On behalf of the Boardboard of Directorsdirectors and management of EnPro Industries, Inc., I cordially invite you to our annual meeting of shareholders. The meeting will be held at the Charlotte Marriott SouthPark, 2200 Rexford Road,company’s headquarters located at 5605 Carnegie Boulevard, Suite 500, Charlotte, North Carolina on Wednesday, May 2, 2007,Monday, June 9, 2008, at 11:9:00 a.m. At this year’s annual meeting, shareholders will be asked to elect eight directors, approve two amendments to our articles of incorporation and ratify the selection of auditors for this year, all as more fully described in the attached proxy statement.

The matters to be acted upon byenclosed materials replace the shareholders atnotice, proxy statement and proxy card that we distributed earlier this meeting are presentedyear in the enclosed Noticecontext of an election contest that was being conducted by Steel Partners II, L.P. On April 11, 2008, we entered into an agreement with Steel Partners that provided for the termination of the election contest, and we agreed that, following the 2008 annual meeting of shareholders, we would add Don DeFosset, one of Steel Partners’ nominees, to Shareholders,our board of directors. We also agreed to reschedule the 2008 annual meeting of shareholders to June 9, 2008, and to add an item to the enclosed proxy statement contains information regarding these matters. We intendagenda for the annual meeting — approval of a proposed amendment to postour articles of incorporation to remove the voting results fromprovisions providing for the meeting onclassification of our website,www.enproindustries.com, by May 7, 2007.board of directors.

ItNo matter how many shares you may own, it is important that your shares be represented at this meeting. Even ifThe accompanying proxy statement and proxy card include this additional agenda item to approve this amendment to our articles of incorporation. Accordingly, regardless of whether or not you delivered a proxy during the election contest with Steel Partners or whether or not you plan to attend we encourage you to promptly sign, datethe meeting, please vote your shares as soon as possible either by marking, signing, dating and return yourreturning the enclosed proxy card in the enclosed postage-paid envelope or to castby casting your votesvote by telephone or over the Internet. Instructions for voting are provided on the proxy card.

THE ANNUAL MEETING OF SHAREHOLDERS of EnPro Industries, Inc., a North Carolina corporation, (the “Company”), will be held at the Charlotte Marriott SouthPark, 2200 Rexford Road,company’s headquarters located at 5605 Carnegie Boulevard, Suite 500, Charlotte, North Carolina on May 2, 2007Monday, June 9, 2008 at 11:9:00 a.m. to:

Information about these matters is contained in the proxy statement attached to this notice.

The Boardboard of Directors of the Companydirectors has fixed March 5, 2007April 24, 2008 as the record date for determining shareholders entitled to notice of and to vote at the meeting. Only those who were registered shareholders at the close of business on that date are entitled to notice of and to vote at the meeting or any adjournment of the meeting.

The Board of Directorsboard hereby solicits a proxy for use at the meeting, in the form accompanying this notice, from each holder of our common stock. Shareholders may withdraw their proxies at the meeting if they desire to vote their shares in person, and they may revoke their proxies for any reason at any time prior to the voting of the proxies at the meeting.

The enclosed proxy is solicited on behalf of the board of directors of EnPro Industries, Inc., in connection with our annual meeting of shareholders to be held on Wednesday, May 2, 2007,Monday, June 9, 2008, at 11:9:00 a.m. at the Charlotte Marriott SouthPark, 2200 Rexford Road,company’s headquarters located at 5605 Carnegie Boulevard, Suite 500, Charlotte, North Carolina, and at any adjournment or postponement of the meeting. You may use the enclosed proxy card whether or not you attend the meeting. If you are a registered stockholdershareholder (that is, you hold shares directly registered in your own name), you may also vote by telephone or over the Internet by following the instructions on your proxy card. If your shares are held in the name of a bank, broker or other nominee, which is referred to as holding in “street name,” you will receive separate voting instructions with your proxy materials. Although most brokers and nominees offer telephone and Internet voting, availability and specific procedures depend on their voting arrangements.

Your vote is very important. For this reason, we encourage you to date, sign, and return your proxy card in the enclosed envelope. Doing so will permit your shares of our common stock to be represented at the meeting by the individuals named on the enclosed proxy card.

This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully.

We are mailing our 20062007 annual report, including financial statements, with this proxy statement to each registered shareholder.shareholder other than those shareholders who received the annual report in connection with our mailing of the proxy statement dated March 24, 2008. We will begin mailing these materials on or around March 22, 2007.May 1, 2008. Any shareholder may receive an additional copy of these materials by request to our investor relations department. You may reach the investor relations department via email toinvestor.relations@enproindustries.cominvestor@enproindustries.com or by calling704-731-1522.

At our annual meeting, shareholders will act on proposals for the following matters:

You may vote if you owned EnPro common stock as of the close of business on the record date, March 5, 2007.April 24, 2008. Each share of common stock is entitled to one vote on each matter considered at the meeting. At the close of business on the record date, 21,359,71619,984,572 shares of EnPro common stock were outstanding and eligible to vote.vote, which amount does not include 220,325 shares held by a subsidiary. The enclosed proxy card shows the number of shares that you are entitled to vote.

All registered shareholders as of the record date (or their duly appointed proxies), beneficial owners presenting satisfactory evidence of ownership as of the record date, and our invited guests may attend the meeting.

You may examine a list of the shareholders entitled to vote at the meeting. We will make that list available at our main executive offices at 5605 Carnegie Boulevard, Suite 500, Charlotte, North Carolina, from March 22April 29, 2008 through the end of the meeting. The list will also be available for inspection at the meeting.

OurYour board of directors recommends that you vote:

If your shares are held in the name of a bank, broker or other nominee and you wish to receive separate copies of our proxy statement and annual report, or request that we send only one set of these materials to you if you are receiving multiple copies, please contact your nominee.

You can access this proxy statement and our 20062007 annual report onForm 10-K, which includes our annual report to shareholders, on our Internet site atwww.enproindustries.com. If you are a registered shareholder, you can choose to receive these documents over the Internet in the future by accessingwww.bankofny.comwww.bnymellon.com/shareowner/isdand following the instructions provided on that website. This could help us save significant printing and mailing expenses. If you choose to receive your proxy materials and annual report electronically, then prior to next year’s shareholder meeting you will receive ane-mail notification when the materials and annual report are available for on-line review, as well as the instructions for voting electronically over the Internet. Your choice for electronic distribution will remain in effect until you revoke it by sending a written request to our offices at 5605 Carnegie Boulevard, Suite 500, Charlotte, North Carolina 28209, Attention: Investor Relations.

If your shares are held through a bank, broker or other nominee, check the information provided by that entity for instructions on how to elect to view future proxy statements and annual reports over the Internet.

Section 16(a) of the Exchange Act requires our directors and officers and people who own more than 10% of our common stock to file with the SECSecurities and Exchange Commission initial reports of ownership and reports of changes in ownership of our common stock. The SEC requires these people to give us copies of all Section 16(a) reports they file.

We have reviewed the copies of all reports furnished to us. Based solely on this review, we believe that no director, officer, or 10% shareholder failed to timely file in 20062007 any report required by Section 16(a). other than the inadvertent sale of 102 shares affected by the administrator of our Retirement Savings Plan for Salaried Employees allocated to the account of Mr. Pomeroy. Mr. Pomeroy reallocated existing balances in his accounts under this plan, which inadvertently resulted in the sale of these EnPro shares. He did not discover this transaction until after the expiration of the time period for timely filing a Form 4.

One of the purposes of the meeting is the election of eight directors to hold office until the annual shareholders’ meeting in 20082009 or until their respective successors are elected and qualified. The board of directors has nominated the eight persons named on the following pages, allpages. All of whomthe nominees are nowincumbent directors and whose terms would otherwise expire upon the election of directors at the conclusionmeeting. On March 10, 2008, we announced our board of directors’ appointment of Stephen E. Macadam to serve as EnPro’s Chief Executive Officer and President effective on April 14, 2008. At that time, our current Chief Executive Officer and President, Ernest F. Schaub, stepped down from those positions in connection with his previously announced retirement plans. In connection with his retirement as Chief Executive Officer and President, and consistent with our Corporate Governance Guidelines, Mr. Schaub volunteered to resign from the meeting.board of directors, and the board accepted his resignation effective April 14, 2008. Mr. Macadam was elected, effective April 14, 2008, to fill the position on the board vacated by Mr. Schaub. Properly executed proxies that do not contain voting instructions will be voted for the election of each of these nominees.

All nominees have indicated that they are willing to serve as directors if elected. If any nominee should become unable or unwilling to serve, the proxies will be voted for the election of such person as the board of directors may designate to replace such nominee.

The board of directors appointed Mr. Hauser to a vacancy on our board in February 2007. Since April 2006, Mr. Hauser has served as Group Executive and Chief Financial Officer of Duke Energy Corporation, one of the largest electric power companies in the United States. HeIn addition to serving as Chief Financial Officer, he was Group Vice President and Chief Financial Officer of Duke Energy Corporation from February 2004 to April 2006,2006. He was acting Chief Financial Officer from November 2003 to February 2004 and Senior Vice President and Treasurer from June 1998 to November 2003. Mr. Hauser is a director of Fairpoint Communications, Inc., a trustee of the North Carolina Blumenthal Performing Arts Center, and a member of the Business Advisory Council for the University of North Carolina at Charlotte.

Copies of our Corporate Governance Guidelines and Code of Business Conduct are available on our website atwww.enproindustries.com.www.enproindustries.com. From our home page, click on the “Investor” tab and then on “Corporate Governance.”

As described in our Corporate Governance Guidelines, the board believes that a substantial majority of the board should consist of independent directors. At its February 20072008 meeting, the board of directors made a determination as to the independence of each of its members in 2006. It also made a determination as to the independence of Mr. Hauser, the candidate whom the Nominating and Corporate Governance Committee had recommended to fill the vacancy resulting from Mr. Hance’s retirement (and whom the board in fact appointed to fill that vacancy).2007. In making these determinations, the board used the definition of an “independent director” in the NYSE listing standards and the categorical standards set forth in our Corporate Governance Guidelines. Under

To assist in the board’s independence determinations, each director completed a questionnaire that included questions to identify any relationships with us or with any of our executive officers or other directors. After discussing all relationships disclosed in the responses to these questionnaires, the board determined that Mr. Bolduc, Mr. Browning, Mr. Ford, Mr. Harnett, Mr. Hance, Mr. Hauser, Mr. Holland, and Mr. Prezzano are independent because none has a material relationship with the company other than as a director. The board noted that Mr. Hance served as Vice Chairman of Bank of America Corporation until January 2005, that Mr. Browning currently serves as a director of Wachovia Corporation, and that boththis bank is one of these banks arethree lenders under our revolving credit facility. The board determined that each of these relationships is immaterial. As our Chief Executive Officer and President, Mr. Schaub’s role as CEOMacadam is automatically disqualifies himdisqualified from being an independent director.

The board of directors has determined that Mr. Hauser is an “audit committee financial expert” as that term is defined in Item 401(h) of the SEC’sRegulation S-K. At its February 20072008 meeting, the board determined that Mr. Hauser, through his education and experience as a certified public accountant and his experience as the Chief Financial Officer of Duke Energy Corporation, has all of the following attributes:

The Nominating and Corporate Governance Committee will consider recommending for nomination director candidates recommended by shareholders. Shareholders who wish to suggest that the board nominate a particular candidate should send a written statement addressed to our Secretary at 5605 Carnegie Boulevard, Suite 500, Charlotte, North Carolina 28209 in accordance with the timeline and procedures set forth in our bylaws for shareholders to nominate directors themselves. See “Shareholder Proposals” for a description of the requirements to be followed in submitting a candidate and the content of the required statements.

Before recommending a sitting director for re-election, the Nominating and Corporate Governance Committee considers whether the director’s re-election would be consistent with the criteria for board membership in our Corporate Governance Guidelines (as described above) and applicable rules and requirements of the SEC and NYSE. This process includes a review on behalf of the Nominating and Corporate Governance Committee of the responses to the annual director questionnaires.

When seeking candidates for director, the Nominating and Corporate Governance Committee may solicit suggestions from incumbent directors, management or others. The Nominating and Corporate Governance Committee may also engage the services of a third party to identify and evaluate candidates. After conducting an initial evaluation of a candidate, the Nominating and Corporate Governance Committee (or the committee Chairman) interviews that candidate if the committee believes the candidate might be a suitable director. The Nominating and Corporate Governance Committee may also ask the candidate to meet with management. If the Nominating and Corporate Governance Committee concludes that a candidate would be a valuable addition to the

The Audit Committee has further discussed with our internal auditors and PwC the overall scope and plans for their respective 20062007 audits. The Audit Committee met with the internal auditors and PwC, with and without management present, to discuss the results of their examinations, the evaluations of our internal control over financial reporting, and the overall quality of our financial reporting.

In reliance upon the Audit Committee’s discussions with management and PwC and the Audit Committee’s review of the representation of management and the report of PwC to the Audit Committee, the Audit Committee

In this Compensation OverviewDiscussion and ObjectivesAnalysis section, we describe our objectives, policies and practices for paying our executive officers the compensation reported below, focusing on how and why we arrived at those objectives and policies and our specific executive compensation decisions. We first discuss how we set compensation, including our specific compensation practices and what we look at in making our compensation decisions. We then analyze why we pay each element of compensation, focusing first on in-service compensation and then addressing compensation to be paid following retirement or other termination of employment.

At our inception in 2002 as a new public company with an uncertainbeing spun-off by Goodrich Corporation, our future was uncertain. At that time, the objective of our executive compensation program was to attract management with proven experience in our industry and the skill sets to foster our success as a standalone entity. To achieve this objective, we believed a competitive compensation package was paramount. Accordingly, we tailored our compensation program to be comparable to the compensation program at Goodrich Corporation, which was not only our former corporate parent andbut also the prior employer of a number of our executive officers. We believe this compensation program is competitive, and in fact that it helped us recruit management with the experience and skills we sought.

Now, five years later, aA primary objective of our executive compensation program now is to retain these officers, and to be in a position to replace them with other high-caliber individuals should that need arise. Again, aA competitive pay package is vitally important to meet this objective. objective, and, accordingly, we set the targeted level of each component of in-service compensation for our executive officers at or near the market median.

A concurrent objective of our executive compensation program is to contribute to our continued success as a company. We seek to accomplish this objective through our incentive plans, by rewarding performance that enhances shareholder value and furthers our strategic and financial objectives. We use both annual and three-year plans to provide incentives for both short-term and long-term performance. We use our annual budget and strategic plans to set incentive target levels, taking into account anticipated sales and income growth. If our performance exceeds these targets, our executive officers earn incentive awards above the market median.

In the fivesix years since our spin-off from Goodrich, our operating performance has increased significantly:

For all other executive officers other than the CEO, the committee considers proposals by the CEO as to the appropriate levels of salary and incentive award opportunities. It then approves these compensation elements as proposed or, in its discretion, revises them. The committee also approves all perquisites (perks) forIn reviewing the compensation of the CEO and the other executive officers, all change in control agreements, the officers’ participation in all benefitcommittee is advised by its outside compensation consultant and retirement plans and all material changes to these plans.

AllTo set performance measures and levels for our annual and long-term incentive plans, our executive officers acting together as a group, recommendreview the budgets for each of our operating units, key economic indicators affecting our businesses, historical performance, recent trends, and our strategic plans. Our executive team proposes performance measures that it believes to be most important and meaningful to the boardachievement of our strategic goals. The executive team also proposes what it believes to be the appropriate weighting to give to each factor in the calculation of the overall incentive awards, and minimum, target and maximum payout levels appropriate for each of the performance measures we choose.

At its December meeting each year, the committee reviews the proposed performance measures and weightings and approves them, either as recommended or with revisions the committee suggests. In addition, the committee previews preliminary minimum, target and maximum payout levels for each performance goals formeasure at the annual bonusDecember meeting. The committee and long-term incentive award. Theits consultant provide the executive officers with feedback on the preliminary payout levels, and the executive team then reviews the committee’s recommendations in conjunction with year-end financial results, revised budgets and economic forecasts. Management makes its final recommendations at the committee’s February meeting, at which time the committee independently reviews management’s recommendations, and makes the final determination of whichwhat performance measures, weightings and payout levels will be used for each incentive award and what the goals will be.award.

The committee often directs members of management to work with our executive compensation consultant to provide information and otherwise help with the consultant’s analyses. TheHowever, the committee does not delegate any of its decision making authority to executive officers or other members of management.

The executive compensation consulting work on broad-based compensation programs like our pension plan and 401(k) plans. This work, which is not requested or overseen by the committee, is generally performed by an entirely separate Watson Wyatt office. Management also engages other consultants to perform work related to broad-based benefits programs (for example, our health and welfare benefits) and compensation of employees who work overseas.

Watson Wyatt’s work for the committee on executive compensation for 20062007 included:

The committee has used a number of tools and considered the regulatory environment in designing our executive compensation program, including corporate policies regarding executive compensation, studies of internal pay fairness, external market studies, “tally sheets,” long-term compensation histories and tax and accounting rules.

First, since our inception, the committee has adhered to a policy of attempting to setsets targeted in-service compensation tofor our executive officers at or near the market median. This policy covers base salaries as well as the incentive awards that officers will receive if we meet annual or three-year business goals. Under this policy, if our performance exceeds our goals — as it has every year, in the case of the annual bonus, and every performance period but one, in the case of the LTIP — our executive officers earn incentive awards above the median. When this happens, of course, their total compensation exceeds the median. On the other hand, if we were to fail to meet our business goals, executive compensation levels would fall below the market median.

Second, the committee has a policy of making variable compensation a significant component of each executive officer’s total compensation. The term “variable compensation” refers to amounts that are at-risk, and that an executive mayvary in fact never receive.amount depending on performance — poor performance leads to little or no awards while superior performance leads to superior awards. The more responsibility an executive has, the higher is his variable compensation as a percentage of his total compensation. Correspondingly, with more responsibility comes a lower percentage of fixed compensation that the executive is more or less guaranteed to earn for doing his job. The following graph shows the percentage of direct compensation awarded to each member of senior management in 2007 that is variable versus

Moreover, our executive officers’ variable compensation is truly at-risk. The committee generally believes “target” performance levels should be ones that represent significant performance improvements, and that the company will not easily achieve.

The policy of making variable compensation a significant portion of our executive officers’ total compensation helps us implement a culture in which the officers know that their pay, to a large extent, really depends on the company’s performance.

Third, the committee has policies aimed at more closely aligning management’s interests with those of our shareholders. One such policy is to systematically include some form of equity grant, or potential equity grant, as part of our executive compensation program. If our officers own shares of our common stock with values that are significant to them, we believe they will be more likely to act to maximize longer-term shareholder value instead of short-term gain. Executive officers currently have the opportunity to earn performance shares for each three-year cycle under our LTIP.

Our stock ownership guidelines suggest that each executive officer hold shares of our common stock with a market value at least equal to a specified multiple of his base salary. The multiple of salary rises with one’s job responsibility. The suggested minimum ownership level for our CEO is three times his base salary, and the suggested minimum levels for the other executive officers range from 0.75 times to 1.5 times salary. In light of these guidelines, the committee has believed it appropriate to provide officers with an opportunity to earn shares as part of the long-term incentive award. All of our named executive officers currently hold at least the suggested minimum number of shares except Mr. Smith and Mr. Childress, who joined the company in December 2005.2005, and therefore has not received any long-term incentive payments to date. Under the guidelines, Mr. SmithChildress has more than threetwo years left to acquire the suggested minimum number of shares.

Our CEO, Mr. Schaub, has recentlyin anticipation of his retirement, implemented aRule 10b5-1 plan in February 2007 to systematically exercise stock options he has received from us and sell a portion of the shares of our common stock he receives upon exercise. The plan covers less than 35%Through the date of the shareshis retirement, Mr. Schaub beneficially owns, and after it is completed he will continuecontinued to own far more than the minimum number of shares that our ownership guidelines suggest.

Each year the committee asks our executive compensation consultant to compare our named executive officers’ salary, target annual bonus and target long-term incentive awards to those granted to officers in the same positions at other similarly sized diversified manufacturing companies. The goal of these studies is to determine whether our pay levels for these compensation elements is competitive. Watson Wyatt’s 2005 marketFor the study helped inform the committee’s executiveused to make compensation decisions for 2006. For that study, the peer group consisted of Flowserve Corporation, Ametek, Inc., Barnes Group, Inc., JLG Industries, Inc., Claror, Inc., Watts Water Technologies, Inc., Nordson Corporation, Actuant Corporation, Robbins & Myers, Inc., Gardner Denver, Inc., Circor International, Inc., IDEX Corporation and The Gormann-Rupp Company.

Watson Wyatt compared 2005 data among us and the members of the group:peer group, calculating our percentile rank on each of these measures versus the group, for operating income before depreciation, sales growth, growth in operating margin before depreciation, and two-yeargrowth in net income, growth in free cash flow, ratio of working capital to sales, three-year total shareholder return. Each performance measure received equal weight.return and return on investment. Based on these performance measures, with each measure receiving equal weight, Watson Wyatt calculated our total performance score, which placed us inwell above the median, near the top of the second quartile, i.e.,quartile. Comparing the top 50%. Watson Wyatt also noted specificallypercentile ranking of our base salary and annual incentive compensation to our named executive officers as compared to the peer group to our total performance score ranking indicated that our operating income, sales growth and operating margin were all very closerelative performance was slightly stronger than our relative executive compensation, while a similar calculation for our long-term incentive compensation indicated an even stronger relative performance compared to the median performance level, but that our two-year total shareholder return was the highest in the group.relative executive compensation.

The consultant thenalso analyzed the three specific compensation elements we awarded each of our named executive officers for 20052006 (base salary, annual bonus and long-term incentive opportunity) as compared to those awarded byto executive officers with similar responsibilities of each member of the peer group and the broader survey group. Its conclusions, as presentedBased on that analysis and the comparisons to the relevant medians of the peer group and survey group, Watson Wyatt made specific recommendations to the committee were as follows:

In addition toAt its normal annual market study, in 2005 Watson Wyatt also provided market pricing analysesOctober 2007 meeting, the committee requested that management review the compensation of the base salary, target annual bonus opportunitiessenior executives and aggregate long-term incentive grant levels that memberskey employees of our peer group offeredsubsidiaries who are not named executive officers. Management’s compensation consultant gathered survey data and other relevant information which management used to their senior human resources and strategic planningconduct its review. The committee considered the results of this study when it met in February 2008 to review the compensation for our executive officers. The committee used this information to determinealso considered the annual compensation packages for Mr. Smithresults in connection with its approval of base salaries and Mr. Childress, both of whom we hiredincentive opportunities at its meeting in the fourth quarter of 2005.February 2008.

At its February 20062007 meeting, the committee reviewed and discussed a “tally sheet” for each of our executive officers. Each tally sheet showed:

Regulatory considerations often affect the design of our executive compensation program. The primary example is the limit under Section 162(m) of the federal tax code on the deductibility of compensation in excess of $1 million granted to top officers. There is an exception to the $1 million compensation ceiling for performance-based compensation that is granted in compliance with specified rules. TheWhile the committee intends for all regular annual bonus and long-term incentive awardscompensation to qualifybe tax deductible, there may be instances where potentially non-deductible compensation is provided to reward executives consistent with our compensation philosophy for this exception in order to maximize our tax deductions for executive compensation.each compensation element.

Section 162(m) factors into other executive compensation actions as well. For example, when the committee decided in 2005 to schedule systematic life insurance policy transfers to four named executive officers, it realized that the value of each policy transfer would be included in the recipient’s compensation for purposes of the $1 million limit on deductibility. (For more information about these policy transfers, including which benefits they will replace, see below under “— Compensation Program ElementsAnalysis — Retirement and Other Post-Termination Compensation — Supplemental retirementRetirement and death benefit agreements.Death Benefit Agreements.”) To avoid losing any of our tax deductions, the committee added a special provision to each of the relevant agreements. Under this provision, if a policy transfer would cause the recipient’s compensation to exceed $1 million for purposes of the Section 162(m) deductibility limit, the portion of that transfer that would have exceeded the limit automatically will be delayed until a later year.

We view our compensation program in two discrete categories — in-service compensation paid to our officers while they remain employed by our company and post-termination compensation to be received by our officers after they have retired or their employment is otherwise terminated. In making decisions regarding the amount of in-service compensation to be paid to the executive officers, the committee decided in 2004analyzes each component and the total amount of in-service compensation against benchmarks and survey data. The amount that executive officers may receive as retirement and other post-employment compensation is also considered. The committee uses tally sheets to discontinue annual stock option grants in part because of stock options’ effect on our financial statements under new accounting rulesconfirm that we adopted effective January 1, 2005.

The following section discusses and analyzes each element of our executive compensation program.

We pay each of our executive officers a base salary to give them a relatively secure baseline level of compensation. Initially, some of our named executive officers’ base salaries were set based on their salaries at our former corporate parent, Goodrich, which was also their prior employer. At the time of the spin-off, the base salaries of those of our executive officers who did not come to us from Goodrich careers were set slightly above the market median, as determined by our executive compensation consultant. In each case,For 2007, the committee believed these initial

Our executive officers’ annual performance plan bonus opportunities ranged from 40% to 80%85% of their actual 20062007 base salaries. The target bonuses, as percentages of base salary, for the named executive officers were as follows:

The committee set the target award levels for our named executive officers based on the results of the Watson Wyatt market studies Watson Wyatt had presented in 2005. First, itand management recommendations. It set each named executive officer’s target award at or near the median for his position in the market study. The committee then added 5% to each executive officer’s target award opportunity to potentially help offset the effect of its decision to eliminate perks. The committee based the thresholdminimum and maximum award levels on information from Watson Wyatt about prevailing market practices in setting the range of annual bonus opportunity around an established target.

Under the terms of the senior executive annual performance plan, which governs the bonus to all of our named executive officers except Mr. Childress, Mr. Pomeroy and Mr. Byrne, the committee can use negative discretion to reduce the size of a bonus award but cannot use discretion to increase any bonus. The management bonus plan under which we awarded Mr. Childress’s, bonusMr. Pomeroy’s and Mr. Byrne’s bonuses permits both positive and negative discretionary changes by the CEO. In the case of Mr. Pomeroy, who served as Vice President — Finance at our Garlock Sealing Technologies subsidiary for the first eight months of 2007 before returning to our corporate office in September 2007, the committee approved an increase of $50,000 over the calculated amount under the management annual performance plan. The committee did not use its discretionadjusted Mr. Pomeroy’s bonus upward in part because he gave up an opportunity to changeearn a cash LTIP award when he joined the amountGarlock Sealing Technologies management team, and in part because he continued to lead Garlock’s finance department for several months while also serving as our corporate controller. The committee also approvedex gratia bonuses to Mr. Dries and Mr. Magee of any bonus awarded to an executive officer for 2006. Based on our performance relative to the plans’ performance goals, the committee awarded the named executive officers the bonuses reported$20,000 and $65,000, respectively, in column (g) (see footnote 2)recognition of the summary compensation table on page 29. These bonuses equaled 176%additional duties undertaken by them since the departure of each named executive officer’s target bonus.

Each year the committee grants long-term incentive performance awards, in overlapping three-year cycles, to our executive officers to provide them with personal financial motivation to help us reach our longer-term goals. These awards also provideIn addition to providing the officers with a long-term stake in our success. success, we believe these awards serve as a significant retention tool to dissuade them from joining another company. In view of our higher ratio of the amount of equity awards outstanding to the total number of outstanding shares as compared to peer companies, the committee believes that use of these long-term performance incentive awards are preferable to options or other equity based awards that may further increase this dilution ratio relative to our peers.

The committee makes these awards under our long-term incentive plan or LTIP, which our shareholders most recently approved in 2004.2007. The committee established the performance goals and corresponding potential award levels for the2006-20082007-2009 LTIP cycle at its February 2006March 2007 meeting. For this cycle, as for the previous two,three, the committee determined that half of the target award to each executive would consist of performance shares and half of cash.cash, other than Mr. Pomeroy, whose entire LTIP award was in performance shares. The committee believes that both types of awards align officers’ long-term interests with those of our shareholders, and that the specific target mix of one half cash, one half shares is appropriate to increase management’s ownership stake in our company.

The committee members generally possess non-public information, which may be material, when they makereconvened on March 19, 2007 to review and finally approve the2007-2009 LTIP awards. To determineThe average of our high and low stock prices immediately preceding the numbersMarch meeting had increased to $36.72 per share from the $33.51 average per share price on the date immediately preceding the February 13 meeting. The committee recognized that using the higher stock price to calculate the number of performance shares that will make upwould reduce the threshold, target and maximum levels of each award, the committee begins with dollar figures. It then calculates the numbersnumber of performance shares using our commonawarded as compared to the amount preliminarily approved at the regularly scheduled February meeting. The committee chose to adjust the number of performance shares downward to reflect the higher stock price in order to keep the initial value of the LTIP awards the same as the initial value as presented at the time. Changes in the price of our common stock after our earnings release affect the value of these performance share awards. Because these awards, if earned, will not be paid out for three years, the committee has never considered whether or which way it expected our stock price to move when it made the LTIP awards.February meeting.

In February 2006, the committee concluded that because of the public disclosure of perks, and the unfavorable attention perks had received in the recent past, their potential negative impact far outweighs the actual value they provide to the benefit recipients. For this reason, the committee decided to eliminateeliminated a number of perks that we had traditionally provided to our executive officers: reimbursement for an automobile and related expenses, financial planning, tax preparation and estate planning expenses and social club dues. In place of the eliminated perks, the committee determined to increase each executive officer’s target annual bonus opportunity by five percent and to raise each officer’s salary by the value of the automobile payments. Any remaining perks, which include an umbrella liability policy, are minimal.

In 2005, we entered into supplemental retirement and death benefits agreements with these same four officers. Under these agreements, we agreed to pay each officer’s vested benefits accrued under the SERP and the restoration plan in annual lump sumlump-sum payments, beginning in 2006 for Mr. Schaub and in 2007 for Mr. Dries and Mr. Magee, and continuing each year thereafter through retirement. We paid Mr. Driscoll’s benefitsSchaub elected to defer all lump sum payments until his retirement in full during 2006 following his retirement.2008. We make these annual lump-sum payments by transferring to the executive ownership of a portion of the life insurance policy we own on the officer’s life. The portion transferred has a cash value equal to the lump sumlump-sum value of SERP and restoration plan benefits being paid. The death benefit of the transferred policy also reduces the amount that might otherwise become payable under the officer’s death benefits agreement. To the extent any policy transfer would cause the recipient’s compensation to exceed $1 million for purposes of the federal tax deductibility limit, the portion of the transfer that would have exceeded the limit automatically will be delayed until a later year. We entered into these supplemental agreements in order to meet our obligations under the SERP, restoration plan and death benefits agreements in the most cost-effective manner.

The committee hasWe have given careful thought to our executive compensation program, including each element of compensation for each executive officer for 2006.2007. In the committee’sour view, the program accomplishes our objectives for it. First, the committee considerswe consider the program as a whole to be competitive and believesbelieve that it has contributed to our strong retention level for executive officers over the past fivesix years as well as our ability to recruit new executive officers as needed. Second, the committee feelswe feel that the program provides appropriate incentives for the executive officers, based on the officers’ responsibility levels, our short- and longer-term business goals and their ability to contribute to achieving these goals. The committee believesWe believe that the program has contributed significantly to the superior returns our shareholders have received over the past fivesix years.

Finally, based on those same factors, as well as our superior operating results, the committee haswe have concluded that the amount of total compensation paid or awarded to each executive for 20062007 was reasonable.

The following information relates to compensation paid or payable for 20062007 to:

We refer to these individuals as the “named executive officers.” We have also included information relating to compensation for 2006 for the named executive officers who were also named executive officers in 2006.