TABLE OF CONTENTS

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Ward J. Timken, Jr. Chairman — Board of Directors

March     22, 2012, 2013

Dear Shareholder:

The 20122013 Annual Meeting of Shareholders of The Timken Company will be held on Tuesday, May 8, 2012,7, 2013, at ten o’clock in the morning at the corporate offices of the company in Canton, Ohio.

This year, you are being asked to act upon threesix matters. The first five matters (Items 1 through 5) are the election of Directors, ratification of our independent auditor selection, advisory approval of a resolution regarding our named executive officer compensation, and approval of amendments to our Amended Articles of Incorporation and Amended Regulations to eliminate certain supermajority voting requirements, all of which are recommended by your Board of Directors. The sixth matter is consideration of a shareholder proposal that your Directors are recommending you do not support. Details of these matters are contained in the accompanying Notice of 20122013 Annual Meeting of Shareholders and Proxy Statement.

Please read the enclosed information carefully before voting your shares. Voting your shares as soon as possible will ensure your representation at the meeting, whether or not you plan to attend.

I appreciate the strong support of our shareholders over the years and look forward to a similar vote of support at the 20122013 Annual Meeting of Shareholders.

Sincerely,

Ward J. Timken, Jr.

Enclosure

The Timken Company

1835 Dueber Avneue,Avenue, S.W.

P.O.P. O. Box 6927

Canton, OH 44706-0927 U.S.A.

Telephone: 330-438-3000United States

Stronger.Commitment. Stronger.Value. Stronger.Worldwide. Stronger.Together. IStronger.By Design.

THE TIMKEN COMPANY

Canton, Ohio

NOTICE OF 20122013 ANNUAL MEETING OF SHAREHOLDERS

The 20122013 Annual Meeting of Shareholders of The Timken Company will be held on Tuesday, May 8, 2012,7, 2013, at 10:00 a.m., at 1835 Dueber Avenue, S.W., Canton, Ohio, 44706 for the following purposes:

Shareholders of record of The Timken Company common stock at the close of business on February 21, 2012,20, 2013, are the shareholders entitled to notice of and to vote at the meeting.

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE 20122013 ANNUAL MEETING OF SHAREHOLDERS, PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE POSTAGE-PAID ENVELOPE PROVIDED OR VOTE YOUR SHARES ELECTRONICALLY THROUGH THE INTERNET OR BY TELEPHONE. VOTING INSTRUCTIONS ARE PROVIDED ON THE ENCLOSED PROXY CARD.

Effect of Not Casting Your Vote. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and these proxy materials will be forwarded to you by your broker, bank or nominee who is considered the shareholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or nominee on how to vote and are also invited to attend the 20122013 Annual Meeting of Shareholders. Your broker, bank or nominee will enclose a voting instruction card for you to use in directing the broker, bank or nominee regarding how to vote your shares. If you do not return the voting instruction card, the broker, bank or other nominee will determine if it has the discretionary authority to vote on the particular matter. Under applicable New York Stock Exchange rules, brokers have the discretion to vote only on any matters deemed by the New York Stock Exchange to be routine, such as the ratification of the selection of the Company’s independent auditor (Item 2 of this Proxy Statement). The election of Directors (Item 1 of this Proxy Statement) and, the shareholder advisory vote on named executive officer compensation (Item 3 of this Proxy Statement), the two proposals to consider amending the Company’s Amended Articles of Incorporation and Amended Regulations (Items 4 and 5 of this Proxy Statement), and the shareholder proposal (Item 6 of this Proxy Statement) are not considered to be routine matters, and your broker will not have discretion to vote on those matters unless you specifically instruct your broker to do so by returning your signed voting instruction card. If you do not provide voting instructions to your broker, your shares will not be voted for the election of any Director nominee or on any matter onfor which your broker does not have discretionary authority.

SCOTT A. SCHERFF

Corporate Secretary and

Vice President — Ethics and Compliance

March    22, 2012, 2013

Important Notice Regarding the Availability of Proxy Materials for the 20122013 Annual Meeting of Shareholders to be held on May 8, 20127, 2013:: This Proxy Statement and our 20112012 Annual Report to Shareholders are available on the Investors’ section of our websitewww.timken.com/investors.

THE TIMKEN COMPANY

PROXY STATEMENT

The enclosed proxy is solicited by the Board of Directors of The Timken Company, an Ohio corporation (the “Company,” “we,” “our,” or “us”), in connection with the 20122013 Annual Meeting of Shareholders to be held on May 8, 2012,7, 2013, at 10:00 a.m. local time at our corporate offices, and at any adjournments and postponements thereof, for the purpose of considering and acting upon the matters specified in the foregoing Notice. The mailing address of our corporate offices is 1835 Dueber Avenue, S.W., Canton, Ohio 44706-2798. The approximate date on which this Proxy Statement and proxy card will be first sent or given to our shareholders is March     22, 2012., 2013.

The Board of Directors is not aware that matters other than those specified in the foregoing Notice will be brought before the meeting for action. However, if any such matters should be brought before the meeting, the persons appointed as proxies may vote or act upon such matters according to their judgment.

ELECTION OF DIRECTORS

We presently have eleventwelve Directors who, pursuant to our Amended Regulations, are divided into three classes with four Directors in Class I, threefour Directors in Class II and four Directors in Class III. At the 2010 annual meeting, our shareholders approved an amendment to our Regulations that eliminates,eliminated, over a three-year period, the classified structure of our Board of Directors. The Directors elected at the 2010 annual meeting were elected for a three-year term; Directors elected at the 2011 annual meeting were elected for a two-year term; and Directors elected at the 2012 annual meeting will bewere elected for a one-year term. At the 2013 annual meetingAnnual Meeting of Shareholders and thereafter, all Directors will stand for election for a one-year term. Accordingly, at the 20122013 Annual Meeting of Shareholders, fourtwelve Directors will be elected to serve in Class III for a one-year term to expire at the 20132014 annual meeting. Candidates for Director receiving the greatest number of votes will be elected. Abstentions and “broker non-votes” (where a broker, other record holder, or nominee indicates on a proxy card that it does not have authority to vote certain shares on a particular matter) will not be counted in the election of Directors and will not have any effect on the result of the vote.

Pursuant to the Majority Voting Policy of the Board of Directors, any Director who fails to receive a majority of the votes cast in his or her election will submit his or her resignation to the Board of Directors promptly after the certification of the election results. The Board of Directors and the Nominating and Corporate Governance Committee will then consider the resignation in light of any factors they consider appropriate, including the Director’s qualifications and service record, as well as any reasons given by shareholders as to why they voted against (or withheld votes from) the Director. The Board of Directors is required to determine whether to accept or reject the tendered resignation within 90 days following the election and to disclose its decision on a Current Report on Form 8-K, as well as the reasons for rejecting any tendered resignation, if applicable.

Subsequent to the 2012 Annual Meeting of Shareholders, assuming that all nominees are elected, we will continue to have eleven Directors who will be divided into three classes with four Directors in Class I, three Directors in Class II and four Directors in Class III.

If any nominee becomes unable, for any reason, to serve as a Director, or should a vacancy occur before the election (which events are not anticipated), the Directors then in office may substitute another person as a nominee or may reduce the number of nominees as they deem advisable.

ITEM NO. 1

ELECTION OF CLASS III DIRECTORS

The Board of Directors, by resolution at its February 10, 20128, 2013 meeting, based on the recommendation of the Nominating and Corporate Governance Committee of the Board, nominated the fourtwelve individuals set forth below to be elected Directors in Class III at the 20122013 Annual Meeting of Shareholders to serve for a term of one year expiring at the annual meeting in 20132014 (or until their respective successors are elected and qualified). All of the nominees, except Diane C. Creel, have been previously elected as a Director by our

shareholders. Ms. Creel was elected as a Director by the Board on June 15, 2012 to fill a vacancy for a term that expires at the 2013 Annual Meeting of Shareholders. Each of the nominees listed below has consented to serve as a Director if elected.

Unless otherwise indicated on any proxy, the persons named as proxies on the enclosed proxy card intend to vote the shares covered by such proxy card in favor of the nominees named below.

THE BOARD OF DIRECTORS RECOMMENDS A VOTEFORTHE ELECTION OF THE NOMINEES NAMED BELOW.

NOMINEES

The following information, obtained in part from the respective nominees and in part from our records, describes the background and experience of each nominee as of January 6, 2012.4, 2013.

Joseph W. Ralston, 68, has served as Vice Chairman of The Cohen Group, an organization that provides clients with comprehensive tools for understanding and shaping their business, political, legal, regulatory and media environments, since 2003. General Ralston completed a distinguished 37-year Air Force career as Commander, U. S. European Command and Supreme Allied Commander Europe, NATO in 2003. Previously, General Ralston served as Vice Chairman of the Joint Chiefs of Staff, the nation’s second highest-ranking military officer. In his current role, General Ralston is in a position to keep our Board of Directors advised on the rapidly changing global political environment, as well as developments in the aerospace industry. As someone who was previously responsible for thousands of troops, General Ralston is familiar with complex human resource issues. Additionally, with the increased regulatory oversight of corporate governance, General Ralston’s understanding of the political environment in Washington provides the Board with a valuable perspective on current legislative developments. He has served on the Board of Directors since 2003, and he also has served on the boards of Lockheed Martin Corporation and URS Corporation since 2003.

John P. Reilly, 68, retired as the Chairman, President and Chief Executive Officer of Figgie International, an international diversified operating company, in 1998. He has more than 30 years of experience in the automotive industry, where he has served as President and Chief Executive Officer of a number of automotive suppliers, including Stant Corporation and Tenneco Automotive. He has also held leadership positions at the former Chrysler Corporation and Navistar International and has served as President of Brunswick Corporation. His hands-on experience in the automotive industry provides our Board with a key resource in a significant sector in which we compete. He also brings his knowledge of financial and human resource issues gained through his 40 years of successful executive leadership to his role on the Board. He has served on the Board of Directors since 2006. Mr. Reilly also serves as a director and non-executive chairman of both Exide Technologies and Material Sciences Corporation, and he has been a director of each of those companies since 2004.

John M. Timken, Jr., 60,Ballbach

Age 52

Director since 2009

Mr. Ballbach is a private investor who has been a successful entrepreneur for many years. A sample of Mr. Timken’s ventures includes involvement in the cable television business and establishing one of the largest commercial mushroom farms in North America. He has also been associated with, and an investor in, among others, a trucking concern, a plastic injection molding business and a chain of ophthalmic laboratories. He is currently a director of a flexible packaging business of which he was one of the founders. Mr. Timken uses his substantial financial acumen and varied business background to bring a candid and challenging approach to interaction with our management and independent auditors. He has served on the Board of Directors since 1986. Mr. Timken is also a substantial long-term shareholder of the Company.

Jacqueline F. Woods, 64, retired as the President of Ameritech Ohio (subsequently renamed AT&T Ohio), a telecommunications company, in 2000. Prior to serving as President, she held positions in finance, operations, marketing, sales and government affairs in that company. Mrs. Woods was inducted into the Ohio Women’s Hall of Fame in 1998. She brings an extensive, broad-based business background as the leader of a large company to her role on the Board and her experience at a primarily consumer-oriented company provides a valuable perspective on customer service. She has served on the Board of Directors since 2000, and she has served as a director of School Specialty, Inc. since 2006 and The Andersons, Inc. since 1999.

CONTINUING DIRECTORS

The remaining seven Directors, named below, will continue to serve in their respective classes until their terms expire in 2013. The following information, obtained in part from the respective Directors and in part from our records, describes the background and experience of each Director as of January 6, 2012.

John M. Ballbach, 51, haspreviously served as President and Chief Executive Officer of VWR International, LLC, a leading global laboratory supply company, sincefrom 2005 through July 2012 and was appointed Chairman of the Board of that company in 2007. Prior to joining VWR International, Mr. Ballbach joinedwas employed by the Valspar Corporation beginning in 1990 and1990. He progressed through a series of management positions to become its President and Chief Operating Officer from 2002 untilthrough 2004. He has served as a director of Valspar Corporation since 2012 and was formerly a director of VWR International from 2005 to 2012.

Mr. Ballbach provides the Board with valuable insight and perspective on general and strategic business matters based on his executive and management experience at VWR International and Valspar. Mr. Ballbach’s leadership experience enables him to offer a global perspective and experience inas well as specific insights into supply chain management are particularly helpful towhich have been important in guiding the BoardBoard’s discussion and planning as we continuethe Company continues to sharpen ourits focus on expanding globally and capturing growth opportunities in diverse industrial markets with strong aftermarket potential. He has served on

Mr. Ballbach is a member of the Board of Directors since 2009.Audit Committee.

Phillip R. Cox, 64,

Age 65

Director since 2004

Mr. Cox has been the President and Chief Executive Officer of Cox Financial Corporation, a financial services company that he founded, for over 35 years. In addition, to his service on our Board of Directors since 2004, Mr. Cox is currently non-executive Chairman of Cincinnati Bell, andwhere he has served as a director there since 1993. He has also has served as a director of Touchstone Mutual Funds since 1994 and Diebold, Incorporated since 2005. Mr. Cox formerly served as a director of Duke Energy Corporation from 2006 to 2008, and prior to its merger with Duke Energy, Cinergy Corp. from 1994 to 2005. With

Mr. Cox provides guidance to our Board based on his life-long backgroundextensive knowledge of dealing with financial matters,finance, investments and capital markets. Mr. Cox brings significant acumenthe perspective of a member of several corporate boards, including as non-executive Chairman and a member of the Audit and Finance, Governance and Nominating and Compensation committees of Cincinnati Bell and Chairman of the Compensation Committee and member of the Investment Committee of Diebold.

Mr. Cox is a member of the Audit Committee.

Diane C. Creel

Age 64

Director since 2012

Ms. Creel served as Chairman, Chief Executive Officer and President of Ecovation Inc., a subsidiary of Ecolab Inc., a waste stream technology company using patented technologies, until her retirement in 2008. Prior to Ecovation, Ms. Creel was Chairman, Chief Executive Officer and President of Earth Tech, Inc. from 1992 to 2003. Ms. Creel has served as a director of Allegheny Technologies Incorporated since 1996 and Enpro Industries, Inc. since 2009. Ms. Creel was formerly a director of Foster Wheeler Ltd. until 2008 and Goodrich Corporation until 2012.

Ms. Creel brings our Board the benefits of her deep experience as a senior executive and Board member of several industrial companies. Ms. Creel’s expertise in engineering, construction and green technology provides a key industry perspective to the Board. Ms. Creel also has experience in mergers and acquisitions, which serves the Board well when evaluating organic and inorganic growth opportunities. Ms. Creel brings the perspective of a member of several boards, including as Lead Independent Director as well as Chair of the Nominating and Governance Committee and member of the Finance and Personnel and Compensation Committees of Allegheny Technologies Incorporated and member of the Audit and Risk Management and Compensation and Human Resources committees of Enpro Industries, Inc.

Ms. Creel is a member of the Compensation Committee as well as the Audit Committee.

James W. Griffith, 58,

Age 59

Director Since 1999

Mr. Griffith has served as the President and Chief Executive Officer of The Timken Company (the “CEO”) since 2002. Mr. Griffith joined the Company in 1984 and has held positions as plant manager, Vice President of Manufacturing in North America and Managing Director of our business in Australia. From 1996 to 1999, he led our automotive business in North America and our bearing business activities in Asia and Latin America. He was elected President and Chief Operating Officer in 1999. Since that time, Mr. Griffith has led a transformation of the Company focused on continuously increasing value for customers and our shareholders. With Mr. Griffith’s broad experience and deep understanding of the Company, and as the CEO, he is a key Director for us. He has also served on the Boardas a director of DirectorsIllinois Tool Works since 1999. He also has been2012 and served as a director of Goodrich Corporation since 2002.until 2012.

As CEO, Mr. Griffith is focused on all aspects of Timken’s operations and plays a critical role in communicating management’s perspective on important matters to the Board. He also provides the Board with in-depth knowledge of each of Timken’s businesses and the global industry and macro-economic challenges and opportunities facing the Company. Mr. Griffith brings the perspective of a member of the board of Illinois Tool Works, including serving as a member of the Audit and Compensation Committee, and is a former member of the board of Goodrich Corporation.

John A. Luke, Jr., 63, is

Age 64

Director since 1999

Mr. Luke has served as the Chairman and Chief Executive Officer of MeadWestvaco Corporation, a leading global producer of packaging, coated and specialty papers, consumer and office products and specialty chemicals. He has held that positionchemicals since 2003. Mr. Luke worked in a number of areasjoined the executive ranks of Westvaco Corporation earlier in his career,1990 after holding leadership positions across the organization, including positions in treasury, marketing and international sales, before joining itssales. As a senior executive ranks in 1990. Heat Westvaco, Mr. Luke led the process of merging the Westvaco Corporation with the Mead Corporation in 2002 to create MeadWestvaco Corporation, a large transformative transaction. As Chief Executive Officer of a company that was founded by his ancestors in 1888,2002. Mr. Luke brings an under-standing of the evolution of a family business into a global corporation. Mr. Luke’s leadership of a large, public global company and his experience in dealing with the issues facing such a company make him well-positioned for his role as a Director. He has served on the Board of Directors since 1999. Mr. Luke also has served as a director of The Bank of New York Mellon Corporation since 2007 and MeadWestvaco Corporation since 2002.

Mr. Luke brings deep executive leadership experience to our Board, including expertise in leading large corporate transformations and evaluating and executing inorganic growth opportunities through acquisitions. As Chief Executive Officer of a company that was founded by his ancestors in 1888, Mr. Luke also brings a unique perspective regarding the challenges and opportunities of transforming a family business into a global corporation. Mr. Luke brings the perspective gained from serving on two

corporate boards, including as Chairman and a member of the Executive Committee of MeadWestvaco Corporation and Chair of the Corporate Governance and Nominating Committee and a member of the Risk and Executive Committees of Bank of New York Mellon Corporation.

Mr. Luke is a member of the Nominating and Corporate Governance Committee and chairs the Compensation Committee.

Joseph W. Ralston

Age 69

Director since 2003

General Ralston has served as Vice Chairman of The Cohen Group, an organization that provides clients with comprehensive tools for understanding and shaping their business, political, legal, regulatory and media environments, since 2003. General Ralston completed a distinguished 37-year Air Force career as Commander, U.S. European Command and Supreme Allied Commander Europe, NATO in 2003. Previously, General Ralston served as Vice Chairman of the Joint Chiefs of Staff, the nation’s second highest-ranking military officer. General Ralston also has served on the boards of Lockheed Martin Corporation and URS Corporation since 2003.

General Ralston’s experience in the private sector, combined with his distinguished career leading thousands of U.S. troops, provides our Board with unmatched expertise across a range of complex operational, human resources, supply chain/logistical and other issues facing a global corporation. Based on his extensive military experience, General Ralston also provides specific insights and knowledge in aerospace, an important segment for the Company. Additionally, General Ralston’s understanding of the political environment in Washington allows him to guide our Board on the challenges and opportunities resulting from governmental actions. General Ralston also brings the perspective of a member of two corporate boards, including as Chair of the Compensation Committee as well as member of the Audit and Board Affairs Committee of URS Corporation and member of the Classified Business and Security, Ethics and Sustainability and Strategic Affairs and Finance Committees of Lockheed Martin.

General Ralston is a member of the Compensation Committee, chairs the Nominating and Corporate Governance Committee and also serves as Lead Director.

John P. Reilly

Age 69

Director since 2006

Mr. Reilly served as the Chairman, President and Chief Executive Officer of Figgie International, an international diversified operating company, until 1998. He has more than 30 years of experience in the automotive industry, where he served as President and Chief Executive Officer of several automotive suppliers, including Stant Corporation and Tenneco Automotive. He also held leadership positions at the former Chrysler Corporation and Navistar International and served as President of Brunswick Corporation. Mr. Reilly also serves as a director and non-executive Chairman of Exide Technologies and Material Sciences Corporation, having served on each company’s board since 2004.

Mr. Reilly brings to our Board the benefits of his extensive automotive industry experience and provides our Board with valuable insight in a significant market for Timken. Based on his 40 years of successful executive leadership with Figgie International, Stant Corporation and Tenneco Automotive, Mr. Reilly is also able to help guide the Board in making strategic and business decisions. Mr. Reilly brings his perspective as non-executive Chairman of two corporate boards, as well as a member of the Compensation Committee of Exide Technologies and Audit Committee of Material Sciences Corporation.

Mr. Reilly is a member of the Compensation and Audit Committees.

Frank C. Sullivan, 51,

Age 52

Director since 2003

Mr. Sullivan has held the position of Chairman and Chief Executive Officer of RPM International Inc., a world leader in specialty coatings, since 2008. HeMr. Sullivan was appointed RPM’s Chief Executive Officer in 2002, prior to which he held positions in sales and corporate development before becoming Chief Financial Officer in 1993. HeMr. Sullivan held various positions in the areas of commercial lending and corporate finance in the banking industry before joining RPM in 1987. With

Mr. Sullivan’sSullivan provides the Board with an extensive financial background he serves

based on his years as a Chief Financial Officer. In addition, having served as a Chief Executive Officer and director of a multinational company, Mr. Sullivan also brings invaluable executive experience on a wide array of issues including strategic planning and the financial expert for our Audit Committee.evaluation and execution of merger and acquisition opportunities. As Chief Executive Officerofficer of a major public company Mr. Sullivan possesses invaluable experience to deal with the wide range of issues facing us, and he is particularly knowledgeablethat was founded by his ancestors in the area of acquisitions due to the substantial level of activity by RPM in that area. Grandson of the founder of RPM,1947, Mr. Sullivan also brings to the Board knowledge and understanding of the evolution of a family business into a large public company. He has served

Mr. Sullivan chairs the Audit Committee as well as serving on the Board of DirectorsNominating and Corporate Governance Committee.

John M. Timken, Jr.

Age 61

Director since 2003, and he1986

Mr. Timken is a private investor who has been a successful entrepreneur and significant shareholder of The Timken Company for many years. Mr. Timken’s ventures include involvement in a cable television business and establishing one of the largest commercial mushroom farms in North America. Mr. Timken currently serves as a director and co-founder of RPM International, Inc. since 1995.a flexible packaging business.

Mr. Timken’s experience as an investor in identifying and helping to increase value across a range of businesses provides the Board with important input in evaluating and guiding the Company in making important capital allocation decisions.

Mr. Timken is a member of the Audit Committee.

Ward J. Timken, 69,

Age 70

Director since 1971

Mr. Timken currently serves as President of The Timken Foundation of Canton, a private charitable foundation that promotes civic betterment through capital fund grants. He has held that position since 2004. The Timken Foundation is not affiliated with The Timken Company. During his 36-year career with thePreviously Mr. Timken held various leadership positions within The Timken Company before retiring in 2003, 2003.

Mr. Timken workedprovides the Board with valuable experience and insight into important strategic matters facing the Company, having served in prominent leadership positions during his 36-year tenure with the Company. Specifically, Mr. Timken’s leadership positions within the steel operations,business, corporate development, and human resources. For many years he was responsible forresources and community relations and was regarded as the “face of the company” in plant locations globally. He traveled extensively during his career, becoming very familiar with our global manufacturing operations, and he bringsbring a wealth of knowledge regarding our history and capabilities to his position as a member of the Board relating to a wide array of Directors. He has served on the Board since 1971. Mr. Timken is also a substantial long-term shareholder of the Company. matters including broad expertise regarding international global manufacturing.

Ward J. Timken is the father of Ward J. Timken, Jr. and the cousin of John M. Timken, Jr.

Ward J. Timken, Jr., 44, is

Age 45

Director since 2002

Mr. Timken has served as Chairman of the Board of Directors of The Timken Company (the “Chairman”). He has held that position since 2005. In his previous position asPreviously, Mr. Timken was President of our Steel Business, he led thesteel business infrom 2004 to 2005, to record levels of profitability at the time and positioned it for even better subsequent performance. He also served as our Corporate Vice President from 2000 to 2003 and was responsible for strategy development. He played a pivotal roleheld key leadership positions in the acquisition and integration of The Torrington Company in 2003, the largest acquisition in our history. His other positions at the Company included key postings in EuropeTimken’s European and Latin America in the 1990s. BeforeAmerican businesses from 1992 to 2000. Prior to joining us in 1992, heTimken, Mr. Timken opened and managed the

Washington, D.C. office of McGough & Associates, a Columbus, Ohio-based government affairs consulting firm. Mr. Timken is also a member of the Board of Pella Corporation, where he has served since 2008.

Mr. Timken provides the Board with relevant experience from having served in several key leadership positions during his tenure with Timken. As President of the steel business, Mr. Timken led the business to record levels of profitability, and as Corporate Vice President, he was responsible for strategy development, including leading the Company’s diversification efforts in the Process Industries segment. Mr. Timken’s broad-based experience has given him an excellentand familiarity with each of Timken’s businesses, along with his deep understanding of our business that positions himthe global industry dynamics across the Company’s markets, allow Mr. Timken to provide outstanding leadershipplay a key role in all matters involving the Board.

Jacqueline F. Woods

Age 65

Director since 2000

Ms. Woods served as the Chairman. HePresident of Ameritech Ohio (subsequently renamed AT&T Ohio), a telecommunications company, until her retirement in 2000. At Ameritech Ohio, Ms. Woods also held various positions in finance, operations, marketing, sales and government affairs. Ms. Woods was inducted into the Ohio Women’s Hall of Fame in 1998. Ms. Woods has served on the boards of School Specialty, Inc. since 2006 and The Andersons, Inc. since 1999.

Ms. Woods’ extensive executive management experience within a large company enables her to help guide the Board in making decisions in areas such as marketing, strategy development, corporate governance and compensation. In addition, her executive experience at a primarily consumer-oriented company provides a valuable perspective on customer service. Ms. Woods also brings her perspective as a member of Directors since 2002. Mr. Timken is alsotwo corporate boards, including serving as a substantial long-term shareholdermember of the Company.Governance and Nominating and Compensation committees of School Specialty, Inc. and the Audit, Governance and Nominating and Compensation committees of The Andersons, Inc.

Ms. Woods is a member of the Compensation Committee as well as the Nominating and Corporate Governance Committee.

Independence Determinations

The Board of Directors has adopted the independence standards of the New York Stock Exchange listing requirements for determining the independence of Directors. The Board has determined that the following continuing Directors and Director nominees meet those independence standards: John M. Ballbach, Phillip R. Cox, Diane C. Creel, John A. Luke, Jr., Joseph W. Ralston, John P. Reilly, Frank C. Sullivan, John M. Timken, Jr., and Jacqueline F. Woods. With respect to John M. Timken, Jr., the Board determined that his family relationship to Ward J. Timken and Ward J. Timken, Jr. does not impair his independence.

Related Party Transactions Approval Policy

Our Directors and executive officers are subject to our Standards of Business Ethics, which requiresrequire that any potential conflicts of interest, such as significant transactions with related parties, be reported to our General Counsel. Our Directors and executive officers are also subject to the Timken Policy Against Conflicts of Interest, which requires that an employee or Director avoid placing himself or herself in a position in which his or her personal interests could interfere in any way with our interests. While not every situation can be identified in a written policy, the Timken Policy Against Conflicts of Interest does specifically prohibit the following situations:

In the event of any potential conflict of interest, pursuant to the charter of the Nominating and Corporate Governance Committee and the provisions of the Standards of Business Ethics and the Timken Policy Against Conflicts of Interest, the Nominating and Corporate Governance Committee would review and, considering such factors as it deems appropriate under the circumstances, make a determination as to whether to grant a waiver to the policies for any such situation. Any waiver would be promptly disclosed to shareholders.

During 2011,2012, the Company made purchases of electric motor repair services in the ordinary course of business from Hannon Electric Company (“HEC”) totaling approximately $296,000.$210,000. The wife and two minor children of Christopher A. Coughlin, our Group President, – Process Industries, have minority interests in HEC and Mr. Coughlin’s father-in-law and mother-in-law are the majority owners of HEC. The Nominating and Corporate Governance Committee determined that the payments to HEC during 20112012 were de minimis, both to HEC and the Company, that the terms of the purchases from HEC were no more favorable to HEC than terms generally available to any other third-party supplier to the Company, and that Mr. Coughlin exercises no influence over the Company’s relationship with HEC.

Board and Committee Meetings

The Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. During 2011,2012, there were eightnine meetings of the Board of Directors, teneight meetings of its Audit Committee, threefive meetings of its Compensation Committee and three meetings of its Nominating and Corporate Governance Committee. All nominees for Director and all continuing Directors attended 75 percent or more of the meetings of the Board and its committees on which they served. It is our policy that all members of the Board of Directors attend the annual meeting of shareholders, and in 20112012, all members attended the meeting. At each regularly scheduled meeting of the Board of Directors, the nonemployee Directors and the independent Directors also meet separately in executive sessions.

DIRECTOR COMPENSATION

Cash Compensation

Each nonemployee Director who served in 20112012 was paid at the annual rate of $80,000 for services as a Director. At its meeting on February 10,9, 2012, the Board of Directors approved an additional annual fee of $10,000 for the Lead Director, (as defined below) beginning January 1, 2012. In addition to base compensation, the following fees arewere paid for serving on a committee of the Board.Board in 2012.

On February 8, 2013, the Board of Directors approved a $10,000 increase to the annual fee for the Lead Director and a $2,500 increase to the annual fee for the Chair of the Nominating and Corporate Governance Committee.

Stock Compensation

Each nonemployee Director serving at the time of our Annual Meetingannual meeting of Shareholdersshareholders on May 10, 2011,8, 2012, received a grant of 3,1002,175 shares of our common stock under The Timken Company 2011 Long-Term Incentive Plan (the “Long-Term Incentive Plan”) following the meeting. The shares received are required to be held by each nonemployee Director until his or her departure from the Board of Directors. Upon a Director’s initial election to the Board, each new nonemployee Director receives a grant of 2,000 restricted shares of our common stock under the Long-Term Incentive Plan, which vest one-fifth annually

over a five-year period. NoDiane C. Creel received such grants were made in 2011.

a grant on August 6, 2012. The Compensation Committee of the Board of Directors has adopted stockshare ownership guidelines that require nonemployee Directors to own 8,000 shares of our common stock. As of December 31, 2011,2012, all of our nonemployee Directors, other than Ms. Creel, met their ownership requirements.

Compensation Deferral

Any Director may elect to defer the receipt of all or a specified portion of his or her cash and/or stock compensation in accordance with the provisions of the Director Deferred Compensation Plan. Pursuant to the plan, cash fees can be deferred and paid at a future date requested by the Director. The amount will be adjusted based on investment crediting options, which include interest earned quarterly at a rate based on the prime rate plus one percent or the total shareholder return ofon our common stock, with amounts paid either in a lump sum or in installments in cash. Stock compensation can be deferred to a future date and paid either in a lump sum or installments and is payable in shares plus a cash amount representing dividend equivalents during the deferral period.

20112012 DIRECTOR COMPENSATION TABLE

The following table provides details of nonemployee Director compensation in 2011:2012:

A

Until 2005, a portion of the compensation for the Directors until 2005 included stock option grants. As of December 31, 2011,2012, the following individuals hadheld the following number of outstanding options and unvested restricted shares:

Name		Outstanding Options		Unvested Restricted Shares
John M. Ballbach		0		800
Phillip R. Cox		0		0
Diane C. Creel		0		2,000
John A. Luke, Jr.		9,000		0
Joseph W. Ralston		6,000		0
John P. Reilly		0		0
Frank C. Sullivan		0		0
John M. Timken, Jr.		0		0
Ward J. Timken		0		0
Jacqueline F. Woods		0		0

BOARD LEADERSHIP STRUCTURE

Our senior leadershipThe Board is shared between two executive positions —currently led by Chairman Ward J. Timken, Jr. In addition, the independent directors have designated Joseph W. Ralston as Lead Director.

The Chairman oversees the planning of the annual Board calendar and, with the Chief Executive Officer (“CEO”), in consultation with the other directors, schedules and sets the agenda for meetings of the Board and leads the discussions at such meetings. In addition, the Chairman provides guidance and oversight to management, helps with the formulation and implementation of the Company’s strategic plans and acts as the Board’s liaison to management. In this capacity, the Chairman, along with the CEO, and the Chairman. Both leaders areis actively engaged on significant matters affecting the Company,Company. The Chairman also leads the Company’s annual meetings of shareholders and performs such other functions and responsibilities as long-term strategy. The CEO focuses on all aspects of our operation, while the Chairman has a greater focus on our governance, including oversight ofset forth in the Board of Directors. Directors General Policies and Procedures or as requested by the Board from time to time.

The positionsBoard’s preferred governance structure is to separate the roles of CEOChairman and ChairmanCEO. With limited exceptions, these roles have been separate for over 80 years, with limited exceptions. We believeyears. While recognizing that there is no single, generally accepted approach to providing Board leadership and that the Board’s leadership structure may vary in the future as circumstances warrant, the Board considers this balance of shared leadership between the two positions isto be a strength for us. It also provides the opportunity for consistent leadership as either person could assume the duties of the other should the need arise on an emergency basis.Company.

Our independent Directors annually select a lead Director (“The Lead Director”) whoseDirector’s duties include: (a) developing agendas for, and presiding over, the executive sessions of the independent Directors;directors; (b) reporting the results of the executive sessions to the CEO and Chairman; (c) providing feedback as required to the other Directorsdirectors on the issues discussed with the CEO and Chairman; (d) serving as a liaison with the CEO, Chairman and the independent Directors;directors; (e) presiding at all meetings of the Board at which the Chairman is not present; (f) approving information sent to the Board; (g) approving agendas for Board meetings; (h) approving Board meeting schedules to ensure that there is sufficient time for discussion of all agenda items; (i) calling meetings of the independent Directors;directors; and (j) ensuring that he or she is available for consultation and direct communications with major shareholders as appropriate. At the executive session of the independent Directors on December 9, 2011, the independent Directors elected Joseph W. Ralston, chairman of the Nominating and Corporate Governance Committee, to serve as Lead Director until the Annual Meeting of Shareholders in 2012. At that time, the independent Directors will elect a Lead Director to serve for the following year until the Annual Meeting of Shareholders in 2013.

RISK OVERSIGHT

The Board of Directors primarily relies on its Audit Committee for oversight of the Company’s risk management. The Audit Committee regularly reviews issues that present particular risks to the Company, including those involving competition, customer demands, economic conditions, planning, strategy, finance, sales and marketing, products, information technology, facilities and operations, supply chain or legal matters. The full Board also reviews these issues as appropriate. The Board believes that this approach, supported by our senior leadership structure, provides appropriate checks and balances against undue risk taking.

AUDIT COMMITTEE

We have a standing Audit Committee that has oversight responsibility with respect to our independent auditors and the integrity of our financial statements. The Audit Committee is composed of Frank C. Sullivan (Audit Committee Chairman), John M. Ballbach, Phillip R. Cox, Diane C. Creel, John P. Reilly, and John M. Timken, Jr. Our Board of Directors has determined that each member of the Audit Committee is financially literate and independent as defined in the listing standards of the New York Stock Exchange. Our Board of Directors has determined that Frank C. Sullivan qualifies as the Audit Committee financial expert.

The Audit Committee’s charter is available on our website atwww.timken.com/investors/governance.

AUDIT COMMITTEE REPORT

The Audit Committee has reviewed and discussed with management and our independent auditors the audited financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.2012. The Audit Committee has also discussed with our independent auditors the matters required to be discussed pursuant to Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

The Audit Committee has received and reviewed the written disclosure and the letter from our independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, has discussed with our independent auditors such independent auditors’ independence, and has considered the compatibility of non-audit services with the auditors’ independence.

Based on the review and discussions referred to above, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011,2012, filed with the Securities and Exchange Commission.

Frank C. Sullivan (Audit Committee Chairman)

John M. Ballbach

Phillip R. Cox

Diane C. Creel

John P. Reilly

John M. Timken, Jr.

COMPENSATION COMMITTEE

We have a standing Compensation Committee that establishes and administers our policies, programs and procedures for compensating our senior management and Board of Directors. Members of the Compensation Committee are John A. Luke, Jr. (Compensation Committee Chairman), Joseph W. Ralston, John P. Reilly, and Jacqueline F. Woods. Our Board of Directors has determined that all members of the Compensation Committee are independent as defined in the listing standards of the New York Stock Exchange.

With the guidance and approval of the Compensation Committee, we have developed compensation programs for our executive officers, including the CEO and the other executive officers named in the Summary Compensation Table, that are intended to enable us to attract, retain and motivate superior quality executive management; reward executive management for financial performance and the achievement of strategic objectives; and align the financial interests of executive management with those of our shareholders. The Compensation Committee determines specific compensation elements for the CEO and the Chairman and considers and acts upon recommendations made by the CEO and the Chairman regarding the other executive officers.

The agenda for meetings of the Compensation Committee is determined by its Chairman with the assistance of the Senior Vice President — Human Resources and Organizational Advancement. The meetings are regularly attended by the Chairman, CEO, Senior Vice President — Human Resources and

Organizational Advancement, and Vice President — Total Rewards. At each meeting, the Compensation Committee meets in executive session. The Chairman of the Compensation Committee reports the Committee’s actions regarding compensation of executive officers to the full Board of Directors. Our Human Resources and Organizational Advancement department supports the Compensation Committee in its duties and may be delegated certain administrative duties in connection with our compensation programs. The Compensation Committee has the sole authority to retain and terminate compensation consultants to assist in the evaluation of Director or executive officer compensation and the sole authority to approve the fees and other retention terms of any compensation consultants. The Compensation Committee has engaged Towers Watson, a global professional services firm, to conduct annual reviews of its total compensation programs for executive officers and, from time-to-time, to review the total compensation of Directors. Towers Watson also provides information to the Compensation Committee on trends in executive compensation and other market data.

With respect to Director compensation, as stated above, the Compensation Committee periodically engages Towers Watson to conduct reviews of total Director compensation, and the Committee then recommends to the full Board of Directors changes in Director compensation that will enhance our ability to attract and retain qualified Directors.

In January 2010, the firm of Towers Watson was created by the merger of Towers Perrin and Watson Wyatt. Towers Perrin had served as an advisor to the Compensation Committee for close to 20 years and was directly engaged by and accountable to the Committee. Watson Wyatt had been our long-time independent actuary. During fiscal 2011,2012, Towers Watson was paid $270,000$179,634 for executive compensation advice and $2,454,000$2,271,900 for actuarial and other services to us and our benefit plans.

The Compensation Committee has concluded that the advice received by the Committee from Towers Watson continues to be objective, unbiased and independent. The Compensation Committee’s careful oversight of the relationship with Towers Watson with respect to compensation advice mitigates the possibility that management could potentially misuse the actuarial engagement to influence Towers Watson’s compensation work for the Committee. The Compensation Committee annually reviews the charges to the Company from Towers Watson for executive compensation advice and other services for the preceding three years, along with an estimate of services for the coming year. Additionally, Towers Watson has adopted internal safeguards to ensure that its executive compensation unit is maintained separately from its actuarial business.

The Compensation Committee also plays an active role in our executive officer succession planning process. The Compensation Committee meets regularly with senior management to ensure that an effective succession process is in place and to discuss potential successors for executive officers. As part of this process, executive officer position profiles are updated to highlight the key skills required to meet future demands, and potential successors are evaluated and development plans are reviewed. At the end of each year, the Compensation Committee reviews the performance of the executive officers and potential successors. The Compensation Committee’s succession planning activities are discussed with the full Board in executive session.

The Compensation Committee’s charter is available on our website atwww.timken.com/investors/governance.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis (the “CD&A”) for the year ended December 31, 20112012 with our management. Following the review and discussion referred to above, the Compensation Committee recommended to our Board of Directors, and our Board approved, the inclusion of the CD&A in our Annual Report on Form 10-K for the fiscal year ended December 31, 20112012 and this Proxy Statement for filing with the Securities and Exchange Commission.

John A. Luke, Jr. (Compensation Committee Chairman)

Diane C. Creel

Joseph W. Ralston

John P. Reilly

Jacqueline F. Woods

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

We have a standing Nominating and Corporate Governance Committee that is responsible for, among other things, evaluating new Director candidates and incumbent Directors and recommending Directors to serve as members of our Board committees. Members of the Nominating and Corporate Governance Committee are Joseph W. Ralston (Nominating and Corporate Governance Committee Chairman), John A. Luke, Jr., Frank C. Sullivan and Jacqueline F. Woods. Our Board of Directors has determined that all members of the Nominating and Corporate Governance Committee are independent as defined in the listing standards of the New York Stock Exchange.

Director candidates recommended by our shareholders will be considered in accordance with the criteria outlined below. In order for a shareholder to submit a recommendation, the shareholder must deliver a communication by registered mail or in person to the Nominating and Corporate Governance Committee, c/o The Timken Company, 1835 Dueber Avenue, S.W., P.O.P. O. Box 6932, Canton, Ohio 44706-0932. Such communication should include the proposed candidate’s qualifications, any relationship between the shareholder and the proposed candidate, and any other information that the shareholder would consider useful for the Nominating and Corporate Governance Committee to consider in evaluating such candidate.

The Board of Directors General Policies and Procedures provide that the general criteria for Director candidates include, but are not limited to, the highest integrity and ethical standards, the ability to provide wise and informed guidance to management, a willingness to pursue thoughtful, objective inquiry on important issues before the Company, and a range of experience and knowledge commensurate with our

needs as well as the expectations of knowledgeable investors. The Nominating and Corporate Governance Committee utilizes a variety of sources to identify possible Director candidates, including professional associations and Board member recommendations. In evaluating candidates to recommend to the Board of Directors, the Nominating and Corporate Governance Committee considers factors consistent with those set forth in the Board of Directors General Policies and Procedures, including whether the candidate enhances the diversity of the Board. Such diversity includes professional background and capabilities, knowledge of specific industries and geographic experience, as well as the more traditional diversity concepts of race, gender and national origin. The attributes of the current Directors and the needs of the Board and the Company are evaluated whenever a Board vacancy occurs, and the effectiveness of the nomination process, including whether that process enhances the Board’s diversity, is evaluated each time a candidate is considered. The Nominating and Corporate Governance Committee is also responsible for reviewing the qualifications of, and making recommendations to the Board of Directors for, Director nominations submitted by our shareholders. All Director nominees are evaluated in the same manner by the Nominating and Corporate Governance Committee, without regard to the source of the nominee recommendation.

Diane C. Creel, who is the only person approved by the Nominating and Corporate Governance Committee for inclusion in the Company’s 2013 Proxy Statement as a Director nominee who has not been previously elected by the shareholders, was recommended by the Company’s Chief Executive Officer.

The Nominating and Corporate Governance Committee also plans for Director succession. The Committee regularly reviews the appropriate size of the Board and whether any vacancies are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Committee considers potential Director candidates. As part of this process, the Committee assesses the skills and attributes of our Board as a whole and of each individual Director and evaluates whether prospective candidates possess complementary skills and attributes that would strengthen our Board.

The Nominating and Corporate Governance Committee’s charter is available on our website atwww.timken.com/investors/governance.

Our code of business conduct and ethics, called the “Standards of Business Ethics,” and our corporate governance guidelines, called the “Board of Directors General Policies and Procedures,” are reviewed annually by the Nominating and Corporate Governance Committee and are available on our website atwww.timken.com/investors/governance.

BENEFICIAL OWNERSHIP OF COMMON STOCK

The following table shows, as of January 6, 2012,4, 2013, the beneficial ownership of our common stock by each continuing Director, nominee for Director and executive officer named in the Summary Compensation Table on page 2831 of this Proxy Statement, and by all continuing Directors, nominees for Director and executive officers as a group. Beneficial ownership of our common stock has been determined for this purpose in accordance with Rule 13d-3 under the Securities Exchange Act of 1934 and is based on the sole or shared power to vote or direct the voting or to dispose or direct the disposition of our common stock. Beneficial ownership as determined in this manner does not necessarily bear on the economic incidents of ownership of our common stock.

(1)	The following table provides additional details regarding beneficial ownership of our common stock:

The following table gives information known to us about each beneficial owner of more than 5 percent of our common stock as of January 6, 2012,4, 2013, unless otherwise indicated below.

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

The Company’s success depends largely on the contributions of motivated, focused and energized people all working to achieve our strategic objectives. This understanding shapes our approach to providing a competitive total compensation package to our CEO and the other executive officers named in the 2012 Summary Compensation Table (the “named executive officers”) that:

The Company uses a balance of short-term and long-term incentives as well as cash and non-cash compensation to meet these objectives. The elements of executive compensation consist of base salary, annual incentives, long-term incentives including performance units, stock options and performance shares, retirement income programs and other benefits. Each element of compensation meets one or more of the objectives described above.

20112012 Business Performance

The Compensation Committee believes that our executive compensation for 20112012 was consistent with our compensation objectives and demonstrates a long-standing focus on pay for performance at all levels. The reported executive compensation reflects changes made to target opportunities to track market practices, payments commensurate with our strong operating performance and changes in the accounting value of pension obligations.

The combined effect of the actions taken by management in recent years to improve both the Company’s market exposure and its internal operating performance droveled to strong operating results and cash flow generation, as well as a strengthened balance sheet, in 2012. The Company’s strategy of continuing to evolve in key markets and further diversifying its portfolio with new products and additional repair services enabled it to achieve double-digit margins in 2012 in the Company to record levelsface of saleslower volumes. Sales were $5.0 billion and profitability in 2011. Sales for 2011 were $5.2 billion, an increase of 28 percent over 2010. Earningsearnings per diluted share were $5.06 for 2011 were $4.59, up 65 percent over 2010. In addition, the Company maintained its considerable liquidity and2012. As a result of this strong balance sheet.performance, our incentive plans generally paid above target levels for 2012.

20112012 Target Pay Adjustments

The Compensation Committee approved the following pay changes with respect to executive compensation targets for the named executive officers in 2011:2012:

Salary: The CEO received a base salary increase of 3.92.8 percent in 2011.2012. The other named executive officers received base salary increases ranging from 2.53.0 percent to 3.7 percent, which is within the range of salary adjustments for all Company employees. The base salary increases were made to maintain alignment with market practice and were effective March 1, 2011.2012. In addition, Mr. Coughlin and Mr. Kyle each received a base salary increase of 11 percent, effective September 1, 2012, in connection with their promotions to Group President. See “Base Salary” below.

Annual Performance Award: The target annual bonus opportunities for the CEOMr. Coughlin and the Chairman for 2011Mr. Kyle were increased from 10070 percent to 11575 percent of base salary, effective September 1, 2012, in connection with their promotions to better align the targets with market practice.Group President. The target opportunities for the other named executive officers remained unchanged for 2011.2012. See “Annual Performance Award” below.

Long-Term Incentives: The named executive officers received target long-term incentive awards in 20112012 with values ranging from approximately $1.1$1.0 million to $4.8$3.8 million. The targetIn an effort to further align the long-term interests of executive leadership with those of our shareholders, and to provide an incentive to achieve medium-term financial objectives, the Compensation Committee in 2012 began granting strategic performance shares in lieu of performance units and performance shares. Strategic performance shares are performance-based restricted stock units that vest based on achievement of specified performance

objectives. Strategic performance shares serve to both reward and retain executives, as the receipt and value of any payout is linked to performance and to the stock price when the shares vest. In addition, Mr. Coughlin and nonqualified stock options was increasedMr. Kyle each received deferred shares (which will vest after five years of continued employment) in 2011 for the CEO and the Chairmanconnection with their promotions to better align with market practice.Group President. See “Long-Term Incentives” below.

CEO Total Pay:The CEO’s target pay for 20112012 positioned his total pay package slightly below the 50^th percentile as defined using the process described below in the “Pay Setting Process” section of this CD&A.discussion.

The table below shows the year-to-year change in targeted compensation for the CEO in 20112012 compared to 2010:2011:

20112012 Incentive Compensation

In addition to total shareholder return, there are a variety of factors that we believe reflect Company performance over both short-term and long-term periods. These factors include earnings before interest and taxes as a percentage of beginning invested capital (“EBIT/BIC”), return on invested capital and earnings per share, among other things. The Company achieved recordstrong operating results with respect to a number of these factors during 2011.2012. These results drove the following incentive compensation awards for performance periods ending on December 31, 2011:2012:

Long-Term Realized Pay

While most individual pay decisions are based on an annual timetable, the Compensation Committee takes a longer-term view of how pay and performance are linked for executives. In addition, the Compensation Committee primarily focuses on the pay realized by executives as a result of performance, not just the values we are required to report in the Summary Compensation Table and its supporting tables. The values in those tables, while important, only tell a portion of the story as they reflect accounting values of different program elements, not realized values. In addition, in the case of pension values, they are influenced by factors such as changes in interest rates, not just changes in the underlying benefit levels or program design.

The table below shows the value of realized compensation for the CEO from 20092010 through 2011,2012, as well as the performance of the Company on the primary incentive metrics tracked by the Company. While not a substitute for the 2012 Summary Compensation Table, this table provides what we believe is an accurate depiction of the relationship between pay and performance at the Company, and shows strong alignment between the two. During this time period, the Company increased shareholder wealth by over $2 billion through increases in stock price and the payment of dividends.

In addition,The increase in realized compensation during 2011, as a result of a decline in the Company’s stock price during the year, the aggregate value of the outstanding stock options, restricted shares and performance shares granted2012 is primarily due to the CEO between 2008 and 2010 declined by approximately $5.8 million.increase in stock option activity. This decline in value which does not include the decline in value of the other shares ownedrealized by the CEO furtherduring a year when total return to shareholders was 26 percent reinforces the performance orientation of our program and the alignment of interests between our executives and our shareholders.

The primary differences between the total amounts shown in this table and in the 2012 Summary Compensation Table is that this table reflects actual gains from option exercises and stock vesting as opposed to the grant date fair value of stock and options awards at the time of grant, and this table does not reflect increases in pension values and perquisites and certain other compensation amounts that are shown in the 2012 Summary Compensation Table.

Governance Actions in 2011

In addition to these pay actions, the Company also made changes to strengthen its compensation programs to reflect best practices in governance of executive pay:

Alignment of Pay and Performance

The Compensation Committee recognizes that 20112012 was an outstandinga very strong year for the Company, despite challenging economic conditions in many of the markets served by the Company. Although theThe Company’s total shareholder return for 2011 underperformed total shareholder return in 20102012 was 26.0 percent, and 2009, the Compensation Committee recognizes that actions taken by management in recent years drove the Company to reach the recordhigh levels of sales and profitability seen in 2012 and 2011. As a result, the Compensation Committee believes that realized pay was aligned with these strong results. In addition, the Company’s three-year annualized total shareholder return of 2828.6 percent and five-year annualized total shareholder return of 8.210.2 percent demonstrate that the Company is creating long-term value for its shareholders that is aligned with pay increaseslevels over these periods. The Compensation Committee also believes that the compensation decisions made in light of the Company’s strong performance, as well as the longer-term implicationimplications of past and present compensation decisions, demonstrate a strong, sustained commitment to paying for performance.

Executive Compensation Program Design

The Company designs its executive compensation programs to ensure they are aligned with competitive market practices, the Company’s emphasis on meeting its performance aspirations and the creation of long-term shareholder value. Based on a review ofThe Compensation Committee periodically reviews the compensation programs and policies that apply to all Company employees the Compensation Committeeand has determined that such programs and policies are not reasonably likely to have a material adverse effect on the Company. Additionally, in establishing and reviewing the executive compensation programs, the Compensation Committee considers whether the programs encourage unnecessary or excessive risk taking and has determined that they do not. The Compensation Committee also considered the result of the 20112012 advisory, non-binding “say-on-pay” vote in connection with the discharge of its responsibilities. Because a substantial majorityover 94 percent of our shareholdersthe votes cast approved the compensation for our named executive officers described in our Proxy Statement for the 20112012 Annual Meeting of Shareholders, the Compensation Committee determined that no changes to our compensation programs were warranted as a result of the shareholder advisory vote. As described above under “Executive Summary,” however, our Compensation Committee

did take action during 20112012 to strengthen our executive compensation programs and to continue to build a pay-for-performance culture.

In order to gauge the competitiveness of its compensation programs, the Company periodically reviews survey data from nationally recognized consulting firms. Collectively, these databases reflect the pay practices of hundreds of companies from a range of industries. The Company attempts to position itself to attract and retain qualified senior executives in the face of competitive pressures in its relevant general labor markets. In 2011,2012, the Company used information regarding the pay practices of companies in these databases with revenues adjusted (via the use of regression analysis) to reflect a company of Timken’s revenue size. Specifically, the Company uses both the Towers Watson Executive Compensation Database and the Aon Hewitt US Total Compensation Measurement Executive Survey. A combined list of the companies in these databases is attached to this Proxy Statement as Appendix B. The Company believes that revenues are an appropriate indicator of the size and complexity of an organization, which should be reflected in determining compensation levels. Furthermore, the Company views general industrial companies of comparable size as the relevant market for the Company’s senior executive talent. In light of the survey data gathered and the relative positioning of Timken’s executives to the competitive market, the Compensation Committee elected to make nominal adjustments to targeted compensation levels for certain executives as described above under “2011“2012 Target Pay Adjustments”.Adjustments.”

Guidelines for salaries, annual incentives and long-term incentive grants are based on the 50th percentile of the general industry data for each position.comparable roles. The Company may provide target compensation above or below the 50th percentile for a particular position based on internal factors such as the executive’s operating responsibilities, experience level, retention risk and tenure and performance in the position. The Company establishes compensation levels in this way for two main reasons. First, this approach sets fair and reasonable pay levels needed to attract and retain qualified executives. Second, it requires excellent performance for pay that is higher than that provided by the majority of companies in the comparison group.

The Company establishes target compensation levels that are consistent with market practicespractice and internal equity considerations relative to base salaries, annual incentive awards and long-term incentive grants, along with the Compensation Committee’s assessment of the appropriate mix for the position. Current compensation is structured to provide needed personal liquidity, focus executives on short-term priorities and dampen the impact of a volatile stock market. Providing a significant portion of executive compensation in the form of long-term compensation strengthens the alignment of executives to the long-term performance of the Company and provides a balance against short-term decision making.

The Company’s incentive compensation programs for executives are designed to link compensation performance with the full spectrum of our business goals, some of which are short-term, while others take several years or more to achieve:

The mix between current and long-term or cash and non-cash compensation varies by management level. For example, the CEO and the Chairman receive more of their total target compensation in the form of long-term compensation relative to the other named executive officers. For both, target compensation consists of approximately 40 percent in current compensation and 60 percent in long-term compensation, made up of approximately:

Target compensation for the other named executive officers is approximately 45 percent in current compensation and 55 percent in long-term compensation, with approximately 65 percent ina greater emphasis on cash and 35 percent in non-cash compensation. Positions lower in the organization have a greater emphasis on current, cash denominated pay. This reflects the Company’s view that more senior executives should have a more significant incentive to focus on and drive long-term performance, while priorities for executives lower in the organization are more heavily focused on shorter-term operational results.

Cash is used for both current and long-term compensation, while non-cash compensation (i.e., share-based(share-based awards) is generally used only for long-term compensation. Cash compensation includes base salary, annual incentive awards and strategic performance units,shares, which are cash-basedstock-denominated awards typically payable at the end of three years subject to attainment of certain corporate performance targets. Strategic performance shares are paid either in cash or in a combination of cash and shares depending on whether the recipient has met the relevant share ownership requirement. Non-cash compensation includesconsists of stock option grants and strategic performance share grants.shares paid in stock. Compensation tied to equity is intended to align the recipient’s interests with those of our shareholders, as changes in stock price have a meaningful impact on the recipient’s personal wealth.

Pay-Setting Process

The CEO and the Senior Vice President — Human Resources and Organizational Advancement, in consultation with Towers Watson, the Compensation Committee’s external compensation consultant, prepare compensation recommendations for the named executive officers (other than the CEO and the Chairman) and present these recommendations to the Compensation Committee. The compensation packages for the CEO and the Chairman are determined by the Compensation Committee (with input from the Chairman on the performance and pay recommendations for the CEO) and approved by the independent members of the Board of Directors during executive session.

The Company compares each element of compensation provided to its named executive officers to market data and considers the total compensation package in relation to the target established for the position, taking into account the scope of responsibilities for the particular position. Total direct compensation (base salary, annual incentives and long-term incentive grants) is also evaluated in relation to the total compensation of comparable positions derived from the general market data.data as well as internal equity considerations. For example, the amount of Mr. Griffith’s compensation is higher than the other named executive officers because it reflects the competitive market for CEO services, and not because of compensation policies different from those applied to the other named executive officers.

In the course of this analysis and development of proposed total compensation packages, the Compensation Committee’s external compensation consultant reviews the relevant information and discusses their findings with the Committee. As part of this process, the Compensation Committee reviews all the components of compensation for the named executive officers and determines that each individual’s total compensation is reasonable and consistent with the Company’s compensation philosophy. The Compensation Committee may also consider additional factors, such as the executive’s operating responsibilities, experience level, retention risk and tenure and performance in the position, and make adjustments to a particular element of an executive’s compensation. The Compensation Committee then approves, with any modifications it deems appropriate, base salary ranges, target annual performance award opportunities and long-term incentive grants for the Company’s named executive officers. The amount of past compensation realized or potentially realizable doeshas not directly impactimpacted the level at which current and long-term pay opportunities arehave been set, though the Compensation Committee does consider this information in its deliberations.

The Company analyzes the overall expense arising from aggregate executive compensation, as well as the accounting and tax treatment of such programs. The Company has addressed the impact of

Section 162(m) of the Internal Revenue Code by obtaining shareholder approval of the Senior Executive Management Performance Plan and the Long-Term Incentive Plan and by structuring certain grants under the Long-Term Incentive Plan as performance-based compensation. All named executive officers participated in the Senior Executive Management Performance Plan for 2011.2012. The Compensation Committee considers the deductibility of compensation and benefits for Federal income tax purposes, along with other relevant factors, when determining executive compensation practices.

As described above, the Compensation Committee engages an external compensation consultant in connection with its oversight of the design, development and implementation of the Company’s executive pay programs. During 2009, the Compensation Committee established a multi-year agreement with Towers Watson to provide this service. In 2011,2012, Towers Watson’s primary areas of assistance were:

The Compensation Committee has authorized Towers Watson to interact with the Company’s management, as needed, on behalf of the Compensation Committee.

Analysis of 20112012 Compensation

Base Salary

Base salaries for the named executive officers are intended to reflect the scope of their responsibilities, the length of their experience performing those responsibilities and their performance. The Compensation Committee determines base salary ranges for executive officers using external surveys of salary practices for positions with similar levels of responsibility. The Compensation Committee also reviews base salaries for the named executive officers annually in light of each officer’s experience, leadership, current salary and position in the salary range.

Following this review process in 2011,2012, the Compensation Committee decided to increase the base salary for the CEO by 3.92.8 percent. The other named executive officers received annual base salary increases ranging from 2.53.0 percent to 3.7 percent.percent, effective March 1, 2012. The base salary increases were consistent with base salary increases implemented throughout the Company. In addition, Mr. Coughlin and Mr. Kyle each received a base salary increase of 11 percent, effective September 1, 2012, in connection with their promotions to Group President.

Annual Performance Award

The Company’s Senior Executive Management Performance Plan provides the named executive officers with the opportunity to earn annual incentive compensation based on the achievement of corporate performance goals established by the Compensation Committee and approved by the Board of Directors. It is intended to focus the named executive officers on specific performance goals in the current year.

The Senior Executive Management Performance Plan is structured to permit us to grant awards that may comply with Section 162(m) of the Internal Revenue Code. In order to qualify the amounts earned under the plan as “performance-based,“performance- based,” the Compensation Committee can exercise discretion only to reduce an award. As a result, performance at target levels results in the plan being funded above the level of the Company’s other annual incentive plans. This provides the Compensation Committee with the flexibility to determine actual awards under the Senior Executive Management Performance Plan for the named executive officers that are consistent with the awards made to other annual incentive plan participants, which has been the historical practice.

For 2011,2012, the Senior Executive Management Performance Plan provided both the CEO and the Chairman a target award opportunity of 115 percent of base salary. The Plan provided the other named executive officers a target award opportunity of 70 percent to 75 percent of base salary. Target award opportunity levels for executive officers were determined by the Compensation Committee based on external surveys of practices for positions with similar levels of responsibility. The actual awards could be higher or lower than the target opportunity based on the results for each performance measure and the extent to which the Compensation Committee uses discretion to reduce the awards.

The Company used two performance measures for funding this plan for 2011:2012: (1) corporate EBIT/BIC (calculated to exclude the effects of acquisitions and divestitures above $50 million in size, changes in tax laws or accounting principles, non-cash impairments, changes in other comprehensive income and any amounts received under the Continued Dumping and Subsidy Offset Act); and (2) working capital as a percentage of sales. Corporate EBIT/BIC constituted 80 percent of the total award calculation and working capital as a percentage of sales constituted 20 percent. The Compensation Committee established corporate EBIT/BIC as the primary performance measure because it believes this measure is closely correlated with the creation of shareholder value. Working capital as a percentage of sales was used to focus the named executive officers on managing working capital.

The Company’s 20112012 performance goals, associated plan funding levels, and actual calculated performance are summarized in the following table:

Senior Executive Management Performance Plan - 2011— 2012

		Threshold				Target				Maximum				Actual
EBIT/BIC			9.0%				21.0	%			29.0%				22.4	%
Working Capital/Sales			27.8%				23.8	%			19.8%				25.2	%
Plan Funding			80%				170	%			260%				177	%

The EBIT/BIC target level for 20112012 was significantly higher than the 20102011 target and the highest target in the history of the plan, despite ongoing uncertainty in most of the Company’s global markets. The actual calculated corporate EBIT/BIC was 25.722.4 percent, which exceeded theor between target and maximum level,levels, while the ratio of working capital to sales was 24.025.2 percent, or slightly better than target.between target and threshold levels. As a result, the Senior Executive Management Performance Plan was eligible to be funded at 243.4177 percent of target. The Compensation Committee determined the actual annual incentive award for each named executive officer under the Senior Executive Management Performance Plan based on the calculated award, as a percentage of target opportunity, under the Company’s annual incentive plan for management level employees other thanmanagement-level employees. The calculated award for 2012 for this broad-based plan was 121 percent. This percentage was then adjusted by 5 percent for the named executive officers. As a result,CEO and the 2011Chairman, and by 10 percent for Mr. Eisenberg, to reflect their strong individual performance in 2012. Accordingly, the 2012 cash award payout under the Senior Executive Management Performance Plan equaled 173127 percent of the target opportunity for eachthe CEO and the Chairman, 133 percent of the target opportunity for Mr. Eisenberg, and 121 percent of the target opportunity for the other named executive officers.

Long-Term Incentives

The Compensation Committee administers the Long-Term Incentive Plan, which iswas approved by our shareholders. Awards under the Long-Term Incentive Plan can be made in the form of non-qualifiednonqualified stock options, incentive stock options, appreciation rights, performance shares, performance units, restricted shares, restricted stock units and deferred shares. In 2011,2012, the Company utilized three different types of long-term incentive grants for the named executive officers:

In total, the Company believes that these three grant typesgrants provide a balanced focus on shareholder value creation and retention of key managers over the course of a full business cycle. These grants also serve to balance the short-term operating focus of the Company and align the long-term financial interests of executive management with those of our shareholders.

The value of each type of long-term incentive grant is linked directly to the performance of the Company or the price of its common stock. For performance units, payouts are entirely contingent on the attainment of corporate performance targets, based on the Company’s three-year strategic plan. In the case of stock options, the recipient recognizes value only to the extent that the stock price rises above the market price of the stock at the time the option is granted. As forFor strategic performance shares, receipta payout is entirely contingent on the attainment of specified corporate performance targets and the value of the payout is directly linked to the stock price. And for deferred shares, the value of the shares is dependent upon achievement of a certain level of performance and the value of the shares is directly related to the stock price andat the dividends paid bytime the Company.shares vest. In each case, an executive must remain employed by the Company for a minimumspecified period of three years (four years for stock options and performance shares)time to earn the full value of anyan award, which aids the Company in retaining executives.

The size of the long-term incentive grants and the allocation of grant value among the three long-term incentive grant types is based on a combination of market practice, internal equity considerations and the relative importance of the objectives behind each of the three grants (i.e.,(to reward attainment of multi-year performance goals, provide value tied to stock price appreciation and foster stock ownership). For the grants made in 2012, the target value to be delivered in stock options and strategic performance shares was 385 percent of target base salary for the CEO and the Chairman, greater215 percent of target base salary for Mr. Eisenberg and 210 percent of target base salary for the other named executive officers. The allocation between stock options and strategic performance shares was 60%/40% for the CEO and the Chairman and 50%/50% for the other named executive officers. Greater emphasis iswas placed on the stock option component for the CEO and the Chairman, reflecting the Compensation Committee’s belief that the CEO and the Chairman, more than other officers, are directly accountable for long-term shareholder value creation.

When determining The Compensation Committee increased the sizeresulting stock option grants for Messrs. Coughlin, Miraglia and Kyle by approximately 10 percent for 2012, in recognition of the stock option and performance share grantsstrong business results delivered in recent years, the Committee concluded that using the2011.

The target value for each grant is converted to a number of shares or options based on a calculated average stock price atover a single pointdefined period prior to the grant. Beginning in time did not reflect the longer term value of the stock. As a result,2012, the Compensation Committee used the average price over the last six months of the year prior tofive trading days immediately preceding the grant date in determining the number of shares granted. The resulting grantsgranted, to reflect reported compensation that may be higher or lower than target levels as a result of differences betweenprices closer to the stockactual price on the dategrant date. This resulted in values in 2012 that were slightly below target values at the time of grant, used for reporting purposes and the average price usedas well as a year-over-year decline in grant value compared to determine the size of the grants. The Company has used this averaging practice the past three years, with the net effect over that period being aggregate grant values that were below our targeted values.2011.

The Compensation Committee typically makes long-term incentive grants performance units, stock options and performance shares at the first regularly scheduled meeting of each year, when the Committee determines all elements of the named executive officers’ compensation for the year. Board and Committee meetings are generally scheduled at least a year in advance. Approval of grants for newly hired or promoted executives during the course of the year occur at the Compensation Committee meeting immediately following the hiring or promotion.

Performance UnitsStock Options

TheIn 2012, our key employees (including the named executive officers haveofficers) received awardsnonqualified stock options that:

The Compensation Committee believes that these awards help the Company retain executives and focus attention on January 1longer-term performance. Stock options are an effective motivational tool because they only have value to the extent the stock price on the date of exercise exceeds the exercise price on the grant date. They are an effective element of compensation and retention, however, only if the stock price grows over the term of the award. For information about the specific number of stock options awarded in 2012 to each year. Cash payouts for performance units are typically made by March following the end of each performance cycle. Performance units act as a strong incentive for the named executive officers, see the 2012 Grants of Plan-Based Awards Table below.

Under accounting rules, the fair value of the stock options on the grant date is expensed over the vesting period in the year the options become vested. When executives exercise stock options, they are taxed at ordinary income tax rates (subject to withholding) and the Company receives a corresponding tax deduction.

Strategic Performance Shares

In an effort to further align the long-term interests of executive leadership with those of our shareholders, and to provide an incentive to achieve the Company’s medium-term financial and strategic objectives. They also encourage retention, as they are subject to forfeiture if the officer voluntarily leaves the Company before the end of the three-year period.

For each of the performance cycles described below,objectives, the Compensation Committee established twoin 2012 began granting strategic performance measures: (1)shares in lieu of performance units and performance shares used in prior years. Strategic performance shares are performance-based restricted stock units that vest based on achievement of specified performance objectives. Strategic performance shares serve to both reward and retain executives, as the receipt of a payout is linked to performance and the value of the payout is linked to the stock price when the shares vest.

The performance objectives for strategic performance shares granted in 2012 were average corporate return on invested capital (ROIC);(“ROIC”) and (2)cumulative earnings per share (EPS).(“EPS”) for the three-year performance period. The Compensation Committee selected these goalsmetrics because it believes they are key components of shareholder value creation and highly correlated to achievement of the Company’s business strategy. Each measure was weighted equally because they are viewed as equally important for these performance cycles. For the 2009 to 2011 performance cycle, actual performance is calculated to exclude the effects of changes in tax laws or accounting principles. For the 2010 to 2012 and 2011 to 2013 performance cycles, actualActual performance is calculated to exclude the effects of changes in tax laws or accounting principles, non-cash impairments, changes in other comprehensive income and any amounts received under the Continued Dumping and Subsidy Offset Act.

2009 to 2011 Performance Cycle

The At the time the specific performance targets for each metric were established, the Compensation Committee establishes a target payout opportunitybelieved that the targets for the strategic performance units for each named executive officer, determinedshares granted in 2012 were very challenging, but achievable. To achieve target performance levels, the Company would have to achieve ROIC levels on par with the strong results delivered in 2011 as a percentage ofwell as above-record EPS on average over the officer’s base salary in effect on January 1 in the first year of thethree-year performance period. For the 2009 to 2011 cycle, the CEO and the Chairman had a target payout opportunity of 100 percent and the other named executive officers had target payout opportunities from 50 percent to 80 percent of their January 1, 2009 base salaries. These target percentages were determined to provide the appropriate allocation of value among the long-term incentives, as described above.

The Company’s performance goals, associated plan funding levels and actual calculated resultstargets for the 2009 to 2011 cyclestrategic performance shares granted in 2012 are summarized in the following table:

2012 to 2014 Strategic Performance Units - 2009 to 2011 CycleShares Targets

For any award to be earned, actual performance must achieve at least the 2009 to 2011 cycle, actual calculatedthreshold performance exceededlevels for both ROIC and EPS. If the targetthreshold performance level for both measureseither measure is not attained, then no payment will occur. If an award is payable, the number of shares earned can range from 50 percent to 150 percent of target based upon the actual performance over the three-year performance period. The value of the shares is equal to the stock price at the end of the performance period. Executives who have met their share ownership requirement at the time of grant receive the value of any final award in cash. Executives who have not met their share ownership requirement at the time of grant receive half of the value of any final award in cash and the CEOother half in equity. For information about the strategic performance shares awarded in 2012 to each of the named executive officers, see the 2012 Grants of Plan-Based Awards Table below.

Under the accounting rules, strategic performance shares that are paid in cash result in variable accounting, whereby the Company’s expense equals the actual value paid to the executives. As such, the ultimate expense is not determinable until the end of the three-year performance period. When the executives earn and receive a payout, the Company receives a corresponding tax deduction. For strategic performance shares that are paid in equity, the grant date fair value is expensed over the service/vesting period. The executives are taxed at ordinary income tax rates (subject to withholding) when the shares vest, and the ChairmanCompany receives a corresponding tax deduction.

Deferred Shares

Mr. Coughlin and Mr. Kyle each received a cash payment equalone-time grant of 25,000 deferred shares, which will vest after five years of continued employment, in connection with their promotions to 146 percentGroup President. The Compensation Committee determined that the size and type of these grants were appropriate to encourage the retention of Mr. Coughlin and Mr. Kyle and to enhance their January 1, 2009 base salariesstock ownership and focus on total shareholder return, as the value of the deferred shares is linked to the stock price when the shares vest. Mr. Coughlin and Mr. Kyle each signed a non-compete agreement in connection with this grant.

Under the accounting rules, the grant date fair value is expensed over the service/vesting period. The executives are taxed at ordinary income tax rates (subject to withholding) when the shares vest, and the otherCompany receives a corresponding tax deduction.

Performance Units

While no longer provided beginning in 2012, the named executive officers received cash payments equalawards of performance units in prior years. The awards were designed to 73 percent to 117 percent of theirfocus the officers’ efforts on the Company’s medium-term performance goals. Three-year performance cycles started on January 1 2009 base salaries.of each year. Cash payouts for performance units are made by March following the end of each performance cycle. Accordingly, a performance cycle for performance units granted in 2010 was completed at the end of 2012 and the payout was approved by the Committee at its first meeting in 2013.

2010 to 2012 Performance Cycle

The severe economic downturn in 2009 significantly affected performance units covering multiple performance cycles. There were no payouts for the 2007 to 2009 cycle or the 2008 to 2010 cycle and at the time the 2010 to 2012 cycle was approved, the probability of achieving the targets for the 2009 to 2011 cycle was believed to be remote. Recognizing the challenges of setting multi-year performance goals in an uncertain environment, while at the same time desiring to strengthen the incentive to achieve the Company’s strategic objectives and to encourage retention of senior management, the Compensation Committee structured the performance units for the 2010 to 2012 performance cycle to provide an opportunity for a payout to be earned in each year of the cycle.

For the 2010 to 2012 performance cycle, the Compensation Committee established two performance measures: (1) ROIC; and (2) EPS. The Compensation Committee selected these metrics because it believed they were key components of shareholder value creation and highly correlated to achievement of the Company’s business strategy. Each metric was weighted equally because they were viewed as equally important for the performance cycle. Actual performance was calculated to exclude the effects of changes in tax laws or accounting principles, non-cash impairments, changes in other comprehensive income and any amounts received under the Continued Dumping and Subsidy Offset Act.

As in the past, the specific performance targets for each measure aremetric were tied to the Company’s internal, confidential three-year strategic plan. Given the uncertain environment at the time the targets were established, the Compensation Committee believed that the targets for the 2010 to 2012 cycle were very challenging, but achievable. The target payout opportunity for the performance units granted in 2010 was 100 percent of base salary (as of January 1, 2010) for the CEO and the Chairman and ranged from 60 percent to 80 percent of base salary (as of January 1, 2010) for the other named executive officers.

Funding (as a percentage of target) for the 2010 to 2012 performance cycle is as follows:

The Company’s performance goals and actual calculated results for the 20112012 component of the 2010 to 2012 cycle are summarized in the following table:

2010 to 2012 Performance Units – 2011— 2012 Performance Goals

Based on these results, the CEO and the Chairman each received a cash payment equal to 100150 percent of their January 1, 2010 base salaries and the other named executive officers received cash payments equal to 6090 percent to 80120 percent of their January 1, 2010 base salaries.

2011 to 2013 Performance Cycle

In 2011, the Compensation Committee returned to the approach used prior to 2010 under which the entire performance award is paid at the end of the three-year cycle. As in the past, the specific performance targets for each measure are tied to the Company’s internal, confidential three-year strategic plan. As a result, at the time the targets were established, the Compensation Committee believed that the targets for the 2011 to 2013 cycle were very challenging, but achievable. For the performance units granted in 2011, the CEO and the Chairman have a target payout opportunity of 100 percent and the other named executive officers have target payout opportunities from 70 percent to 80 percent of their January 1, 2011 base salaries, as reflected in the 2011 Grants of Plan-Based Awards Table below.

Under the accounting rules, performance units result in variable accounting, whereby the Company’s expense equals the value paid to the executives. As such, the ultimate expense is not determinable until the end of the three-year performance period. When the executives earn and receive a payout, the Company receives a corresponding tax deduction.

Stock Options

Key Employees (including the named executive officers) receive nonqualified stock options that:

The Compensation Committee believes that this structure helps the Company retain executives and focus attention on longer-term performance. Stock options are an effective motivational tool because they only

have value to the extent the stock price on the date of exercise exceeds the exercise price on the grant date. They are an effective element of compensation and retention, however, only if the stock price grows over the term of the award. For information about the specific number of stock options awarded to each of the named executive officers, see the 2011 Grants of Plan-Based Awards Table below.

Under accounting rules, the fair value of the stock options on the grant date is expensed over the vesting period in the year the options become vested. When executives exercise stock options, they are taxed at ordinary income tax rates (subject to withholding) and the Company receives a corresponding tax deduction.

Performance Shares

Performance shares are equity grants that are forfeited if a specified performance objective is not achieved. Performance shares serve to both reward and retain executives, as the receipt of the shares is linked to performance and the value of the shares is linked to the stock price when the shares vest.

The performance objective for performance shares granted in 2011 was corporate EBIT/BIC of 4 percent or better in any single year during the four-year vesting period. This performance objective was met in 2011 and the shares converted to time-based vesting, with 25 percent of the award vesting on the first anniversary of the grant and an additional 25 percent vesting on each of the next three anniversaries. For information about the specific number of performance shares awarded to each of the named executive officers, see the 2011 Grants of Plan-Based Awards Table below.

Under accounting rules, the grant date fair value of the performance shares is expensed over the service/vesting period based on the shares that are earned, provided the performance metric is met. The executives are taxed at ordinary income tax rates (subject to withholding) when the shares vest, and the Company receives a corresponding tax deduction.

Stock Ownership Guidelines

Stock ownership guidelines have been established for all senior executives and are intended to align the interests of executive management with those of our shareholders by requiring executives to be subject to the same long-term stock price volatility our shareholders experience. These guidelines

establish the following specific ownership target for each of the named executive officers: Mr. Griffith — 100,000 shares; Mr. Timken — 80,000 shares; Mr. Eisenberg — 33,000 shares; Mr. Coughlin — 33,000 shares; Mr. Miraglia — 28,000 shares; and Mr. CoughlinKyle — 28,00033,000 shares. The Company considers all shares owned by the executive, including deferred shares, restricted shares and performance shares still subject to forfeiture, but not including shares that are subject to unexercised options, in determining whether the executive has met the ownership targets. As of December 31, 2011,2012, the named executive officers all exceeded their ownership targets. The Company has a formal policy that prohibits pledging Company stock or hedging the economic risk related to such stock ownership.

Retirement Income Programs

The Company’s retirement income programs are an important retention tool. The Company maintains both qualified and nonqualified retirement income programs. The named executive officers participate in qualified plans on the same terms and conditions as all other salaried employees and also participate in the Company’s nonqualified retirement income programs. The Company currently provides nonqualified retirement income through two types of plans:

Although the policies and procedures underlying the Company’s retirement income programs are the same for all participants, the age and length of service (including service as an officer of the Company) of each participant can have a significant effect on their benefit calculation because the programs have changed over time. In addition, because benefits under the Company’s retirement income programs are based on base salary and cash annual incentive compensation for the five highest non-consecutive years (out of the final ten years), pension values can increase significantly as salary and cash annual incentive compensation increases. Pension values are also influenced by external factors such as the current environment of low interest rates, which have caused pension values to increase. See “Pension Benefits” below.

The value of the nonqualified retirement income programs is quantified each year and these programs are periodically reviewed for their competitiveness. To date, the value of these programs has not had a significant impact on decisions regarding salary, annual incentive awards or long-term incentive grants.

Termination-Related Payments

In addition to retirement payments, the Company provides termination-related payments in the event of involuntary termination without cause and involuntary termination without cause following a change in control.

The Company provides payments in the event of involuntary termination without causecontrol through severance agreements with individual executives. Severance agreements are provided based on competitive market practice and the Company’s desire to ensure some level of income continuity should an executive’s employment be terminated without cause. The Company believes that providing for such income continuity results in greater management stability and lower unwanted management turnover.

Severance agreements also provide for termination payments following involuntary termination without cause following a change in control. These provisions are based on competitive practice and are designed to ensure that executives’ interests remain aligned with shareholders should a potential change of control occur. They are also intended to provide some level of income continuity should an executive’s employment be terminated without cause. The Company believes, as stated above, that providing for

such income continuity results in greater management stability and lower unwanted management turnover.

The level of severance benefits under the applicable scenario reflects the Company’s perception of competitive market practice for the named executive officers’ positions, based on an assessment by Towers Watson. Severance pay was established as a multiple of base salary and actual annual incentive compensation, based on competitive market practice. Specific dollar values were not targeted by the Compensation Committee, although the Compensation Committee did review “tally sheets” that showed the estimated cost of such benefits under various scenarios. The amounts of potential payouts are indicated in the Termination Scenarios table on page 38.41.

Deferred Compensation

The Company maintains a Deferred Compensation Plan that allows certain employees, including the named executive officers, to defer receipt of all or a portion of their salary, employee contributions and Company match that would otherwise be directed to the Post-Tax Savings Plan and/or incentive compensation payable in cash or common shares until a specified point in the future. Cash deferrals earn interest quarterly at a rate based on the prime rate plus one percent. None of the named executive officers earned “above-market” interest, as defined by the Securities and Exchange Commission.

The Deferred Compensation Plan is not funded by the Company, and participants have an unsecured contractual commitment by the Company to pay the amounts due under the plan. When such payments are due, they will be distributed from the Company’s general assets. In the event of a change in control in the Company, as defined in the plan, participants are entitled to receive deferred amounts immediately. The Compensation Committee believebelieves that providing employees with tax deferral opportunities aids in the attraction and retention of such employees.

The value of deferred compensation amounts is quantified each year and this program is periodically reviewed for its competitiveness. To date, the value of deferred compensation has not had a significant impact on decisions regarding salary, annual incentive awards or long-term incentive grants.

Perquisite Programs

The Company’s executive officers, including all of the named executive officers, are eligible to participate in a number of broad-based benefit programs, including health, disability and life insurance programs. The named executive officers may also receive certain perquisites including term life insurance coverage, financial counseling and tax preparation, access to corporate country club memberships (although personal expenses are not reimbursed), and home security systems. The value of these benefits is reflected in the All Other Compensation column in the 2012 Summary Compensation Table below. Beginning January 1, 2011, theThe Company no longer providesdoes not provide tax gross-ups for these benefits to executives. These benefits are intended to provide executives with a competitive perquisite program that is reasonable and consistent with the Company’s overall approach to executive compensation. The total cost of these benefits is a small percentage of each named executive officer’s total compensation.

EXECUTIVE COMPENSATION

20112012 SUMMARY COMPENSATION TABLE

The following table sets forth information concerning compensation for our named executive officers for 2011:2012:

Performance share grants for each of the named executive officers require the Company to achieve a performance objective for at least one year during the four-year vesting period. Upon attainment of the performance objective, the grants convert to time vesting for all shares. The 2011 performance share grants required the Company to achieve a performance objective of EBIT/BIC of 4 percent or better and this objective was achieved in 2011.

(2)

The amounts shown in this column for 20112012 represent the grant date fair market value of nonqualified stock options at the time they were granted in 2011, computed2012 (calculated in accordance with FASB ASC Topic 718,718) using the Black-Scholes model. All stock options vest at a rate of 25 percent per year. Assumptions used to determine the value of these nonqualified stock options are listed in the discussion of Stock Compensation Plans in Note 119 of ourthe Company’s Consolidated Financial Statements contained in ourthe Company’s Annual Report on Form 10-K for the year ended December 31, 2011.2012.

of the named executive officers were as follows: Mr. Griffith — $2,105,921, $1,493,431$1,594,678 and $1,025,004;$1,537,506; Mr. Timken — $1,661,521, $1,180,170$1,259,649 and $810,000;$1,215,000; Mr. Eisenberg — $803,993, $687,709$640,000 and $472,003;$708,005; Mr. Coughlin — $405,000 and $351,000; Mr. Miraglia — $553,147, $438,565$400,100 and $301,006;$451,508; and Mr. Coughlin — $524,902, $257,889Kyle $405,000 and $234,000.$297,000.