such Competition within thirty days from his or her receipt of notice of such determination nor diligently taken all reasonable steps to that end during such thirty‑day period and thereafter.
|
(a)
|
the specific reasons for such denial;
|
(b)
|
a specific reference to the provisions of the Program on which the denial is based;
|
(c)
|
a description of any additional information or material necessary for the claimant to perfect his or her claim, and a description of why it is needed; and
|
(d)
|
an explanation of the Program's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Administrator determines that there are special circumstances requiring additional time to make a decision, the Administrator shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional ninety-day period.
|
(a)
|
no Participant or Recipient shall have any right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Program;
|
(b)
|
nothing contained in the Program shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, Recipient or any other person;
|
(c)
|
to the extent that any person acquires a right to receive payments from the Company under the Program, such right shall be no greater than the right of an unsecured general creditor of the Company; and
|
(d)
|
all payments to be made under the Program shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of amounts payable under the Program.
|
(a)
|
reduce or terminate the benefit of a Participant participating in the Program at the time of any such termination, amendment, or modification;
|
(b)
|
terminate the participation of a Participant participating in the Program at the time of any such termination, amendment, or modification;
|
(c)
|
increase the eligibility requirements applicable to a Participant participating in the Program at the time of any such termination, amendment or modification;
|
(d)
|
terminate the Program, or reduce or terminate any benefit, or terminate the participation or any rights or benefits, after the occurrence of a Corporate Change Vesting Event, with respect to a Participant or Recipient who was a Participant or Recipient, or became a Participant or Recipient, at the time of the occurrence of such Corporate Change Vesting Event; or
|
(e)
|
permit an acceleration of time of payment of a Participant’s benefit under the Program, other than:
|
(1)
|
as necessary to comply with a certificate of divestiture, as defined in Section 1043(b)(2) of the Code;
|
(2)
|
as necessary to pay Federal Insurance Contribution (“FICA”) taxes and any resulting federal, state, local or foreign income taxes attributable to amounts deferred under the Program, subject to the limitations of Section 1.409A-3(j)(4)(vi) of the Regulations;
|
(3)
|
in the event the arrangement fails to meet the requirements of Section 409A of the Code with respect to one or more Participants, and then only in such amount as is included in income of such Participant(s) as a result of such failure;
|
(4)
|
due to a termination of the Program that meets the requirements of Section 1.409A-3(j)(4)(ix) of the Regulations; or
|
(5)
|
as otherwise may be permitted under Section 409A of the Code.
|
1.
|
Definitions
|
(a)
|
Account
: A notional account or sub-account established for record-keeping purposes for a Participant.
|
(b)
|
Administrator
: The Parker Total Rewards Administration Committee of the Company or, if applicable, the administration subcommittee appointed by the Parker Total Rewards Administration Committee with respect to the Program.
|
(c)
|
Affiliated Group
: The Company and all entities with which the Company would be considered a single employer under Sections 414(b) and 414(c) of the Code, provided that in applying Sections 1563(a)(1), (2), and (3) of the Code for purposes of determining an Affiliated Group of corporations under Section 414(b) of the Code, the language “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Sections 1563(a) (1), (2), and (3) of the Code, and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, “at least 50 percent” is used instead of “at least 80 percent” each place it appears in that regulation.
|
(d)
|
Beneficiary
: The person or persons or entity designated as such in accordance with
Article 8
of the Program.
|
(e)
|
Board
: The Board of Directors of the Company.
|
(f)
|
Business Combination
: A merger, consolidation, share exchange or similar form of corporate reorganization of the Company or any Subsidiary that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in connection with the transaction or otherwise.
|
(g)
|
Change in Control
: The occurrence of one of the following events:
|
(1)
|
A change in ownership of the Company, which occurs on the date that any one person or more than one person acting as a group (within the meaning of the Regulations) acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total voting power of the stock of the Company. Notwithstanding the foregoing, if any one person or group is considered to own more than 50% of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group is not considered to cause a change in the ownership of the Company or a change in the effective control of the Company (within the meaning of
Section 1(g)(2)
of this Program). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires ownership of more than 50% of the total voting power of the stock of the Company as a result of the acquisition by the Company of stock of the Company which, by reducing the number of shares outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change in Control would occur as a result of such an acquisition by the Company (if not for the operation of this sentence), and after the Company’s acquisition such person becomes the beneficial owner of additional stock of the Company that increases the percentage of outstanding shares of stock of the Company owned by such person, a Change in Control shall then occur.
|
(2)
|
A change in effective control of the Company, which occurs on either of the following dates:
|
(i)
|
The date that any one person or more than one person acting as a group (within the meaning of the Regulations) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) ownership of stock of the Company possessing 30% or more of the total voting
|
(ii)
|
The date that a majority of the Board is replaced during any 12-month period by directors whose appointment or election was not endorsed by a majority of the members of the Board prior to the date of such appointment or election.
|
(3)
|
A change in the ownership of a substantial portion of the Company’s assets, which occurs on the date that any one person or more than one person acting as a group (within the meaning of the Regulations) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) assets that have a total gross fair market value equal to or more than 65% of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. The gross fair market value of assets shall be determined without regard to liabilities associated with such assets. Notwithstanding the foregoing, a transfer of assets shall not result in a change in ownership of a substantial portion of the Company’s assets if such transfer is to:
|
(i)
|
a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;
|
(ii)
|
an entity 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;
|
(iii)
|
a person or group (within the meaning of the Regulations) that owns, directly or indirectly, 50% or more of the total value or voting power of the stock of the Company; or
|
(iv)
|
an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly by a person or group described in
Section 1(g)(3)(iii)
of this Program.
|
(h)
|
Change in Control Severance Agreement
: The agreement between a Participant and the Company that provides for certain benefits if the Participant’s employment terminates following a Corporate Change Vesting Event.
|
(i)
|
Code
: The Internal Revenue Code of 1986, as amended, or any successor statute, and regulations and guidance issued thereunder.
|
(j)
|
Committee
: The Administrator, the Investment Committee or the Compensation Committee, as applicable.
|
(k)
|
Company
: Parker-Hannifin Corporation, an Ohio corporation, its corporate successors, and the surviving corporation resulting from any merger of Parker-Hannifin Corporation with any other corporation or corporations.
|
(l)
|
Company Voting Securities
: Securities of the Company eligible to vote for the election of the Board.
|
(m)
|
Compensation
: The amount of compensation paid to a Participant from the Affiliated Group during the calendar year including base salary, bonuses payable under the Company’s Return on Net Assets (RONA) Plan (except or to the extent determined by the Compensation Committee to be extraordinary) and Target Incentive Bonus Program, any amounts which would otherwise be paid as compensation during the calendar year but which are deferred by a Participant pursuant to any qualified or nonqualified deferred compensation program sponsored by the Affiliated Group, and any amounts that would otherwise be paid as compensation during the calendar year but which are deferred under Sections 125, 127 or 129 of the Code, but excluding:
|
(1)
|
any deferred compensation received during such year but credited under the Program to the Participant for a prior year;
|
(2)
|
any income realized due to the exercise of stock options or stock appreciation rights;
|
(3)
|
any payments, in cash, deferred or otherwise, payable to the Participant under the Company’s Long-Term Incentive bonus program, under any extraordinary bonus arrangements, under any severance agreement, or as or in lieu of an executive perquisite; and
|
(4)
|
such items as fringe benefits includible in income as compensation for federal tax purposes, moving and educational reimbursement expenses, overseas allowances received by the Participant from the Affiliated Group, and any other irregular payments.
|
(n)
|
Compensation Committee
: The Human Resources and Compensation Committee of the Board.
|
(o)
|
Contribution Percentage
: For a Participant in a Plan Year, an amount equal to a percentage of his or her Compensation based upon salary grade as of the last day of the Plan Year, determined as follows:
|
(p)
|
Corporate Change Vesting Event
: The occurrence of one of the following events:
|
(1)
|
any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding Company Voting Securities; provided, however, that the event described in this paragraph shall not be deemed to be a Corporate Change Vesting Event by virtue of any of the following situations:
|
(i)
|
an acquisition by the Company or any Subsidiary;
|
(ii)
|
an acquisition by any employee benefit plan sponsored or maintained by the Company or any Subsidiary;
|
(iii)
|
an acquisition by any underwriter temporarily holding securities pursuant to an offering of such securities;
|
(iv)
|
a Non-Control transaction (as defined in paragraph (3));
|
(v)
|
as pertains to a Participant, any acquisition by the Participant or any group of persons (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act) including the Participant (or any entity in which the Participant or a group of persons including the Participant, directly or indirectly, holds a majority of the voting power of such entity’s outstanding voting interests); or
|
(vi)
|
the acquisition of Company Voting Securities from the Company, if a majority of the Board approves a resolution providing expressly that the acquisition pursuant to this clause (vi) does not constitute a Corporate Change Vesting Event under this paragraph (1);
|
(2)
|
individuals who, at the beginning of any period of twenty-four (24) consecutive months, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, that any person becoming a director subsequent to the beginning of such twenty-four (24) month period, whose election, or nomination for election, by the Company’s shareholders was approved by a vote of at least two-thirds of the directors comprising the Incumbent Board who are then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be, for purposes of this paragraph (2), considered as though such person were a member of the
|
(3)
|
the consummation of a Business Combination, unless:
|
(i)
|
immediately following such Business Combination:
|
(A)
|
more than 50% of the total voting power of the Surviving Corporation resulting from such Business Combination or, if applicable, the Parent Corporation of such Surviving Corporation, is represented by Company Voting Securities that were outstanding immediately prior to the Business Combination (or, if applicable, shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination;
|
(B)
|
no person (other than any employee benefit plan sponsored or maintained by the Surviving Corporation or the Parent Corporation) is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation); and
|
(C)
|
at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation), following the Business Combination, were members of the Incumbent Board at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (a “Non-Control Transaction”); or
|
(ii)
|
the Business Combination is effected by means of the acquisition of Company Voting Securities from the Company, and a majority of the Board approves a resolution providing expressly that such Business Combination does not constitute a Corporate Change Vesting Event under this paragraph (3); or
|
(4)
|
the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company and its Subsidiaries.
|
(q)
|
Corporate Change Vesting Event Compensation
: The sum of (1) the Participant’s highest annual rate of base salary during the 12-month period immediately preceding the Corporate Change Vesting Event and (2) the highest of (x) the Participant’s average bonus (annualized for any partial years of employment) earned during the 3-year period immediately preceding the year in which the Corporate Change Vesting Event occurs (or shorter annualized period if the Participant had not been employed for the full three-year period), (y) the Participant’s target bonus amounts for the year in which the Change in Control occurs and (z) the Participant’s target bonus amounts for the year in which the Corporate Change Vesting Event occurs.
|
(r)
|
Crediting Rate
: For any Participant’s Account over any period, the notional gains or losses equal to those that would have been generated if the Account had been invested in those investment alternatives available under the Savings Restoration Plan (or as otherwise designated by the Investment Committee) as shall have been chosen by such Participant for such period.
|
(s)
|
Disability
: The condition whereby a Participant is:
|
(1)
|
unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or
|
(2)
|
by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under the Executive Long-Term Disability Plan or any other accident and health plan covering employees of the Company.
|
(t)
|
ERISA
: The Employee Retirement Income Security Act of 1974, as amended, or any successor statute, and regulations and guidance issued thereunder.
|
(u)
|
Executive Long-Term Disability Plan
: The Parker-Hannifin Corporation Executive Long-Term Disability Plan, as it may be amended from time to time.
|
(v)
|
Investment Committee
: The Parker Total Rewards Investment Committee of the Company or, if applicable, the investment subcommittee appointed by the Parker Total Rewards Investment Committee with respect to the Program.
|
(w)
|
Normal Retirement Date
: The date on which a Participant attains age 65.
|
(x)
|
Parent Corporation
: The ultimate parent corporation which directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of a Surviving Corporation.
|
(y)
|
Participant
: An eligible executive designated to participate in the Program pursuant to
Article 2
who has timely submitted a Participation Agreement to the Administrator, while employed by the Company.
|
(z)
|
Participation Agreement
: An employee’s written or electronic agreement to participate in the Program and initial election of the form of payment of supplemental retirement benefits pursuant to
Section 4.02(a)
.
|
(aa)
|
Plan Year
. The calendar year.
|
(bb)
|
Program
: The Parker-Hannifin Corporation Defined Contribution Supplemental Executive Retirement Program set forth herein, as it may subsequently be amended.
|
(cc)
|
Recipient
: A retiree or Beneficiary who is currently receiving benefits or is entitled to receive benefits under the Program.
|
(dd)
|
Regulations
: The regulations issued under Section 409A of the Code. Reference to any section of the Regulations shall be read to include any amendment or revision of such Regulation.
|
(ee)
|
Savings Restoration Plan
: The Parker-Hannifin Corporation Amended and Restated Savings Restoration Plan as it currently exists, and as it may subsequently be amended.
|
(ff)
|
Seed Contribution
: A discretionary contribution to a Participant’s Account determined solely by the Compensation Committee.
|
(gg)
|
Service
: Employment as an employee by any member of the Affiliated Group, as well as employment by a corporation, trade or business, that is now part of the Affiliated Group at a time prior to its becoming part of the Affiliated Group, but in such case only if and to the extent that the Compensation Committee shall so direct at any time prior to retirement. For purposes of determining a Participant’s eligibility to receive a benefit hereunder, Service shall include any additional years credited to a Participant under
Section 2.06
.
|
(hh)
|
Specified Employee
: A person designated from time to time as such by the Administrator pursuant to Section 409A(a)(2)(B)(i) of the Code and the Company’s policy for determining specified employees.
|
(ii)
|
Spouse
: An individual of the same or opposite sex of a Participant to whom the Participant is married in, and under the laws of, the state of celebration of such marriage.
|
(jj)
|
Subsidiary
: Any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity.
|
(kk)
|
Surviving Corporation
: The corporation resulting from a Business Combination.
|
(ll)
|
Termination of Employment
: A Participant’s “separation from service” with the Affiliated Group, within the meaning of Section 1.409A-1(h) of the Regulations; provided, that in applying Section 1.409A-1(h)(ii) of the Regulations, a separation from service shall be deemed to occur if the Company and the Participant reasonably anticipate that the level of bona fide services the Participant will perform for the Affiliated Group after a certain date (whether as an employee or as an independent contractor) will permanently decrease to less than 50% of the average level of bona fide services performed by the Participant for the Affiliated Group (whether as an employee or as an independent contractor) over the immediately preceding 36-month period (or the full period of services performed
|
(mm)
|
Valuation Date
: Each day on which the New York Stock Exchange is open, except that for purposes of determining the value of a distribution under Articles 4, 5 and 6 it shall mean the 24th day of each month (or the most recent business day preceding such date) immediately preceding the month in which a distribution is to be made.
|
2.
|
Participation
|
(a)
|
such Participant (but not a Recipient) shall be treated as having been employed, for purposes of determining Service under this Program for three additional years from the date of the Corporate Change Vesting Event; and
|
(b)
|
such Participant’s (but not a Recipient’s) Account shall be increased by the product of (i) the lesser of (A) three (3) and (B) the quotient resulting from dividing the number of full and partial months from the date of a Corporate Change Vesting Event until the Participant’s Normal Retirement Date, by twelve (12) and (ii) his or her Contribution Percentage for the Plan Year in which the Corporate Change Vesting Event occurs, based upon the Participant’s salary grade on the date of the Corporate Change Vesting Event and the Corporate Change Vesting Event Compensation. For the avoidance of doubt, such increase shall not include or reflect deemed interest or earnings at the Crediting Rate or otherwise.
|
3.
|
Supplemental Retirement Benefits
|
4.
|
Payment of Benefits
|
(a)
|
Initial Election of Payment Form
. To the extent permitted by Section 1.409A-2(a)(5) of the Regulations, within 30 days of the time an individual is designated as a Participant under this Program, he or she may elect, on his or her initial Participation Agreement, to receive payment of his or her supplemental retirement benefit under this Program in the form of a single lump sum payment equal to the value of his or her account as of the Valuation Date or in substantially equal annual installments over five, ten or fifteen years commencing on the date specified in
Section 4.01
and on January 1 of each succeeding year in the applicable 5, 10 or 15 year period. If a Participant fails to make a valid election, the Participant’s supplemental retirement benefit under this Program shall be paid in a lump sum.
|
(b)
|
One-Time Change by Participant
. A Participant shall be allowed a one-time election to change the form of payment of his or her supplemental retirement benefit; provided, however, that:
|
(1)
|
any such election shall not be effective for at least 12 months following the date made; and
|
(2)
|
as a result of any such election, payment shall be delayed for five (5) years from the date the payment was scheduled to commence or to be made (taking into account any delay in payment or commencement of payment under
Section 4.01
on account of a Participant’s status as a Specified Employee).
|
(c)
|
Payment Upon a Change in Control
. Thirty (30) days after a Change in Control, in lieu of any other payments due with respect to benefits earned under the Program to the date of the Change in Control, each Participant and each Recipient shall receive a lump sum payment equal to the value of his or her account as of the Valuation Date.
|
(d)
|
Special Rule Applicable to Specified Employees
. If a Specified Employee dies after Termination of Employment but prior to commencement of benefits, the Specified Employee’s Beneficiary shall receive a payment as of the first of the month following the Specified Employee’s date of death equal to the aggregate of the monthly payments that would have been made to the Specified Employee in accordance with
Section 4.01
but substituting the Specified Employee’s date of death for the actual commencement of payment. Any additional amounts payable to the Specified Employee’s Beneficiary shall be determined as of the Specified Employee’s date of death in accordance with the form of payment applicable to the Specified Employee as of the Specified Employee’s Termination of Employment.
|
(e)
|
Certain Matters Following a Lump Sum Payment
. A Participant who has received a Change in Control lump sum payment shall thereafter, while in the employ of the Company, continue to accrue benefits under the Program.
|
(f)
|
Payment of Taxes
. A Participant’s Account shall be reduced by, and the Participant shall be paid, the amount necessary to satisfy (and in no event to exceed) the aggregate of the Federal Insurance Contributions Act (FICA) tax and any local income taxes (and any federal, state, local or foreign income tax withholding related to such taxes) imposed on compensation deferred under the Program pursuant to Section 1.409A-3(j)(4)(vi) of the Regulations.
|
(g)
|
Miscellaneous
. For purposes of Section 409A of the Code, each installment payment shall be considered a separate payment.
|
5.
|
Disability Benefits
|
6.
|
Death Benefits
|
7.
|
Non-Competition
|
(a)
|
the Secretary of the Company shall have given written notice to the Participant or retiree-Recipient that, in the opinion of the Compensation Committee, the Participant or retiree-Recipient is engaged in Competition within the meaning of the foregoing provisions of this
Section 7.02
, specifying the details;
|
(b)
|
the Participant or retiree-Recipient shall have been given a reasonable opportunity, upon receipt of such notice, to appear before and to be heard by the Compensation Committee with respect to his or her views regarding the Compensation Committee’s opinion that the Participant or retiree-Recipient engaged in Competition;
|
(c)
|
following any hearing pursuant to
Section 7.02(b)
, the Secretary of the Company shall have given written notice to the Participant or retiree-Recipient that the Compensation Committee determined that the Participant or retiree-Recipient is engaged in Competition; and
|
(d)
|
the Participant or retiree-Recipient shall neither have ceased to engage in such Competition within thirty days from his or her receipt of notice of such determination nor diligently taken all reasonable steps to that end during such thirty-day period and thereafter.
|
8.
|
Beneficiary Designation
|
9.
|
General Provisions
|
(a)
|
the specific reasons for such denial;
|
(b)
|
a specific reference to the provisions of the Program on which the denial is based;
|
(c)
|
a description of any additional information or material necessary for the claimant to perfect his or her claim, and a description of why it is needed; and
|
(d)
|
an explanation of the Program’s claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Administrator determines that there are special circumstances requiring additional time to make a decision, the Administrator shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional ninety-day period.
|
(a)
|
no Participant or Recipient shall have any right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Program;
|
(b)
|
nothing contained in the Program shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, Recipient or any other person;
|
(c)
|
to the extent that any person acquires a right to receive payments from the Company under the Program, such right shall be no greater than the right of an unsecured general creditor of the Company; and
|
(d)
|
all payments to be made under the Program shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of amounts payable under the Program.
|
To the Company or the Administrator:
|
Attention: Secretary
|
To the Participant:
|
Address of residence on file with the Company
|
(a)
|
reduce or terminate the benefit of a Participant participating in the Program at the time of any such termination, amendment, or modification;
|
(b)
|
terminate the participation of a Participant participating in the Program at the time of any such termination, amendment, or modification;
|
(c)
|
increase the eligibility requirements applicable to a Participant participating in the Program at the time of any such termination, amendment or modification;
|
(d)
|
terminate the Program, or reduce or terminate any benefit, or terminate the participation or any rights or benefits, after the occurrence of a Corporate Change Vesting Event, with respect to a Participant or Recipient who was a Participant or Recipient, or became a Participant or Recipient, at the time of the occurrence of such Corporate Change Vesting Event; or
|
(e)
|
permit an acceleration of time of payment of a Participant’s benefit under the Program, other than:
|
(1)
|
as necessary to comply with a certificate of divestiture, as defined in Section 1043(b)(2) of the Code;
|
(2)
|
as necessary to pay Federal Insurance Contribution (“FICA”) taxes and any resulting federal, state, local or foreign income taxes attributable to amounts deferred under the Program, subject to the limitations of Section 1.409A-3(j)(4)(vi) of the Regulations;
|
(3)
|
in the event the arrangement fails to meet the requirements of Section 409A of the Code with respect to one or more Participants, and then only in such amount as is included in income of such Participant(s) as a result of such failure;
|
(4)
|
due to a termination of the Program that meets the requirements of Section 1.409A-3(j)(4)(ix) of the Regulations; or
|
(5)
|
as otherwise may be permitted under Section 409A of the Code.
|
1.1.
|
Account
shall mean the notional account established for record-keeping purposes for a Participant pursuant to
Article 5
. The term Account shall include the Restoration Account and/or the Excess RIA Account, as applicable.
|
1.2.
|
Adjusted Matching Percentage
shall mean the sum of 100% of the first 3% of a Participant's Total Deferral Percentage, plus 50% of the next 2% of the Participant's Total Deferral Percentage. The maximum Adjusted Matching Percentage for any Plan Year shall be 4%.
|
1.3.
|
Administrator
shall mean the Parker Total Rewards Administration Committee of the Company or, if applicable, the administration subcommittee appointed by the Parker Total Rewards Administration Committee with respect to the Plan.
|
1.4.
|
Affiliated Group
shall mean the Company and all entities with which the Company would be considered a single employer under Sections 414(b) and 414(c) of the Code, provided that in applying Section 1563(a)(1), (2), and (3) of the Code for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language "at least 50 percent" is used instead of "at least 80 percent" each place it appears in Section 1563(a)(1), (2), and (3) of the Code, and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, "at least 50 percent" is used instead of "at least 80 percent" each place it appears in that regulation. Such term shall be interpreted in a manner consistent with the definition of "service recipient" contained in Section 409A of the Code.
|
1.5.
|
Annual Deferral
shall mean the amount of Compensation which the Participant elects to defer for a Plan Year pursuant to
Articles 2 and 3
.
|
1.6.
|
Annualized Base Salary
shall mean a Participant's annualized base salary, determined by the Administrator as of November 1 of the calendar year immediately preceding the Plan Year for which the Matching Limit is being determined.
|
1.7.
|
Applicable Dollar Amount
shall mean the "applicable dollar amount" determined under Section 402(g)(1)(B) of the Code for the Plan Year for which the Matching Limit is being determined.
|
1.8.
|
Beneficiary
shall mean the person or persons or entity designated as such in accordance with
Article 14
.
|
1.9.
|
Change in Control
means the occurrence of one of the following events:
|
(a)
|
A change in ownership of the Company, which occurs on the date that any one person or more than one person acting as a group (within the meaning of the Regulations under Section 409A of the Code) acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total voting power of the stock of the Company. Notwithstanding the foregoing, if any one person or group is considered to own more than 50% of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group is not considered to cause a change in the ownership of the Company or a change in the effective control of the Company (within the meaning of
Section 1.9(b)
of this Plan). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires ownership of more than 50% of the total voting power of the stock of the Company as a result of the acquisition by the Company of stock of the Company which, by reducing the number of shares outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change in Control would
|
(b)
|
A change in effective control of the Company, which occurs on either of the following dates:
|
(i)
|
The date that any one person or more than one person acting as a group (within the meaning of the Regulations under Section 409A of the Code) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) ownership of stock of the Company possessing 30% or more of the total voting power of the Company. Notwithstanding the foregoing, if any one person or group is considered to own 30% or more of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group is not considered to cause a change in the effective control of the Company or a change in ownership of the Company (within the meaning of
Section 1.9(a)
of this Plan). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires ownership of more than 30% of the total voting power of the stock of the Company as a result of the acquisition by the Company of stock of the Company which, by reducing the number of shares outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change in Control would occur as a result of such an acquisition by the Company (if not for the operation of this sentence), and after the Company's acquisition such person becomes the beneficial owner of additional stock of the Company that increases the percentage of outstanding shares of stock of the Company owned by such person, a Change in Control shall then occur.
|
(ii)
|
The date that a majority of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election was not endorsed by a majority of the members of the board prior to the date of such appointment or election.
|
(c)
|
a change in the ownership of a substantial portion of the Company’s assets, which occurs on the date that any one person or more than one person acting as a group (within the meaning of the Regulations under Section 409A of the Code) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) assets that have a total gross fair market value equal to or more than 65% of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. The gross fair market value of assets shall be determined without regard to liabilities associated with such assets. Notwithstanding the foregoing, a transfer of assets shall not result in a change in ownership of a substantial portion of the Company's assets if such transfer is to: (i) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock, (ii)
|
1.10.
|
Code
shall mean the Internal Revenue Code of 1986, as amended, or any successor statute, and regulations or other guidance issued thereunder.
|
1.11.
|
Committee
shall mean the Administrator, the Investment Committee or the Compensation Committee, as applicable.
|
1.12.
|
Compensation
shall mean:
|
(a)
|
For amounts that are due and payable before January 1, 2007, the sum of the Participant's base salary and regular bonuses (including profit-sharing, the Company's Return on Net Assets (RONA) Plan, and target incentive bonus, but excluding sales commissions, payments under any long term incentive plan, volume incentive plan, or other extraordinary bonus or incentive plan) for a Plan Year before reductions for deferrals under the Plan, or the Executive Deferral Plan, or the Savings Plan, or the Parker-Hannifin Corporation Cafeteria Plan, or the Group Insurance Plan for Hourly and Salaried Employees of Parker-Hannifin Corporation.
|
(b)
|
For Plan Years beginning on and after January 1, 2007, Compensation shall mean a Participant’s base salary before reductions for deferrals under the Plan, or the Executive Deferral Plan, or the Savings Plan, or the Parker-Hannifin Corporation Cafeteria Plan, or the Group Insurance Plan for Hourly and Salaried Employees of Parker-Hannifin Corporation. Compensation shall not include any amounts payable on account of Termination of Employment, whether paid periodically or in a lump sum.
|
1.13.
|
Compensation Committee
shall mean the Human Resources and Compensation Committee of the Board.
|
1.14.
|
Crediting Rate
shall mean: (a) the amount described in
Section 1.14.1
to the extent the Account balance represents either Annual Deferrals under
Article 3
or earnings previously credited on such deferrals under
Section 5.2(d)
, or Excess RIA Contributions under
Section 4.1(b)
or earnings previously credited on such Excess RIA Contributions under
Section 5.2(d)
; or (b) the amount described in
Section 1.14.2
to the extent the Restoration Account balance represents either Matching Credits under
Section 4.1(a)
or interest previously credited on such Matching Credits under
Section 5.2(d)
.
|
1.15.
|
Disability
shall mean the condition whereby a Participant is (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (b) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under any accident and health plan covering employees of the Company. The Administrator, in its complete and sole discretion, shall determine a Participant's Disability. The Administrator may require that the Participant submit to an examination on an annual basis, at the expense of the Company, by a competent physician or medical clinic selected by the Administrator to confirm Disability. On the basis of such medical evidence, the determination of the Administrator as to whether or not a condition of Disability exists or continues shall be conclusive.
|
1.16.
|
Disability Benefit
shall mean the benefit payable pursuant to
Article 9
.
|
1.17.
|
Early Retirement Date
shall mean age 55 with ten or more years of employment with the Company.
|
1.18.
|
Eligible Executive
shall mean a key 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.
|
1.19.
|
Eligible RIA Executive
shall mean an employee of the Company or any of its subsidiaries who is entitled to receive an allocation to the Retirement Income Account portion of the Savings Plan, and (a) who receives compensation, as such term is used to determine contributions under the Savings Plan, in excess of the amount specified in Section 401(a)(17) of the Code, or (b) whose benefits payable from the Savings Plan are directly or indirectly limited pursuant to Section 415(c) of the Code.
|
1.20.
|
ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended, or any successor statute, and regulations or other guidance issued thereunder.
|
1.21.
|
Estimated Bonuses
shall mean:
|
(a)
|
For each Plan Year beginning before January 1, 2007, the sum of a Participant's RONA and Target Incentive bonuses payable during the Plan Year for which the Matching Limit
|
(b)
|
For each Plan Year beginning on and after January 1, 2007, the sum of a Participant's RONA and Target Incentive bonuses payable in August of the Plan Year for which the Matching Limit is being determined, estimated in good faith by the Administrator as of November 1 of the immediately preceding calendar year.
|
1.22.
|
Excess RIA Account
shall mean the Account established pursuant to
Section 5.1(b)
of this Plan.
|
1.23.
|
Excess RIA Contribution
shall mean the difference between the amount actually contributed to a Participant’s Retirement Income Account under the Savings Plan with respect to a Plan Year and the amount that would have been contributed for such Plan Year but for the application of the Statutory Limits, as adjusted for cost of living increases.
|
1.24.
|
Executive Deferral Plan
shall mean the Parker-Hannifin Corporation Amended and Restated Executive Deferral Plan as it currently exists and as it may subsequently be amended.
|
1.25.
|
Investment Committee
shall mean the Parker Total Rewards Investment Committee of the Company or, if applicable, the investment subcommittee appointed by the Parker Total Rewards Investment Committee with respect to the Plan.
|
1.26.
|
Matching Credit
shall mean the Company's credit to the Participant's Restoration Account under
Section 4.1(a)
.
|
1.27.
|
Matching Limit
shall mean, for any Plan Year, the excess of: (a) the lesser of: (i) $17,000 or (ii) the product of the Adjusted Matching Percentage times the sum of the Participant's Projected Gross Compensation, over (b) the product of 4% times the lesser of: (i) the Statutory Limit under Section 401(a)(17) of the Code on compensation that may be taken into account under the Savings Plan for the Plan Year, or (ii) the excess of a Participant's Projected Gross Compensation over the Participant's Projected SRP Deferral and Projected EDP Deferral.
|
1.28.
|
Matching Percentage
shall mean, for any Plan Year, the percentage determined by dividing a Participant's Matching Limit by the Participant's Projected SRP Deferral.
|
1.29.
|
Normal Retirement Date
shall mean the date on which a Participant attains age 65.
|
1.30.
|
Participant
shall mean an Eligible Executive who has elected to participate and has completed a Participation Agreement pursuant to
Article 2
or an Eligible RIA Executive entitled to receive an Excess RIA Contribution.
|
1.31.
|
Participation Agreement
shall mean the Eligible Executive’s or Eligible RIA Executive’s written or electronic election to participate in the Plan and/or to select distribution options in accordance with
Article 6
.
|
1.32.
|
Plan Year
shall mean the calendar year.
|
1.33.
|
Projected EDP Deferral
shall mean the amount that would be deferred by a Participant under Section 3.1(a) of the Executive Deferral Plan for the Plan Year for which the Matching Limit is being determined, if the terms "Salary" and "Bonuses" used therein referred to the Participant's Annualized Base Salary and Estimated Bonuses, respectively.
|
1.34.
|
Projected Gross Compensation
shall mean the sum of a Participant's RONA and target incentive bonuses payable during the Plan Year for which the Matching Limit is being determined, estimated in good faith by the Administrator as of November 1 of the immediately preceding calendar year, plus the Participant's Annualized Base Salary.
|
1.35.
|
Projected Savings Plan Deferral
shall mean the lesser of (a) the Applicable Dollar Amount, or (b) 75% of the excess of a Participant's Projected Gross Compensation over the Participant's Projected SRP Deferral and Projected EDP Deferral.
|
1.36.
|
Projected SRP Deferral
shall mean:
|
(a)
|
For the Plan Year beginning January 1, 2005:
|
(i)
|
For a Participant who is not eligible to participate in the Executive Deferral Plan for such Plan Year, the lesser of: (A) $25,000 or (B) the product of the sum of the Participant's Annualized Base Salary and Estimated Bonuses times the percentage of Compensation specified in the Participant's Annual Deferral under
Section 3.1
for the Plan Year for which the Matching Limit is being determined.
|
(ii)
|
For a Participant who is eligible to participate in the Executive Deferral Plan for such Plan Year, the lesser of: (A) $7,600 or (B) the product of the sum of the Participant's Annualized Base Salary and Estimated Bonuses times the percentage of Compensation specified in the Participant's Annual Deferral under
Section 3.1
for the Plan Year for which the Matching Limit is being determined.
|
(b)
|
For the Plan Year beginning January 1, 2006, the lesser of: (i) $25,000 or (ii) the product of the sum of the Participant's Annualized Base Salary and Estimated Bonuses times the percentage of Compensation specified in the Participant's Annual Deferral under
Section 3.1
for the Plan Year for which the Matching Limit is being determined.
|
(c)
|
For each Plan Year beginning on and after January 1, 2007, the lesser of: (i) $25,000 or (ii) the product of the Participant's Annualized Base Salary times the percentage of Compensation specified in the Participant's Annual Deferral under
Section 3.1
for the Plan Year for which the Matching Limit is being determined.
|
1.37.
|
Regulations
shall mean regulations issued under Section 409A of the Code. Reference to any section of the Regulations shall be read to include any amendment or revision of such Regulation.
|
1.38.
|
Restoration Account
shall mean the Account established pursuant to
Section 5.1(a)
.
|
1.39.
|
Retirement
shall mean a Separation from Service from the Affiliated Group that follows Normal or Early Retirement Date.
|
1.40.
|
Retirement Benefit
shall mean the benefit payable pursuant to
Article 6
.
|
1.41.
|
Savings Plan
shall mean the Parker Retirement Savings Plan, as it currently exists and as it may subsequently be amended.
|
1.42.
|
Separation from Service
shall have the meaning set out in Section 1.409A-1(h) of the Regulations; provided, that in applying Section 1.409A-1(h)(ii) of the Regulations, a separation from service shall be deemed to occur if the Company and the Participant reasonably anticipate that the level of bona fide services the Participant will perform for the Affiliated Group after a certain date (whether as an employee or as an independent contractor) will permanently decrease to less than 50% of the average level of bona fide services performed by the Participant for the Affiliated Group (whether as an employee or as an independent contractor) over the immediately preceding 36-month period (or the full period of services performed for the Affiliated Group if the Participant has been providing services to the Affiliated Group for less than 36 months). In the event of a disposition of assets by the Company to an unrelated person, the Administrator reserves the discretion to specify (in accordance with Section 1.409A-1(h)(4) of the Regulations) whether a Participant who would otherwise experience a Separation from Service with the Company as part of the disposition of assets will be considered to experience a separation from service for purposes of Section 1.409A-1(h) of the Regulations.
|
1.43.
|
Specified Employee
shall mean a person designated from time to time as such by the Administrator pursuant to Section 409A(a)(2)(B)(i) of the Code and the Company's policy for determining specified employees.
|
1.44.
|
Spouse
shall mean an individual of the same or opposite sex of a Participant to whom the Participant is married in, and under the laws of, the state of celebration of such marriage.
|
1.45.
|
Statutory Limits
shall mean any limit on compensation taken into account in calculating benefits under the Savings Plan under Section 401(a)(17) of the Code or that directly or indirectly affects the amount of benefits payable from the Savings Plan pursuant to Section 415(c) of the Code or any other applicable Section of the Code.
|
1.46.
|
Subsidiary
shall mean any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity.
|
1.47.
|
Survivor Benefit
shall mean the benefit payable pursuant to
Article 8.
|
1.48.
|
Termination Benefit
shall mean the benefit payable pursuant to
Article 7
.
|
1.49.
|
Termination of Employment
shall mean Separation from Service from the Affiliated Group, other than Separation from Service due to Retirement, Disability or death.
|
1.50.
|
Total Deferral Percentage
shall mean the percentage determined by dividing the sum of a Participant's Projected SRP Deferral and Projected Savings Plan Deferral by the Participant's Projected Gross Compensation.
|
1.51.
|
Unforeseeable Emergency
shall mean a severe financial hardship arising from: (a) the illness or accident of the Participant, the Participant’s Spouse, or the Participant’s dependent (as defined in Section 152(a) of the Code), (b) loss of the Participant’s property due to casualty, or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The determination of when a Participant has incurred an Unforeseeable Emergency shall be made by the Administrator, in its sole discretion, pursuant to and subject to the conditions of Section 409A of the Code and Regulations thereunder.
|
1.52.
|
Valuation Date
shall mean each day on which the New York Stock Exchange is open, except that for purposes of determining the value of a distribution under
Articles 6, 7, 8, 9 or 15
, it shall mean the 24th day of each month (or the most recent business day preceding such date) immediately preceding the month in which a distribution is to be made.
|
2.1.
|
Participant Deferral or Automatic Participation
.
|
(a)
|
An Eligible Executive shall become a Participant in the Plan on the first day of the Plan Year coincident with or next following the date the individual becomes an Eligible Executive, provided such Eligible Executive has submitted to the Administrator a Participation Agreement prior to the beginning of the Plan Year and within the enrollment period designated by the Administrator. In the Participation Agreement, and subject to the restrictions in
Article 3
, the Eligible Executive shall designate the Annual Deferral for the covered Plan Year.
|
(b)
|
An Eligible RIA Executive shall become a Participant in this Plan automatically on January 1 of the Plan Year immediately following the first Plan Year that the Participant's right to an Excess RIA Contribution accrues. A Participant who is not an Eligible Executive for the first Plan Year that such Participant is an Eligible RIA Executive (or any earlier Plan Year) shall submit an initial Participation Agreement to the Administrator within thirty (30) days of becoming a Participant in this Plan. To the extent permitted under Section 409A of the Code, such a Participant's election of a distribution option in such an initial Participation Agreement submitted within thirty (30) days of becoming a Participant in this Plan shall govern the form of payment of such Participant's Excess RIA Account, except as otherwise provided in Section 6.4.
|
(c)
|
An individual may be both an Eligible Executive and an Eligible RIA Executive.
|
2.2.
|
Continuation of Participation
. An individual who has become a Participant in this Plan pursuant to
Section 2.1
shall continue as a Participant in the Plan even though such individual ceases to be an Eligible Executive and/or an Eligible RIA Executive; provided that any such
|
3.1.
|
Deferral Election
. A Participant may elect on the Participation Agreement to make an Annual Deferral to defer a specified percentage of Compensation relating to services performed during a Plan Year. Except as may be otherwise permitted under Section 409A of the Code, an election to make Annual Deferrals with respect to Compensation relating to services performed during a Plan Year must be made prior to the beginning of such Plan Year. An election to make Annual Deferrals for a Plan Year shall be irrevocable, except as otherwise permitted by the Regulations, including Section 1.409A-3(j)(4)(viii) of the Regulations, where cancellation of a deferral election is required by Section 401(k) of the Code upon the Participant’s taking a hardship withdrawal from the Savings Plan.
|
3.2.
|
Amount of Annual Deferral
. The Annual Deferral shall be determined as follows:
|
(a)
|
For the Plan Year beginning January 1, 2005:
|
(i)
|
For a Participant who is not eligible to participate in the Executive Deferral Plan, any whole percentage between 1 and 15% of Compensation (maximum Annual Deferral of $25,000).
|
(ii)
|
For a Participant who is eligible to participate in the Executive Deferral Plan, any whole percentage between 1 and 5% of Compensation (maximum Annual Deferral of $7,600).
|
(b)
|
For the Plan Year beginning January 1, 2006, any whole percentage between 1 and 15% of Compensation (maximum Annual Deferral of $25,000).
|
(c)
|
For any Plan Year beginning January 1, 2007 or later, any whole percentage between 1 and 20% of Compensation (maximum Annual Deferral of $25,000).
|
3.3.
|
Vesting
. The Participant's right to his or her Annual Deferrals and gains or losses thereon, shall be 100% vested at all times.
|
4.1.
|
Amount
.
|
(a)
|
Matching Credit
. The Company's Matching Credit in each Plan Year shall equal the product of the Participant's Annual Deferral for such Plan Year times the Matching Percentage for the Plan Year; provided, however, that in no event shall the Matching Credit credited to a Participant's Account in any Plan Year exceed the Matching Limit for such Plan Year. The Matching Percentage and Matching Limit for a Participant for
|
(b)
|
Excess RIA Contributions
. Effective April 1, 2004, in the Plan Year following any Plan Year in which an Eligible RIA Participant has an Excess RIA Contribution with respect to the Savings Plan, the Eligible RIA Participant shall receive an allocation of an amount equal to such Excess RIA Contribution.
|
4.2.
|
Vesting
.
|
(a)
|
The Participant's right to receive Matching Credits and gains or losses thereon credited to the Participant's Restoration Account shall be one hundred percent (100%) vested.
|
(b)
|
From April 1, 2004 to December 31, 2006, the Participant’s right to his or her Excess RIA Account and gains or losses thereon shall be 100% vested after the Participant has 5 years of Service, as such term is defined in the Savings Plan, or upon attainment of Normal Retirement Age as that term is defined in the Savings Plan.
|
(c)
|
Effective January 1, 2007, the Participant’s right to his or her Excess RIA Account and gains or losses thereon shall be 100% vested after the Participant has 3 years of Service, as such term is defined in the Savings Plan, or upon attainment of Normal Retirement Age as that term is defined in the Savings Plan.
|
5.1.
|
Accounts
. Solely for record keeping purposes, the Company shall maintain an Account for each Participant, which Account shall consist of one or more sub-accounts, as follows:
|
(a)
|
A Restoration Account to which shall be credited all Annual Deferrals made by a Participant and Matching Credits, as well as all gains or losses with respect thereto.
|
(b)
|
An Excess RIA Account to which shall be credited the amount of the Participant’s Excess RIA Contributions, as well as all gains and losses with respect thereto.
|
(c)
|
The Account for a Participant listed on
Appendix A
shall have sub-accounts for pre-2016 and post-2015 amounts credited to the Participant’s Account if, prior to January 1, 2016, such Participant elects a time and form of payment for such post-2015 amounts other than monthly installments over fifteen (15) years without an annual lump sum payment.
|
5.2.
|
The Timing of Credits
.
|
(a)
|
Annual Deferrals made under
Article 3
shall be credited to the Restoration Account on the same day the deferrals would otherwise have been paid to the Participant but for the deferral election;
|
(b)
|
Matching Credits under
Article 4
shall be credited to the Restoration Account as of the day the corresponding Annual Deferrals are credited to the Restoration Account;
|
(c)
|
Excess RIA Contributions shall be credited to the Participant’s Excess RIA Account as of February 1 (or the next business day thereafter) of the year in which the Participant’s Excess RIA Contribution with respect to a Plan Year is determined; and
|
(d)
|
Gains or losses shall be credited to the Participant’s Account as of the close of business on each Valuation Date, based on the Crediting Rate in effect for the day under
Section 1.14
.
|
5.3.
|
Terminations
. Following a Participant's Termination of Employment, Retirement or death, gains or losses shall continue to be credited to the Participant’s Account through the final Valuation Date.
|
5.4.
|
Statement of Accounts
. The Administrator shall provide periodically to each Participant a statement setting forth the balance of the Account maintained for such Participant.
|
6.1.
|
Amount
. Upon Retirement, the Company shall pay to the Participant the value of his or her vested Account at the time and in the manner determined pursuant to the rules set forth in this
Article 6
.
|
6.2.
|
Form of Retirement Benefits
. Except as otherwise provided pursuant to an election under
Section 6.4(c)
, the Retirement Benefit shall be paid monthly over a period of fifteen (15) years; provided, however, that the Participant may elect in accordance with the terms of
Section 6.4
to have payment made in one of the following options:
|
(a)
|
a single lump sum payment in cash;
|
(b)
|
monthly installments over 5, 10 or 15 years; or
|
(c)
|
an annual lump sum amount equal to a specified whole number percentage (1-8%) of the account balance as of the Valuation Date preceding each such annual payment, plus monthly installments of the remaining balance of the Account over 5, 10 or 15 years. Annual lump sum payments pursuant to this
Section 6.2(c)
, with respect to all Retirement Benefits under this Plan, including Grandfathered Amounts, shall be paid as follows: (i) the first lump sum payment shall be made on the first day of the second month after the Participant's Retirement, and (ii) the remaining lump sum payments shall be made on January 1 of each succeeding year in the applicable 5, 10 or 15 year period.
|
6.3.
|
Time of Payment
. Except as otherwise provided pursuant to an election under
Section 6.4(c)
, payment of a Participant's Account shall be made or shall begin as of the first day of the second month after the Participant's Retirement or on the first day of the month following the first, second, third, fourth or fifth anniversary of the Participant’s Retirement, as elected by the Participant in accordance with the terms of
Section 6.4
. Notwithstanding the foregoing, payment to any Specified Employee will be made or will commence on the first day of the seventh month following the Participant’s Retirement and shall include any
|
6.4.
|
Elections
.
|
(a)
|
Initial Election
. A Participant shall elect the time and form of payment of his or her Account payable on Retirement on his or her initial Participation Agreement in accordance with such rules as the Administrator shall reasonably apply. Notwithstanding the foregoing, a Participant listed on
Appendix A
to the Plan may elect a time and form of payment for post-2015 amounts credited to the Participant’s Account without regard to his or her prior election (or deemed election) for pre-2016 amounts credited to the Participant’s Accounts. Any such election must be made prior to January 1, 2016, shall be irrevocable as of December 31, 2015, and shall apply to all post-2015 amounts credited to the Participants’ Accounts and is in addition to any further deferral elections under
Section 6.4(b)
. If any such Participant fails to make such an election, his or her Retirement Benefit shall be paid monthly over a period of fifteen (15) years.
|
(b)
|
One-Time Change by Participant
. To the extent permitted by Section 409A of the Code, a Participant may make a one-time election to delay payment or change the form of payment at any time up to 12 months before the first scheduled payment; provided, however, that: (i) any such election shall not be effective for at least 12 months following the date made; (ii) 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 6.3
on account of a Participant's status as a Specified Employee); and (iii) any such change made by a Participant listed on
Appendix A
to the Plan shall apply to both pre-2016 and post-2015 amounts credited to the Participant’s Account to the extent permitted by Section 409A of the Code.
|
(c)
|
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 or her Account under this Plan, provided that: (i) 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, (ii) 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 (iii) 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.
|
6.5.
|
Small Benefit Exception
.
|
(a)
|
Benefits Payable Prior to January 1, 2008
. Notwithstanding the foregoing, with respect to a Participant's Retirement Benefit under the Plan that would otherwise be paid in installments (or as a combination of lump sums and installments) prior to January 1, 2008, if the balance of the Participant's Account under the Plan as of the date payment would otherwise commence is less than or equal to ten thousand dollars ($10,000), 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 6.5(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, effective December 31, 2007 with respect to a Participant's Retirement Benefit under the Plan that would otherwise be paid in installments (or as a combination of lump sums and installments) after December 31, 2007, if the aggregate balances of the Participant's accounts under the Plan, the Executive Deferral Plan and any other nonqualified deferred compensation arrangement that is aggregated with any portion of the Plan or the Executive Deferral Plan under Section 1.409A-1(c) of the Regulations as of the date payment would otherwise commence is less than or equal to 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 6.5(b)
will be made on the first day of the seventh month following the Participant's Termination of Employment.
|
7.1.
|
Amount and Time of Payment
. As of the first day of the second month after Termination of Employment, the Company shall pay to the Participant a Termination Benefit equal to the value of the vested Account as of the Valuation Date. Notwithstanding the foregoing, payment of a Termination Benefit to any Specified Employee pursuant to this
Article 7
will be made on the first day of the seventh month following the Participant's Termination of Employment.
|
7.2.
|
Form of Termination Benefits
. The Company shall pay the Termination Benefits in a single lump sum.
|
8.1.
|
Amount
. If the Participant dies (whether before or after Retirement or other Termination of Employment) with any balance remaining in his or her Account, the Company shall pay to the Participant’s Beneficiary a Survivor Benefit equal to the vested balance of the Account on the date of death.
|
8.2.
|
Form of Survivor Benefits
. The Company shall pay the vested balance of the Participant's Account in a single lump sum payment in cash; provided, however, that the Participant may elect in accordance with the terms of
Section 6.4
to have payment made in one of the following options:
|
(a)
|
a single lump sum payment in cash; or
|
(b)
|
monthly installments over 5, 10 or 15 years.
|
8.3.
|
Time of Payment
. Payment of Survivor Benefits shall be made or shall begin as of the first day of the second month following the date of death, and the provisions of
Sections 6.3 and 6.4
regarding payment to a Specified Employee and the 5-year delay of payments following certain elections shall be disregarded for purposes of the payment of the Survivor Benefit pursuant to this
Article 8
.
|
8.4.
|
Survivor Benefits Paid From Grandfathered Amounts
. To the extent that the Company pays to a Participant's Beneficiary a Survivor Benefit consisting of Grandfathered Amounts, the time and form of payment of such Grandfathered Amounts shall be governed by the Participant's election as in effect on December 31, 2006 and the terms of the Plan as in effect on December 31, 2004; provided, however, that after December 31, 2006 a Participant may make a one-time election to have all Grandfathered Amounts paid in a lump sum as of the first day of the second month after the Participant's death (regardless of whether the Participant dies before or after the date that payment of Grandfathered Amounts would otherwise commence under the Plan). In accordance with the terms of the Plan as in effect on December 31, 2004, any election to change the form of payment of Survivor Benefits from Grandfathered Amounts must be filed at least thirteen (13) months prior to the date that payment of Survivor Benefits would otherwise commence or be made, unless the Participant's Beneficiary agrees to take a ten percent (10%) reduction in the value of the Grandfathered Amounts.
|
8.5.
|
Small Benefit Payments
.
|
(a)
|
Benefits Payable Prior to January 1, 2008
. Notwithstanding the foregoing, with respect to a Survivor Benefit under the Plan that would otherwise be paid in installments prior to January 1, 2008, if the balance of the Participant's Account under the Plan as of the date that payment of the Survivor Benefit would otherwise commence is less than or equal to ten thousand dollars ($10,000), the Company shall pay such benefit in a single lump sum.
|
(b)
|
Benefits Payable After December 31, 2007
. Notwithstanding the foregoing, effective December 31, 2007 with respect to a Survivor Benefit under the Plan that would otherwise be paid in installments after December 31, 2007, if the aggregate balances of the Participant's accounts under the Plan, the Executive Deferral Plan and any other nonqualified deferred compensation arrangement that is aggregated with any portion of the Plan or the Executive Deferral Plan under Section 1.409A-1(c) of the Regulations as of the date that payment of the Survivor Benefit would otherwise commence is less than or equal to the applicable dollar amount in effect on such date under Section 402(g)(1)(B) of the Code, the Company shall pay the Survivor Benefit under the Plan in a single lump sum.
|
12.1.
|
Non-assignability
. The benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by or to any person or entity, at any time or in any manner whatsoever. These benefits shall be exempt from the claims of creditors of any Participant or other claimants and from all orders, decrees, levies, garnishment or executions against any Participant to the fullest extent allowed by law.
|
12.2.
|
No Right to Company Assets
. The benefits paid under the Plan shall be paid from the general funds of the Company, and the Participants and any Beneficiaries shall be no more than unsecured general creditors of the Company with no special or prior right to any assets of the Company for payment of any obligations under this Plan.
|
12.3.
|
Protective Provisions
. Each Participant shall cooperate with the Company by furnishing any and all information requested by the Administrator, in order to facilitate the payment of benefits under this Plan, taking such physical examinations as the Administrator may deem necessary and taking such other actions as may be requested by the Administrator. If a Participant refuses to cooperate, the Company shall have no further obligation to the Participant under the Plan. If a Participant makes any material misstatement of information or nondisclosure of medical history, then no benefits shall be payable to the Participant or the Participant's Beneficiary or estate under the Plan beyond the sum of the Participant's Annual Deferrals.
|
12.4.
|
Withholding
. Each Participant and Beneficiary shall make appropriate arrangements with the Company for satisfaction of any federal, state or local income tax withholding requirements and Social Security or other employee tax requirements applicable to the payment of benefits under the Plan. If no other arrangements are made, the Company may provide, at its discretion, for such withholding and tax payments as may be required.
|
15.1.
|
Amendment of Plan
.
|
(a)
|
The Company may at any time amend the Plan in whole or in part, provided, however, that such amendment: (i) shall not decrease the balance of the Participant's Account at the time of such amendment; and (ii) shall not retroactively decrease the applicable Crediting Rate of the Plan prior to the time of such amendment.
|
(b)
|
In addition, no amendment shall permit an acceleration of time of payment of a Participant’s benefit under the Plan, other than: (i) as necessary to comply with a certificate of divestiture, as defined in Section 1043(b)(2) of the Code; (ii) in accordance with
Sections 6.5 and 8.5
with respect to small cashouts; (iii) as necessary to pay Federal Insurance Contribution (“FICA”) taxes and any resulting federal, state, local or foreign income taxes attributable to amounts deferred under the Plan, subject to the limitations of Section 1.409A-3(j)(4)(vi) of the Regulations; (iv) in the event the arrangement fails to meet the requirements of Section 409A of the Code with respect to one or more Participants, and then only in such amount as is included in income of such Participant(s) as a result of such failure; (v) due to a termination of the Plan pursuant to
Section 15.2
that meets the requirements of Section 1.409A-3(j)(4)(ix) of the Regulations; or (vi) as otherwise may be permitted under Section 409A of the Code.
|
(c)
|
The Company may amend the Crediting Rate of the Plan prospectively, in which case the Company shall notify the Participants of such amendment in writing within thirty (30) days after such amendment.
|
15.2.
|
Termination of Plan
. The Company may terminate the Plan only as permitted by Section 1.409A-3(j)(4)(ix) of the Regulations (Plan Terminations and Liquidations), or as otherwise may be permitted by future Regulations or other guidance under Section 409A of the Code. Notwithstanding the foregoing, the Company may at any time determine to cease all future deferrals and contributions to the Plan. In such event, Participants' Accounts shall continue to be held and administered in accordance with the terms of this Plan; provided, however that the Company shall determine, in its sole discretion, whether to continue to credit Participants' Accounts with earnings at the otherwise applicable Crediting Rates or instead to credit Participants' Accounts, as of January 1 of the year that all future deferrals and contributions to the Plan are ceased, with a reasonable rate of interest, not less than the prime rate as published in the Wall Street Journal, in either case continuing until distribution of Participants' Accounts in accordance with the terms of the Plan.
|
15.3.
|
Company Action
. Except as provided in
Section 15.4
, the Company's power to amend or terminate the Plan shall be exercisable by the Company's Board of Directors or by the committee or individual authorized by the Company's Board of Directors to exercise such powers.
|
15.4.
|
Distribution on Income Inclusion Under Section 409A
. In the event the Administrator determines that amounts deferred under the Plan fail to meet the requirements of Section 409A of the Code and must be recognized as income for federal income tax purposes, distribution of the amount required to be included in income shall be made to affected Participants to the extent permitted by Section 409A of the Code.
|
16.1.
|
Successors of the Company
. The rights and obligations of the Company under the Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company.
|
16.2.
|
ERISA Plan
. The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for "a select group of management or highly compensated employees" within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA.
|
16.3.
|
Trust
. The Company shall be responsible for the payment of all benefits under the Plan. The Company may establish one or more grantor trusts for the purpose of providing for payment of benefits under the Plan. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Company's creditors. Benefits paid to the Participant from any such trust shall be considered paid by the Company for purposes of meeting the obligations of the Company under the Plan.
|
16.4.
|
Employment Not Guaranteed
. Nothing contained in the Plan nor any action taken under this Plan shall be construed as a contract of employment or as giving any Participant any right to continued employment with the Company.
|
16.5.
|
Gender, Singular and Plural
. All pronouns and variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
|
16.6.
|
Captions
. The captions of the articles and sections of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
|
16.7.
|
Validity
. If any provision of the Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provisions of the Plan.
|
16.8.
|
Waiver of Breach
. The waiver by the Company of any breach of any provision of the Plan by a Participant shall not operate or be construed as a waiver of any subsequent breach by such Participant.
|
16.9.
|
Applicable Law.
The Plan shall be governed and construed in accordance with the laws of the State of Ohio except where the laws of the State of Ohio are preempted by ERISA or the Code.
|
16.10.
|
Notice
. Any notice or filing required or permitted to be given to the Company or the Administrator under the Plan shall be sufficient if in writing and hand-delivered, or sent by first class mail, facsimile, or electronic mail to the principal office of the Company, directed to the attention of the Administrator. Such notice shall be deemed given as of the date of delivery, or, if delivery is made by mail, as of the date shown on the postmark.
|
17.1.
|
Claims Procedure
. The Administrator shall notify a Participant in writing, within ninety (90) days after his or her written application for benefits, of his or her eligibility or noneligibility for benefits under the Plan. If the Administrator determines that a Participant is not eligible for benefits or full benefits, the notice shall set forth: (a) the specific reasons for such denial; (b) a specific reference to the provisions of the Plan on which the denial is based; (c) a description of any additional information or material necessary for the claimant to perfect his or her claim, and a description of why it is needed; and (d) an explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Administrator determines that there are special circumstances requiring additional time to make a decision, the Administrator shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional ninety-day period.
|
17.2.
|
Review Procedure
. If a Participant is determined by the Administrator not to be eligible for benefits, or if the Participant believes that he or she is entitled to greater or different benefits, the Participant shall have the opportunity to have such claim reviewed by the Administrator by filing a petition for review with the Administrator within sixty (60) days after receipt of the notice issued by the Administrator. Said petition shall state the specific reasons which the Participant believes entitle him or her to benefits or to greater or different benefits. Within sixty (60) days after receipt by the Administrator of the petition, the Administrator shall afford the Participant (and counsel, if any) an opportunity to present his or her position to the Administrator in writing, and the Participant (or counsel) shall have the right to review the pertinent documents. The Administrator shall notify the Participant of its decision in writing within the sixty-day period, stating specifically the basis of its decision, written in a manner calculated to be understood by the Participant and the specific provisions of the Plan on which the decision is based. If the sixty-day period is not sufficient, the decision may be deferred for up to another sixty-day period at the election of the Administrator, but notice of this deferral shall be given to the Participant. In the event of the death of the Participant, the same procedures shall apply to the Participant's beneficiaries.
|
17.3.
|
Payment
. Any benefits paid in accordance with the procedures provided in this Article 17 shall be made consistent with the rules of Section 409A of the Code.
|
1.1.
|
Actuarial Value
shall mean the actuarial present value of the benefits calculated by an actuary selected by the Administrator and using the actuarial assumptions employed under the Qualified Plan.
|
1.2.
|
Administrator
shall mean the Parker Total Rewards Administration Committee of the Company or, if applicable, the administration subcommittee appointed by the Parker Total Rewards Administration Committee with respect to the Plan.
|
1.3.
|
Affiliated Group
shall mean The Company and all entities with which the Company would be considered a single employer under Sections 414(b) and 414(c) of the Code, provided that in applying Sections 1563(a)(1), (2), and (3) of the Code for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language "at least 50 percent" is used instead of "at least 80 percent" each place it appears in Sections 1563(a)(1), (2), and (3) of the Code, and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, "at least 50 percent" is used instead of "at least 80 percent" each place it appears in that regulation. Such term shall be interpreted in a manner consistent with the definition of "service recipient" contained in Section 409A of the Code.
|
1.4.
|
Beneficiary
shall mean the person or persons or entity designated as such in accordance with
Article 10
of the Plan.
|
1.5.
|
Change in Control
shall mean the occurrence of one of the following events:
|
(a)
|
A change in ownership of the Company, which occurs on the date that any one person or more than one person acting as a group (within the meaning of the Regulations under Section 409A of the Code) acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total voting power of the stock of the Company. Notwithstanding the foregoing, if any one person or group is considered to own more than 50% of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group is not considered to cause a change in the ownership of the Company or a change in the effective control of the Company (within the meaning of
Section 1.5(b)
of this Plan). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires ownership of more than 50% of the total voting power of the stock of the Company as a result of the acquisition by the Company of stock of the Company which, by reducing the number of shares outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change in Control would occur as a result of such an acquisition by the Company (if not for the operation of this sentence), and after the Company's acquisition such person becomes the beneficial owner of additional stock of the Company that increases the percentage of outstanding shares of stock of the Company owned by such person, a Change in Control shall then occur.
|
(b)
|
A change in effective control of the Company, which occurs on either of the following dates:
|
(i)
|
The date that any one person or more than one person acting as a group (within the meaning of the Regulations under Section 409A of the Code) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) ownership of stock of the Company possessing 30% or more of the total voting power of the Company. Notwithstanding the foregoing, if any one person or group is considered to own 30% or more of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or group is not considered to cause a change in the effective control of the Company or a change in ownership of the Company (within the meaning of
Section 1.5(a)
of this Plan). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires ownership of more than 30% of the total voting power of the stock of the Company as a result of the acquisition by the Company of stock of the Company which, by reducing the number of shares outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change in Control would occur as a result of such an acquisition by the Company (if not for the
|
(ii)
|
The date that a majority of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election was not endorsed by a majority of the members of the board prior to the date of such appointment or election.
|
(c)
|
A change in the ownership of a substantial portion of the Company’s assets, which occurs on the date that any one person or more than one person acting as a group (within the meaning of the Regulations under Section 409A of the Code) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) assets that have a total gross fair market value equal to or more than 65% of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. The gross fair market value of assets shall be determined without regard to liabilities associated with such assets. Notwithstanding the foregoing, a transfer of assets shall not result in a change in ownership of a substantial portion of the Company's assets if such transfer is to (i) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock, (ii) an entity 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (iii) a person or group (within the meaning of the Regulations under Section 409A of the Code) that owns, directly or indirectly, 50% or more of the total value or voting power of the stock of the Company; or (iv) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly by a person or group described in
Section 1.5(c)(iii)
of this Plan.
|
1.6.
|
Code
shall mean the Internal Revenue Code of 1986, as amended, or any successor statute, and regulations or other guidance issued thereunder.
|
1.7.
|
Committee
shall mean the Administrator, the Investment Committee or the Compensation Committee, as applicable.
|
1.8.
|
Compensation Committee
shall mean the Human Resources and Compensation Committee of the Company’s Board of Directors.
|
1.9.
|
Disability
shall mean the condition whereby a Participant is:
|
(a)
|
unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or
|
(b)
|
by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under any accident and health plan covering employees of the Company. The Administrator, in its complete and sole discretion, shall determine a Participant's Disability. The Administrator may require that the Participant submit to an examination on an annual basis, at the expense of the Company, by a competent physician or medical clinic selected by the Administrator to confirm Disability. On the basis of such medical evidence, the determination of the Administrator as to whether or not a condition of Disability exists or continues shall be conclusive.
|
1.10.
|
Early Retirement Date
shall mean the "Early Retirement Date" as defined in the Qualified Plan.
|
1.11.
|
EDP
shall mean the Parker-Hannifin Corporation Amended and Restated Executive Deferral Plan as it currently exists and as it may subsequently be amended.
|
1.12.
|
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.
|
1.13.
|
ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended, or any successor statute, and regulations or other guidance issued thereunder.
|
1.14.
|
Investment Committee
shall mean the Parker Total Rewards Investment Committee of the Company or, if applicable, the investment subcommittee appointed by the Parker Total Rewards Investment Committee with respect to the Plan.
|
1.15.
|
Normal Retirement Date
shall mean the "Normal Retirement Date" as defined in the Qualified Plan.
|
1.16.
|
Participant
shall mean an Eligible Executive who has become a participant hereunder pursuant to
Article 2
.
|
1.17.
|
Qualified Plan
shall mean the Parker-Hannifin Consolidated Pension Plan as it currently exists and as it may subsequently be amended, or any other qualified defined benefit plan maintained by the Company and in which an Eligible Executive participates.
|
1.18.
|
Regulations
shall mean regulations issued under Section 409A of the Code. Reference to any section of the Regulations shall be read to include any amendment or revision of such Regulation.
|
1.19.
|
Separation from Service
shall have the meaning set out in Section 1.409A-1(h) of the Regulations; provided, that in applying Section 1.409A-1(h)(ii) of the Regulations, a separation from service shall be deemed to occur if the Company and the Participant reasonably anticipate that the level of bona fide services the Participant will perform for the Affiliated Group after a certain date (whether as an employee or as an independent contractor) will permanently decrease to less than 50% of the average level of bona fide services performed by the Participant for the Affiliated Group (whether as an employee or as an independent contractor) over the immediately preceding 36-month period (or the full period of services performed for the Affiliated Group if the Participant has been providing services to the Affiliated Group for less than 36 months). In the event of a disposition of assets by the Company to an unrelated person, the Administrator reserves the discretion to specify (in accordance with Section 1.409A-1(h)(4) of the Regulations) whether a Participant, who would otherwise experience a Separation from Service with the Affiliated Group as part of
|
1.20.
|
SERP
shall mean the Parker-Hannifin Corporation Amended and Restated Supplemental Executive Retirement Benefits Program as it currently exists and as it may subsequently be amended.
|
1.21.
|
SERP Participant
shall mean a Participant in the Plan who also is a participant in the SERP.
|
1.22.
|
SERP Participation Date
shall mean the date that a Participant in the Plan becomes a SERP Participant.
|
1.23.
|
SERP Vesting Date
shall mean the date that a SERP Participant becomes vested in a benefit under the SERP.
|
1.24.
|
Specified Employee
shall mean a person designated from time to time as such by the Administrator pursuant to Section 409A(a)(2)(B)(i) of the Code and the Company's policy for determining specified employees.
|
1.25.
|
SRP
shall mean the Parker-Hannifin Corporation Amended and Restated Savings Restoration Plan as it currently exists and as it may subsequently be amended.
|
1.26.
|
Statutory Limit
shall mean any limit on compensation taken into account in calculating benefits under the Qualified Plan under Section 401(a)(17) of the Code, any limit on benefits or contributions to the Qualified Plan under Section 415 of the Code, or any other limit that directly or indirectly affects the amount of benefits payable from the Qualified Plan.
|
1.27.
|
Subsidiary
shall mean any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity.
|
1.28.
|
Surviving Spouse
shall mean the person who is the Participant's spouse at the time of the Participant's death and who has been such spouse for at least one year immediately prior to the date of the Participant's death.
|
1.29.
|
Termination of Employment
shall mean Separation from Service with the Affiliated Group for any reason whatsoever, whether voluntary or involuntary, other than as a result of the Participant's Disability or death.
|
(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.
|
3.1.
|
Amount
.
|
(a)
|
For Eligible Executives who are Participants in this Plan as of December 31, 2008, upon Termination of Employment on or after Normal or Early Retirement Date, or after the Participant has a nonforfeitable right to a benefit under the Qualified Plan, the Participant shall be entitled to a retirement benefit payable in the form provided in
Section 3.3
and at the time provided in
Section 3.4
.
|
(b)
|
For Eligible Executives who become Participants in this Plan after December 31, 2008, upon Termination of Employment on or after Normal or Early Retirement Date, or after the Participant has a nonforfeitable right to a benefit under the Qualified Plan, the Participant shall be entitled to a retirement benefit as provided in
Section 3.3
, provided that the Participant has satisfied the vesting requirement of
Section 3.2
.
|
(c)
|
The retirement benefit of a Participant under
Section 3.1(a) or 3.1(b)
of the Plan shall equal (i) the benefit that would be payable to the Participant under the Qualified Plan calculated as if (A) no Statutory Limit applies to such benefit; (B) the Participant had not elected to defer any compensation under the SRP or the EDP; (C) Compensation for purposes of calculating the benefit under the Qualified Plan includes incentive payments or bonuses (other than long term incentive payments or other irregular or extraordinary incentive or bonus payments) paid after the month in which the Participant has a Termination of Employment; and (D) Compensation and Years of Participation for purposes of calculating the benefit under the Qualified Plan include any additional amounts as agreed to by the Company, less (ii) the benefit that is actually payable under the Qualified Plan, plus (iii) any additional benefit that the Company agrees to provide to a Participant under this Plan by a written agreement with specific reference to this Plan. Notwithstanding the foregoing and solely for purposes of calculating the amount of a Participant's retirement benefit under the Plan, on and after any SERP Participant's SERP Vesting Date that occurs after December 31, 2007, the retirement benefit of such SERP Participant under
Section 3.1(a)
or
Section 3.1(b)
of the Plan shall equal the greater of: (y) the retirement benefit determined under this
Section 3.1(c)
(in the form of payment in effect on the SERP Vesting Date) as if such SERP Participant's Termination of Employment had occurred on the SERP Participation Date, and (z) the retirement benefit determined
|
3.2.
|
Vesting Requirement
. An Eligible Executive who becomes a Participant after December 31, 2008 shall satisfy the vesting requirement of this
Section 3.2
if such Participant remains employed by the Affiliated Group until the date which is 13 months after the date upon which either:
|
(a)
|
the Participant's retirement benefits under the Qualified Plan first became limited by a Statutory Limit; or
|
(b)
|
the Participant first elects to defer compensation under the SRP and/or EDP. Notwithstanding the foregoing, a Participant shall be deemed to satisfy the vesting requirement of this
Section 3.2
upon the Participant's death or Disability or the date of a Change in Control.
|
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) through (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
.
|
(i)
|
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.
|
(ii)
|
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.
|
3.4.
|
Time of Payment of Retirement Benefits
. Payment of a Participant's retirement benefit shall commence or shall be made as of the first of the month following the Participant's Termination of Employment; provided, however, that payment of retirement benefits to any Specified Employee will commence or be made on the first day of the seventh month following the Participant's Termination of Employment based on the Participant’s age and actuarial assumptions in effect on the first day of the month following the Participant’s Termination of Employment and in the case of payments paid in any form of annuity shall include any payments that would have been made between the Participant's Termination of Employment and the actual date of commencement of payment if the Participant had not been a Specified Employee. Notwithstanding the foregoing, to the extent required by
Section 3.3(b)(iii) or Section 3.3(b)(v),
payment of a Participant's retirement benefit shall commence or be made on the date that is five years from the date payment would otherwise commence or be made under this
Section 3.4
.
|
3.5.
|
Special Rule Applicable to Specified Employees
. If a Specified Employee dies after Termination of Employment but prior to commencement of benefits, the Specified Employee’s Beneficiary shall receive a payment as of the first of the month following the Specified Employee’s date of death equal to the aggregate of the monthly payments that
|
3.6.
|
Benefits in Foreign Currency
. To the extent that a Participant’s retirement benefit under this Plan is calculated with reference to a benefit denominated in a currency other than U.S. Dollars and payable over the Participant’s life expectancy, then for purposes of determining the retirement benefit payable under this Plan, such benefit shall be converted to the U.S. Dollar equivalent based on the Foreign Exchange Rate. For purposes of this Plan, the Foreign Exchange Rate means the fixed exchange rate derived from the two-point average of the Bid/Asked spread of the market implied forward exchange rates as calculated by Bloomberg's FRD function, or its successor function on the same or comparable financial information system, determined on a weighted average basis for the period beginning at the date of Separation from Service of the Participant and ending on a date estimated to be the Participant 's date of death based upon the applicable mortality table prescribed under Section 417(e) of the Code for qualified plans.
|
4.1.
|
Eligibility
. If a Participant suffers a Disability prior to Termination of Employment, the Participant shall be eligible for a benefit under this
Article 4
.
|
4.2.
|
Amount
.
|
(a)
|
Disability Before January 27, 2012
. If a Participant suffers a Disability before January 27, 2012, the amount of the benefit payable to the Participant under this
Article 4
shall be equal to the Retirement Benefit described in
Article 3
, determined as if the Participant's Termination of Employment occurred on the date of the Participant's Disability.
|
(b)
|
Disability on or After January 27, 2012
.
|
(i)
|
Disability After Age 55
. If a Participant suffers a Disability on or after January 27, 2012 and after the Participant's attainment of age 55, the amount of the benefit payable to the Participant under this
Article 4
shall be equal to the Actuarial Value of the Retirement Benefit described in
Article 3
, determined as if the Participant was not a Specified Employee and had retired on the date of his or her Disability.
|
(ii)
|
Disability Before Age 55
. If a Participant suffers a Disability on or after January 27, 2012 and prior to the Participant's attainment of age 55, then the amount of the benefit payable to the Participant under this
Article 4
shall be determined by (i) calculating the Actuarial Value of the Retirement Benefit described in
Article 3
(using the actuarial assumptions and the Participant's Compensation determined as of the date of the Participant's Disability) that the Participant would be eligible to receive as of the first of the month following attainment of age 55 if the Participant had not become Disabled and had continued to be employed by the Company (with credit for Years of Participation) until retirement on the date that the Participant would attain age 55 (assuming, for this purpose, that the Participant would not be a Specified Employee on such date); and (ii) discounting the amount determined under the preceding clause (i) from the first of the month following the date the Participant would attain age 55 to the first of the month following the Participant's Disability, using the actuarial assumptions in effect on the date of the Participant's Disability.
|
4.3.
|
Form of Disability Benefits
.
|
(a)
|
Disability Before January 27, 2012
. If a Participant suffers a Disability before January 27, 2012, the Participant's disability benefit pursuant to this
Article 4
shall be paid in the form of a single life annuity; provided, however, that 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 disability benefit under this
Section 4.2(a)
in a single lump sum.
|
(b)
|
Disability on or After January 27, 2012
. If a Participant suffers a Disability on or after January 27, 2012, the Participant's disability benefit pursuant to this
Article 4
shall be paid in the form of a single lump sum payment.
|
4.4.
|
Time of Payment of Disability Benefits
. Payment of a Participant's disability benefit shall be made (or commence, as applicable) as of the first of the month following the Participant's Disability, and the provisions of
Article 3
regarding payment to a Specified Employee and the 5-year delay of payments following certain elections shall be disregarded for purposes of the payment of benefits pursuant to this
Article 4
.
|
5.1.
|
Amount
. If a Participant dies prior to Termination of Employment and a benefit is payable to the Participant's Surviving Spouse under the Qualified Plan, the Participant's Surviving Spouse shall be eligible for a survivor benefit under this
Article 5
. The survivor benefit payable to a Participant's Surviving Spouse under this
Article 5
shall equal the Actuarial
|
5.2.
|
Form of Survivor Benefits
. The survivor benefit payable under this
Article 5
shall be paid to the Participant's Surviving Spouse in the form of a single lump sum payment.
|
5.3.
|
Time of Payment of Survivor Benefits
. Payment of the survivor benefit shall be made as of the first of the month following the date of the Participant's death, and the provisions of
Article 3
regarding payment to a Specified Employee and the 5-year delay of payments following certain elections shall be disregarded for purposes of the payment of survivor benefits pursuant to this
Article 5
.
|
6.1.
|
Non-assignability
. The benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by or to any person or entity, at any time or any manner whatsoever. These benefits shall be exempt from the claims of creditors of any Participant or other claimants and from all orders, decrees, levies, garnishment or executions against any Participant to the fullest extent allowed by law.
|
6.2.
|
No Right to Company Assets
. The benefits paid under the Plan shall be paid from the general funds of the Company, and the Participant and any Beneficiary shall be no more than unsecured general creditors of the Company with no special or prior right to any assets of the Company for payment of any obligations hereunder.
|
6.3.
|
Protective Provisions
. The Participant shall cooperate with the Company by furnishing any and all information requested by the Administrator, in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Administrator may deem necessary and taking such other actions as may be requested by the Administrator. If the Participant refuses to cooperate, the Company shall have no further obligation to the Participant under the Plan. In the event of a Participant's suicide during the first two (2) years of participation in the Plan, or if the Participant makes any material misstatement of information or nondisclosure of medical history, then no benefits shall be payable to the Participant or the Participant's Beneficiary under the Plan.
|
6.4.
|
Withholding
. The Participant or the Beneficiary shall make appropriate arrangements with the Company for satisfaction of any federal, state or local income tax withholding requirements and Social Security or other employee tax requirements applicable to the payment of benefits under the Plan. If no other arrangements are made, the Company may provide, at its discretion, for such withholding and tax payments as may be required.
|
9.1.
|
Amendment of Plan
.
|
(a)
|
The Company may at any time amend the Plan in whole or in part, provided, however, that such amendment shall not decrease the value of benefits accrued under the Plan prior to the time of such amendment.
|
(b)
|
In addition, no amendment shall permit an acceleration of time of payment of a Participant’s benefit under the Plan, other than:
|
(i)
|
as necessary to comply with a certificate of divestiture, as defined in Section 1043(b)(2) of the Code;
|
(ii)
|
in accordance with
Section 3.2(e)
with respect to small cashouts;
|
(iii)
|
as necessary to pay Federal Insurance Contribution (“FICA”) taxes and any resulting federal, state, local or foreign income taxes attributable to amounts deferred under the Plan, subject to the limitations of Section 1.409A-3(j)(4)(vi) of the Regulations;
|
(iv)
|
in the event the arrangement fails to meet the requirements of Section 409A of the Code with respect to one or more Participants, and then only in such amount as is included in income of such Participant(s) as a result of such failure;
|
(v)
|
due to a termination of the Plan pursuant to
Section 9.2
of the Plan that meets the requirements of Section 1.409A-3(j)(4)(ix) of the Regulations; or
|
(vi)
|
as otherwise may be permitted under Section 409A of the Code.
|
9.2.
|
Termination of Plan
. The Company may terminate the Plan only as permitted by Section 1.409A-3(j)(4)(ix) of the Regulations (Plan Terminations and Liquidations), or as otherwise may be permitted by future Regulations or other guidance under Section 409A of the Code.
|
9.3.
|
Company Action
. Except as provided in
Section 9.4
, the Company's power to amend or terminate the Plan shall be exercisable by the Company's Board of Directors or by the committee or individual authorized by the Company's Board of Directors to exercise such powers.
|
9.4.
|
Distribution on Income Inclusion Under Section 409A
. In the event the Administrator determines that benefits under the Plan fail to meet the requirements of Section 409A of the Code and must be recognized as income for federal income tax purposes, distribution of the amount required to be included in income shall be made to affected Participants to the extent permitted by Section 409A of the Code.
|
11.1.
|
Successors of the Company
. The rights and obligations of the Company under the Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company.
|
11.2.
|
ERISA Plan
. The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for "a select group of management or highly compensated employees" within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA.
|
11.3.
|
Trust
. The Company shall be responsible for the payment of all benefits under the Plan. The Company may establish one or more grantor trusts for the purposes of providing for payment of benefits under the Plan. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Company's creditors. Benefits paid to the Participant from any such trust shall be considered paid by the Company for purposes of meeting the obligations of the Company under the Plan.
|
11.4.
|
Employment Not Guaranteed
. Nothing contained in the Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Participant any right to continued employment with the Company.
|
11.5.
|
Gender, Singular and Plural
. All pronouns and variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
|
11.6.
|
Captions
. The captions of the articles and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
|
11.7.
|
Validity
. If any provision of the Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provisions of the Plan.
|
11.8.
|
Waiver of Breach
. The waiver by the Company of any breach of any provision of the Plan by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.
|
11.9.
|
Applicable Law
. The Plan shall be governed and construed in accordance with the laws of the State of Ohio except where the laws of the State of Ohio are preempted by ERISA.
|
11.10.
|
Notice
. Any notice or filing required or permitted to be given to the Company under the Plan shall be sufficient if in writing and hand-delivered, or sent by first class mail to the principal office of the Company, directed to the attention of the Administrator. Such notice shall be deemed given as of the date of delivery, or, if delivery is made by mail, as of the date shown on the postmark.
|
12.1.
|
Claims Procedure
. The Administrator shall notify a Participant in writing, within ninety (90) days after his or her written application for benefits, of his or her eligibility or noneligibility for benefits under the Plan. If the Administrator determines that a Participant is not eligible for benefits or full benefits, the notice shall set forth:
|
(a)
|
the specific reasons for such denial;
|
(b)
|
a specific reference to the provisions of the Plan on which the denial is based;
|
(c)
|
a description of any additional information or material necessary for the claimant to perfect his or her claim, and a description of why it is needed; and
|
(d)
|
an explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Administrator determines that there are special circumstances requiring additional time to make a decision, the Administrator shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional ninety-day period.
|
12.2.
|
Review Procedure
. If a Participant is determined by the Administrator not to be eligible for benefits, or if the Participant believes that he or she is entitled to greater or different benefits, the Participant shall have the opportunity to have such claim reviewed by the Administrator by filing a petition for review with the Administrator within sixty (60) days after receipt of the notice issued by the Administrator. Said petition shall state the specific reasons which the Participant believes entitle him or her to benefits or to greater or different benefits. Within sixty (60) days after receipt by the Administrator of the petition, the Administrator shall afford the Participant (and counsel, if any) an opportunity to present his or her position to the Administrator in writing, and the Participant (or counsel) shall have the right to review the pertinent documents. The Administrator shall notify the Participant of its decision in writing within the sixty-day period, stating specifically the basis of its decision, written in a manner calculated to be understood by the Participant and the specific provisions of the Plan on which the decision is based. If the sixty-day period is not sufficient, the decision may be deferred for up to another sixty-day period at the election of the Administrator, but notice of this deferral shall be given to the Participant. In the event of the death of the Participant, the same procedures shall apply to the Participant's Beneficiary.
|
1.1
|
Account
shall mean the sum of the Annual Deferral Account, all LTI Deferral Accounts (vested and unvested), and all Discretionary Company Credit Accounts, if any.
|
1.2
|
Administrator
shall mean the Parker Total Rewards Administration Committee of the Company or, if applicable, the administration subcommittee appointed by the Parker Total Rewards Administration Committee with respect to the Plan.
|
1.3
|
Affiliated Group
shall mean the Company and all entities with which the Company would be considered a single employer under Sections 414(b) and 414(c) of the Code, provided that in applying Section 1563(a)(1), (2), and (3) of the Code for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the
|
1.4
|
Annual Deferral
shall mean the amount of Compensation which the Participant elects to defer for a Plan Year pursuant to
Articles 2 and 3
.
|
1.5
|
Annual Deferral Account
shall mean the notional account established with respect to a Participant’s Annual Deferrals for recordkeeping purposes pursuant to
Article 5
.
|
1.6
|
Beneficiary
shall mean the person or persons or entity designated as such in accordance with
Article 14
.
|
1.7
|
Board
shall mean the Board of Directors of the Company.
|
1.8
|
Bonuses
shall mean:
|
(a)
|
For amounts that are due and payable before January 1, 2007, amounts payable in cash to the Participant by the Company, in the form of annual and other regular periodic bonuses, before reductions for deferrals under this Plan,
the Savings Plan or the Savings Restoration Plan. “Annual and other regular periodic bonuses” shall include amounts payable under the Company’s Return on Net Assets (RONA) Plan and the Target Incentive Program, but shall exclude any payments under any long-term incentive program, any volume incentive or similar bonus program, and any other extraordinary bonus or incentive program.
|
(b)
|
For Plan Years beginning on and after January 1, 2007, amounts payable to the Participant by the Company in August of each such Plan Year under the Company’s RONA Plan (except to the extent determined by the Compensation Committee to be extraordinary) and Target Incentive Program.
|
1.9
|
Business Combination
shall mean a merger, consolidation, share exchange or similar form of corporate reorganization of the Company or any Subsidiary that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in connection with the transaction or otherwise.
|
1.10
|
Change in Control
shall mean the occurrence of one of the following events:
|
(a)
|
A change in ownership of the Company, which occurs on the date that any one person or more than one person acting as a group (within the meaning of the Regulations under Section 409A of the Code) acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more
|
(b)
|
A change in effective control of the Company, which occurs on either of the following dates:
|
(i)
|
The date that any one person or more than one person acting as a group (within the meaning of the Regulations under Section 409A of the Code) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) ownership of stock of the Company possessing 30% or more of the total voting power of the Company. Notwithstanding the foregoing, if any one person or group is considered to own 30% or more of total voting power of the stock of the Company, the acquisition of additional stock by the same person or group is not considered to cause a change in the effective control of the Company or a change in ownership of the Company (within the meaning of
Section 1.10(a)
of this Plan). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires ownership of more than 30% of the total voting power of the stock of the Company as a result of the acquisition by the Company of stock of the Company which, by reducing the number of shares outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change in Control would occur as a result of such an acquisition by the Company (if not for the operation of this sentence), and after the Company’s acquisition such person becomes the beneficial owner of additional stock of the Company that increases the percentage of outstanding shares of stock of the Company owned by such person, a Change in Control shall then occur.
|
(ii)
|
The date that a majority of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election
|
(c)
|
A change in the ownership of a substantial portion of the Company’s assets, which occurs on the date that any one person or more than one person acting as a group (within the meaning of the Regulations under Section 409A of the Code) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) assets that have a total gross fair market value equal to or more than 65% of the total gross fair market value of all the assets of the Company immediately before such acquisition or acquisitions. The gross fair market value of assets shall be determined without regard to liabilities associated with such assets. Notwithstanding the foregoing, a transfer of assets shall not result in a change in ownership of a substantial portion of the Company’s assets if such transfer is to (A) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock, (B) an entity 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (C) a person or group (within the meaning of the Regulations under Section 409A of the Code) that owns, directly or indirectly, 50% or more of the total value or voting power of the stock of the Company, or (D) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly by a person or group described in
Section 1.10(c)(iii)
of this Plan.
|
1.11
|
Code
shall mean the Internal Revenue Code of 1986, as amended, or any successor statute, and regulations or other guidance issued thereunder.
|
1.12
|
Committee
shall mean the Administrator, the Investment Committee or the Compensation Committee, as applicable.
|
1.13
|
Company Voting Securities
shall mean securities of the Company eligible to vote for the election of the Board.
|
1.14
|
Compensation
shall mean the sum of the Participant’s Salary and anticipated Bonuses for a Plan Year before reductions for deferrals under this Plan, the Savings Plan, the Savings Restoration Plan, the Parker-Hannifin Corporation Cafeteria Plan, or the Group Insurance Plan for Hourly and Salaried Employees of Parker-Hannifin Corporation. Compensation shall not include any amounts payable on account of Termination of Employment, whether paid periodically or in a lump sum.
|
1.15
|
Compensation Committee
shall mean the Human Resources and Compensation Committee of the Board.
|
1.16
|
Corporate Change Vesting Event
shall mean any of the following events have occurred:
|
(a)
|
any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding Company Voting Securities; provided, however, that the event described in this paragraph shall not be deemed to be a Corporate Change Vesting Event by virtue of any of the following situations: (i) an acquisition by the Company or any Subsidiary; (ii) an acquisition by any employee benefit plan sponsored or maintained by the Company or any Subsidiary; (iii) an acquisition by any underwriter temporarily holding securities pursuant to an offering of such securities; (iv) a Non-Control Transaction (as defined in paragraph (c)); (v) as pertains to a Participant, any acquisition by the Participant or any group of persons (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act) including the Participant (or any entity in which the Participant or a group of persons including the Participant, directly or indirectly, holds a majority of the voting power of such entity’s outstanding voting interests); or (vi) the acquisition of Company Voting Securities from the Company, if a majority of the Board approves a resolution providing expressly that the acquisition pursuant to this clause (vi) does not constitute a Corporate Change Vesting Event under this paragraph (a);
|
(b)
|
individuals who, at the beginning of any period of twenty-four (24) consecutive months, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof; provided, that any person becoming a director subsequent to the beginning of such twenty-four (24) month period, whose election, or nomination for election, by the Company’s shareholders was approved by a vote of at least two-thirds of the directors comprising the Incumbent Board who are then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be, for purposes of this paragraph (b), considered as though such person were a member of the Incumbent Board; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be a member of the Incumbent Board;
|
(c)
|
the consummation of a Business Combination, unless: (i) immediately following such Business Combination: (A) more than 50% of the total voting power of the Surviving Corporation resulting from such Business Combination or, if applicable, the Parent Corporation of such Surviving Corporation, is represented by Company Voting Securities that were outstanding immediately prior to the Business Combination (or, if applicable, shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan sponsored or maintained by the Surviving Corporation or the Parent Corporation) is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation), and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation), following the Business Combination, were members of the Incumbent Board at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (a “Non-Control Transaction”) or (ii) the Business Combination is effected by means of the acquisition of Company Voting Securities from the Company, and a majority of the Board approves a resolution providing expressly that such Business Combination does not constitute a Corporate Change Vesting Event under this paragraph (c); or
|
(d)
|
the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company and its Subsidiaries.
|
1.17
|
Crediting Rate
shall mean any notional gains or losses equal to those generated as if the Participant’s Account balance had been invested in one or more of the investment portfolios designated as available by the Investment Committee, less separate account fees and less applicable administrative charges determined annually by the Administrator.
|
1.18
|
Disability
shall mean the condition whereby a Participant is (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (b) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under any accident and health plan covering employees of the Company. The Administrator, in its complete and sole discretion, shall determine a Participant’s Disability. The Administrator may require that the Participant submit to an examination on an annual basis, at the expense of the Company, by a competent physician or medical clinic selected by the Administrator to confirm Disability. On the basis of such medical evidence, the determination of the
|
1.19
|
Discretionary Company Credit
shall mean the amount, if any, which the Company credits to a Participant’s Account in accordance with
Article 4
.
|
1.20
|
Discretionary Company Credit Account
shall mean the one or more notional accounts established with respect to a Participant’s Discretionary Company Credits, if any, for recordkeeping purposes pursuant to
Article 5
.
|
1.21
|
Early Retirement Date
shall mean age 55 with ten or more years of employment with the Company; provided, however, that any Early Retirement prior to age 60 must be with the consent of the Compensation Committee.
|
1.22
|
Eligible Executive
shall mean a key 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.
|
1.23
|
ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended, or any successor statute, and regulations or other guidance issued thereunder.
|
1.24
|
Investment Committee
shall mean the Parker Total Rewards Investment Committee of the Company or, if applicable, the investment subcommittee appointed by the Parker Total Rewards Investment Committee with respect to the Plan.
|
1.25
|
LTI Deferral
shall mean the amount of any LTI Payment which the Participant elects to defer with respect to a Plan Year pursuant to
Articles 2 and 3
.
|
1.26
|
LTI Deferral Account
shall mean the one or more notional accounts established with respect to a Participant’s LTI Deferrals for recordkeeping purposes pursuant to
Article 5
.
|
1.27
|
LTI Payment
shall mean the amount that would otherwise be payable to an Eligible Executive for a Plan Year under any long-term incentive program of the Company.
|
1.28
|
Normal Retirement Date
shall mean the date on which a Participant attains age 65.
|
1.29
|
Parent Corporation
shall mean the ultimate parent corporation which directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of a Surviving Corporation.
|
1.30
|
Participant
shall mean an Eligible Executive who has elected to participate and has completed a Participation Agreement pursuant to
Article 2
.
|
1.31
|
Participation Agreement
shall mean the Participant’s written election to participate in the Plan.
|
1.32
|
Performance Period
shall have the meaning provided by the applicable long-term incentive program of the Company.
|
1.33
|
Plan Year
shall mean the calendar year.
|
1.34
|
Retirement
shall mean a termination of employment following Normal or Early Retirement Date.
|
1.35
|
Salary
shall mean the Participant’s annual basic rate of pay from the Company (excluding Bonuses, commissions and other non-regular forms of compensation) before reductions for deferrals under this Plan, the Savings Plan, the Savings Restoration Plan, the Parker-Hannifin Corporation Cafeteria Plan, or the Group Insurance Plan for Hourly and Salaried Employees of Parker-Hannifin Corporation.
|
1.36
|
Savings Plan
shall mean The Parker Retirement Savings Plan as it currently exists and as it may subsequently be amended.
|
1.37
|
Savings Restoration Plan
shall mean the Parker-Hannifin Corporation Amended and Restated Savings Restoration Plan as it currently exists and as it may subsequently be amended.
|
1.38
|
Separation from Service
shall have the meaning set out in Section 1.409A-1(h) of the Regulations; provided, that in applying Section 1.409A-1(h)(ii) of the Regulations, a separation from service shall be deemed to occur if the Company and the Participant reasonably anticipate that the level of bona fide services the Participant will perform for the Affiliated Group after a certain date (whether as an employee or as an independent contractor) will permanently decrease to less than 50% of the average level of bona fide services performed by the Participant for the Affiliated Group (whether as an employee or as an independent contractor) over the immediately preceding 36-month period (or the full period of services performed for the Affiliated Group if the Participant has been providing services to the Affiliated Group for less than 36 months). In the event of a disposition of assets by the Company to an unrelated person, the Administrator reserves the discretion to specify (in accordance with Section 1.409A-1(h)(4) of the Regulations) whether a Participant who would otherwise experience a Separation from Service with the Company as part of the disposition of assets will be considered to experience a separation from service for purposes of Section 1.409A-1(h) of the Regulations.
|
1.39
|
Specified Employee
shall mean a person designated from time to time as such by the Administrator pursuant to Section 409A(a)(2)(B)(i) of the Code and the Company’s policy for determining specified employees.
|
1.40
|
Subsidiary
shall mean any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity.
|
1.41
|
Surviving Corporation
shall mean the corporation resulting from a Business Combination.
|
1.42
|
Termination of Employment
shall mean Separation from Service from the Affiliated Group, other than Separation from Service due to Retirement, Disability or death.
|
1.43
|
Unforeseeable Emergency
shall mean a severe financial hardship arising from (a) the illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent (as defined in Section 152(a) of the Code), (b) loss of the Participant’s property due to casualty, or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The determination of when a Participant has incurred an Unforeseeable Emergency shall be made by the Administrator in its sole discretion, pursuant to and subject to the conditions of Section 409A of the Code and Regulations thereunder.
|
1.44
|
Valuation Date
shall mean each day on which the New York Stock Exchange is open, except that for purposes of determining the value of a distribution under
Article 6, 7, 8, 9 or 15
, it shall mean the 24th day of each month (or the most recent business day preceding such date) immediately preceding the month in which a distribution is to be made.
|
2.1
|
Participation Agreement/Deferrals
.
|
(a)
|
An Eligible Executive shall become a Participant in the Plan on the first day of the Plan Year following appointment as an Eligible Executive and submission to the Administrator of an Annual Participation Agreement. To be effective, the Eligible Executive must submit the Annual Participation Agreement to the Administrator prior to the beginning of the Plan Year and during the enrollment period designated by the Administrator. In the Annual Participation Agreement, and subject to the restrictions in
Article 3
, the Eligible Executive shall designate the Annual Deferral for the covered Plan Year.
|
(b)
|
With respect to those Participants who are eligible for an LTI Payment pursuant to a long-term incentive award from the Company for a performance cycle beginning before July 1, 2008, the Administrator shall provide for an enrollment period and LTI Participation Agreements each year under which the Participant may designate any LTI Deferrals for a specified Plan Year. To be effective, the Participant must submit the LTI Participation Agreement during the enrollment period designated by the Administrator pursuant to
Section 6.4(c)
of this Plan. Except as otherwise determined by the Administrator, no LTI Deferrals shall be allowed with respect to any long-term incentive award period beginning on or after July 1, 2008.
|
2.2
|
Continuation of Participation
. An Eligible Executive who has become a Participant in the Plan shall continue as a Participant in the Plan even though such executive ceases to be an Eligible Executive. However, a Participant shall not be eligible to elect a new Annual Deferral or LTI Deferral unless the Participant is an Eligible Executive for the Plan Year for which the election is made.
|
3.1
|
Deferral Commitment
.
|
(a)
|
A Participant may elect in the Annual Participation Agreement to defer an amount equal to a specified dollar amount of Salary to be earned by such Participant during the next Plan Year and a percentage (up to a maximum specified dollar amount) of Bonuses to be earned by such Participant during the Company’s fiscal year beginning during the next Plan Year.
|
(b)
|
A Participant may elect in the LTI Participation Agreement to defer an amount equal to a specified dollar amount or a percentage of the LTI Payment that may be payable to the Participant in the next Plan Year pursuant to a long-term incentive award from the Company for a performance cycle beginning before July 1, 2008.
|
(c)
|
Annual Deferrals and LTI Deferrals under this Plan shall be irrevocable.
|
3.2
|
Minimum Annual Election
.
|
(a)
|
A Participant’s elected Annual Deferral for a Plan Year must equal at least five thousand dollars ($5,000), from either Salary or Bonuses or a combination of Salary and Bonuses.
|
(b)
|
The elected LTI Deferral for a Plan Year must equal at least five thousand dollars ($5,000).
|
(c)
|
Where a Participant elects to defer a specified percentage of Salary, Bonuses, and/or LTI Payment, the determination of whether the Annual Deferral or LTI Deferral is at least five thousand dollars ($5,000) shall be made by multiplying the applicable elected percentages of Salary, Bonuses, and/or LTI Payment to be deferred by the Participant’s anticipated Salary, Bonuses, and/or LTI Payment in the Plan Year immediately preceding the Plan Year for which the Deferral is being made. The Administrator may, in its sole discretion, permit Participants to elect to defer amounts in the form of a percentage based on anticipated future Salary, Bonuses, and/or LTI Payments.
|
3.3
|
Maximum Deferral Commitment
.
|
(a)
|
Maximum Annual Deferral
.
|
(i)
|
Effective January 1, 2005, the Annual Deferral for any Plan Year may not exceed 90% of Salary plus 90% of Bonuses; provided, that the Annual Deferral may not reduce the Participant’s income to an amount below the old age, survivor, and disability insurance wage base under Social Security.
|
(ii)
|
Effective January 1, 2007, the Annual Deferral for any Plan Year may not exceed 80% of Salary plus 80% of Bonuses; provided, that the Annual Deferral may not reduce the Participant’s income to an amount below the old age, survivor, and disability insurance wage base under Social Security.
|
(b)
|
Maximum LTI Deferral
. The maximum LTI Deferral for a Plan Year is 100% of the LTI Payment.
|
3.4
|
Vesting
. Subject to
Section 12.3
:
|
(a)
|
The Participant’s right to the value of his or her Annual Deferral Account, as adjusted for gains and losses, shall be 100% vested at all times.
|
(b)
|
The Participant’s right to the value of each LTI Deferral Account, as adjusted for gains and losses, shall be 100% vested as of the third June 30 following the time the LTI Deferral Account is established; provided, however, that the Participant shall be fully vested in all LTI Deferrals as of the time: (i) the Participant is vested in his or her benefit under the Parker-Hannifin Corporation Amended and Restated Supplemental Executive Retirement Benefits Program; (ii) the Participant retires prior to age 60 with permission of the Compensation Committee; (iii) the Participant retires due to Disability; (iv) the Participant dies; (v) there is a Corporate Change Vesting Event; or (vi) the Plan terminates.
|
(c)
|
Unless otherwise provided by the Compensation Committee in the notice of award, the Participant’s right to the value of each Discretionary Company Credit Account, if any, as adjusted for gains and losses, shall be 100% vested at all times.
|
5.1
|
Accounts
. Solely for recordkeeping purposes, the Company shall maintain for each Participant one Annual Deferral Account for all Annual Deferrals, a separate LTI Deferral Account with respect to each LTI Deferral made by the Participant, and a separate Discretionary Company Credit Account with respect to each Discretionary Company Credit, if any, made by the Company with respect to the Participant.
|
5.2
|
Timing of Credits—Pre-Termination
. Each Plan Year, the Company shall credit to the Annual Deferral Account a Participant’s Annual Deferrals as of the time the deferrals would otherwise have been paid to the Participant but for the Annual Deferral election, the Company shall credit to a separate LTI Deferral Account a Participant’s LTI Deferral as of the time the deferrals would otherwise have been paid to the Participant but for the LTI Deferral election, and the Company shall credit to a separate Discretionary Company Credit Account a Participant’s Discretionary Company Credit, if any, as of the time stated in the notice of award with respect to any such Discretionary Company Credit. Gains or losses shall be credited to the Participant’s Account as of the close of business on each Valuation Date, based on the Crediting Rate(s) in effect for the day under
Section 1.17
.
|
5.3
|
Terminations
. Following a Participant’s Termination of Employment, Retirement or death, gains or losses shall continue to be credited to the Participant’s Account through the final Valuation Date.
|
5.4
|
Statement of Accounts
. The Administrator shall provide periodically to each Participant a statement setting forth the balance of the Annual Deferral Account and each LTI Deferral Account maintained for such Participant.
|
6.1
|
Amount
. Upon Retirement, the Company shall pay to the Participant the value of his or her Account at the time and in the manner selected by the Participant pursuant to the rules set forth in this
Article 6
.
|
6.2
|
Form of Retirement Benefits
. The Retirement Benefit shall be paid monthly over a period of fifteen (15) years; provided, however, that the Participant may elect in accordance with the terms of
Section 6.4
to have payment made in one of the following options:
|
(a)
|
a single lump sum payment in cash;
|
(b)
|
monthly installments over 5, 10 or 15 years; or
|
(c)
|
an annual lump sum amount equal to a specified whole number percentage (1-8%) of the account balance as of the Valuation Date preceding each such annual payment, plus monthly installments of the remaining balance of the Account over 5, 10 or 15 years. Annual lump sum payments pursuant to this
Section 6.2(c)
, with respect to all Retirement Benefits under this Plan, including Grandfathered
|
6.3
|
Time of Payment
. Payment of a Participant’s Account shall be made or shall begin as of the first day of the second month after the Participant’s Retirement or on the first day of the month following the first, second, third, fourth or fifth anniversary of the Participant’s Retirement, as elected by the Participant in accordance with the terms of
Section 6.4
. Notwithstanding the foregoing, payment to any Specified Employee will commence on the first day of the seventh month following the Participant’s Retirement and shall include any payments that would have been made between the Participant’s Retirement and the actual date of commencement of payment if the Participant had not been a Specified Employee.
|
6.4
|
Elections
.
|
(a)
|
Initial Election
. A Participant shall elect the time and form of payment of his or her Account payable on Retirement on his or her initial Participation Agreement, in accordance with such rules as the Administrator shall reasonably apply.
|
(b)
|
One-Time Change by Participant
. To the extent permitted by Section 409A of the Code, a Participant may make a one-time election to delay payment or change the form of payment at any time up to 12 months before the first scheduled payment; provided, however, that (i) any such election shall not be effective for at least 12 months following the date made; and (ii) 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 6.3
on account of a Participant’s status as a Specified Employee).
|
(c)
|
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 or her Account under this Plan, provided that: (i) 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,
|
6.5
|
Small Benefit Exception
.
|
(d)
|
Benefits Payable Prior to January 1, 2008
. Notwithstanding the foregoing, with respect to a Participant’s Retirement Benefit under the Plan that would otherwise be paid in installments (or as a combination of lump sums and installments) prior to January 1, 2008, if the balance of the Participant’s Account under the Plan as of the date payment would otherwise commence is less than or equal to ten thousand dollars ($10,000), 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 6.5(a)
will be made on the first day of the seventh month following the Participant’s Termination of Employment.
|
(e)
|
Benefits Payable After December 31, 2007
. Notwithstanding the foregoing, effective December 31, 2007 with respect to a Participant’s Retirement Benefit under the Plan that would otherwise be paid in installments (or as a combination of lump sums and installments) after December 31, 2007, if the aggregate balances of the Participant’s accounts under the Plan, the Savings Restoration Plan and any other nonqualified deferred compensation arrangement that is aggregated with any portion of the Plan or the Savings Restoration Plan under Section 1.409A-1(c) of the Regulations as of the date payment would otherwise commence is less than or equal to 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 6.5(b)
will be made on the first day of the seventh month following the Participant’s Termination of Employment.
|
7.1
|
Amount and Time of Payment
. As of the first day of the second month after Termination of Employment, the Company shall pay to the Participant a termination benefit equal to the vested balance as of the Valuation Date of the Participant’s Account. Notwithstanding the foregoing, payment of a Termination Benefit to any Specified Employee pursuant to this
Article 7
will be made on the first day of the seventh month following the Participant’s Termination of Employment.
|
7.2
|
Form of Termination Benefits
. The Company shall pay the termination benefits in a single lump sum.
|
8.1
|
Amount
. If the Participant dies (whether before or after Retirement or other Termination of Employment) with any balance remaining in his or her Account, the Company shall pay to the Participant’s Beneficiary a Survivor Benefit equal to the vested balance of the Account on the date of death.
|
8.2
|
Form of Survivor Benefits
. The Company shall pay the vested balance of the Participant’s Account in a single lump sum payment in cash; provided, however, that the Participant may elect in accordance with the terms of
Section 6.4
to have payment made in one of the following options:
|
(d)
|
a single lump sum payment in cash; or
|
(e)
|
monthly installments over 5, 10 or 15 years.
|
8.3
|
Time of Payment
. Payment of Survivor Benefits shall be made or shall begin as of the first day of the second month following the date of death, and the provisions of
Sections 6.3 and 6.4
regarding payment to a Specified Employee and the 5-year delay of payments following certain elections shall be disregarded for purposes of the payment of the Survivor Benefit pursuant to this
Article 8
.
|
8.4
|
Survivor Benefits Paid From Grandfathered Amounts
. To the extent that the Company pays to a Participant’s Beneficiary a Survivor Benefit consisting of Grandfathered Amounts, the time and form of payment of such Grandfathered Amounts shall be governed by the Participant’s election as in effect on December 31, 2006 and the terms of the Plan as in effect on December 31, 2004; provided, however, that after December 31, 2006 a Participant may make a one-time election to have all Grandfathered Amounts paid in a lump sum as of the first of the second month after the Participant’s death (regardless of whether the Participant dies before or after the date that payment of Grandfathered Amounts would otherwise commence under the Plan). In accordance with the terms of the Plan as in effect on December 31, 2004, any election to change the form of payment of Survivor Benefits from Grandfathered Amounts must be filed at least thirteen (13) months prior to the date that payment of the Survivor Benefits would otherwise commence or be made, unless the Participant’s Beneficiary agrees to take a ten percent (10%) reduction in the value of the Grandfathered Amounts.
|
8.5
|
Small Benefit Payments
.
|
(a)
|
Benefits Payable Prior to January 1. 2008
. Notwithstanding the foregoing, with respect to a Survivor Benefit under the Plan that would otherwise be paid in installments prior to January 1, 2008, if the vested balance of the Participant’s
|
(b)
|
Benefits Payable After December 31, 2007
. Notwithstanding the foregoing, effective December 31, 2007 with respect to a Survivor Benefit under the Plan that would otherwise be paid in installments after December 31, 2007, if the aggregate vested balances of the Participant’s accounts under the Plan, the Savings Restoration Plan and any other nonqualified deferred compensation arrangement that is aggregated with any portion of the Plan or the Savings Restoration Plan under Section 1.409A-1(c) of the Regulations as of the date payment would otherwise commence is less than or equal to the applicable dollar amount in effect on such date under Section 402(g)(1)(B) of the Code, the Company shall pay the Survivor Benefit under the Plan in a single lump sum.
|
10.1
|
Distribution
. If a Change in Control occurs, the Participant (or after the Participant’s death the Participant’s Beneficiary) shall receive a lump sum payment of the balance of the Participant’s Account within thirty (30) days after the Change of Control. In the event either: (a) such a distribution is made on a Change in Control; or (b) the Participant’s employment is terminated prior to a Change in Control and the Participant reasonably demonstrates that such termination was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control (such a termination of employment an “Anticipatory Termination”) and the Participant receives a lump sum payment of the Participant’s Account in connection with such Anticipatory Termination, the Participant shall receive an additional adjustment payment within thirty (30) days after the Change in Control calculated in accordance with the formula set forth in
Exhibit A
hereto.
|
10.2
|
Gross-Up Payment
. In addition to any other amounts payable under this Plan, in the event it shall be determined that any payment, distribution or acceleration of vesting of any benefit under this Plan would be subject to the excise tax imposed by Section 4999 of the Code, or any successor provision, or any interest or penalties are incurred by the Participant with respect to such excise tax, then the Participant shall be entitled to receive
|
12.1
|
Non-assignability
. The benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by or to any person or entity, at any time or in any manner whatsoever. These benefits shall be exempt from the claims of creditors of any Participant or other claimants and from all orders, decrees, levies, garnishment or executions against any Participant to the fullest extent allowed by law.
|
12.2
|
No Right to Company Assets
. The benefits paid under the Plan shall be paid from the general funds of the Company, and the Participants and any Beneficiaries shall be no more than unsecured general creditors of the Company with no special or prior right to any assets of the Company for payment of any obligations under this Plan.
|
12.3
|
Protective Provisions
. The Participant shall cooperate with the Company by furnishing any and all information requested by the Administrator, in order to facilitate the payment of benefits under this Plan, taking such physical examinations as the Administrator may deem necessary and taking such other actions as may be requested by the Administrator. If the Participant refuses to cooperate, the Company shall have no further obligation to the Participant under the Plan. If the Participant makes any material misstatement of information or nondisclosure of medical history, then no benefits shall be payable to the Participant or the Participant’s Beneficiary or estate under the Plan beyond the sum of the Participant’s Annual Deferrals, LTI Deferrals, and Discretionary Company Credits, if any.
|
12.4
|
Withholding
. The Participant or the Beneficiary shall make appropriate arrangements with the Company for satisfaction of any federal, state or local income tax withholding requirements and Social Security or other employee tax requirements applicable to the payment of benefits under the Plan. If no other arrangements are made, the Company may provide, at its discretion, for such withholding and tax payments as may be required.
|
15.1
|
Amendment of Plan
.
|
(a)
|
The Company may at any time amend the Plan in whole or in part, provided, however, that such amendment: (i) shall not decrease the balance of the Participant’s Account at the time of such amendment; and (ii) shall not retroactively decrease the applicable Crediting Rate of the Plan prior to the time of such amendment. The Company may amend the Crediting Rate or Fixed Crediting Rate of the Plan prospectively, in which case, the Company shall notify the Participants of such amendment in writing within thirty (30) days after such amendment.
|
(b)
|
Notwithstanding the foregoing, no amendment shall permit an acceleration of time of payment of a Participant’s benefit under the Plan, other than: (i) as necessary to comply with a certificate of divestiture, as defined in Section 1043(b)(2) of the Code; (ii) in accordance with Sections 6.5 and 8.5 of the Plan with respect to small cashouts; (iii) as necessary to pay Federal Insurance Contribution (“FICA”) taxes and any resulting federal, state, local or foreign income taxes attributable to amounts deferred under the Plan, subject to the limitations of Section 1.409A-3(j)(4)(vi) of the Regulations; (iv) in the event the arrangement fails to meet the requirements of Section 409A of the Code with respect to one or more Participants, and then only in such amount as is included in income of such Participant(s) as a result of such failure; (v) due to a termination of the Plan pursuant to Section 15.2 of the Plan that meets the requirements of Section 1.409A-3(j)(4)(ix) of the Regulations; or (f) as otherwise may be permitted under Section 409A of the Code.
|
15.2
|
Termination of Plan
. The Company may terminate the Plan only as permitted by Section 1.409A-3(j)(4)(ix) of the Regulations (Plan Terminations and Liquidations), or as otherwise may be permitted by future Regulations or other guidance under Section 409A of the Code. Notwithstanding the foregoing, the Company may at any time determine to cease all future deferrals and contributions to the Plan. In such event, Participants’ Accounts shall continue to be held and administered in accordance with the terms of this Plan; provided, however that the Company shall determine, in its sole discretion, whether to continue to credit Participants’ Accounts with earnings at the otherwise applicable Crediting Rates or instead to credit Participants’ Accounts, as of January 1 of the year that all future deferrals and contributions to the Plan are ceased, with a reasonable rate of interest, not less than the prime rate as published in the Wall Street Journal, in either case continuing until distribution of Participants’ Accounts in accordance with the terms of the Plan.
|
15.3
|
Company Action
. Except as provided in
Section 15.4
, the Company’s power to amend or terminate the Plan shall be exercisable by the Company’s Board of Directors or by the committee or individual authorized by the Company’s Board of Directors to exercise such powers.
|
15.4
|
Distribution on Income Inclusion Under Section 409A
. In the event the Administrator determines that amounts deferred under the Plan fail to meet the requirements of Section 409A of the Code and must be recognized as income for federal income tax purposes, distribution of the amount required to be included in income shall be made to affected Participants to the extent permitted by Section 409A of the Code.
|
16.1
|
Successors of the Company
. The rights and obligations of the Company under the Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company.
|
16.2
|
ERISA Plan
. The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for “a select group of management or highly compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA.
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16.3
|
Trust
. The Company shall be responsible for the payment of all benefits under the Plan. The Company may establish one or more grantor trusts for the purpose of providing for payment of benefits under the Plan. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Company’s creditors. Benefits paid to the Participant from any such trust shall be considered paid by the Company for purposes of meeting the obligations of the Company under the Plan.
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16.4
|
Employment Not Guaranteed
. Nothing contained in the Plan nor any action taken under this Plan shall be construed as a contract of employment or as giving any Participant any right to continued employment with the Company.
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16.5
|
Gender, Singular and Plural
. All pronouns and variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.
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16.6
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Captions
. The captions of the articles and sections of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
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16.7
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Validity
. If any provision of the Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provisions of the Plan.
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16.8
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Waiver of Breach
. The waiver by the Company of any breach of any provision of the Plan by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.
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16.9
|
Applicable Law
. The Plan shall be governed and construed in accordance with the laws of the State of Ohio except where the laws of the State of Ohio are preempted by ERISA.
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16.10
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Notice
. Any notice or filing required or permitted to be given to the Company or the Administrator under the Plan shall be sufficient if in writing and hand-delivered, or sent by first class mail, facsimile or electronic mail to the principal office of the Company, directed to the attention of the Administrator. Such notice shall be deemed given as of the date of delivery, or, if delivery is made by mail, as of the date shown on the postmark.
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17.1
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Claims Procedure
. The Administrator shall notify a Participant in writing, within ninety (90) days after his or her written application for benefits, of his or her eligibility or noneligibility for benefits under the Plan. If the Administrator determines that a Participant is not eligible for benefits or full benefits, the notice shall set forth: (a) the specific reasons for such denial; (b) a specific reference to the provisions of the Plan on which the denial is based; (c) a description of any additional information or material necessary for the claimant to perfect his or her claim, and a description of why it is needed; and (d) an explanation of the Plan’s claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Administrator determines that there are special circumstances requiring additional time to make a decision, the Administrator shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional ninety-day period.
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17.2
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Review Procedure
. If a Participant is determined by the Administrator not to be eligible for benefits, or if the Participant believes that he or she is entitled to greater or different benefits, the Participant shall have the opportunity to have such claim reviewed by the Administrator by filing a petition for review with the Administrator within sixty (60) days after receipt of the notice issued by the Administrator. Said petition shall state the specific reasons which the Participant believes entitle him or her to benefits or to greater or different benefits. Within sixty (60) days after receipt by the Administrator of the petition, the Administrator shall afford the Participant (and counsel, if any) an opportunity to present his or her position to the Administrator in writing, and the Participant (or counsel) shall have the right to review the pertinent documents. The Administrator shall notify the Participant of its decision in writing within the sixty-day period, stating specifically the basis of its decision, written in a manner calculated to be understood by the Participant and the specific provisions of the Plan on which the decision is based. If the sixty-day period is not sufficient, the decision may be deferred for up to another sixty-day period at the election of the Administrator, but notice of this deferral shall be given to the Participant. In the event of the death of the Participant, the same procedures shall apply to the Participant’s beneficiaries.
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1.
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The Participant’s Account balance under the Plan as of the date of the Change in Control (or as of the Anticipatory Termination date, if larger) (the “EDP Amount”) will be projected forward to the Commencement Date at an assumed tax-deferred annual earnings rate equal to the Moody’s Seasoned Baa Corporate Bond Yield Average for the last twelve full calendar months prior to the Change in Control (the “Moody’s Rate”) (such projected amount shall be known as the “Projected Balance”). The Projected Balance will then be converted into annual installment benefit payments based upon the Participant’s elected form of retirement payments under the Plan, assuming continued tax-deferred earnings on the undistributed balance at the Moody’s Rate (the “Projected Annual Payouts”). The Projected Annual Payouts will then be reduced for assumed income taxes at the highest applicable federal, state and local marginal rates of taxation in effect in the Participant’s taxing jurisdiction(s) for the calendar year in which the Make Whole Amount is paid (the “Tax Rate”). The after-tax Projected Annual Payouts will be known as the “After-Tax Projected Benefits”.
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2.
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The term “Made Whole Amount”, as used herein, shall mean the EDP Amount plus the Make Whole Amount. The Make Whole Amount is the amount which, when added to the EDP Amount, will yield After-Tax Annuity Benefits (as hereinafter defined) equal to the After-Tax Projected Benefits, based on the following assumptions:
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(a)
|
The Made Whole Amount will be taxed at the Tax Rate upon receipt by the Participant.
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(b)
|
The after-tax Made Whole Amount will be deemed to be invested, by the Participant in a tax-deferred annuity that is structured to make payments beginning on the Commencement Date in the same form as elected by the Participant under the Plan (the “Annuity”).
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(c)
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The Annuity will accrue interest at the Moody’s Rate, less 80 basis points (i.e., 0.80%).
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(d)
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Annual Annuity payments will be taxed at the Tax Rate (after taking into account the annuity exclusion ratio), yielding “After-Tax Annuity Benefits”.
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Grant Date
|
Number of RSUs
|
[Grant Date]
|
[Number Granted]
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•
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Before you accept your grant,
click on the links below to review the Terms and Conditions and the Plan, which govern this award.
|
•
|
Accept
the Terms and Conditions and execute this Agreement by clicking on the “Accept” button below.
|
•
|
Inform the Company of any change in address or contact information, as necessary
.
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3.
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Transfers of Parker Stock Accounts
|
|
Six Months Ended
|
|
|
|
|
|
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||||||||||||||||
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December 31,
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Fiscal Year Ended June 30,
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||||||||||||||||||||||||
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2015
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2014
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2015
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2014
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2013
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2012
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2011
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||||||||||||||
EARNINGS
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|
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|
|
|
|
|
|
|
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||||||||||||||
Income from continuing operations before income taxes and noncontrolling interests
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$
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505,529
|
|
|
$
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739,901
|
|
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$
|
1,432,240
|
|
|
$
|
1,556,720
|
|
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$
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1,311,001
|
|
|
$
|
1,576,698
|
|
|
$
|
1,413,721
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
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||||||||||||||
Interest on indebtedness, exclusive of interest capitalized
|
68,240
|
|
|
47,152
|
|
|
115,077
|
|
|
79,845
|
|
|
88,668
|
|
|
89,888
|
|
|
97,009
|
|
|||||||
Amortization of deferred loan costs
|
1,817
|
|
|
1,454
|
|
|
3,329
|
|
|
2,721
|
|
|
2,884
|
|
|
2,902
|
|
|
2,695
|
|
|||||||
Portion of rents representative of interest factor
|
20,943
|
|
|
21,991
|
|
|
41,886
|
|
|
43,983
|
|
|
44,493
|
|
|
41,515
|
|
|
39,499
|
|
|||||||
Loss (income) of equity investees
|
(10,562
|
)
|
|
(11,188
|
)
|
|
(23,204
|
)
|
|
(11,141
|
)
|
|
(247
|
)
|
|
1,237
|
|
|
2,592
|
|
|||||||
Amortization of previously capitalized interest
|
84
|
|
|
95
|
|
|
179
|
|
|
190
|
|
|
193
|
|
|
196
|
|
|
226
|
|
|||||||
Income as adjusted
|
$
|
586,051
|
|
|
$
|
799,405
|
|
|
$
|
1,569,507
|
|
|
$
|
1,672,318
|
|
|
$
|
1,446,992
|
|
|
$
|
1,712,436
|
|
|
$
|
1,555,742
|
|
FIXED CHARGES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest on indebtedness, exclusive of interest capitalized
|
$
|
68,240
|
|
|
$
|
47,152
|
|
|
$
|
115,077
|
|
|
$
|
79,845
|
|
|
$
|
88,668
|
|
|
$
|
89,888
|
|
|
$
|
97,009
|
|
Amortization of deferred loan costs
|
1,817
|
|
|
1,454
|
|
|
3,329
|
|
|
2,721
|
|
|
2,884
|
|
|
2,902
|
|
|
2,695
|
|
|||||||
Portion of rents representative of interest factor
|
20,943
|
|
|
21,991
|
|
|
41,886
|
|
|
43,983
|
|
|
44,493
|
|
|
41,515
|
|
|
39,499
|
|
|||||||
Fixed charges
|
$
|
91,000
|
|
|
$
|
70,597
|
|
|
$
|
160,292
|
|
|
$
|
126,549
|
|
|
$
|
136,045
|
|
|
$
|
134,305
|
|
|
$
|
139,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
RATIO OF EARNINGS TO FIXED CHARGES
|
6.44
|
x
|
|
11.32
|
x
|
|
9.79
|
x
|
|
13.21
|
x
|
|
10.64
|
x
|
|
12.75
|
x
|
|
11.18
|
x
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Parker-Hannifin Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
|
/s/ Thomas L. Williams
|
|
Thomas L. Williams
|
|
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Parker-Hannifin Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
|
/s/ Jon P. Marten
|
|
Jon P. Marten
|
|
Executive Vice President - Finance &
|
|
Administration and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
|
/s/ Thomas L. Williams
|
|
Name: Thomas L. Williams
|
|
Title: Chief Executive Officer
|
|
|
|
/s/ Jon P. Marten
|
|
Name: Jon P. Marten
|
|
Title: Executive Vice President-Finance &
|
|
Administration and Chief Financial Officer
|