Summary
Parker-Hannifin Corporation (PH) announced on August 19, 2014, the adoption of a new Profitable Growth Incentive Plan (the "Plan") effective August 13, 2014. This Plan replaces the previous Volume Incentive Plan and targets key executive and staff members, including Robert W. Bond, Vice President and President of the Fluid Connectors Group. The primary objective of the Plan is to incentivize sustainable growth by rewarding participants for both organic sales increases and growth achieved through acquisitions. Key to the Plan is the adjustment of annual General RONA bonuses based on a "PG RONA Multiplier." This multiplier is directly tied to the three-year compound annual growth rate (CAGR) of external customer sales within each operating group or division. The structure incentivizes higher growth rates, with potential adjustments ranging from 90% to 130% of the base bonus. Notably, negative adjustments linked to below-target CAGR will not take effect until the fiscal year ending 2016, while other aspects of the Plan are effective for the fiscal year ending 2015.
Key Highlights
- 1Adoption of the new Profitable Growth Incentive Plan (the "Plan") replacing the Volume Incentive Plan.
- 2The Plan aims to reward executives and staff for achieving organic sales growth and growth through acquisitions.
- 3Key participant includes Robert W. Bond, VP and President of Fluid Connectors Group and a named executive officer.
- 4Annual General RONA bonuses will be adjusted by a "PG RONA Multiplier" based on a three-year compound annual growth rate (CAGR) of external customer sales.
- 5The "PG RONA Multiplier" ranges from 90% for CAGR <= -5% to 130% for CAGR >= 15%.
- 6Negative adjustments to bonuses will be delayed until the fiscal year ending 2016.
- 7The Plan is effective for the fiscal year ending 2015, excluding the negative adjustment trigger.