SCHEDULE 14A INFORMATION
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17325 EUCLID AVENUE - CLEVELAND, OHIO 44112
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 25, 1995
The annual meeting of shareholders of Parker-Hannifin Corporation will be
held at the Corporation's Parflex Division, 1300 North Freedom Street,
Ravenna, Ohio, in the Training Room, on Wednesday, October 25, 1995, at 9:00
a.m., Eastern Daylight Time, for the following purposes:
1. Fixing at five the number of Directors in the class whose three-year
term of office will expire in 1998 and electing five Directors in such class;
2. Adopting Amended Articles of Incorporation to increase the number of
authorized Common Shares of the Corporation from 150,000,000 to 300,000,000;
3. Approving the Corporation's Non-Employee Directors' Stock Plan;
4. Appointing Coopers & Lybrand L.L.P. as independent public
accountants for the fiscal year ending June 30, 1996; and
5. Transacting such other business as may properly come before the
Shareholders of record at the close of business on August 30, 1995, are
entitled to vote at the meeting. Please sign and return the enclosed Proxy
promptly. A return envelope is enclosed for your convenience.
By Order of the Board of Directors
JOSEPH D. WHITEMAN
September 25, 1995
17325 Euclid Avenue - Cleveland, Ohio 44112
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of the Corporation of proxies to be voted at the
annual meeting of shareholders scheduled to be held on October 25, 1995, and
at all adjournments thereof. Only shareholders of record at the close of
business on August 30, 1995 will be entitled to vote. On that date,
__________ Common Shares were outstanding and entitled to vote at the
meeting, each share being entitled to one vote. This Proxy Statement and the
form of Proxy are being mailed to shareholders on September 25, 1995.
Shareholders of the Corporation have cumulative voting rights in the
election of Directors, provided any shareholder gives notice in writing to
the President or a Vice President or the Secretary of the Corporation not
less than 48 hours before the time fixed for holding the meeting that he
desires that the voting at such election be cumulative and an announcement of
the giving of such notice is made upon the convening of the meeting by the
Chairman or the Secretary or by or on behalf of the shareholder giving such
notice. In such event, each shareholder has the right to cumulate his votes
and give one nominee the number of votes equal to the number of Directors of
each class to which Directors are nominated multiplied by the number of votes
to which his shares are entitled, or he may distribute his votes on the same
principle among two or more nominees to each such class, as he sees fit. In
the event that voting at the election is cumulative, the persons named in the
Proxy will vote shares represented by valid Board of Directors' Proxies on a
cumulative basis for the election of the nominees named below, allocating the
votes of such shares in accordance with their judgment.
ELECTION OF DIRECTORS
The Directors of the class elected at each annual election hold office
for terms of three years. The Board of Directors of the Corporation
presently consists of 12 members divided into three classes, each of which
consists of four members. Shareholder approval is sought to increase overall
membership of the Board of Directors to 13 by fixing at five the number of
directors in the class whose term will expire in 1998 and electing Katherine
M. Hudson, a new nominee, and John G. Breen, Patrick S. Parker, Walter Seipp
and Dennis W. Sullivan, directors whose terms of office expire in 1995, to
such class. A plurality of the Common Shares voted in person or by proxy is
required to elect a director.
Should any nominee become unable to accept nomination or election, the
proxies will be voted for the election of such other person as a Director as
the Board of Directors may recommend. However, the Board of Directors has no
reason to believe that this contingency will occur.
NOMINEES FOR ELECTION AS DIRECTORS FOR TERM EXPIRING IN 1998
JOHN G. BREEN, 61, has served as a Director of the Corporation since 1980.
He is Chairman of the Compensation and Management Development Committee and
a member of the Nominating and Pension Committees. Mr. Breen is the Chairman
of the Board and Chief Executive Officer of The Sherwin Williams Company
(paints and coatings). Mr. Breen is also a Director of National City
Corporation, Mead Corporation and Goodyear Tire and Rubber Company.
KATHERINE M. HUDSON, 48, is President and Chief Executive Officer of W. H.
Brady Company (coated film and industrial identification products).
Previously she was Vice President and General Manager of Printing and
Publishing Imaging for Eastman Kodak Company from 1992 to 1994; and Vice
President and Director of Information Systems for Eastman Kodak Company from
1987 to 1992. Ms. Hudson is also a Director of Apple Computer, Inc.
PATRICK S. PARKER, 65, has served as a Director of the Corporation since
1960. Mr. Parker is the Chairman of the Board of Directors of the
WALTER SEIPP, 69, has served as a Director of the Corporation since 1992. He
is a member of the Nominating Committee. Dr. Seipp is the Chairman of the
Supervisory Board of Commerzbank AG in Frankfurt, Germany. Previously, he
was Chairman of the Board of Managing Directors of Commerzbank AG from 1981
DENNIS W. SULLIVAN, 56, has served as a Director of the Corporation since
1983. Mr. Sullivan is the Executive Vice President - Industrial and
Automotive of the Corporation. Mr. Sullivan is also a Director of Ferro
Corporation and KeyCorp.
PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 1997
DUANE E. COLLINS, 59, has served as a Director of the Corporation since 1992.
Mr. Collins became President and Chief Executive Officer of the Corporation
in July 1993. Prior to that date, Mr. Collins served as the Corporation's
Vice Chairman of the Board from June 1992 to June 1993 and Executive Vice
President and President, International, from 1987 to 1992.
ALLEN H. FORD, 67, has served as a Director of the Corporation since 1975.
He is Chairman of the Audit Committee and a member of the Nominating and
Pension Committees. Now a Consultant, Mr. Ford was formerly the Senior Vice
President -Finance and Control of The Standard Oil Company (diversified
natural resources). Mr. Ford is also a Director of First Union Real Estate
ALLAN L. RAYFIELD, 60, has served as a Director of the Corporation since
1984. He is a member of the Nominating, Audit and Compensation and
Management Development Committees. Now retired, Mr. Rayfield previously
served as President, Chief Executive Officer and Director of M/A - COM, Inc.
(microwave manufacturing) from November, 1993 to December, 1994; President
and Chief Operating Officer of M/A-COM, Inc. from March 1991 to November
1993; Chairman of the Board and Chief Executive Officer of International
Telecharge, Inc. (telecommunications) from April 1990 to March 1991; Managing
Director of Forstmann Rayfield & Co. (equity investment) from April 1989 to
April 1990; and Senior Vice President of GTE Corporation (telecommunications
and electronic systems and equipment) from 1985 to 1989.
PAUL G. SCHLOEMER, 67, has served as a Director of the Corporation since
1982. Mr. Schloemer served as President and Chief Executive Officer of the
Corporation from 1984 to 1993. Mr. Schloemer is also a Director of
Rubbermaid Incorporated, AMP Incorporated and Esterline Technologies
PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 1996
PAUL C. ELY, JR., 63, has served as a Director of the Corporation since 1984.
He is Chairman of the Pension Committee and a member of the Nominating
Committee. Mr. Ely is presently General Partner of Alpha Partners (venture
capital seed financing). From December 1988 to July 1989, Mr. Ely was
Executive Vice President and Director of Unisys Corporation (computers).
Prior to that date, Mr. Ely was President and Chief Executive Officer of
Convergent, Inc. (computers) from 1985 to 1988 and Executive Vice President
and Director of Hewlett-Packard Company (computers) from 1980 to 1984. Mr.
Ely is also a Director of Network Peripherals, Inc. and Tektronix, Inc.
FRANK A. LEPAGE, 68, has served as a Director of the Corporation since 1977.
He is Chairman of the Nominating Committee and a member of the Audit
Committee. Now retired, Mr. LePage previously served as Director and
Executive Vice President of The Firestone Tire & Rubber Company (manufacturer
of tires and related products). Mr. LePage is also a Director of Acme Metals
PETER W. LIKINS, 59, has served as a Director of the Corporation since 1989.
He is a member of the Nominating, Audit and Compensation and Management
Development Committees. Dr. Likins is the President of Lehigh University.
Dr. Likins also serves as Director of Consolidated Edison Company of New York,
Inc., Communications Satellite Corp. and Safeguard Scientifics, Inc.
WOLFGANG R. SCHMITT, 51, has served as a Director of the Corporation since
1992. He is a member of the Nominating and Compensation and Management
Development Committees. Mr. Schmitt is the Chairman of the Board of
Directors, President and Chief Executive Officer of Rubbermaid Incorporated
(manufacturer of rubber and plastic products). He was previously President
and Chief Operating Officer of Rubbermaid from 1991 to 1992, President and
General Manager of Rubbermaid's Home Products Division from 1984 to 1991 and
Executive Vice President of Rubbermaid from 1987 to 1991. Mr. Schmitt also
serves as a director of Kimberly-Clark Inc.
No Director of the Corporation is related to any other Director. During
the fiscal year ended June 30, 1995, there were six meetings of the
Corporation's Board of Directors. Each Director attended at least 75% of the
meetings held by the Board of Directors and the Committees of the Board on
which he served.
The Audit Committee, which met twice during the fiscal year ended June
30, 1995, is responsible for reviewing with the Corporation's financial
management and its independent auditors, the proposed auditing program
(including both the independent and the internal audits) for each fiscal
year, the results of the audits and the adequacy of the Corporation's
internal control structure. This Committee recommends to the Board of
Directors the appointment of the independent auditors for the fiscal year.
The Pension Committee, which met once during the fiscal year ended June
30, 1995, is responsible for reviewing with the Corporation's management the
funding and investment policies for defined benefit plans and defined
contribution plans sponsored by the Corporation.
The Compensation and Management Development Committee, which met four
times during the fiscal year ended June 30, 1995, is responsible for annually
reviewing and fixing the salaries and other compensation of the officers of
the Corporation, deciding upon the grant of stock options to the officers and
other employees of the Corporation and reviewing corporate policies and
programs for the development of management personnel.
The Nominating Committee, which met twice during the fiscal year ended
June 30, 1995, is responsible for evaluating and recommending to the Board
qualified nominees for election as Directors of the Corporation and
considering other matters pertaining to the size and composition of the
Board. The Nominating Committee will give appropriate consideration to
qualified persons recommended by shareholders for nomination as Directors of
the Corporation, provided that such recommendations are accompanied by
information sufficient to enable the Committee to evaluate the qualifications
of the nominee. Nominations should be sent to the attention of the Secretary
of the Corporation.
Compensation of Directors. The Corporation compensates Directors, other
than officers who are Directors, for their services. Except as otherwise
indicated below, the annual retainer for such Directors is $24,000. The fee
for attending each Board and Committee meeting is $1,000 for all such
Directors other than Committee Chairmen, whose fee is $1,500 for chairing
committee meetings. Patrick S. Parker, Chairman of the Board of Directors,
receives an annual retainer of $120,000, plus meeting fees, club memberships
and the use of a leased automobile. Directors may elect to defer all or a
portion of their fees under the Corporation's Deferred Compensation Plan for
Directors or to elect to receive all or a portion of their fees in common
shares of the Corporation pursuant to the Corporation's Non-Employee
Directors' Stock Plan (if such plan is approved at this year's Annual Meeting
of Shareholders (see page ____)).
The Corporation has adopted a Retirement Plan for Directors, other than
officers who are Directors, which provides for payments of 50% of the annual
retainer in effect on the date of retirement until the monthly payments made
equal the Director's months of service, or until 120 monthly payments have
been made, or until death, whichever occurs first. Minimum requirements to
qualify for the plan are three years of service (one full term) and
attainment of age 65 prior to retirement as a Director. All current
directors have met the service requirements of the Plan.
COMPENSATION AND MANAGEMENT DEVELOPMENT
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Management Development Committee of the Board of
Directors (the "Committee") has furnished the following report on executive
The Committee, which consists entirely of four outside Directors, has
overall responsibility to:
* review the performance and long-term management potential of the
executive officers of the Corporation; and
* review and fix the salaries and other compensation of the executive
officers of the Corporation.
Following review and approval by the Committee, all issues pertaining to
executive compensation are submitted to the full Board of Directors in
conjunction with its approval and review of the Corporation's strategies and
operating plans, thereby assuring that the Corporation's system of executive
compensation is reasonable and appropriate, meets its stated purpose and
effectively serves the interests of the shareholders and the Corporation.
The Corporation's executive compensation programs are designed to attract
and retain key executives critical to the long-term success of the
Corporation by remaining competitive with other multinational-diversified
manufacturing companies of similar size. Comparative compensation
information is used by the Committee to establish competitive salary grade
ranges at the market median for both base pay and total annual compensation.
The group of companies used for compensation comparison purposes is not the
same as the S&P Manufacturing (Diversified Industrials) Index, which is the
peer group of companies included in the performance graph on page _____.
Comparative compensation information is obtained by the Committee from
independent surveys of numerous diversified manufacturers, which the
Committee believes is important in order to establish competitive
compensation ranges at the appropriate levels. On the other hand, the S&P
Index utilized in the performance graph contains data only with respect to a
limited number of companies who are in businesses similar to the Corporation,
which data is theoretically reflective of the stock performance of all
diversified manufacturers as a whole.
The Corporation's executive compensation programs also are intended to
reward executives commensurate with performance and attainment of pre-
determined financial objectives. Accordingly, compensation of executive
officers is directly and materially linked to both operating and stock price
performance, aligning closely the financial interests of the Corporation's
executives with those of its shareholders.
Compensation for the Corporation's executives consists of four primary
1. A base salary within a competitively established range. The
specific base salary within the range is determined by length of service and
individual contributions and performance as measured against pre-established
goals and objectives. Goals and objectives for each executive vary in
accordance with each executive's responsibilities and are established by each
2. An annual cash incentive bonus that is comprised of two components:
a. an amount that is determined by the Corporation's pre-tax
return on average assets as compared to the Corporation's annual goal
established at the beginning of the fiscal year (the "Target Incentive
b. an amount that is determined based on the return on division
net assets for the divisions in each executive's individual operating unit
(or the average return for all divisions for corporate staff executive
officers) (the "RONA Bonus").
The target amount of the annual cash incentive bonuses is established in
such a manner that base salary plus the target bonus will be within the
competitively determined total annual compensation range mentioned above.
Target annual incentive bonuses typically represent approximately 30-40% of
total targeted annual compensation for the executive officers with
operational profit and loss responsibility (including the Chief Executive
Officer) and 20-30% of total targeted annual compensation for the other
The Chief Executive Officer, with the approval of the Committee, also has
the authority to establish additional annual incentive programs for operating
executives. In fiscal year 1995, under a Volume Incentive Plan, operating
group presidents had the opportunity to earn an additional bonus of 5% of
base salary for each 1% of sales by which their group exceeded their previous
years' sales by more than 7.5%.
3. A long-term incentive plan (LTIP) award that is based upon the
Corporation's actual average return on equity for a three fiscal year period,
payable in cash and/or restricted stock at the election of the Committee.
The amount of the LTIP award is calculated by applying a pre-determined
multiplier to the mid-point of the base salary range for each executive. The
multiplier ranges from .35 for the lowest executive salary grade to 1.0 for
the Chief Executive Officer, which is consistent with the Committee's
philosophy to provide the most significant incentives to the highest ranking
4. Stock option grants determined by the recipient's salary grade
level. Grants are intended to recognize different levels of responsibility
as indicated by salary grade. Executives at the same grade level receive the
same number of options. Stock options are granted with an exercise price
equal to the fair market value of the Corporation's Common Stock on the day
of grant and all current grants are exercisable between one and ten years
from the date granted.
Incentive compensation for the Corporation's executives is significantly
"at risk", based upon the financial performance of the Corporation. Indeed,
more than one half of each executive's targeted total compensation (including
base salary, annual bonus, LTIP payouts and stock options) may fluctuate
significantly from year to year because it is directly tied to business and
Long-term incentive programs are designed to link the interests of the
executives with those of the stockholders. LTIP awards, whether paid in cash
or restricted stock, focus on long-term return on equity, which is directly
related to enhancing shareholder value. Restricted stock awards build stock
ownership and encourage a long-term focus on shareholder value, since the
stock is restricted from being sold, transferred, or assigned for a specified
period. Stock option grants provide an incentive that aligns the executive's
interests with those of the shareholders, since stock options will provide
value to the executive only when the price of the Corporation's stock
increases above the option grant price.
The Corporation's executive compensation philosophy is specifically
evident in the compensation paid during the most recent fiscal year to the
Corporation's President and Chief Executive Officer, Duane E. Collins. Mr.
Collins' increase in base salary from fiscal 1994 to fiscal 1995 of 13.3% is
reflective of his "outstanding" performance rating for fiscal 1994 (his first
year as President and Chief Executive Officer), the fact that his base salary
was in the first quartile of his rate range, and the resulting desire of the
Committee to increase his base salary significantly towards the mid-point of
the range to be reflective of Mr. Collins' responsibilities as the Chief
Executive of a large multinational industrial company. In addition, based on
the Corporation's fiscal 1995 operating plan, Mr. Collins was to receive 100%
of his Target Incentive Bonus of $210,000 if the Corporation's actual pre-tax
return on average assets, adjusted primarily for acquisitions and currency
transactions, was 12%. A minimum payout of 52% of the Target Incentive Bonus
was established at a 7.3% pre-tax return on average assets and a maximum
payout of 150% of the Target Incentive Bonus was established at a 14.7% pre-
tax return on average assets. During the fiscal year ended June 30, 1995,
the Corporation's adjusted pre-tax return on average assets was 16.96% and
each executive officer, including Mr. Collins, received an amount equal to
the 150% of his Target Incentive Bonus, which is included in the "Bonus"
column of the Summary Compensation Table on page ____.
Mr. Collins' RONA Bonus was targeted at $247,500 based upon an
approximate 25.5% average return on division net assets. The average return
on division net assets was 35.85%, resulting in a RONA Bonus payment to Mr.
Collins of $344,082, which is included in the "Bonus" column of the Summary
Compensation Table on page ____. The other executive officers also received
RONA Bonuses based upon the return on division net assets by their respective
operating units (or the average return for all divisions for corporate staff
Based on the Corporation's average return on equity, adjusted as
described below, of 12.17% for the three fiscal years ended June 30, 1995,
Mr. Collins and the other executive officers received a final payment under
the 1993-94-95 Long Term Incentive Plan in the form of restricted shares, as
reported in the "LTIP Payouts" column of the Summary Compensation Table on
page ____. Such payment represents 54.04% of the target payment that could
have been achieved had the Corporation achieved its return on equity goal of
16% during such period.
During fiscal year 1995, Mr. Collins and the other executive officers
also received a long-term incentive award as described in the LTIP table on
page ___. In addition, although Mr. Collins and the other executive officers
received a stock option grant in April 1994, based on a subsequent
independent executive compensation survey, the Committee decided that the
April 1994 grant was understated based on the market median and granted to
Mr. Collins and the other executive officers additional stock options in
August 1994 to offset the understated prior award, as reported in Option
Grants Table on page ____. The number of stock options granted to each
executive officer was determined by applying a pre-determined multiplier
(ranging from approximately .20 to .60) to the mid-point of the base salary
range for each executive, increasing such value in light of the historical
performance of the Corporation's stock price based upon the Black-Scholes
valuation model, and dividing the resultant value by the then current stock
At the recommendation of Mr. Collins, the Committee approved a Volume
Incentive Plan for fiscal 1995 as previously described above. The incentive
payable under the Plan were not capped due to a desire to significantly
stimulate sales growth in fiscal 1995, after several years of relatively flat
sales. Due to the record sales achieved by the Corporation during fiscal
1995, the resulting payments to participants under this Plan were
significant. Mr. Zito, the only executive officer named in the Summary
Compensation Table on page ____ to receive a bonus under the Volume Incentive
Plan, received a payment of $304,500 which is included in the "Bonus" column
in the Summary Compensation Table. Total payments to all operating group
presidents under the Plan in fiscal 1995 were $2,879,507. The Committee
believes that the unlimited incentives available under this Plan were at
least partially responsible for the dramatic growth of the Corporation in
fiscal 1995. Having achieved Mr. Collins' goal of restarting the growth of
the Corporation during fiscal 1995, the Committee has approved a new
arrangement for the Volume Incentive Plan for fiscal 1996 which limits the
payment receivable under the Plan so that the unusual one-time unlimited
incentives available in fiscal 1995 under the prior arrangement are unlikely
to continue. Under this new arrangement, operating group presidents will
have the opportunity to earn an additional bonus of 1% of base salary for
each 1% of sales by which their group exceeded fiscal 1995 sales by more than
7.5% up to 12.5% and an additional 2% of base salary for each additional 1%
of sales by which their group exceeded fiscal 1995 sales; subject, however,
to an overall maximum of 15% of base salary. As in fiscal 1995, the 1996
Plan limits the effect of acquisitions to 5% of the sales volume increases.
A further limiting factor in the 1996 Plan, however, is that sales growth
above 12.5% will result in additional payments under the Plan only if the
group is exceeding corporate goals with respect to its return on sales
and its assets/sales ratio.
During the past fiscal year, the Corporation recorded all-time sales and
earnings records, far exceeding both forecasted and prior years' performance.
In accordance with the Corporation's compensation philosophy, the incentive
compensation payable to each executive, including Mr. Collins, was
significantly greater than it would have been had the Corporation merely
achieved its financial goals during fiscal 1995. The Committee concurs with
management's belief that financial results should continue to improve in
fiscal 1996 and, if so, executive incentive compensation should continue at
a similar level. In addition, fiscal 1995's record-breaking performance will
continue to affect incentive compensation in the future as the fiscal 1995
results will be included in the 1994-95-96 and 1995-96-97 Long Term Incentive
During 1993, the Omnibus Budget Reconciliation Act of 1993 (the "Act")
was enacted by Congress. The Act includes potential limitations on the
deductibility of compensation in excess of $1 million paid to the
Corporation's Chief Executive Officer and four other highest paid executive
officers beginning in fiscal year 1995. The Committee has taken the
necessary actions to ensure the deductibility of compensation paid by the
Corporation to such individuals.
[JGB Signature] [ALR Signature]
JOHN G. BREEN ALLAN L. RAYFIELD
[PWL Signature] [WRS Signature]
DR. PETER W. LIKINS WOLFGANG R. SCHMITT
The following table summarizes compensation paid by the Corporation for
each of the last three fiscal years to its Chief Executive Officer and each of
the other four most highly compensated executive officers:
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Other Annual Underlying LTIP Other
Fiscal Compensation Options Payouts Compensation
Name and Principal Position Year Salary ($) Bonus ($) ($) (a) (#) (b) ($) (c) ($) (d)
___________________________________ ______ __________ ________ ____________ __________ ________ ____________
The following table summarizes stock option grants by the Corporation
during the fiscal year ended June 30, 1995 to each of the executive officers
identified in the Summary Compensation Table on page ____:
Duane E. Collins, 1995 680,004 659,082 8,066 30,000 225,798 20,078
President and Chief Executive 1994 600,000 465,840 7,920 22,500 73,425 4,500
Officer (e) 1993 430,000 134,349 73,390 37,500 0 11,263
Dennis W. Sullivan, 1995 500,004 417,252 8,202 15,900 173,121 20,432
Executive Vice President - 1994 472,992 276,990 83,569 9,600 56,306 6,765
Industrial & Automotive 1993 430,000 128,928 3,208 37,500 0 10,214
Michael J. Hiemstra, 1995 351,348 242,837 2,648 9,600 120,483 19,519
Vice President - 1994 338,645 173,489 1,897 5,400 39,146 7,450
Finance and Administration 1993 328,000 89,250 2,135 30,000 0 8,662
Donald A. Zito, 1995 300,000 583,380 705 9,600 97,868 19,879
Vice President, and President, 1994 279,996 217,247 2,779 5,400 31,804 6,276
Fluid Connectors Group 1993 255,000 93,286 1,852 24,000 0 6,833
Stephen L. Hayes, 1995 285,000 166,797 3,823 9,600 0 15,163
Vice President, and President, 1994 259,020 97,371 2,990 5,400 0 8,981
Parker Bertea Aerospace Group (f) 1993 204,700 51,222 2,418 45,000 0 8,559
(a) Unless otherwise indicated, no executive officers named in the Summary
Compensation Table received personal benefits or perquisites in excess of
the lesser of $50,000 or 10% of his total compensation reported in the
Salary and Bonus columns. Reported in this column is annual compensation
consisting of (i) amounts reimbursed by the Corporation for the payment
of income taxes on certain executive perquisites; (ii) $69,968 in
executive perquisites received by Mr. Collins in fiscal year 1993,
including $40,000 of which was for the payment of a country club
membership fee; and (iii) $76,097 in executive perquisites received by
Mr. Sullivan in fiscal year 1994, including $42,800 of which was for the
payment of a country club membership fee.
(b) All option grants have been adjusted for the 3-shares-for-2 common stock
split paid June 2, 1995.
(c) Dollar value of restricted shares issued as interim and final payments
under the 1993-94-95 Long Term Incentive Plan in August 1994 and August
1995, respectively. Such value is based on the Corporation's stock price
on the date of issuance of the shares. The restricted shares are subject
to a three-year vesting period from the date of issuance, with
accelerated vesting in the event of the death, disability or normal
retirement of the Plan participant. Dividends are paid by the
Corporation on the restricted shares. The number and value of the
aggregate restricted stock holdings for each of the above-named executive
officers as of June 30, 1995 is as follows: Mr. Collins, 2,670 shares
with a value of $96,788; Mr. Sullivan, 2,047 shares with a value of
$74,204; Mr. Hiemstra, 1,423 shares with a value of $51,584; Mr. Zito,
1,156 shares with a value of $41,905; and Mr. Hayes, no shares.
(d) Represents matching contributions by the Corporation to the Parker
Hannifin Employees' Savings Plus Stock Ownership Plan and the Parker
Hannifin Savings Restoration Plan.
(e) Mr. Collins was named President and Chief Executive Officer on July 1,
1993, the beginning of fiscal year 1994.
(f) Mr. Hayes was named Vice President, and President, Parker Bertea
Aerospace Group on April 16, 1993.
OPTION GRANTS IN FISCAL 1995
Number of % of Total Potential realizable value at
Securities Options Exercise assumed annual rates of stock
Underlying Granted to Or Base price appreciation for option term (b)
Options Employees Price Expiration ______________________________________
Name Granted (#) (a) in Fiscal 1995 ($/Sh) Date 5% ($) 10% ($) 9.35% ($) (c)
_________________ ______________ ______________ ________ __________ _______ _________ ___________
The following table summarizes exercises of stock options during the
fiscal year ended June 30, 1995 by each of the executive officers identified
in the Summary Compensation Table on page ____ and the fiscal year-end value
of unexercised options for such executive officers:
Duane E. Collins 30,000 4.4% $28.00 8/30/04 528,271 1,338,744 1,213,370
Dennis W. Sullivan 15,900 2.3% $28.00 8/30/04 279,984 709,534 643,086
Michael J. Hiemstra 9,600 1.4% $28.00 8/30/04 169,047 428,398 388,278
Donald A. Zito 9,600 1.4% $28.00 8/30/04 169,047 428,398 388,278
Stephen L. Hayes 9,600 1.4% $28.00 8/30/04 169,047 428,398 388,278
(a) Options are exercisable on the date following completion of one year of
continuous employment after the date of grant (i.e., August 31, 1995)
Fiscal 1995 grants and exercise prices have been adjusted for the 3-
shares-for-2 common stock split paid on June 2, 1995.
(b) The potential realizable value illustrates the value that might be
recognized upon the exercise of the options immediately prior to the
expiration of their term, assuming the specified compounded rates of
appreciation over the entire term of the option. Shareholders of the
Corporation, as a group, would realize $1,293,608,949 and $3,278,259,062
at assumed annual rates of appreciation of 5% and 10%, respectively, over
the ten-year life of the options. There can be no assurance that the
amounts reflected in this table will be achieved.
(c) Represents the Corporation's actual rate of stock price appreciation over
the past 10 years.
AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND FY-END OPTION VALUES
Securities Underlying Value of Unexercised
Shares Value Unexercised Options In-the-Money
Acquired on Realized at FY-End (#) (1) Options at FY-End ($)
Name Exercise (#) (1) ($) Exercisable / Unexercisable Exercisable / Unexercisable
__________________ ________________ ________ ___________________________ __________________________
The following table summarizes awards by the Corporation during the
fiscal year ended June 30, 1995 to each of the executive officers identified
in the Summary Compensation Table on page ___ under the Corporation's Long
Term Incentive Plan:
Duane E. Collins 19,500 266,379 129,750 / 30,000 2,135,565 / 247,500
Dennis W. Sullivan 17,625 338,485 150,600 / 15,900 2,567,622 / 131,175
Michael J. Hiemstra 31,500 261,573 105,100 / 9,600 1,842,633 / 79,200
Donald A. Zito 15,000 271,605 71,400 / 9,600 1,241,268 / 79,200
Stephen L. Hayes 12,450 206,035 35,400 / 9,600 540,768 / 79,200
(1) Adjusted to reflect the 3-shares-for-2 common stock split paid on
June 2, 1995.
LONG TERM INCENTIVE PLAN - AWARDS IN FISCAL 1995
Estimated Future Payouts under
Number of Performance or Non-Stock Price-Based Plans
Shares Other Period Until ____________________________________________
Name (#) Maturation or Payout Threshold (#) Target (#) Maximum (#)
___________________ _________ ____________________ _____________ __________ ___________
Awards under the Corporation's Long Term Incentive Plan (LTIP) during the
last fiscal year were made in the form of restricted shares of the
Corporation's Common Stock and entitle each executive officer to receive a
pro rata share of his award based upon the Corporation's actual average return
on equity (threshold of 8%; target of 14%; maximum of 20%) for the three
fiscal years ending June 30, 1997. Awards are payable in August, 1997.
Executive officers will receive cash in lieu of restricted shares under the
LTIP if they are retired at the time of payment or if they elect, prior to
June 30, 1996, to defer the amount earned under the LTIP pursuant to the
Corporation's Executive Deferral Plan. The number of shares awarded under
the LTIP have been adjusted for the 3-shares-for-2 common stock split paid
on June 2, 1995.
PENSION PLAN TABLE
The following table summarizes the estimated annual benefits payable upon
retirement to the executive officers identified in the Summary Compensation
Table on page ____:
Duane E. Collins 25,614 3 Years 6,404 25,614 51,228
Dennis W. Sullivan 11,228 3 Years 2,807 11,228 22,455
Michael J. Hiemstra 6,000 3 Years 1,500 6,000 12,000
Donald A. Zito 6,000 3 Years 1,500 6,000 12,000
Stephen L. Hayes 6,000 3 Years 1,500 6,000 12,000
Years of Service
Remuneration 15 or more
The foregoing table sets forth the straight-life annuity payable under
the Corporation's Supplemental Executive Retirement Benefits Program at the
normal retirement age of 65. The years of service under the Program for each
of the executive officers identified in the Summary Compensation Table on page
___, at their respective retirement dates, will be as follows: Mr. Collins, 35
years; Mr. Sullivan, 35 years; Mr. Hiemstra, 25 years; Mr. Zito, 35 years and
Mr. Hayes, 34 years. The Program provides an annual benefit based upon the
average of the participant's three highest years of cash compensation (salary,
RONA Bonus and Target Incentive Bonus) with the Corporation. Benefits payable
under the Program are based on calendar year compensation. Since the amounts
set forth in the "Salary" and "Bonus" columns in the Summary Compensation
Table on page __ are determined on a fiscal year basis and, since the amount
set forth in the "Bonus" column for Mr. Zito in fiscal 1995 includes payments
received under the Volume Incentive Plan (which is not included in determining
benefits under the Program), such amounts do not provide a totally accurate
basis to determine benefits payable under the Program. The average of each
named participant's three highest calendar years of cash compensation included
in determining benefits under the Program is as follows: Mr. Collins, $769,225;
Mr. Sullivan, $655,175; Mr. Hiemstra, $470,922; Mr. Zito, $408,377; and
Mr. Hayes, $301,718. Benefits are subject to reduction for payments received
under the Corporation's Retirement Plan and Pension Restoration Plan plus 50%
of primary social security benefits.
Officer Agreements Effective Upon "Change in Control". The Corporation
has entered into separate agreements (collectively the "Agreements") with
Messrs. Collins, Sullivan, Zito, Hiemstra and Hayes. The Agreements are
designed to retain the executives and provide for continuity of management in
the event of any actual or threatened change in the control of the
Corporation. Each Agreement only becomes operative upon a "Change in Control
of the Company", as that term is defined in the Agreements, and only if the
executive is then in the employ of the Corporation. A Change in Control of
the Company shall be deemed to have occurred if and when: (i) any "person"
(as such term is used in Sections 13(d)(2) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) is or becomes a beneficial
owner, directly or indirectly, of securities of the Corporation representing
20% or more of the combined voting power of the Corporation's then
outstanding securities; (ii) during any period of twenty-four consecutive
months, individuals who at the beginning of such twenty-four month period
were Directors of the Corporation for whom the executive shall have voted
cease to constitute at least a majority of the Board of Directors of the
Corporation; (iii) the Corporation enters into a merger, consolidation or
other reorganization, or sells all its assets, and after such transaction
less than 55% of the then outstanding stock of the Corporation is held by
shareholders who held stock prior to any such transaction; or (iv) there is
a complete liquidation or dissolution of the Corporation.
Each Agreement provides that, after the Agreement becomes operative,
i.e., after a "Change in Control", the executive will receive during
employment annual compensation, consisting of base salary plus incentive
compensation, in an amount not less than that received for the fiscal year
ended immediately prior to the execution date of each Agreement, plus any
increase in salary granted to him from time to time prior to and after any
"Change in Control". In addition, each Agreement provides for continuance,
after a "Change in Control", at not less than present levels, of employee
benefit plans and practices (or equivalent successor plans and practices),
including retirement plans, stock option and stock appreciation rights plans,
life and accidental death and dismemberment insurance and medical and health
and welfare plans. If the executive was not previously designated a
participant in the Supplemental Executive Retirement Benefits Program
(described in connection with the Pension Plan Table on page _____), upon a
"Change in Control" he automatically becomes a participant in that Program.
Following a "Change in Control", if an executive under age 60 (i) is
terminated by the Corporation without "cause" (as defined in the Agreements)
or (ii) terminates his employment following his removal from office or due to
a significant change in authority of his office, he will be entitled (except
for Messrs. Zito, Hiemstra and Hayes who are subject to Sections 280G or 4999
of the Internal Revenue Code) until he reaches age 60 (but in no event for
more than 10 years): (a) to receive from the Corporation annual compensation
equal to the aggregate of his then current base salary plus his most recent
incentive compensation award under the Corporation's Incentive Compensation
Plan, as then in effect; and (b) to participate in specified employee benefit
plans and practices as if he continued as an employee of the Corporation.
The executive is obligated to endeavor to mitigate damages by seeking
comparable employment elsewhere and, to the extent he receives compensation
and benefits from another employer, the foregoing payments and benefits
provided by the Corporation will be reduced accordingly. Any outstanding
stock option held by an executive whose employment terminates in the manner
described above (before or after age 60) will be surrendered to the
Corporation in exchange for a lump-sum payment of the excess of the "fair
market value" of the Common Shares subject to the option over the exercise
price of the option. In each Agreement, the executive agrees that he will
forfeit the foregoing payments and benefits if he engages in "competition"
with the Corporation during the period that any payments are made or benefits
are provided under the Agreement, and agrees not to disclose to others,
either while in the employ of the Corporation or thereafter, any confidential
information relating to the Corporation. If the employment of an executive
is terminated without "cause" by the Corporation after age 60 (or, if
earlier, after 10 years following the date of the Agreement) and prior to his
normal retirement date, the Corporation is to pay the executive, as a
severance allowance, an amount equal to 50% of one year's total compensation.
COMMON SHARE PRICE PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative shareholder
return on the Corporation's Common Shares with the S&P 500 Index and the S&P
Manufacturing (Diversified Industrials) Index during the period June 30,
1990 through June 30, 1995, assuming the investment of $100 on June 30,
1990, and the reinvestment of dividends.
Comparison of Five Year Cumulative Total Return Among
the S&P 500 Index and
the S&P Manufacturing (Diversified Industrials) Index
6/30/90 6/30/91 6/30/92 6/30/93 6/30/94 6/30/95
TRANSACTIONS WITH MANAGEMENT
During the fiscal year ended June 30, 1995, the Corporation made payments
totaling $122,198 to Cleveland Jet Center, Inc. for maintenance and other
related services for the Corporation's owned aircraft. Cleveland Jet Center,
Inc. is wholly owned by Patrick S. Parker, Chairman of the Board of Directors
of the Corporation, and Mr. Parker is a Director of such corporation.
ADOPTION OF AN AMENDMENT TO AMENDED ARTICLES OF INCORPORATION
The Board of Directors recommends that the shareholders adopt an
amendment to the Corporation's Amended Articles of Incorporation to increase
the number of authorized common shares, $.50 par value ("Common Shares"),
from 150,000,000 to 300,000,000. This action would increase the total
authorized shares of the Corporation from 153,000,000 to 303,000,000. The
shares would consist of 300,000,000 Common Shares and 3,000,000 shares of
Serial Preferred Stock ("Serial Preferred Stock").
On April 12, 1995, the Board of Directors approved a three-shares-for-two
stock split of the Common Shares payable June 2, 1995 to shareholders of
record on May 18, 1995. The stock split increased by 50% the number of
Common Shares outstanding on June 2, 1995. As of August 30, 1995 (the record
date for the 1995 Annual Meeting of Shareholders), there were _______________
Common Shares issued and outstanding, ________________ Common Shares reserved
for issuance under the 1987 Shareholder Rights Agreement, and
_________________ Common Shares reserved for issuance upon the exercise of
stock options held by employees under Employee Stock Option and Stock
Incentive Plans, leaving only _________________ authorized, unissued and
unreserved Common Shares. As of August 30, 1995, there was no Serial
Preferred Stock issued.
The availability of additional shares will enhance the Corporation's
flexibility in connection with possible future actions, such as stock
dividends, stock splits, financings, employee benefit programs, acquisitions
or other corporate purposes. Although the Corporation has no present plans,
arrangements, understandings, or commitments to issue additional Common
Shares, the Board of Directors believes that it is in the best interests of
the Corporation to have the flexibility to issue such Common Shares without
shareholder approval after possible actions are identified. The Board of
Directors will determine whether, when and on what terms the issuance of
Common Shares may be warranted in connection with any of the foregoing
The availability for issuance of additional Common Shares could enable
the Board of Directors to render more difficult or discourage an attempt to
obtain control of the Corporation. For example, the issuance of Common
Shares in a public or private sale, merger or similar transaction would
increase the number of outstanding shares, thereby possibly diluting the
interest of a party attempting to gain control of the Corporation. The
Corporation is not aware, however, of any pending or threatened efforts to
obtain control of the Corporation.
The additional Common Shares, as is the case with the presently
authorized Common Shares, will not be subject to preemptive rights. The
additional shares may be issued by the Board of Directors without further
authorization by the shareholders, except in accordance with any requirements
of applicable law or if required by the policies of the New York Stock
Exchange. It is possible that under certain circumstances the issuance of
such shares may result in dilution of shareholders' voting rights and per
share equity in the earnings and assets of the Corporation.
Vote Required for Adoption of the Amended Articles. The increase in the
number of authorized shares would be effected by the adoption of an amendment
to the Amended Articles of Incorporation. No change other than the increase
in the number of authorized Common Shares from 150,000,000 to 300,000,000
will be made in the existing Amended Articles. Adoption of the amendment to
the Amended Articles of Incorporation requires the affirmative vote of the
holders of at least two-thirds of the outstanding Common Shares.
The Board of Directors unanimously recommends a vote FOR adoption of the
amendment to the Amended Articles of Incorporation.
ADOPTION OF THE NON-EMPLOYEE DIRECTORS' STOCK PLAN
The Board of Directors recommends that the stockholders approve the
adoption of the Non-Employee Directors' Stock Plan (the "Plan").
If approved by the stockholders, members of the Board of Directors of the
Corporation (the "Board") who are not employees of the Corporation may elect
to receive all or part of the fees they receive as a director in the form of
Common Stock. The purpose of the Plan is to advance the interests of the
Corporation by enabling members of the Board to receive Common Shares in lieu
of cash compensation. The Plan is administered by the Compensation and
Management Development Committee of the Board (the "Committee"). The
principal features of the Plan are summarized below.
Each member of the Board who is not a regular employee of the Corporation
is eligible to participate in the Plan. Eleven directors will be eligible
for participation in the Plan following shareholder approval. Any non-
employee director shall make his or her election at least six months prior to
the effective date of such election. The Common Shares will be issued to
such director promptly at the beginning of the period to which the election
applies and the number of Common Shares received will be equal to the amount
of fees for such period divided by the average of the high and low quotations
for the Common Shares reported for the New York Stock Exchange - Composite
Transactions on the date such election takes effect. No fractional shares
will be issued; all shares awarded shall be full shares, rounded up to the
nearest whole share. The Committee may at its discretion impose restrictions
and conditions on the issuance of the Common Shares to Plan participants,
including without limitations restrictions on the transferability of the
Common Shares and the vesting of ownership of the Common Shares in the
The maximum number of Common Shares that may be purchased under the Plan
shall be 50,000; provided, however, that the number, rights and privileges of
the shares issuable under the Plan shall be increased, decreased or changed
in the event of any future stock splits, stock dividends or other changes in
the capitalization of the Corporation. The Plan became effective October 26,
1994 (subject to approval by the shareholders of the Corporation) and will
terminate on December 31, 2004.
Set forth below is information relating to the number of Common Shares
which participants in the Plan have elected to receive in lieu of fees,
subject to approval of the Plan by the shareholders:
NEW PLAN BENEFITS
Non-Employee Directors' Stock Plan
Non-Executive Director Group 2,990 shares
Assuming an election by a participant to convert his or her entire
retainer of $72,000 for his or her three-year term of office into Common
Shares, based upon the price of Common Shares on the New York Stock Exchange
on August 30, 1995 of $__________________, a participant would receive
____________ Common Shares at the commencement of such three-year term under
Approval by Stockholders. In order to be adopted, the Non-Employee
Directors' Stock Plan must be approved by the affirmative vote of a majority
of the outstanding shares of Common Stock represented at the meeting and
entitled to vote.
The Board of Directors unanimously recommends a vote FOR approval of the
Non-Employee Directors' Stock Plan.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee and the Board of Directors recommend the appointment
of Coopers & Lybrand L.L.P. as certified public accountants to examine the
financial statements of the Corporation as of and for the fiscal year
ending June 30, 1996. Coopers & Lybrand L.L.P. has made the annual audit
of the Corporation's accounts since its organization in 1938. A
representative of Coopers & Lybrand L.L.P. is expected to be present at the
meeting with an opportunity to make a statement if he desires to do so and
to respond to appropriate questions. Ratification of the appointment of
Coopers & Lybrand L.L.P. as certified public accountants requires the
affirmative vote of a majority of the votes cast thereon.
The Board of Directors unanimously recommends a vote FOR the proposal.
PRINCIPAL SHAREHOLDERS OF THE CORPORATION
The following table sets forth, as of August 17, 1995, the name and
address of each person believed to be a beneficial owner of more than 5% of
the Common Shares of the Corporation, the number of shares and the percentage
so owned, as well as the beneficial ownership of Common Shares of the
Corporation by the Directors, the executive officers of the Corporation named
in the Summary Compensation Table on page ______, and all Directors and
executive officers as a group:
Amount and Nature Percentage
Name of of of
Beneficial Owner Beneficial Ownership(A) Class(B)
FMR Corp. 4,288,772(C) 8.76%(C)
82 Devonshire Street
Boston, MA 02109-3614
J. G. Breen _______
P. C. Ely _______
A. H. Ford _______
K. M. Hudson _______
F. A. LePage _______
P. W. Likins _______
P. S. Parker _______(D)
A. L. Rayfield _______
W. R. Schmitt _______
P. G. Schloemer _______(D)
W. Seipp _______
D. E. Collins _______(D)
D. W. Sullivan _______(D)
D. A. Zito _______(D)
M. J. Hiemstra _______(D)
S. L. Hayes _______(D)
All Directors and executive _________(D) _____%
officers as a group
(A) Unless otherwise indicated, the beneficial owner has sole voting and
(B) No Director or executive officer beneficially owned more than 1% of the
Corporation's Common Stock as of August 17, 1995.
(C) Pursuant to a statement filed by FMR Corp. with the SEC in accordance
with Rule 13d-1 of the Securities Exchange Act of 1934 on behalf of
itself, Edward C. Johnson 3rd (Chairman of FMR Corp.), Fidelity
Management & Research Company, Fidelity Magellan Fund, Fidelity
Management Trust Company and Fidelity International Limited, FMR Corp.
has reported that as of December 31, 1994 (prior to the 3-shares-for-2
Common Stock split paid on June 2, 1995) it had sole voting power over
76,382 shares and sole investment power over 4,288,772 shares.
(D) These amounts include __________, __________, __________, __________,
__________, __________, and __________ Common Shares subject to options
exercisable on or prior to October 16, 1995 granted under the
Corporation's stock option plans held by Messrs. Parker, Schloemer,
Collins, Sullivan, Zito, Hiemstra and Hayes and all Directors and
executive officers as a group, respectively. Such Common Shares are
deemed to be outstanding only for the purpose of computing the percentage
of shares owned by each of the individuals and the officers and Directors
as a group. These amounts also include ________, ________, ________,
________, ________, ________ and ________ Common Shares as to which
Messrs. Parker, Schloemer, Collins, Sullivan, Zito, Hiemstra, and Hayes
and all Directors and executive officers as a group, respectively, hold
voting power pursuant to the Corporation's Employees' Savings Plus Stock
Ownership Plan as of June 30, 1995.
As required by the Securities and Exchange Commission rules under Section
16 of the Securities and Exchange Act of 1934, the Corporation notes that
during the fiscal year ended June 30, 1995, Patrick S. Parker, Chairman of
the Board, filed one untimely report regarding one transaction in the
Corporation's Common Shares.
The deadline for shareholders to submit proposals to be considered for
inclusion in the proxy statement for the 1996 Annual Meeting of Shareholders
is expected to be May 27, 1996.
The Board of Directors knows of no other matters which will be presented
at the meeting. However, if any other matters properly come before the
meeting or any adjournment, the person or persons voting the proxies will
vote in accordance with their best judgment on such matters.
The Corporation will bear the expense of preparing, printing and mailing
this Proxy Statement. In addition to solicitation by mail, officers and
other employees of the Corporation may solicit the return of proxies. The
Corporation will request banks, brokers and other custodians, nominees and
fiduciaries to send proxy material to beneficial owners of Common Shares.
The Corporation will, upon request, reimburse them for their expenses in so
doing. The Corporation has retained Kissel-Blake Inc., 110 Wall Street, New
York, New York, to assist in the solicitation of proxies at an anticipated
cost of $__________ plus disbursements.
You are urged to sign and return your Proxy promptly in order to make
certain your shares will be voted at the meeting. Shares represented by
properly executed proxies will be voted in accordance with any specification
made thereon and, if no specification is made, will be voted in favor of
fixing at five the number of Directors in the class whose three-year term of
office will expire in 1998 and for the election of the nominees for Directors
in such class; in favor of the adoption of the amendment to the Amended
Articles of Incorporation of the Corporation; in favor of the adoption of the
Corporation's Non-Employee Directors' Stock Plan; and in favor of the
appointment of Coopers & Lybrand L.L.P. as independent public accountants for
the fiscal year ending June 30, 1996. Abstentions and broker non-votes are
counted in determining the votes present at a meeting. Consequently, an
abstention or a broker non-vote has the same effect as a vote against a
proposal, as each abstention or broker non-vote would be one less vote in
favor of a proposal. You may revoke your Proxy by giving notice to the
Corporation in writing or in open meeting, without affecting any vote
previously taken. However, your mere presence at the meeting will not
operate to revoke your Proxy.
The Annual Report of the Corporation, including financial statements for
the fiscal year ended June 30, 1995, is being mailed to shareholders with
this Proxy Statement.
By Order of the Board of Directors
JOSEPH D. WHITEMAN
September 25, 1995
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON OCTOBER 25, 1995
This Proxy is Solicited on behalf of the Board of Directors
1995 The undersigned hereby appoints PATRICK S. PARKER, DUANE E. COLLINS and
JOSEPH D. WHITEMAN, and any of them, as proxies to represent and to vote
P all shares of stock of Parker-Hannifin Corporation which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of the
R Corporation to be held on October 25, 1995, and at any adjournments
thereof, on the proposals more fully described in the Proxy Statement
O for the Meeting in the manner specified herein and on any other business
that may properly come before the Meeting.
Y Election of Directors (change of address)
Proposal to fix at five the number _________________________________
of Directors in the class whose term _________________________________
of office will expire in 1998 and to _________________________________
elect the following to such class: _________________________________
(If you have written in the above
John G. Breen space, please mark the correspon-
Patrick S. Parker ding box on the reverse side of
Katherine M. Hudson this card.)
Dennis W. Sullivan
You are encouraged to specify your choices by marking the appropriate boxes
(SEE REVERSE SIDE) but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxies cannot
vote your shares unless you sign and return this Card. _______________
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Adoption of [ ] [ ] [ ]
(see reverse) Articles of
For, except vote withheld 3. Adoption of [ ] [ ] [ ]
from the following Non-Employee
4. Appointment of [ ] [ ] [ ]
Lybrand L.L.P. as
auditors for FY96
The Board of Directors recommends
a vote FOR Items 1, 2, 3 and 4.
Change of Address [ ]
Signature(s) ___________________________________ Date _____________________
Signature(s) ___________________________________ Date _____________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
S&P 500 Index 100 107 122 138 140 177
S&P Manufacturing (Diversified Industrials) Index 100 106 105 124 139 183
Parker-Hannifin Corporation 100 94 106 124 164 213
PARKER-HANNIFIN CORPORATION NON-EMPLOYEE DIRECTORS'
ARTICLE A -- Purpose.
The purpose of the Parker Hannifin Non-Employee Directors' Stock Plan
(hereinafter referred to as the "Plan") is to strengthen the alignment of
interests between non-employee directors (hereinafter referred to as
"Participants") and the shareholders of Parker Hannifin Corporation
(hereinafter referred to as the "Company") through the increased ownership of
shares of the Company's Common Stock. This will be accomplished by allowing
Participants to elect voluntarily to convert a portion of their fees for
services as a director into Common Stock.
ARTICLE B -- Administration.
1. The Plan shall be administered by the Compensation and Management
Development Committee (hereinafter referred to as the "Committee") of the
Board of Directors of the Company (hereinafter referred to as the "Board"),
or such other committee as may be designated by the Board. The Committee
shall consist of not less than four (4) members of the Board who are not
full-time employees of the Company, appointed by the Board from time to time
and to serve at the discretion of the Board.
2. It shall be the duty of the Committee to administer this Plan in
accordance with its provisions and to make such recommendations of amendments
or otherwise as it deem necessary or appropriate. A decision by a majority
of the Committee shall govern all actions of the Committee.
3. Subject to the express provisions of this Plan, the Committee shall
have authority to allow Participants the right to elect to receive fees for
services as a director partly in cash and partly in whole shares of the Common
Stock of the Company, subject to such conditions or restrictions, if any, as
the Committee may determine. The Committee also has the authority to make
all other determinations it deems necessary or advisable for administering
4. The Committee may establish from time to time such regulations,
provisions, and procedures within the terms of this Plan as, in its opinion,
may be advisable in the administration of this Plan.
5. The Committee may designate the Secretary of the Company or other
employees of the Company to assist the Committee in the administration of this
Plan and may grant authority to such persons to execute documents on behalf of
ARTICLE C -- Participation and Participant Elections.
1. Participation in the Plan shall be limited to Directors who are not
full-time employees of the Company.
2. Elections by Directors under the Plan to receive shares of Common
Stock in lieu of fees shall be irrevocably made in writing at least six (6)
months prior to the effective date of the election.
ARTICLE D -- Limitation on Number of Shares for the Plan.
1. The total number of shares of Common Stock of the Company that may
be awarded each year shall not exceed 7,500 shares. The total number of
shares of Common Stock of the Company that may be awarded under the plan is
2. Shares transferred or reserved for purposes of the Plan will be
subject to appropriate adjustment in the event of future stock splits, stock
dividends or other changes in capitalization; following any such change, the
term "Common Stock" or "shares of Common Stock" of the Company, as used in
the Plan, shall be deemed to refer to such class of shares or other
securities as may be applicable.
ARTICLE E -- Shares Subject to Use Under the Plan.
Shares of Common Stock to be awarded under the terms of this Plan shall
be either treasury shares or authorized but unissued shares.
ARTICLE F -- Transfer of Shares.
1. The Committee may transfer Common Stock of the Company under the
Plan subject to such conditions or restrictions, if any, as the Committee may
determine. The conditions and restrictions may vary from time to time and may
be set forth in agreements between the Company and the Participant or in the
awards of stock to them, all as the Committee determines.
2. The shares awarded shall be valued at the average of the high and
low quotations for Common Stock of the Company on the New York Stock Exchange
on the day of the transfer to a Participant. All shares awarded shall be
full shares, rounded up to the nearest whole share.
ARTICLE G -- Additional Provisions.
1. The Board may, at any time, repeal this Plan or may amend it from
time to time except that no such amendment may amend this paragraph, increase
the annual aggregate number of shares subject to this Plan, or alter the
persons eligible to participate in this Plan. The Participants and the
Company shall be bound by any such amendments as of their effective dates,
but if any outstanding awards are affected, notice thereof shall be given to
the holders of such awards and such amendments shall not be applicable to
such holder without his or her written consent. If this Plan is repealed in
its entirety, all theretofore awarded shares subject to conditions or
restrictions transferred pursuant to this Plan shall continue to be subject
to such conditions or restrictions.
2. Every recipient of shares pursuant to this Plan shall be bound by
the terms and provisions of this Plan and the transfer of shares agreement
referable thereto, and the acceptance of any transfer of shares pursuant to
this Plan shall constitute a binding agreement between the recipient and the
ARTICLE H --Duration of Plan.
This Plan shall become effective as of October 26, 1994 subject to
ratification before December 31, 1995 by the affirmative vote of the holders
of a majority of the Common Stock of the Company present, or represented, and
entitled to vote at a meeting duly held. Any shares awarded prior to approval
of the Plan by the shareholders must be restricted until such approval is
obtained and shall be subject to immediate forfeiture in the event such
approval is not obtained in which case the Participants would receive the
fees they would have received for their services as Directors since October
26, 1994. This Plan will terminate on December 31, 2004 unless a different
termination date is fixed by the shareholders or by action of the Board but no
such termination shall affect the prior rights under this Plan of the Company
or of anyone to whom shares have been transferred prior to such termination.