SCHEDULE 14A INFORMATION STATEMENT

          Proxy Statement Pursuant to Section 14(a) of the Securities
                             Exchange Act of 1934


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[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12


                          PARKER-HANNIFIN CORPORATION
_______________________________________________________________________
               (Name of Registrant as Specified in its Charter)


                         Joseph D. Whiteman, Secretary
______________________________________________________________________
                  (Name of Person(s) Filing Proxy Statement)

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                         PARKER-HANNIFIN CORPORATION
         6035 PARKLAND BOULEVARD - MAYFIELD HEIGHTS, OHIO 44124-4141

                  NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                             OCTOBER 22, 1997


       The annual meeting of shareholders of Parker-Hannifin Corporation will
be held at the Corporation's headquarters at 6035 Parkland Boulevard,
Mayfield Heights, Ohio 44124, on Wednesday, October 22, 1997, 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 2000 and electing five Directors in
such class;

       2.  Adopting an Amendment to the Corporation's Amended Articles of
Incorporation to increase the authorized Common Shares of the Corporation
from 300,000,000 to 600,000,000;

       3.  Adopting an Amendment to the Corporation's Amended Articles of
Incorporation to change the principal place of business of the Corporation
in Ohio from the City of Cleveland to the City of Mayfield Heights;

       4.  Adopting an Amendment to the Corporation's 1993 Stock Incentive
Program to limit the number of stock options granted to any individual in
a three-year period;

       5. Appointing Coopers & Lybrand L.L.P. as independent public
accountants for the fiscal year ending June 30, 1998; and

       6.  Transacting such other business as may properly come before the
meeting.

       Shareholders of record at the close of business on August 29, 1997,
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
                                       JOSEPH D. WHITEMAN
                                          Secretary
September 22, 1997

                        PARKER-HANNIFIN CORPORATION
        6035 Parkland Boulevard - Mayfield Heights, Ohio 44124-4141

                               PROXY STATEMENT



       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 22, 1997,
and at all adjournments thereof.  Only shareholders of record at the close
of business on August 29, 1997 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 22, 1997.

       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 15 members divided into three classes.  The class
whose term expires in 1997 consists of five members, the class whose term
expires in 1998 consists of four members and the class whose term expires
in 1999 consists of six members.  Since the last annual meeting of
shareholders, Hector R. Ortino was elected to the Board of Directors in
January 1997 to a term expiring in 1999 and Debra L. Starnes was elected
to the Board of Directors in July 1997 to a term expiring in 1999.  In
addition, in October 1996, Walter Seipp retired from the Board of
Directors.

       Shareholder approval is sought to fix at five the number of directors
in the class whose term will expire in 2000 and to elect Duane E. Collins,
Allen H. Ford, Allan L. Rayfield, Paul G. Schloemer and Michael A.
Treschow, Directors whose terms of office expire in 1997, 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 2000 

DUANE E. COLLINS, 61, 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. 
Mr. Collins also serves as a Director of The Sherwin Williams Company.

ALLEN H. FORD, 69, 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 Investments and Gliatech, Inc.

ALLAN L. RAYFIELD, 62, has served as a Director of the Corporation since
1984.  He is a member of the Audit, Compensation and Management
Development and Nominating 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; and President and Chief Operating Officer of M/A-COM, Inc. from
March 1991 to November 1993.  Mr. Rayfield is also a Director of Acme
Metals Inc.

PAUL G. SCHLOEMER, 69, has served as a Director of the Corporation since
1982.  He is a member of the Nominating Committee.  Mr. Schloemer was
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 Corporation.

MICHAEL A. TRESCHOW, 54, was elected to the Board of Directors in July,
1996.  He is a member of the Audit and Nominating Committees.  Mr.
Treschow has been the President and Chief Executive of AB Electrolux
(electrical appliances) in Sweden since ______________.  He was previously
the President and Chief Executive Officer of Atlas Copco AB from
____________ to _____________.  Mr. Treschow is also a Director of SKF AB
and Saab Automobile AB.

        PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 1998

JOHN G. BREEN, 63, 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.

HECTOR R. ORTINO, 55, was elected to the Board of Directors in January,
1997.  He is a member of the Audit and Nominating Committees.  Mr. Ortino
has been the President and Chief Operating Officer of Ferro Corporation
(specialty materials) since _______________.  He was previously
________________.

PATRICK S. PARKER, 67, has served as a Director of the Corporation since
1960. Mr. Parker is the Chairman of the Board of Directors of the
Corporation.

DENNIS W. SULLIVAN, 58, has served as a Director of the Corporation since
1983.  Mr. Sullivan is Executive Vice President and, since July 1, 1997,
a member of the Office of the President of the Corporation.  Mr. Sullivan
is also a Director of Ferro Corporation and KeyCorp.

        PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 1999

PAUL C. ELY, JR., 65, 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).  Mr. Ely is also a Director
of Tektronix, Inc.

FRANK A. LEPAGE, 70, has served as a Director of the Corporation since
1977.  He is a member of the Audit and Nominating Committees.  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 Inc.

PETER W. LIKINS, 61, has served as a Director of the Corporation since
1989.  He is Chairman of the Nominating Committee and a member of the
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, 53, has served as a Director of the Corporation since
1992.  He is a member of the Compensation and Management Development and
Nominating Committees.  Mr. Schmitt is the Chairman of the Board 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.  Mr. Schmitt also serves as a
Director of Kimberly-Clark Inc.

DEBRA L. STARNES, 44, was elected to the Board of Directors in July, 1997. 
She is a member of the Nominating and Pension  Committees.  Ms. Starnes
has been the Senior Vice President, Petrochemicals of Lyondell
Petrochemical Company (petrochemical production) since _________________. 
She was previously ______________________.

STEPHANIE A. STREETER, 40, was elected to the Board of Directors in April
1996.  She is a member of the Audit and Nominating Committees.  Ms.
Streeter is the Group Vice President of Worldwide Office Products of Avery
Dennison Corporation (adhesives and office products).  She was previously
Vice President and General Manager of Avery Dennison Brands from November
1993 to May 1996 and Vice President and General Manager of Office Labels
and Avery Dennison from June 1991 to November 1993.


       No Director of the Corporation is related to any other Director. 
During the fiscal year ended June 30, 1997, there were five 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 or she served except for Mr. Schmitt.

       The Audit Committee, which met twice during the fiscal year ended June
30, 1997, 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, 1997, 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 three
times during the fiscal year ended June 30, 1997, 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 three times during the fiscal year
ended June 30, 1997, 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 $132,000, 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 (the "Directors Deferral Plan") 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.

       In August 1996, the Board of Directors terminated the Retirement Plan
for Directors, except with respect to Directors who had already retired
and who continue to receive payments under the Plan.  Upon termination,
each Director received credit under the Directors Deferral Plan in a
phantom Parker-Hannifin Common Stock account in an amount equal to the
present value of their vested benefits under the Directors Retirement
Plan.  Said account balance is non-transferable and must remain in the
Directors Deferral Plan until the retirement of the Director.

       The Board of Directors adopted the Non-Employee Directors Stock Option
Plan in August 1996.  Each Director who is not a current or retired
employee of the Corporation was granted 1,000 stock options under such
Plan in August 1996 at an option price equal to the then current fair
market value of the Corporation's Common Stock.  Such options have a ten-
year term and vest following one year of continued service as a Director. 
Mr. Ortino was granted 500 stock options upon identical terms upon his
election to the Board in January 1997. 

       Compensation Committee Interlocks and Insider Participation.  The
following Directors serve as members of the Corporation's Compensation and
Management Development Committee:  Messrs. Breen, Likins, Rayfield, and
Schmitt.  Mr. Collins, the President and Chief Executive Officer of the
Corporation, serves on the Compensation Committee of The Sherwin Williams
Company.  Mr. Breen is the Chairman and Chief Executive Officer of The
Sherwin Williams Company.

                    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 compensation.

       The Committee, which consists entirely of four outside non-employee
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 base pay, annual bonus and long-term
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 Manufacturing (Diversified Industrials) 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 three
primary elements:

       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 executive's supervisor.

       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 Bonus"); and

           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 amounts of the annual cash incentive bonuses are
established in such a manner so that base salary plus the target bonuses
will be within the competitively determined total annual compensation
range mentioned above.  Target annual cash incentive bonuses represent
approximately 35-45% of total targeted annual compensation for the
executive officers with operational profit and loss responsibility
(including the Chief Executive Officer) and 25-35% of total targeted
annual compensation for the other executive officers.

       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 1997, under a Volume Incentive Plan,
operating group presidents had the opportunity to earn an additional bonus
of 1% of base salary for each 1% of sales by which their group exceeded
their previous year's sales by between 7.5% and 12.5%, and an additional
bonus of 2% of base salary for each 1% of sales by which their group
exceeded their previous year's sales by more than 12.5%; subject, however,
to an overall maximum of 15% of the participant's base salary.  An
identical Volume Incentive Plan has been adopted for fiscal year 1998.  

       3.  Long-term incentive compensation that is comprised of two
components:

           a.  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 restricted stock (unless the
           participant elects to receive cash pursuant to an election under
           the Corporation's Executive Deferral Plan).  The amount of the
           LTIP award in shares is calculated by dividing a target LTIP
           dollar value (adjusted for risk of forfeiture) by the market price
           of the Corporation's Common Stock at the beginning of the three-
           year performance period.  The target LTIP value is established by
           the Committee at the market median of comparative LTIP
           compensation information.

           b.  A stock option grant determined by utilizing the Black-
           Scholes valuation model to derive a target stock option dollar
           value (adjusted for risk of non-vesting).  The target stock
           option value is established by the Committee at the market median
           of comparative stock option compensation information.  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 grants are generally 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 individual performance.

       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.

       In August 1996, the Board of Directors, at the recommendation of the
Committee, adopted stock ownership guidelines that are designed to
encourage the accumulation and retention of the Corporation's Common Stock
by its Directors, executive officers and other key executives.  These
guidelines, stated as a multiple of executives' base salaries and of
Directors' annual retainer, are as follows:  Chief Executive Officer:
three times; Vice Presidents: two times; other executive officers and
group presidents: one time; and non-officer Directors: four times.  The
recommended time period for reaching the above guidelines is five years. 
The Chief Executive Officer reviews compliance with this policy with the
Committee on an annual basis.

       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 1996 to fiscal 1997 of
6.25% is reflective of his "outstanding" performance rating for fiscal
1996.  In addition, based on the Corporation's fiscal 1997 operating plan,
Mr. Collins was entitled to receive 100% of his Target Incentive Bonus of
$300,000 if the Corporation's actual pre-tax return on average assets,
adjusted primarily for acquisitions and currency transactions, was 14.6%. 
A minimum payout of 15% of the Target Incentive Bonus was established at
a 3.4% pre-tax return on average assets and a maximum payout of 150% of
the Target Incentive Bonus was established at a 17.8% pre-tax return on
average assets.  During the fiscal year ended June 30, 1997, the
Corporation's adjusted pre-tax return on average assets was 14.96% and
each executive officer, including Mr. Collins, received an amount equal to
105.9% 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 $377,550 based upon an
approximate 31.8% average return on division net assets.  The average
return on division net assets was 33.8%, resulting in a RONA Bonus payment
to Mr. Collins of $400,484, 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 executive officers).

       Based on the Corporation's average return on equity of 19.18% for the
three fiscal years ended June 30, 1997, Mr. Collins and the other
executive officers received a payment under the 1995-96-97 Long Term
Incentive Plan in the form of either restricted shares or contributions to
their Executive Deferral Plan accounts in an amount equal to the value of
the restricted shares earned, as reported in the "LTIP Payouts" column of
the Summary Compensation Table on page ____.  Such payment represents
186.47% of the target payment that would have been achieved had the
Corporation achieved its return on equity goal of 14% during such period.

       During fiscal year 1997, Mr. Collins and the other executive officers
also received a long-term incentive award as described in the LTIP table
on page ___ and a stock option grant as reported in Option Grants Table on
page ____.  

       During the past fiscal year, the Corporation once again recorded all-
time sales and earnings records, exceeding the prior years' record
performance and forecasted performance.  Accordingly, incentive
compensation payable to each executive, including Mr. Collins, exceeded
the target levels of annual compensation established by the Committee at
the beginning of the fiscal year and greatly exceeded the 1995-96-97 LTIP
target compensation.

       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
or is taking, including seeking amendment to the 1993 Stock Incentive
Program, the necessary actions to ensure the deductibility of compensation
paid by the Corporation to such individuals.

       JOHN G. BREEN                    ALLAN L. RAYFIELD
       JOHN G. BREEN                    ALLAN L. RAYFIELD

       DR. PETER W. LIKINS              WOLFGANG R. SCHMITT
       DR. PETER W. LIKINS              WOLFGANG R. SCHMITT


                            EXECUTIVE COMPENSATION

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 ___________________________________ ______________________ Awards Payouts __________ _______ Securities Other Annual Underlying LTIP All Other Fiscal Compensation Options Payouts Compensation Name and Principal Position Year Salary ($) Bonus ($) ($)(a) (#)(b) ($)(c) ($)(d) ___________________________________ _______ __________ _________ ____________ __________ __________ ___________ Duane E. Collins, 1997 830,880 718,184 14,222 88,500 2,898,556 11,531 President and Chief Executive 1996 783,473 611,981 18,068 99,000 988,348 14,570 Officer 1995 680,004 659,082 8,066 45,000 225,798 20,078 Dennis W. Sullivan, 1997 551,256 358,129 7,137 39,000 1,270,554 12,814 Executive Vice President 1996 525,000 323,325 8,144 56,250 436,055 12,934 1995 500,004 417,252 8,202 23,850 173,121 20,432 Michael J. Hiemstra, 1997 376,392 215,491 2,939 18,000 678,972 12,637 Vice President - 1996 361,920 199,074 6,574 22,500 232,553 14,672 Finance and Administration 1995 351,348 242,837 2,648 14,400 120,483 19,519 Donald A. Zito, 1997 331,500 239,672 8,467 18,000 678,972 13,338 Vice President, and President, 1996 318,744 236,557 7,015 22,500 232,553 13,502 Fluid Connectors Group 1995 300,000 583,380 705 14,400 97,868 19,879 Stephen L. Hayes, 1997 314,196 235,623 9,727 18,000 678,972 11,448 Vice President, and President, 1996 299,244 215,668 9,734 22,500 232,553 13,507 Parker Bertea Aerospace Group 1995 285,000 166,797 3,823 14,400 107,427 15,163 (a) 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 amounts reimbursed by the Corporation for the payment of income taxes on certain executive perquisites. (b) All option grants have been adjusted for the 3-shares-for-2 common stock split paid on September 5, 1997. (c) For 1997 the amounts represent contributions to the executives' Executive Deferral Plan ("EDP") accounts made under the 1995-96-97 Long Term Incentive Plan. For 1996 and 1995 the amounts represent the dollar value of restricted shares issued as payments under the 1994-95-96 and 1993-94-95 Long Term Incentive Plans, respectively, based on the Corporation's stock price on the date of issuance of the shares. The restricted shares and EDP contributions are subject to a three-year vesting period, 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, 1997 was as follows: Mr. Collins, 51,266 shares with a value of $2,074,116; Mr. Sullivan, 26,730 shares with a value of $1,081,451; Mr. Hiemstra, 15,828 shares with a value of $640,375; Mr. Zito, 14,564 shares with a value of $589,215; and Mr. Hayes, 13,196 shares with a value of $533,868. The number of restricted shares has been adjusted for the 3-shares-for-2 common stock split paid September 5, 1997. (d) Represents matching contributions by the Corporation to the Parker Hannifin Retirement Savings Plan and the Parker Hannifin Savings Restoration Plan.
The following table summarizes stock option grants by the Corporation during the fiscal year ended June 30, 1997 to each of the executive officers identified in the Summary Compensation Table on page __:
OPTION GRANTS IN FISCAL 1997 Individual Grants _____________________________________________________ Number of % of Total Potential realizable value at Securities Options Exercise assumed annual rates of stock Underlying Granted to Or Base price appreciation for option term (b) Options Employees Price Expiration _______________________________________ Name Granted (#)(a) in Fiscal 1997 ($/Sh) Date 5% ($) 10% ($) 10.68% ($)(c) ___________________ _______________ ______________ ________ __________ ___________ ___________ _____________ Duane E. Collins 88,500 6.5% $24.667 8/14/06 1,372,812 3,479,112 3,839,042 Dennis W. Sullivan 39,000 2.9% $24.667 8/14/06 604,968 1,533,168 1,691,781 Michael J. Hiemstra 18,000 1.3% $24.667 8/14/06 279,216 707,616 780,822 Donald A. Zito 18,000 1.3% $24.667 8/14/06 279,216 707,616 780,822 Stephen L. Hayes 18,000 1.3% $24.667 8/14/06 279,216 707,616 780,822 (a) Options are exercisable on the date following completion of one year of continuous employment after the date of grant (i.e., August 15, 1997). Restorative or "reload" option rights are attached to each option and up to two reload options will be granted upon exercise, subject to certain provisions, if the exercise price is paid using shares of the Corporation's common stock owned by the optionee. Fiscal 1997 grants and exercise prices have been adjusted for the 3-shares-for-2 common stock split paid on September 5, 1997. (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 $1,728,684,426 and $4,380,998,076 at assumed annual rates of appreciation of 5% and 10%, respectively, over the ten-year life of the options. There can be no assurance that the amounts reflected in this table will be achieved. (c) Represents the Corporation's actual rate of stock price appreciation over the 10-year period ending June 30, 1997.
The following table summarizes exercises of stock options during the fiscal year ended June 30, 1997 by each of the executive officers identified in the Summary Compensation Table on page __ and the fiscal year-end value of unexercised options for such executive officers:
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL YEAR-END OPTION VALUES Number of Securities Underlying Value of Unexercised Shares Value Unexercised Options In-the-Money Acquired on Realized at FY-End (#)(a) Options at FY-End ($) Name Exercise (#)(a) ($) Exercisable / Unexercisable Exercisable / Unexercisable ___________________ _______________ ________ ___________________________ ___________________________ Duane E. Collins 19,125 419,156 319,500 / 88,500 7,175,379 / 1,397,565 Dennis W. Sullivan 16,875 242,775 237,375 / 39,000 6,648,104 / 615,876 Michael J. Hiemstra 19,125 414,375 175,500 / 18,000 4,514,770 / 284,251 Donald A. Zito - - 144,000 / 18,000 3,623,343 / 284,251 Stephen L. Hayes 15,000 319,614 60,000 / 18,000 1,227,743 / 284,251 (a) Adjusted to reflect the 3-shares-for-2 common stock split paid on September 5, 1997.
The following table summarizes awards by the Corporation during the fiscal year ended June 30, 1997 to each of the executive officers identified in the Summary Compensation Table on page __ under the Corporation's Long Term Incentive Plan:
LONG TERM INCENTIVE PLAN - AWARDS IN FISCAL 1997 Estimated Future Payouts under Number of Performance or Non-Stock Price-Based Plans Shares Other Period Until ________________________________________ Name (#) Maturation or Payout Threshold (#) Target (#) Maximum (#) ___________________ _________ ____________________ _____________ __________ ___________ Duane E. Collins 23,398.5 3 Years 5,849.6 23,398.5 46,797.0 Dennis W. Sullivan 10,336.5 3 Years 2,584.1 10,336.5 20,673.0 Michael J. Hiemstra 5,911.5 3 Years 1,477.9 5,911.5 11,823.0 Donald A. Zito 5,911.5 3 Years 1,477.9 5,911.5 11,823.0 Stephen L. Hayes 5,911.5 3 Years 1,477.9 5,911.5 11,823.0
Target 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, 1999. Awards are payable in August 1999. 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 May 31, 1998, to defer the amount earned under the LTIP pursuant to the Corporation's Executive Deferral Plan. The target number of shares awarded under the LTIP and the estimated future payouts have been adjusted for the 3-shares-for-2 common stock split paid on September 5, 1997. 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 __: Years of Service Remuneration 15 or more ____________ ________________ $ 300,000 $ 165,000 500,000 275,000 700,000 385,000 900,000 495,000 1,100,000 605,000 1,300,000 715,000 1,500,000 825,000 1,700,000 935,000 1,900,000 1,045,000 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 ___ (except for Mr. Zito), at their respective retirement dates, will be as follows: Mr. Collins, 40 years; Mr. Sullivan, 44 years; Mr. Hiemstra, 25 years; and Mr. Hayes, 34 years. Mr. Zito has announced his early retirement effective September 30, 1997 at which time he will have 35 years of service under the Program (but will receive a reduced benefit in accordance with the terms of the Program). 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 amounts set forth in the "Bonus" column for Mr. Zito in fiscal 1996 and 1995 and Mr. Hayes in fiscal 1997 and 1996 include payments received under the Volume Incentive Plan (which is not included in determining benefits under the Program), such amounts do not reflect the benefits payable under the Program. If the benefits were to be payable to each named participant based on retirement as of June 30, 1997, the average of the three highest calendar years of cash compensation included in determining benefits under the Program for each of the named participants would be as follows: Mr. Collins, $1,316,404; Mr. Sullivan, $856,991; Mr. Hiemstra, $564,902; Mr. Zito, $539,474; and Mr. Hayes, $440,427. Benefits are subject to reduction for payments received under the Corporation's Retirement Plan plus 50% of primary social security benefits. 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, 1992 through June 30, 1997, assuming the investment of $100 on June 30, 1992, and the reinvestment of dividends.
Comparison of Five Year Cumulative Total Return Among Parker-Hannifin Corporation, the S&P 500 Index and the S&P Manufacturing (Diversified Industrials) Index 6/30/92 6/30/93 6/30/94 6/30/95 6/30/96 6/30/97 Parker-Hannifin Corporation 100 117 155 202 241 351 S&P 500 Index 100 114 115 145 183 247 S&P Manufacturing (Diversified Industrials) Index 100 119 132 175 223 332
"Change in Control" Severance Agreements with Officers. 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 Corporation, as that term is defined in the Agreements, and the subsequent termination of the employment of the executive pursuant to the terms of the Agreement. A Change in Control of the Corporation shall be deemed to have occurred if and when: (i) subject to certain exceptions, 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) 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 (the "Incumbent Board") cease to constitute at least a majority of the Board of Directors of the Corporation, unless the election, or nomination for election, of any person becoming a Director subsequent to the beginning of such twenty- four month period was approved by a vote of at least two-thirds of the Incumbent Board; (iii) the Corporation enters into a merger, consolidation or other reorganization, or sells all its assets, unless (a) immediately following the business combination: (1) more than 50% of the total voting power eligible to elect directors of the resulting corporation is represented by shares that were Common Shares immediately prior to the business combination, (2) subject to certain exceptions, no person becomes the beneficial owner, directly or indirectly, of 20% or more of the voting power of the corporation resulting from the business combination, and (3) at least a majority of the members of the board of directors of the resulting corporation were members of the Incumbent Board at the time of the Board of Directors of the Corporation's approval of the execution of the initial agreement providing for such business combination, or (b) the business combination is effected by means of the acquisition of Common Shares from the Corporation, and the Board of Directors of the Corporation approves a resolution providing expressly that such business combination does not constitute a "Change in Control"; or (iv) the shareholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation. Each Agreement provides that, if the employment of the executive is terminated during the three years following a Change in Control of the Corporation, either by the Corporation without "Cause" (as defined in the Agreements) or by the executive for "Good Reason" (as defined in the Agreements and described below), the executive shall be entitled to receive (a) pro rata salary and bonus for the year of termination of employment; (b) severance pay equal to three times the executive's annual salary and bonus; (c) continuation of welfare benefits (e.g., medical, life insurance, disability coverage) for a period of three years; (d) to the extent not previously received, all amounts previously deferred under the Corporation's non-qualified income deferral plans together with a "make whole" amount designed to compensate the executive for the lost opportunity to continue to defer receipt of such income (and the earnings thereon) pursuant to elections made under such deferral plans; and (e) a "gross-up" payment to offset the effect, if any, of the excise tax imposed by Section 4999 of the Internal Revenue Code. "Good Reason" for termination of employment by the executive includes, without limitation, diminution in duties, reduction in compensation or benefits or relocation. In addition, termination of employment by the executive for any or no reason during the 180-day period beginning on the 91st day after the Change in Control shall constitute Good Reason. A Change in Control of the Corporation also has an effect under other executive compensation plans of the Corporation, as follows: (1) any outstanding unvested stock option held by an executive vests immediately upon a Change in Control; (2) any outstanding unvested restricted stock issued to an executive pursuant to the Corporation's Long Term Incentive Plans ("LTIP") vests immediately in the event of a Change in Control; (3) any outstanding LTIP award to an executive will be paid in full in cash upon a Change in Control, at the target amount or on the basis of corporate financial performance to the date of the Change in Control, whichever is greater; (4) if previously elected by the executive, upon a Change in Control, all amounts previously deferred by the executive under the Executive Deferral Plan, together with the "make whole" amount (described in subsection (d) of the preceding paragraph), will be paid to the executive; and (5) upon a Change in Control, each participant under the Corporation's Supplemental Executive Retirement Benefits Program will receive three additional years of age and service credit under the Program and will receive a lump-sum payment equal to the present value of the participant's vested benefit under the Program. ADOPTION OF AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION Increase in Authorized Shares. 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 300,000,000 to 600,000,000. This action would increase the total authorized shares of the Corporation from 303,000,000 to 603,000,000. The shares would consist of 600,000,000 Common Shares and 3,000,000 shares of Serial Preferred Stock. On July 10, 1997, the Board of Directors approved a three-shares-for- two stock split of the Commons Shares payable September 5, 1997 to shareholders of record on August 21, 1997. The stock split increased by 50% the number of Common Shares outstanding on September 5, 1997. As of September ___, 1997 there were __________________ Common Shares issued and outstanding, ____________ Common Shares reserved for issuance under the 1997 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 Commons Shares. As of September ____, 1997, 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, financing alternatives, employee benefit programs, acquisitions or other corporate actions. 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 seeking shareholder approval at the time 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 purposes. 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, like 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. Change in Principal Place of Business. In August 1997, the Corporation moved to a new state-of-the art headquarters facility in Mayfield Heights, Ohio from its previous headquarters in Cleveland, Ohio. Accordingly, the Board of Directors recommends that the Corporation adopt an amendment to the Corporation's Amended Articles of Incorporation to change the location of the Corporation's principal place of business in the State of Ohio from Cleveland to Mayfield Heights. Vote Required for Adoption of the Amended Articles. The increase in the number of authorized shares and the change in the location of the Corporation's principal place of business would be effected by the adoption of amendments to the Amended Articles of Incorporation. No change other than the increase in the number of authorized Common Shares from 300,000,000 to 600,000,000 and the change in the location of the Corporation's principal place of business will be made in the existing Amended Articles. Adoption of each of the amendments 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 amendments to the Amended Articles of Incorporation. AMENDMENT TO 1993 STOCK INCENTIVE PROGRAM General. In 1993, the shareholders of the Corporation approved the 1993 Stock Incentive Program (the "1993 Program") in order to permit the Corporation to continue to provide a long-term incentive to key employees by encouraging them to participate in the Corporation's anticipated future growth through the ownership of the Corporation's Common Shares made available through the grant of stock options and other forms of stock incentives. The 1993 Program permits the Corporation to grant to key employees non-qualified stock options ("NQSOs"), incentive stock options ("ISOs"), stock appreciation rights, restricted stock, incentive shares and dividend equivalent rights. The 1993 Program is administered by the Compensation and Management Development Committee of the Board of Directors which must be comprised of at least three non-employee Directors of the Corporation. The 1993 Program provides for the annual grant of awards in an amount not in excess of 1.5% of the Common Shares outstanding on June 30 of the immediately preceding fiscal year, provided that Common Shares available for awards in any fiscal year that are not utilized will be available for use in subsequent years. In no event will the number of Common Shares available for awards in any fiscal year exceed 2.5% of the Common Shares outstanding on June 30 of the previous fiscal year. The amount and terms of any awards are subject to the sole discretion of the Committee; provided, however, that all stock option exercise prices must be at least 100% of the fair market value of the Common Shares at the time of grant. Subject to limited exceptions, the Board of Directors may amend the 1993 Program or any award granted thereunder without the approval of the shareholders. The 1993 Program will continue in effect until terminated by the Board of Directors. The New York Stock Exchange closing price for the Corporation's Common Shares on September ____, 1997 was $_________. Eligibility. The persons eligible to receive awards under the 1993 Program are those key salaried employees of the Corporation or its subsidiaries with executive, managerial, technical or professional responsibility, including an officer who is also a Director. The Committee, in its sole discretion, selects those persons entitled to participate in the 1993 Program. There are approximately 900 employees of the Corporation eligible to participate in the 1993 Program. The Committee determines, subject to the terms of the 1993 Program, the individuals to whom awards will be granted, the number and type of awards to be granted and the terms and conditions of any award granted. The Committee is also authorized to adopt rules, guidelines and practices governing the 1993 Program and to interpret the provisions of the 1993 Program and any awards. Income Tax Treatment of Options. Generally there are no federal income tax consequences to the Corporation or to the recipient of ISOs either at the time of grant or at the time of exercise of such options, except that the excess of the fair market value at the time of exercise of Common Shares acquired on exercise of ISOs over the option price may be subject to the alternative minimum tax. If Common Shares acquired on exercise of ISOs are held for at least two years after the date of grant and for one year after acquisition of the Common Shares by the optionee upon exercise, then any gain or loss on subsequent disposition of the Common Shares will be treated for federal income tax purposes as long- term capital gain or loss. If the foregoing holding period requirements are not met, gain recognized on disposition of the Common Shares is taxable as ordinary income to the optionee to the extent of the excess, if any, of the fair market value of the Common Shares acquired on the exercise date over the option price, and the Corporation will become entitled to a deduction in the same amount. Any further gain or loss to the optionee will be taxed as short-term or long-term capital gain depending on the holding period. A NQSO issued under the 1993 Program will not result in any taxable income to the optionee or deduction to the Corporation at the time it is granted. Unlike an ISO, the holder of a NQSO will be deemed to have received compensation, taxable as ordinary income, at the time of exercise of the option in an amount equal to the difference between the fair market value of the Common Shares at the time of exercise and the option price, and the Corporation will at the same time become entitled to a tax deduction of like amount. If the Common Shares acquired are later sold or exchanged, the difference between the sale price and the fair market value of the shares on date of exercise of the option is taxable as long-term or short-term capital gain or loss depending on the holding period. Amendment. The Board of Directors seeks approval to amend the 1993 Program solely with respect to limiting the number of stock options granted to any individual in a three-year period. Other than this amendment, the 1993 Program will remain as currently in effect. Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation over $1 million paid, or otherwise taxable, to persons named in the Summary Compensation Table and employed by the Company at the end of the applicable year. Qualifying performance- based compensation will not be subject to the deduction limit if certain requirements are met. In the case of stock options, one requirement is that the 1993 Program state a maximum number of shares with respect to which stock options may be granted during a specified period. The 1993 Program, as amended, provides that no employee shall be granted stock options for more than 500,000 shares of Common Stock in a three-year period, thereby satisfying the new requirement. Set forth below is a table showing the number and dollar value of shares of restricted stock granted in fiscal year 1997 and the number of stock options which are outstanding as of August 20, 1997 under the 1993 Program for each of the named executive officers in the Summary Compensation Table on page ____, all current executive officers as a group, and all employees (except executive officers) as a group: Number of Shares and Value of Restricted Name Number of Options Stock Granted in FY97 Duane E. Collins _______ _______ $_______ Dennis W. Sullivan _______ _______ $_______ Donald A. Zito _______ _______ $_______ Michael J. Hiemstra _______ _______ $_______ Stephen L. Hayes _______ _______ $_______ All current executive officers as a group _______ _______ $_______ All employees (except executive officers) as a group _______ ________ $_______ Approval of the amendment to the 1993 Program requires the affirmative vote of the holders of at least a majority of the votes present or represented and entitled to vote on the proposal at the Annual Meeting. The Board of Directors recommends a VOTE FOR approval of the amendment. 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, 1998. 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 20, 1997, 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)(B) Class(C) Capital Research and Management Company 5,740,000(D) 7.73% 333 South Hope Street Los Angeles, CA 90071 Trimark Financial Corporation 4,010,000(E) 5.4% One First Canadian Place Suite 5600 Toronto, Ontario M5X 1E5 J. G. Breen __________ P. C. Ely __________ A. H. Ford __________ F. A. LePage __________ P. W. Likins __________ H. R. Ortino __________ P. S. Parker __________(F) A. L. Rayfield __________ P. G. Schloemer __________(F) W. R. Schmitt __________ D. L. Starnes __________ S. A. Streeter __________ M. A. Treschow __________ D. E. Collins __________(F) D. W. Sullivan __________(F) D. A. Zito __________(F) M. J. Hiemstra __________(F) S. L. Hayes __________(F) All Directors and executive __________(F) ____% officers as a group (27 persons) (A) Unless otherwise indicated, the beneficial owner has sole voting and investment power. (B) All share amounts have been adjusted for the three-shares-for-two common stock split paid on September 5, 1997. (C) No Director or executive officer beneficially owned more than 1% of the Corporation's Common Stock as of August 20, 1997. (D) Pursuant to a statement filed by Capital Research and Management Company with the SEC in accordance with Rule 13d-1 of the Securities Exchange Act of 1934, Capital Research Development Company has reported that as of December 31, 1996, it had sole voting power over __________ Common Shares and sole investment power over __________ Common Shares. (E) Pursuant to a statement filed by Trimark Financial Corporation with SEC in accordance with Rule 13d-1 of the Securities Exchange Act of 1934, Trimark Financial Corporation has reported that as of December 31, 1996, it had sole voting and investment power over 4,010,000 Common Shares. (F) These amounts include _______, _________, _________, _________, _________, _________, _________, and ______________ Common Shares subject to options exercisable on or prior to October ____, 1997 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 Retirement Savings Plan as of June 30, 1997. SHAREHOLDERS' PROPOSALS The deadline for shareholders to submit proposals to be considered for inclusion in the proxy statement for the 1998 Annual Meeting of Shareholders is expected to be May 31, 1998. GENERAL 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 $14,000, 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 2000 and for the election of the nominees for Directors in such class; in favor of the amendments to the Corporation's Amended Articles of Incorporation; in favor of the amendment to the Corporation's 1993 Stock Incentive Program; and in favor of the appointment of Coopers & Lybrand L.L.P. as independent public accountants for the fiscal year ending June 30, 1998. 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, 1997, is being mailed to shareholders with this Proxy Statement. By Order of the Board of Directors JOSEPH D. WHITEMAN JOSEPH D. WHITEMAN Secretary September 22, 1997 PARKER-HANNIFIN CORPORATION PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON OCTOBER 22, 1997 This Proxy is Solicited on behalf of the Board of Directors 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 all shares of stock of Parker-Hannifin Corporation which the undersigned is entitled to vote at the Annual Meeting of Shareholders of the Corporation to be held on October 22, 1997, and at any adjournments thereof, on the proposals more fully described in the Proxy Statement for the Meeting in the manner specified herein and on any other business that may properly come before the Meeting. _____________________________________________________________________________ PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. Please sign exactly as your name(s) appear(s) hereon. Executors, administrators, guardians, officers of corporations and other signing in a fiduciary capacity should state their full titles as such. _____________________________________________________________________________ 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. HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS? _________________________________ ____________________________________ _________________________________ ____________________________________ _________________________________ ____________________________________ [X] PLEASE MARK VOTES AS IN THIS EXAMPLE WITH- FOR ALL FOR HOLD EXCEPT 1.Election of Directors [ ] [ ] [ ] PARKER-HANNIFIN CORPORATION Duane E. Collins Allen H. Ford Allan L. Rayfield Paul G. Schloemer Michael A. Treschow RECORD DATE SHARES: INSTRUCTION: To withhold authority to vote for a particular nominee, mark the "For All Except" box and strike a line through the name(s) of the nominee(s). Your shares will be voted for the remaining nominee(s). FOR AGAINST ABSTAIN 2.Amendment to Amended [ ] [ ] [ ] Articles of Incorporation to increase authorized shares. 3.Amendment to Amended [ ] [ ] [ ] Articles of Incorporation to change principal place of business. 4.Amendment to 1993 Stock [ ] [ ] [ ] Incentive Program. 5.Appointment of Coopers & [ ] [ ] [ ] Please be sure to sign and Lybrand L.L.P. as date this Proxy. auditors for FY98. __________________________ The Board of Directors recommends a vote FOR Signature and Date Items 1, 2, 3, 4 and 5. __________________________ Mark box at right if an address change or [ ] Signature and Date comment has been noted on the reverse side of this card.
        Parker-Hannifin Corporation 1993 Stock Incentive Program

                      Effective: April 22, 1993
                        Amended: August 15, 1996
                Proposed Amendment Effective: October 22, 1997

1.   Purpose.

     The 1993 Stock Incentive Program is intended to help maintain and develop 
strong management through ownership of shares of the Corporation by key 
employees of the Corporation and its Subsidiaries and for recognition of 
efforts and accomplishments which contribute materially to the success of the 
Corporation's business interests.

2.   Definitions.
     In this Program, except where the context otherwise indicates, the
following definitions apply:
     (a)  "Award" means a stock option, stock appreciation right ("SAR"), 
restricted stock, incentive share, dividend equivalent right ("DER"), or other
award under this Program.
     (b)  "Board" means the Board of Directors of the Corporation.
     (c)  "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 
     Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the 
     Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 
     13d-3 under the Exchange Act), directly or indirectly, of securities of 
     the Corporation representing 20% or more of the combined voting power of 
     the Corporation's then outstanding securities eligible to vote for the 
     election of the Board (the "Corporation'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 Corporation or any Subsidiary; (B) an 
     acquisition by any employee benefit plan sponsored or maintained by the 
     Corporation 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 an individual Grantee, any acquisition by the 
     Grantee or any group of persons (within the meaning of Sections 13(d)(3) 
     and 14(d)(2) of the Exchange Act) including the Grantee (or any entity in 
     which the Grantee or a group of persons including the Grantee, directly 
     or indirectly, holds a majority of the voting power of such entity's 
     outstanding voting interests); or (F) the acquisition of Corporation 
     Voting Securities from the Corporation, 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 


                                    - 1 -

     beginning of such twenty-four (24) month period, whose election, or 
     nomination for election, by the Corporation'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 Corporation 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 Corporation 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 Corporation or any 
     Subsidiary that requires the approval of the Corporation'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 
     Corporation Voting Securities that were outstanding immediately prior to 
     the Business Combination (or, if applicable, shares into which such 
     Corporation 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 Corporation 
     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 Corporation Voting Securities from the 
     Corporation, 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


                                    - 2 -

           (iv)   the stockholders of the Corporation approve a plan of 
     complete liquidation or dissolution of the Corporation or the sale or 
     other disposition of all or substantially all of the assets of the 
     Corporation and its Subsidiaries.

     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 Corporation Voting Securities as a result of the acquisition of 
Corporation Voting Securities by the Corporation which, by reducing the number
of Corporation 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 Corporation (if 
not for the operation of this sentence), and after the Corporation's 
acquisition such person becomes the beneficial owner of additional Corporation 
Voting Securities that increases the percentage of outstanding Corporation 
Voting Securities beneficially owned by such person, a Change in Control shall 
then occur.

     Notwithstanding anything in this Program to the contrary, if a Grantee's 
employment is terminated prior to a Change in Control, and the Grantee 
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 
Program, 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 
Grantee.

     (d)  "Code" means the Internal Revenue Code, as in effect from time to 
time.
     (e)  "Compensation and Management Development Committee" or "Committee" 
means the committee of the Board so designated.  The Committee will be 
constituted in a manner that satisfies all applicable legal requirements, 
including satisfying the disinterested administration standard set forth in 
Rule 16b-3.
     (f)  "Corporation" means Parker-Hannifin Corporation, an Ohio 
corporation, and its Subsidiaries.
     (g)  "Designated beneficiary" means the person designated by the grantee 
of an award hereunder to be entitled, on the death of the grantee, to any 
remaining rights arising out of such award. Such designation must be made in 
writing and in accordance with such regulations as the Committee may 
establish.
     (h)  "Detrimental activity" means activity that is  determined in 
individual cases, by the Committee or its express delegate, to be detrimental 
to the interests of the Corporation or a Subsidiary, including without 
limitation (i) the rendering of services for an organization, or engaging in a 
business, that is, in the judgment of the Committee or its express delegate, 
in competition with the Corporation; (ii) the disclosure to any one outside of 
the Corporation, or the use for any purpose other than the Corporation's 
business, of confidential information or material related to the Corporation, 
whether acquired by the employee during or after employment with the 
Corporation; or (iii) fraud, embezzlement, theft-in-office or other illegal 
activity.


                                    - 3 -

     (i)  "Dividend equivalent right," herein sometimes called a "DER," means 
the right of the holder thereof to receive, pursuant to the terms of the DER, 
credits based on the cash dividends that would be paid on the shares specified 
in the DER if such shares were held by the grantee, as more particularly set 
forth in Section 12(a) below.
     (j)  "Eligible employee" means an employee who is an officer, or in a 
managerial, executive, technical, professional, or other key position as 
determined by the Committee.
     (k)  "Employee" means a regular employee of the Corporation or one of its 
Subsidiaries.
     (l)  "Exchange Act" means the Securities Exchange Act of 1934, as amended 
from time to time.
     (m)  "Fair market value" in relation to a share as of any specific time 
shall mean such value as reported for New York Stock Exchange--Composite 
Transactions on such date, or if no shares are traded on that date, the next 
preceding date on which trading occurred.
     (n)  "Grantee" means a recipient of an award under this Program.
     (o)  "Incentive share" means an award of shares granted pursuant to 
Section 11 below.
     (p)  "Incentive stock option," herein sometimes called an "ISO," means a 
stock option meeting the requirements of Section 422 of the Code or any 
successor provision.
     (q)  "Insider" means a person subject to the reporting requirements of 
Section 16(a) of the Exchange Act with respect to equity securities of the 
Corporation.
     (r)  "Restricted stock" means any share issued with the restriction that 
the holder may not sell, transfer, pledge, or assign such share and such other 
restrictions (which may include, but are not limited to, restrictions on the 
right to vote or receive dividends) which may expire separately or in 
combination, at one time or in installments, all as specified by the grant.
     (s)  "Rule 16b-3" means Rule 16b-3 (or any successor thereto) under the 
Exchange Act that exempts from Section 16(b) of the Exchange Act transactions 
under employee benefit plans, as in effect from time to time with respect to 
this Program.
     (t)  "Share" means a common share, par value $.50, of the Corporation 
issued and reacquired by the Corporation or previously authorized but 
unissued.
     (u)  "Shareholder-approved plan" means any of the plans constituting 
parts of any of the incentive programs previously or hereafter approved by 
shareholders of the Corporation.
     (v)  "Stock appreciation right," herein sometimes called an "SAR," means 
the right of the holder thereof to receive, pursuant to the terms of the SAR, 
a number of shares or cash or a combination of shares and cash, based on the 
increase in the value of the number of shares specified in the SAR, as more 
particularly set forth in Section 9 below.
     (w)  "Subsidiary" means any corporation, partnership, or other entity in 
which the Corporation, directly or indirectly, owns a 50 percent or greater 
equity interest.
     (x) "Terminate" means cease to be an employee, except by death, but a 
change of employment from the Corporation or one Subsidiary to another 
Subsidiary or to the Corporation shall not be considered a termination.


                                    - 4 -

     (y) "Terminate normally" for an employee participating in this Program 
means terminate
           (i)   as a result of retirement under the applicable
     retirement plan or policy of the Corporation or a Subsidiary, 
           (ii)  as a result of that employee becoming eligible for
     disability income under the Corporation's long-term disability program, 
     or
           (iii) with written approval of the Committee given in the
     context of recognition that all or a specified portion of the
     outstanding awards to that employee will not expire or be
     forfeited or annulled because of such termination and, in each
     such case, without being terminated for cause.
     (z) "Year" means fiscal year.

3.   Eligibility. 
     The selection of eligible employees to receive awards will be within the 
discretion of the Committee.  More than one award may be granted to the same 
eligible employee.  Members of the Committee are not eligible for the grant of 
awards.

4.   Administration.
     (a)  The Committee shall administer this Program.  The Committee will, 
subject to the terms of the Program, have the authority to (i) select the 
eligible employees who will receive awards; (ii) grant awards; (iii) determine 
the number and types of awards to be granted to employees; (iv) determine the 
terms, conditions, vesting periods and restrictions applicable to awards;
(v) adopt, alter and repeal administrative rules and practices governing this 
Program; (vi) interpret the terms and provisions of this Program and any 
awards granted under this Program; (vii) prescribe the forms of any notices of 
awards or other instruments relating to awards; and (viii) otherwise supervise 
the administration of this Program.  All decisions by the Committee will be 
made with the approval of not less than a majority of its members.
     (b)  All determinations and interpretations pursuant to the provisions of 
this Program shall be binding and conclusive upon the individual employees 
involved and all persons claiming under them.
     (c)  With respect to Insiders, transactions under this Program are 
intended to comply with all applicable conditions of Rule 16b-3.  To the 
extent any provision of this Program or any action by the Committee under this 
Program fails to so comply, such provision or action shall, without further 
action by any person, be deemed to be automatically amended to the extent 
necessary to effect compliance with Rule 16b-3, provided that if such 
provision or action cannot be amended to effect such compliance, such 
provision or action shall be deemed null and void, to the extent permitted by 
law and deemed advisable by the appropriate authority. Each award to an 
Insider under this Program shall be deemed issued subject to the foregoing 
qualification.
     (d)  An award under this Program is not transferable except, as provided 
in the award, by will, pursuant to the laws of descent and distribution, or 
pursuant to a qualified domestic relations order, and is not subject, in whole 
or in part, to attachment, execution, or levy of any kind.  The designation by 
a grantee of a designated beneficiary shall not constitute a transfer.
Notwithstanding the foregoing, an employee may transfer any nonqualified stock 
option granted under this Plan to members of his immediate family (defined as 

                                    - 5 -

his children, grandchildren and spouse) or to one or more trusts for the 
benefit of such family members or partnerships in which such family members 
are the only partners if the instrument evidencing such stock option expressly 
so provides (or is amended to so provide) and the employee does not receive 
any consideration for the transfer; provided that any such transferred stock 
option shall continue to be subject to the same terms and conditions that 
are applicable to such stock option immediately prior to its transfer (except 
that such transferred stock option shall not be further transferable by the 
transferee inter vivos).
     (e)  Any rights with respect to an award granted under this Program 
existing after the grantee dies are exercisable by the grantee's designated 
beneficiary or, if there is no such designated beneficiary who may, and does, 
lawfully do so, by the grantee's personal representative.
     (f)  Except as otherwise provided herein, a particular form of award may 
be granted to an eligible employee either alone or in addition to other awards 
hereunder.  The provisions of particular forms of award need not be the same 
with respect to each recipient.
     (g)  The Committee may delegate any of its authority to any other person 
or persons that it deems appropriate, provided the delegation does not cause 
the Program or any awards granted under this Program to fail to qualify for 
the exemption provided by Rule 16b-3.
     (h)  This Program and all action taken under it shall be governed by the 
laws of the State of Ohio without giving effect to the principles of conflict 
of laws thereof.

5.   Term.
     This Program will continue in effect until terminated by the Board. 

6.   Awards That May Be Granted.
     The aggregate number of shares that may be subject to awards granted 
under this Program in any fiscal year, subject to adjustment as provided in 
Section 7 below, will be equal to the sum of (a) one and one-half percent 
(1.5%) of the number of shares outstanding on the last day of the previous 
fiscal year; plus (b) the number of shares that were available for the grant 
of awards in previous fiscal years; provided, that, in no event will the 
number of shares available for the grant of awards in any fiscal year exceed 
two and one-half percent (2.5%) of the shares outstanding on the last day of 
the previous fiscal year.  The aggregate number of shares that may be issued 
upon exercise of ISOs is 1,000,000. When an unexercised award lapses, expires, 
terminates or is forfeited, the related shares may be available for 
distribution in connection with future awards but will continue to be subject 
to the 2.5% maximum described above.  The assumption of awards granted by an
organization acquired by the Corporation, or the grant of awards under this 
Program in substitution for any such awards, will not reduce the number of 
shares available in any fiscal year for the grant of awards under this 
Program.

7.   Adjustments.
     In the event that the Committee shall determine that any stock dividend, 
extraordinary cash dividend, recapitalization, reorganization, merger, 
consolidation, split-up, spin-off, combination, exchange of shares, warrants 
or rights offering to purchase common stock of the Corporation at a price 

                                    - 6 -

substantially below fair market value, or other similar corporate event 
affects the common stock of the Corporation such that an adjustment is 
required in order to preserve the benefits or potential benefits intended to 
be made available under this Program, then the Committee shall, in its sole 
discretion, and in such manner as the Committee may deem equitable, adjust any 
or all of (a) the number and kind of shares which thereafter may be the 
subject of Awards under this Program, (b) the number and kind of shares 
subject to outstanding Awards, and (c) the exercise price with respect to any 
of the foregoing.

8.   Stock Options.
     One or more stock options can be granted to any eligible employee.  No 
employee may be granted stock options for more than 500,000 shares of common
stock in any three-year period.  Each stock option so granted shall be subject 
to such terms and conditions as the Committee shall impose.  The exercise 
price per share shall be specified by the grant, but shall in no instance be 
less than 100 percent of fair market value at the time of grant.  Payment of 
the exercise price shall be made in cash, shares, or other consideration, or 
any combination thereof, in accordance with the terms of this Program and any 
applicable regulations of the Committee in effect at the time and valued at 
fair market value on the date of exercise of the stock option. Stock options 
granted hereunder may be designated as ISOs (except to the extent otherwise 
specified in this Section 8) or nonqualified stock options.  To the extent 
that the aggregate fair market value of shares with respect to which stock 
options designated as ISOs are exercisable for the first time by any grantee 
during any year (under all plans of the Corporation and any Subsidiary 
thereof) exceeds $100,000, such stock options shall be treated as not being 
ISOs.  ISOs must comply with requirements of Section 422 of the Code.

9.   Stock Appreciation Rights.
     (a)  An SAR may be granted to an eligible employee as a separate award 
hereunder.  Any such SAR shall be subject to such terms and conditions as the 
Committee shall impose, which shall include provisions that (i) such SAR shall 
entitle the holder thereof, upon exercise thereof in accordance with such SAR 
and the regulations of the Committee, to receive from the Corporation that 
number of shares having an aggregate value equal to the excess of the fair 
market value, at the time of exercise of such SAR, of one share over the 
exercise price per share specified by the grant of such SAR (which shall in no 
instance be less than 100 percent of fair market value at the time of grant) 
times the number of shares specified in such SAR, or portion thereof, which is 
so exercised.
     (b)  Any stock option granted under this Program may include an SAR, 
either at the time of grant or by amendment.  An SAR included in a stock 
option shall be subject to such terms and conditions as the Committee shall 
impose, which shall include provisions that
          (i) such SAR shall be exercisable to the extent, and only to the 
     extent, the stock option is exercisable; and 
          (ii) such SAR shall entitle the optionee to surrender to the 
     Corporation unexercised the stock option in which the SAR is included, 
     or any portion thereof, and to receive from the Corporation in exchange 
     therefor that number of shares having an aggregate value equal to the 


                                    - 7 -

     excess of the fair market value, at the time of exercise of such SAR, of 
     one share over the exercise price specified in such stock option times 
     the number of shares specified in such stock option, or portion thereof, 
     which is so surrendered.
     (c)  In lieu of the right to receive all or any specified portion of such 
shares, an SAR may entitle the holder thereof to receive the cash equivalent 
thereof as specified by the grant.
     (d)  An SAR may provide that such SAR shall be deemed to have been 
exercised at the close of business on the business day preceding the 
expiration of such SAR or the related stock option, if any, if at such time 
such SAR has positive value and would have expired.

10.  Restricted Stock.
     (a)  An award of restricted stock may be granted hereunder to an eligible 
employee, for no cash consideration, for such minimum consideration as may be 
required by applicable law, or for such other consideration as may be 
specified by the grant.  The terms and conditions of restricted stock, 
including the vesting period, shall be specified by the Committee, at its sole 
discretion, in the grant.
     (b)  Any restricted stock issued hereunder may be evidenced in such 
manner as the Committee in its sole discretion shall deem appropriate, 
including, without limitation, book-entry registration or issuance of a stock 
certificate or certificates.  In the event any stock certificate is issued in 
respect of shares of restricted stock awarded hereunder, such certificate 
shall bear an appropriate legend with respect to the restrictions applicable 
to such award.

11.  Incentive Shares.
     (a)  An incentive award may be granted hereunder in the form of shares. 
Incentive shares may be granted to an eligible employee for no cash 
consideration, for such minimum consideration as may be required by applicable 
law, or for such other consideration as may be specified by the grant.  The 
terms and conditions of incentive shares shall be specified by the grant. 
     (b)  Incentive shares may be paid to the grantee in a single installment 
or in installments and may be paid at the time of grant or deferred to a later 
date or dates.  Each grant shall specify the time and method of payment as 
determined by the Committee.

12.  Dividend Equivalent Rights; Interest Equivalents.
     (a)  A DER may be granted hereunder to an eligible employee, as a 
component of another award or as a separate award.  The terms and conditions 
of DERs shall be specified by the grant.  Dividend equivalents credited to the 
holder of a DER may be paid currently or may be deemed to be reinvested in 
additional shares (which may thereafter accrue additional dividend 
equivalents).  Any such reinvestment shall be at fair market value at the time 
thereof. DERs may be settled in cash or shares or a combination thereof, in a 
single installment or installments.  A DER granted as a component of another 
award may provide that such DER shall be settled upon exercise, settlement, or 
payment of, or lapse of restrictions on, such other award, and that such DER 
shall expire or be forfeited or annulled under the same conditions as such 
other award. A DER granted as a component of another award may also contain 
terms and conditions different from such other award.

                                    - 8 -

     (b)  Any award under this Program that is settled in whole or in part in 
cash on a deferred basis may provide by the grant for interest equivalents to 
be credited with respect to such cash payment.  Interest equivalents may be 
compounded and shall be paid upon such terms and conditions as may be 
specified by the grant.  

13.  Deferral of Payment.
     With the approval of the Committee, the delivery of shares, cash or any 
combination thereof subject to an award may be deferred, either in the form of 
installments or a single future delivery.  The Committee may also permit 
selected grantees to defer payment of some or all of their awards, as well as 
other compensation, in accordance with procedures established by the Committee 
to assure that recognition of taxable income is deferred under the Code.

14.  Termination of Employment.
     If the employment of a grantee terminates for any reason, all 
unexercised, deferred and unpaid awards may be exercisable and paid only in 
accordance with rules established by the Committee.  These rules may provide, 
as the Committee deems appropriate, for the expiration, continuation, or 
acceleration of the vesting of all or part of the awards.

15.  Detrimental Activity.
     The Committee may cancel any unexpired, unpaid or deferred awards at any 
time if the grantee is not in compliance with all applicable provisions of 
this Program or with the terms of any notice of award or if the grantee 
engages in detrimental activity. The Committee may, in its discretion and as a 
condition to the exercise of an award, require a grantee to acknowledge that 
he or she is in compliance with all applicable provisions of the Program and 
of any notice of award and has not engaged in any detrimental activity.

16.  Change in Control.
     The Committee may in its discretion and upon such terms as it deems 
appropriate, accelerate the date on which any outstanding option or SAR 
becomes exercisable or waive the restrictions or other terms and conditions on 
the vesting of any restricted or incentive shares in the event of a proposed 
change in control of the Corporation.  In addition to the foregoing, the 
Corporation may, with the approval of the Committee, purchase stock options 
previously granted to any person who is at the time of any such transaction an 
employee of the Corporation for a price equal to the difference between the 
consideration per share payable pursuant to the terms of the transaction and 
the option price.

17.  Substitute Awards.
     The Committee may grant awards in substitution for, or upon the 
assumption of, awards granted by another corporation that is merged into, 
consolidated with, or all or a substantial part of the assets or stock of 
which is acquired by the Corporation or a Subsidiary.  The terms and 
provisions of any awards granted under this Section 16 may vary from the terms 
and provisions otherwise specified in this Program and may, instead, 
correspond to the terms and provisions of the awards granted by the other 
corporation.

                                    - 9 -

18.  Amendments to This Program; Amendments of Outstanding Awards. 
     (a)  The Board can from time to time amend or terminate this Program, or 
any provision hereof.  Approval of the shareholders of the Corporation will be 
required only to the extent necessary to comply with Rule 16b-3 or any other 
applicable law, regulation, or listing requirement, or to qualify for an 
exemption or characterization that is deemed desirable by the Board.
     (b)  The Committee may, in its discretion, amend the terms of any award, 
prospectively or retroactively, but no such amendment may impair the rights of 
any grantee without his or her consent. The Committee may, in whole or in 
part, waive any restrictions or conditions applicable to, or accelerate the 
vesting of, any award.

19.  Withholding Taxes.
     The Corporation shall have the right to deduct from any cash payment made 
under this Program any federal, state or local income or other taxes required 
by law to be withheld with respect to such payment.  It shall be a condition 
to the obligation of the Corporation to deliver shares or securities of the 
Corporation upon exercise of a stock option or SAR, upon settlement of a DER, 
upon delivery of restricted stock or incentive shares, or upon exercise,
settlement, or payment of any other award under this Program, that the grantee 
of such award pay to the Corporation such amount as may be requested by the 
Corporation for the purpose of satisfying any liability for such withholding 
taxes.  Any award under this Program may provide by the grant that the grantee 
of such award may elect, in accordance with any applicable regulations of the 
granting authority, to pay a portion or all of the amount of such minimum 
required or additional permitted withholding taxes in shares.  The grantee 
shall authorize the Corporation to withhold, or shall agree to surrender back 
to the Corporation, on or about the date such withholding tax liability is 
determinable, shares previously owned by such grantee or a portion of the 
shares that were or otherwise would be distributed to such grantee pursuant to 
such award having a fair market value equal to the amount of such required or
permitted withholding taxes to be paid in shares.

20.  Grants of Awards to Employees Who are Foreign Nationals.
     Without amending this Program, but subject to the limitations specified 
in Section 18 above, the Committee can grant, amend, administer, annul, or 
terminate awards to eligible employees who are foreign nationals on such terms 
and conditions different from those specified in this Program as may in the 
judgment of the granting authority be necessary or desirable to foster and 
promote achievement of the purposes of this Program.

21.  Rights of Employees.
     Nothing in this Program will confer upon any grantee the right to 
continued employment by the Corporation or limit in any way the Corporation's 
right to terminate any grantee's employment at will.

22.  Effective Date.
     This Program was ratified by the Board and became effective on 
April 22, 1993, subject to approval of the shareholders on or before 
October 28, 1993.  Awards may be granted prior to approval of the Program by 
shareholders, but no such award may be exercised until after the Program has 
been approved by shareholders.  If the shareholders do not approve the Program 
on or before October 28, 1993, all awards granted under the Program shall 
terminate.

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