Exhibit (10)(m)* to Report
on Form 10-K for Fiscal
Year Ended June 30, 1996
by Parker-Hannifin Corporation
Parker-Hannifin Corporation 1996-97-98 Long Term
Incentive Plan Description, as amended as of August 15, 1996
*Numbered in accordance with Item 601 of Regulation S-K.
PARKER-HANNIFIN CORPORATION
1996-97-98
LONG TERM INCENTIVE PLAN
The purpose of the Plan is to provide a long-term incentive portion of bonus
compensation. The plan's focus is on return on equity. It balances a
competitive base salary pay structure, an annual cash bonus compensation based
on a return on average assets, and a stock option plan with ten-year exercise
rights. The return on equity objective is a key financial goal and
comprehends return on sales at the net income level and asset utilization.
The participants in this plan in the near term will be limited to Corporate
Officers and Group Presidents. They clearly can affect broadly the overall
financial performance of the company. At a later date, it could be expanded
to include Operating Vice Presidents and equivalent Corporate Staff positions.
The key elements of Parker-Hannifin's plan are as follows:
Participation
Those key executives having a critical impact on the long term performance of
the Company selected by the Chief Executive Officer and approved by the
Compensation and Management Development Committee of the Board.
Performance Period
Three-year average Return on Equity with the grant to cover FY 96, 97 and 98.
Size of Awards
Commensurate with bonus compensation and stock option level of participants as
determined by the CEO with approval of the Compensation and Management
Development Committee.
Performance Objective
The Return on Equity objective is 14%.
Value Range
Actual value of the payments under the Plan will be within a range of 25% to
200% of target value based on performance against the objective.
Performance Range
For performance below a threshold of 8% ROE objective, no payment will be
made. For performance between 8% and 20% ROE, payments will be earned between
25% and 200% of the target value on a proportional basis above and below the
target value. The plan is capped at 200%.
Payment
Payments earned under the plan will be paid at the end of the three-year
performance period. Payment will be made in restricted stock of the
Corporation unless the participant is retired at the time of payment or has
previously elected a cash payment to be deferred under the Corporation's
Executive Deferral Plan. The value of the cash payment in lieu of restricted
shares is determined based upon the share price of Parker-Hannifin's Common
Shares on June 30, 1998. The restricted shares would be subject to a vesting
schedule and such other terms and conditions determined by the Compensation
Committee at the time of issuance. Any payout pursuant to this plan that will
result in the exceedance of the $1 million cap on the tax deductibility of
executive compensation will be deferred until such time in the earliest
subsequent fiscal year that such cap will not be exceeded.
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Termination of Employment
If a participant dies, retires (with consent of the Compensation and
Management Development Committee if earlier than age 60) or is disabled during
the performance period, he will receive a pro rata portion of the award
payable upon completion of the performance period. A participant who resigns
or is otherwise terminated during the performance period forfeits the award.
Performance Schedule
The Plan performance schedule, based on the three year simple average of
annual report Return on Equity, is as follows:
Return on Equity
____________________________________________________________
<8.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%
_____ ____ _____ _____ _____ _____ _____ _____
Payout % 0 25 50 75 100 133 167 200
Change in Control
In the event of a "Change in Control" of the Corporation (as defined below),
the payout under the Plan will be accelerated to fifteen (15) days
after the Change in Control. The amount of the payout will be in cash and
will be the greater of the target award or the amount the payout would have
been had ROE during the Performance Period to the end of the fiscal quarter
immediately preceding the date of the Change in Control continued throughout
the Performance Period. The cash amount of such payout will be based upon
the closing New York Stock Exchange stock price of the Corporation's Common
Shares on the first day of the Performance Period or the date of the Change
in Control, whichever is greater. If the Participant will reach age 65 prior
to the end of the Performance Period, the payout in the event of a Change in
Control will be reduced on a pro rata basis.
"Change in Control" means the occurrence of one of the following events:
(i) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Parker-Hannifin Corporation (the "Company") representing 20% or
more of the combined voting power of the Company's then outstanding securities
eligible to vote for the election of the Board of Directors of the Company
(the "Board") (the "Company's Voting Securities"); provided, however, that the
event described in this paragraph shall not be deemed to be a Change in
Control by virtue of any of the following situations: (A) an acquisition by
the Company or any corporation or entity in which the Company has a direct or
indirect ownership interest of 50% or more of the total combined voting power
of the then outstanding securities of such corporation or other entity (a
"Subsidiary"); (B) an acquisition by any employee benefit plan sponsored or
maintained by the Company or any Subsidiary; (C) an acquisition by any
underwriter temporarily holding securities pursuant to an offering of such
securities; (D) a Non-Control Transaction (as defined in paragraph (iii)); (E)
as pertains to a Plan participant (the "Executive"), any acquisition by the
Executive or any group of persons (within the meaning of Sections 13(d)(3) and
14(d)(2) of the Exchange Act) including the Executive (or any entity in which
the Executive or a group of persons including the Executive, directly or
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indirectly, holds a majority of the voting power of such entity's outstanding
voting interests); or (F) the acquisition of Company Voting Securities from
the Company, if a majority of the Board approves a resolution providing
expressly that the acquisition pursuant to this clause (F) does not constitute
a Change in Control under this paragraph (i);
(ii) individuals who, at the beginning of any period of twenty-four
(24) consecutive months, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority thereof; provided, that (A)
any person becoming a director subsequent to the beginning of such twenty-four
(24) month period, whose election, or nomination for election, by the
Company's shareholders was approved by a vote of at least two-thirds of the
directors comprising the Incumbent Board who are then on the Board (either by a
specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall be, for purposes of this paragraph (ii), considered as though
such person were a member of the Incumbent Board; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors
or any other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board shall be deemed to be a member of the
Incumbent Board;
(iii) the consummation of a merger, consolidation, share exchange or
similar form of corporate reorganization of the Company or any Subsidiary that
requires the approval of the Company's stockholders, whether for such
transaction or the issuance of securities in connection with the transaction
or otherwise (a "Business Combination"), unless (A) immediately following such
Business Combination: (1) more than 50% of the total voting power of the
corporation resulting from such Business Combination (the "Surviving
Corporation") or, if applicable, the ultimate parent corporation which
directly or indirectly has beneficial ownership of 100% of the voting
securities eligible to elect directors of the Surviving Corporation (the
"Parent Corporation"), is represented by Company Voting Securities that were
outstanding immediately prior to the Business Combination (or, if applicable,
shares into which such Company Voting Securities were converted pursuant to
such Business Combination), and such voting power among the holders thereof is
in substantially the same proportion as the voting power of such Company
Voting Securities among the holders thereof immediately prior to the Business
Combination, (2) no person (other than any employee benefit plan sponsored or
maintained by the Surviving Corporation or the Parent Corporation) is or
becomes the beneficial owner, directly or indirectly, of 20% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation), and (3) at least a majority of the members of the
board of directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation), following the Business Combination,
were members of the Incumbent Board at the time of the Board's approval of the
execution of the initial agreement providing for such Business Combination
(a "Non-Control Transaction") or (B) the Business Combination is effected by
means of the acquisition of Company Voting Securities from the Company, and a
majority of the Board approves a resolution providing expressly that such
Business Combination does not constitute a Change in Control under this
paragraph (iii); or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or the sale or other disposition of
all or substantially all of the assets of the Company and its Subsidiaries.
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Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any person acquires beneficial ownership of more than 20%
of the Company Voting Securities as a result of the acquisition of Company
Voting Securities by the Company which, by reducing the number of Company
Voting Securities outstanding, increases the percentage of shares beneficially
owned by such person; provided, that if a Change in Control would occur as a
result of such an acquisition by the Company (if not for the operation of this
sentence), and after the Company's acquisition such person becomes the
beneficial owner of additional Company Voting Securities that increases the
percentage of outstanding Company Voting Securities beneficially owned by such
person, a Change in Control shall then occur.
Notwithstanding anything in this Plan to the contrary, if the Executive's
employment is terminated prior to a Change in Control, and the Executive
reasonably demonstrates that such termination was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control, (a "Third Party"), then for all purposes of this
Plan, the date immediately prior to the date of such termination of employment
shall be deemed to be the date of a Change in Control for such Executive.
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