SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PARKER-HANNIFIN CORPORATION
_______________________________________________________________________
(Name of Registrant as Specified In Its Charter)
Joseph D. Whiteman, Secretary
_______________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:_/
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_/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
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1) Amount previously Paid:
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<PAGE>
PARKER-HANNIFIN CORPORATION
17325 Euclid Avenue - Cleveland, Ohio 44112
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 26, 1994
The annual meeting of shareholders of Parker-Hannifin Corporation will
be held at the Corporation's Hydraulic Valve Division, 520 Ternes
Avenue, Elyria, Ohio, in the employee cafeteria on Wednesday, October
26, 1994, at 10:00 a.m., Eastern Daylight Time, for the following
purposes:
1. Fixing at four the number of Directors in the class whose three-year
term of office will expire in 1997 and electing four Directors in such
class;
2. Appointing Coopers & Lybrand as independent public accountants for
the fiscal year ending June 30, 1995; and
3. Transacting such other business as may properly come before the meeting.
Shareholders of record at the close of business on August 30, 1994, 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 26, 1994
<PAGE>
PARKER-HANNIFIN CORPORATION
17325 Euclid Avenue - Cleveland, Ohio 44112
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 26, 1994, and at all adjournments thereof. Only shareholders of
record at the close of business on August 30, 1994 will be entitled to
vote. On that date, 48,973,148 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 26, 1994.
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 Board of Directors of the Corporation presently consists of 12
members divided into three classes, each of which consists of four
members. Since the last annual meeting of shareholders, Dr. Robert H.
Cannon, Jr., a member of the class whose term expires in 1995, retired
from the Board of Directors.
The Directors of the class elected at each annual election shall
hold office for terms of three years. Shareholder approval is sought to
fix at four the number of directors in the class whose term will expire
in 1997 and to elect Duane E. Collins, Allen H. Ford, Allan L. Rayfield
and Paul G. Schloemer, directors whose terms of office expire in 1994,
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 anticipate that this will occur.
NOMINEES FOR ELECTION AS DIRECTORS FOR TERM EXPIRING IN 1997
DUANE E. COLLINS, 58, 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, Mr. Collins served as the
Corporation's Vice Chairman of the Board from June 1992 to June 1993
and Executive Vice President and President, International, from 1987
to 1992.
ALLEN H. FORD, 66, 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.
1
<PAGE>
ALLAN L. RAYFIELD, 59, has served as a Director of the Corporation since
1984. He is a member of the Nominating, Audit and Compensation and
Management Development Committees. Mr. Rayfield is the President,
Chief Executive Officer and Director of M/A-COM, Inc. (microwave
manufacturing). Previously, Mr. Rayfield was President and Chief
Operating Officer of M/A-COM, Inc. from March 1991 to November 1993;
Chairman of the Board and Chief Executive Officer of International
Telecharge, Inc. (telecommunications) from April 1990 to March 1991;
Managing Director of Forstmann Rayfield & Co. (equity investment) from
April 1989 to April 1990; and Senior Vice President of GTE Corporation
(telecommunications and electronic systems and equipment) from 1985 to
1989.
PAUL G. SCHLOEMER, 66, has served as a Director of the Corporation since
1982. Mr. Schloemer served as President and Chief Executive Officer of
the Corporation from 1984 to 1993. Mr. Schloemer is also a Director of
Rubbermaid Incorporated, AMP Incorporated and Esterline Technologies
Corporation.
PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 1996
PAUL C. ELY, JR., 62, 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 the General Partner of
Alpha Partners (venture capital seed financing). From December 1988 to
July 1989, Mr. Ely was Executive Vice President and Director of Unisys
Corporation (computers). Prior to that, Mr. Ely was President and
Chief Executive Officer of Convergent, Inc. (computers) from 1985 to
1988 and Executive Vice President and Director of Hewlett-Packard
Company (computers) from 1980 to 1984. Mr. Ely is also a Director of
Network Peripherals, Inc. and Tektronix, Inc.
FRANK A. LEPAGE, 67, has served as a Director of the Corporation since
1977. He is Chairman of the Nominating Committee and a member of the
Audit Committee. Now retired, Mr. LePage previously served as Director
and Executive Vice President of The Firestone Tire & Rubber Company
(manufacturer of tires and related products). Mr. LePage is also a
Director of Acme Metals Inc.
PETER W. LIKINS, 58, has served as a Director of the Corporation since
1989. He is a member of the Nominating, Audit and Compensation and
Management Development Committees. Dr. Likins is the President of
Lehigh University. Dr. Likins also serves as Director of Consolidated
Edison Company of New York, Inc., Communications Satellite Corp. and
Safeguard Scientifics, Inc.
WOLFGANG R. SCHMITT, 50, has served as a Director of the Corporation
since 1992. He is a member of the Nominating and Compensation and
Management Development Committees. Mr. Schmitt is the Chairman of the
Board of Directors, President and Chief Executive Officer of
Rubbermaid Incorporated (manufacturer of rubber and plastic products).
He was previously President and Chief Operating Officer of Rubbermaid
from 1991 to 1992, President and General Manager of Rubbermaid's Home
Products Division from 1984 to 1991 and Executive Vice President of
Rubbermaid from 1987 to 1991. Mr. Schmitt also serves as a director of
Kimberly-Clark Inc.
PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 1995
JOHN G. BREEN, 60, 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.
PATRICK S. PARKER, 64, has served as a Director of the Corporation since
1960. Mr. Parker is the Chairman of the Board of the Corporation.
2
<PAGE>
WALTER SEIPP, 68, has served as a Director of the Corporation since
1992. He is a member of the Nominating Committee. Dr. Seipp is the
Chairman of the Supervisory Board of Commerzbank AG in Frankfurt,
Germany. Previously, he was Chairman of the Board of Managing
Directors of Commerzbank AG from 1981 to 1991.
DENNIS W. SULLIVAN, 55, has served as a Director of the Corporation
since 1983. Mr. Sullivan is the Executive Vice President - Industrial
and Automotive of the Corporation. Mr. Sullivan is also a Director of
Ferro Corporation and KeyCorp.
No Director of the Corporation is related to any other Director. During
the fiscal year ended June 30, 1994, 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 served except for Dr. Likins.
The Audit Committee, which met twice during the fiscal year ended June
30, 1994, 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, 1994, 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, 1994, 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 did not meet during the fiscal year
ended June 30, 1994, 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, retired as an executive officer as of June
30, 1994 and will retire as an employee of the Corporation on October
31, 1994. Thereafter, he will receive an annual retainer of $120,000 as
Chairman of the Board, plus club memberships and the continued use of a
leased automobile.
The Corporation has adopted a Retirement Plan for Directors, other
than officers who are Directors, which provides for payments of 50% of
the annual retainer in effect on the date of retirement until the
monthly payments made equal the Director's months of service, or until
120 monthly payments have been made, or until death, whichever occurs
first. Minimum requirements to qualify for the plan are three years of
service (one full term) and attainment of age 65 prior to retirement as
a Director. All current directors except Messrs. Schmitt and Seipp have
met the service requirements of the Plan.
3
<PAGE>
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 Directors,
has overall responsibility to:
* review the performance and long-term management potential of the
executive officers of the Corporation; and
* review and fix the salaries and other compensation of the
executive officers of the Corporation.
Following review and approval by the Committee, all issues
pertaining to executive compensation are submitted to the full Board of
Directors in conjunction with its approval and review of the
Corporation's strategies and operating plans, thereby assuring that the
Corporation's system of executive compensation is reasonable and
appropriate, meets its stated purpose and effectively serves the
interests of the shareholders and the Corporation.
The Corporation's executive compensation programs are designed to
attract and retain key executives critical to the long-term success of
the Corporation by remaining competitive with other multinational
diversified manufacturing companies of similar size. Comparative
compensation information is used by the Committee to establish
competitive salary grade ranges at the market median for both base pay
and total annual compensation. The group of companies used for
compensation comparison purposes is not the same as the S&P
Manufacturing (Diversified Industrials) Index, which is the peer group
of companies included in the performance graph on page 11. Comparative
compensation information is obtained by the Committee from independent
surveys of numerous diversified manufacturers, which the Committee
believes is important in order to establish competitive compensation
ranges at the appropriate levels. On the other hand, the S&P Index
utilized in the performance graph contains data only with respect to a
limited number of companies who are in businesses similar to the
Corporation, which data is theoretically reflective of the stock
performance of all diversified manufacturers as a whole.
The Corporation's executive compensation programs also are intended
to reward executives commensurate with performance and attainment of
pre-determined financial objectives. Accordingly, compensation of
executive officers is directly and materially linked to both operating
and stock price performance, aligning closely the financial interests of
the Corporation's executives with those of its shareholders.
Compensation for the Corporation's executives consists of four primary
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 amount of the annual cash incentive bonuses is
established in such a manner that base salary plus the target
bonus will be within the competitively determined total annual
compensation range mentioned above. Target annual incentive
bonuses typically represent approximately 30-40% of total
targeted annual compensation for the executive officers with
operational profit and loss responsibility
4
<PAGE>
(including the Chief Executive Officer) and 15-25% of targeted
total 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. For example, in fiscal year
1994, operating group presidents had the opportunity to earn an
additional bonus if their group exceeded their sales plan by
more than 5%.
3. A long-term incentive plan (LTIP) award that is based upon the
Corporation's actual average return on equity for a three
fiscal year period, payable in cash and/or restricted stock at
the election of the Committee. The amount of the LTIP award is
calculated by applying a pre-determined multiplier to the
midpoint of the base salary range for each executive. The
multiplier ranges from .55 for the lowest executive salary
grade to 1.5 for the Chief Executive Officer, which is
consistent with the Committee's philosophy to provide the most
significant incentives to the highest ranking executives.
4. Stock option grants determined by the recipient's salary grade
level. Grants are intended to recognize different levels of
responsibility as indicated by salary grade. All executives in
the same grade level receive the same number of options. Stock
options are granted with an exercise price equal to the fair
market value of the Corporation's common stock on the day of
grant and all current grants are exercisable between one and
ten years from the date granted.
Incentive compensation for the Corporation's executives is
significantly "at risk", based upon the financial performance of the
Corporation. Indeed, more than one half of each executive's targeted
total compensation (including base salary, annual bonus, LTIP payouts
and stock options) may fluctuate significantly from year to year because
it is directly tied to business and 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 stock increases above the option
grant price.
The Corporation's executive compensation philosophy is specifically
evident in the compensation paid during the most recent fiscal year to
the Corporation's President and Chief Executive Officer, Duane E.
Collins. The significant increase in Mr. Collins' fiscal 1994 base
salary is reflective of his recent promotion to that position. For the
same reason, Mr. Collins' base salary was established well below the
mid-point of his salary grade range. In addition, based on the
Corporation's fiscal 1994 operating plan, Mr. Collins was to receive
100% of his Target Incentive Bonus of $186,400 if the Corporation's
actual pre-tax return on average assets, adjusted primarily for
acquisitions and currency transactions, was 7.1%. A minimum payout of
48% of the Target Incentive Bonus was established at a 5.5% pre-tax
return on average assets and a maximum payout of 150% of the Target
Incentive Bonus was established at an 8.7% pre-tax return on average
assets. During the fiscal year ended June 30, 1994, the Corporation's
adjusted pre-tax return on average assets, further adjusted as described
below, was 9.72% and each executive officer, including Mr. Collins,
received an amount equal to the maximum 150% of his Target Incentive
Bonus, which is included in the "Bonus" column of the Summary
Compensation Table on page 7.
Mr. Collins' RONA Bonus was targeted at $165,600 based upon an
approximate 21% average return on division net assets. The average
return on division net assets, adjusted as described below, was slightly
more than 23%, resulting in a RONA Bonus payment to Mr. Collins of
$186,240, which is included in the "Bonus" column of the Summary
Compensation Table on page 7. 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, adjusted as
described below, of 8.14% for the two fiscal years ended June 30, 1994,
Mr. Collins and the other executive officers received an interim payment
5
<PAGE>
under the 1993-94-95 Long Term Incentive Plan in the form of restricted
shares, as reported in the "LTIP Payouts" column of the Summary
Compensation Table on page 7. Such payment represents 25.7% of the
target payment that could have been achieved had the Corporation
achieved its return on equity goal of 16% of such period.
Mr. Collins and the other executive officers also received a long-
term incentive award as described in the LTIP table on page 9 and were
granted the stock options described in the stock option award table on
page 8. The significant difference between the number of stock options
awarded to Mr. Collins and the other executive officers is reflective of
the Committee's philosophy of assuring that the CEO has a significant
incentive to increase the stock price and shareholder value.
In fiscal 1994 the Corporation not only achieved record sales but
also experienced markedly improved operating results before the effect
of charges taken in the fiscal third quarter to reduce the book value of
certain long-term assets and to recognize downsizing and relocation
activities. Most of the charges were taken to reflect structural changes
that have occurred in the aerospace industry and to recognize continuing
economic problems in Europe and South America. The Committee, believing
that the charges were appropriate to position the Corporation in
addressing marketplace realities, unanimously approved the principle
that the above-identified charges against earnings would not have an
effect on the Corporation's annual and long-term incentive compensation
plans. Accordingly, the Corporation's actual return on average assets,
return on division net assets and return on equity were adjusted for
purposes of determining compensation payable under such plans.
During 1993, the Omnibus Budget Reconciliation Act of 1993 (the
"Act") was enacted by Congress. The Act includes potential limitations
on the deductibility of compensation in excess of $1 million paid to the
Corporation's Chief Executive Officer and four other highest paid
executive officers beginning in fiscal year 1995. The Committee has
taken the necessary actions to ensure the deductibility of compensation
paid by the Corporation to such individuals.
John G. Breen, Chairman Dr. Peter W. Likins
John G. Breen, Chairman Dr. Peter W. Likins
Allan L. Rayfield Wolfgang R. Schmitt
Allan L. Rayfield Wolfgang R. Schmitt
6
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes compensation paid by the Corporation
for each of the last three fiscal years to its Chief Executive Officer
and each of the other four most highly compensated executive officers:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
__________________________________ _________________________________________
Awards Payouts
___________ _____________
Securities
Other Annual Underlying All Other
Fiscal Compensation Options LTIP Compensation
Name and Principal Position Year Salary($) Bonus($) ($)(a) (#) Payouts($)(b) ($)(c)
________________________________ ______ _________ ________ ____________ __________ _____________ ____________
<S> <C> <C> <C> <C> <C> <C> <C>
Duane E. Collins, 1994 600,000 465,840 7,920 15,000 73,425 4,500
President and Chief Executive 1993 430,000 134,349 73,390 25,000 0 11,263
Officer (d) 1992 294,000 60,068 2,914 0 0 9,791
Patrick S. Parker, 1994 516,000 184,771 6,861 0 65,258 4,942
Chairman of the Board 1993 516,000 168,861 7,074 36,000 0 7,324
of Directors 1992 455,000 141,020 4,093 0 0 7,212
Dennis W. Sullivan, 1994 472,992 276,990 83,569 6,400 56,306 6,765
Executive Vice President - 1993 430,000 128,928 3,208 25,000 0 10,214
Industrial & Automotive 1992 388,500 91,663 4,620 0 0 10,154
Michael J. Hiemstra, 1994 338,645 173,489 1,897 3,600 39,146 7,450
Vice President - 1993 328,000 89,250 2,135 20,000 0 8,662
Finance and Administration 1992 295,000 74,997 3,460 0 0 7,692
Donald A. Zito, 1994 279,996 217,247 2,779 3,600 31,803 6,276
Vice President, and President, 1993 255,000 93,286 1,852 16,000 0 6,833
Fluid Connectors Group 1992 216,500 83,316 2,652 0 0 7,552
<FN>
(a) Unless otherwise indicated, no executive officers named in the
Summary Compensation Table received personal benefits or
perquisites in excess of the lesser of $50,000 or 10% of his total
compensation reported in the Salary and Bonus columns. Reported in
this column is annual compensation consisting of (i) amounts
reimbursed by the Corporation for the payment of income taxes on
certain executive perquisites; (ii) $69,968 in executive
perquisites received by Mr. Collins in fiscal year 1993, including
$40,000 of which was for the payment of a country club membership
fee; and (iii) $76,097 in executive perquisites received by Mr.
Sullivan in fiscal year 1994, including $42,800 of which was for
the payment of a country club membership fee.
(b) Dollar value of restricted shares issued as a pro rata interim
payment under the 1993-94-95 Long Term Incentive Plan. Such value is
based on the Corporation's stock price on August 18, 1994, the date of
issuance of the shares. The amount of the interim payment was
determined based upon the Corporation's adjusted average return on
equity of 8.14% for the two fiscal years ended June 30, 1994.
Determination of the ultimate payment earned under such Plan will
depend upon the Corporation's average return on equity for the three
years ending June 30, 1995. Accordingly, the restricted shares issued
as an interim payment are subject to forfeiture dependent upon fiscal
1995 performance of the Corporation. The restricted shares are subject
to a three-year vesting period from the date of issuance, with
accelerated vesting in the event of the death, disability or normal
retirement of the Plan participant. No other restricted shares of the
Corporation are currently issued. Dividends are paid by the
Corporation on the restricted shares.
(c) Represents matching contributions by the Corporation to the Parker
Hannifin Employees' Savings Plus Stock Ownership Plan.
(d) Mr. Collins was named President and Chief Executive Officer on
July 1, 1993, the beginning of fiscal year 1994.
</TABLE>
7
<PAGE>
The following table summarizes stock option grants by the
Corporation during the fiscal year ended June 30, 1994 to each of the
executive officers identified in the Summary Compensation Table on page 7:
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1994
Individual Grants
Number of
Securities Potential realizable value at
Underlying % of Total Options Exercise or assumed annual rates of stock
Options Granted to Employees Base Price Expiration price appreciation for option term (b)
Name Granted (#)(a) in Fiscal 1994 ($/Sh) Date 5% ($) 10% ($) 7.82% ($)(c)
____________________ ______________ ____________________ ___________ __________ ______________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
Duane E. Collins 15,000 30.1% $40.25 4/21/04 379,695 962,222 678,139
Patrick S. Parker 0 --- --- --- --- --- ---
Dennis W. Sullivan 6,400 12.9% 40.25 4/21/04 162,003 410,548 289,339
Michael J. Hiemstra 3,600 7.2% 40.25 4/21/04 91,127 230,933 162,753
Donald A. Zito 3,600 7.2% 40.25 4/21/04 91,127 230,933 162,753
<FN>
(a) Options are exercisable on the date following completion of one
year of continuous employment after the date of grant (i.e., April
22, 1995).
(b) The potential realizable value illustrates the value that might be
recognized upon the exercise of the options immediately prior to
the expiration of their term, assuming the specified compounded
rates of appreciation over the entire term of the option.
Shareholders of the Corporation, as a group, would realize
$1,235,510,743 and $3,131,026,801 at assumed annual rates of
appreciation of 5% and 10%, respectively, over the ten-year life of
the options. There can be no assurance that the amounts reflected
in this table will be achieved.
(c) Represents the Corporation's actual rate of stock price
appreciation over the past 10 years.
</TABLE>
The following table summarizes exercises of stock options during
the fiscal year ended June 30, 1994 by each of the executive officers
identified in the Summary Compensation Table on page 7 and the fiscal
year-end value of unexercised options for such executive officers:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1994 AND FY-END OPTION VALUES
Number of
Securities Underlying Value of Unexercised
Shares Value Unexercised Options In-the-Money
Acquired on Realized at FY-End (#) Options at FY-End ($)
Name Exercise (#) ($) Exercisable / Unexercisable Exercisable / Unexercisable
___________________ ____________ ________ ___________________________ ___________________________
<S> <C> <C> <C> <C>
Duane E. Collins 3,600 31,662 84,500 / 15,000 1,204,750 / 35,625
Patrick S. Parker 33,000 453,750 136,550 / 0 2,011,520 / 0
Dennis W. Sullivan 14,125 260,885 105,750 / 6,400 1,600,544 / 15,200
Michael J. Hiemstra 0 0 87,500 / 3,600 1,076,500 / 8,550
Donald A. Zito 3,000 36,315 54,000 / 3,600 807,000 / 8,550
</TABLE>
8
<PAGE>
The following table summarizes awards by the Corporation during the
fiscal year ended June 30, 1994 to each of the executive officers
identified in the Summary Compensation Table on page 7 under the
Corporation's Long-Term Incentive Plan:
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN - AWARDS IN FISCAL 1994
Estimated Future Payouts under
Number of Performance or Non-Stock Price-Based Plans
Shares Other Period Until ____________________________________________
Name (#) Maturation or Payout Threshold (#) Target (#) Maximum (#)
__________________ _________ ____________________ _____________ __________ ___________
<S> <C> <C> <C> <C> <C>
Duane E. Collins 17,000 3 Years 4,250 17,000 34,000
Patrick S. Parker 3,333 3 Years 833 3,333 6,666
Dennis W. Sullivan 7,500 3 Years 1,875 7,500 15,000
Michael J. Hiemstra 4,000 3 Years 1,000 4,000 8,000
Donald A. Zito 4,000 3 Years 1,000 4,000 8,000
</TABLE>
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 16%; maximum
of 20%) for the three fiscal years ending June 30, 1996.
<TABLE>
<CAPTION>
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 7:
Years of Service
Remuneration 15 or more
____________ ________________
<S> <C>
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
</TABLE>
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 7, at their respective retirement dates, will
be as follows: Mr. Parker, 35 years; Mr. Collins, 35 years; Mr.
Sullivan, 35 years; Mr. Hiemstra, 25 years; and Mr. Zito, 35 years. The
Program provides an annual benefit based upon the average of the
participant's three highest calendar years of cash compensation (salary
and annual bonus) with the Corporation. The amounts set forth in the
"Salary" and "Bonus" columns in the Summary Compensation Table on page 7
are determined on a fiscal year basis and, thus, do not provide a
totally accurate basis to determine benefits payable under the Program
(which are based on calendar year compensation). The average of each
named participant's three highest calendar years of cash compensation
are as follows: Mr. Collins, $497,542; Mr. Parker, $647,952; Mr.
Sullivan, $531,777; Mr Hiemstra, $398,985; and Mr. Zito, $321,784.
Benefits are subject to reduction for payments received under the
Corporation's Retirement Plan for Salaried Employees and 50% of primary
social security benefits.
9
<PAGE>
Officer Agreements Effective Upon "Change in Control". The Corporation
has entered into separate agreements (collectively the "Agreements")
with Messrs. Collins, Sullivan, Hiemstra and Zito. Prior to his recent
retirement as an executive officer, the Corporation also had a similar
Agreement with Mr. Parker which has now terminated. The Agreements are
designed to retain the executives and provide for continuity of
management in the event of any actual or threatened change in the
control of the Corporation. Each Agreement only becomes operative upon a
"Change in Control of the Company", as that term is defined in the
Agreements, and only if the executive is then in the employ of the
Corporation. The term "Change in Control of the Company" for the purpose
of the Agreements means a change in control of a nature that would be
required to be reported in response to applicable regulations under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), as in
effect on January 1, 1980. Such a Change in Control shall be deemed to
have occurred if and when (i) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the 1934 Act) is or becomes a beneficial
owner, directly or indirectly, of securities of the Corporation
representing 25% or more of the combined voting power of the
Corporation's then outstanding securities, or (ii) during any period of
twenty-four consecutive months, individuals who at the beginning of such
twenty-four month period were Directors of the Corporation for whom the
executive shall have voted cease for any reason to constitute at least a
majority of the Board of Directors of the Corporation.
Each Agreement provides that, after the Agreement becomes
operative, i.e., after a "Change in Control", the executive will receive
during employment annual compensation, consisting of base salary plus
incentive compensation, in an amount not less than that received for the
fiscal year ended immediately prior to the execution date of each
Agreement, plus any increase in salary granted to him from time to time
prior to and after any "Change in Control". In addition, each Agreement
provides for continuance, after a "Change in Control", at not less than
present levels, of employee benefit plans and practices (or equivalent
successor plans and practices), including retirement plans, stock option
and stock appreciation rights plans, life and accidental death and
dismemberment insurance and medical and health and welfare plans. If the
executive was not previously designated a participant in the
Supplemental Executive Retirement Benefits Program (described above),
upon a "Change in Control" he automatically becomes a participant in
that Program. Following a "Change in Control", if an executive under age
60 (i) is terminated by the Corporation without "cause" (as defined in
the Agreements) or (ii) terminates his employment following his removal
from office or due to a significant change in authority in his office,
he will be entitled (except for Mr. Hiemstra and Mr. Zito who are
subject to Sections 280G or 4999 of the Code) until he reaches age 60
(but in no event for more than 10 years): (a) to receive from the
Corporation annual compensation equal to the aggregate of his then
current base salary plus his most recent incentive compensation award
under the Corporation's Incentive Compensation Plan, as then in effect;
and (b) to participate in specified employee benefit plans and practices
as if he continued as an employee of the Corporation. The executive is
obligated to endeavor to mitigate damages by seeking comparable
employment elsewhere and, to the extent he receives compensation and
benefits from another employer, the foregoing payments and benefits
provided by the Corporation will be reduced accordingly. Any outstanding
stock option held by an executive who is involuntarily terminated before
or after age 60 will be surrendered to the Corporation in exchange for a
lump-sum payment of the excess of the "fair market value" of the Common
Shares subject to the option over the exercise price of the option. In
each Agreement, the executive agrees that he will forfeit the foregoing
payments and benefits if he engages in "competition" with the
Corporation during the period that any payments are made or benefits are
provided under the Agreement, and agrees not to disclose to others,
either while in the employ of the Corporation or thereafter, any
confidential information relating to the Corporation. If the employment
of an executive is terminated without "cause" by the Corporation after
age 60 (or, if earlier, after 10 years following the date of the
Agreement) and prior to his normal retirement date, the Corporation is
to pay the executive, as a severance allowance, an amount equal to 50%
of one year's total compensation.
10
<PAGE>
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,
1989 through June 30, 1994, assuming the investment of $100 on June 30,
1989, and the reinvestment of dividends.
<TABLE>
<CAPTION>
Comparison of Five Year Cumulative Total Return Among
Parker-Hannifin Corporation, the S&P 500 Index and the
S&P Manufacturing (Diversified Industrials) Index
6/30/89 6/30/90 6/30/91 6/30/92 6/30/93 6/30/94
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index 100 116 125 142 161 163
S&P Manufacturing (Diversified Industrials) Index 100 123 131 129 153 171
Parker-Hannifin Corporation 100 113 106 119 139 184
</TABLE>
TRANSACTIONS WITH MANAGEMENT
During the fiscal year ended June 30, 1994, the Corporation made
payments totalling $204,914 to Cleveland Jet Center, Inc. for
maintenance and other related services for the Corporation's owned
aircraft. Cleveland Jet Center, Inc. is wholly owned by Patrick S.
Parker, Chairman of the Board of Directors of the Corporation, and Mr.
Parker is a Director of such corporation.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee and the Board of Directors recommend the
appointment of Coopers & Lybrand as certified public accountants to
examine the financial statements of the Corporation as of and for the
fiscal year ending June 30, 1995. Coopers & Lybrand has made the annual
audit of the Corporation's accounts since its organization in 1938. A
representative of Coopers & Lybrand 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.
11
<PAGE>
PRINCIPAL SHAREHOLDERS OF THE CORPORATION
The following table sets forth, as of August 18, 1994, 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 7, and
all Directors and executive officers as a group:
Amount and Nature Percentage
Name of of of
Beneficial Owner Beneficial Ownership (A) Class (B)
________________ ________________________ _________
Society Corporation 3,138,802 (C) 6.5%
127 Public Square
Cleveland, OH 44114-1306
FMR Corp. 5,149,172 (D) 10.55%
82 Devonshire Street
Boston, MA 02109-3614
J. G. Breen 2,000
P. C. Ely 750
A. H. Ford 4,000
F. A. LePage 5,000
P. W. Likins 100
A. L. Rayfield 700
P. G. Schloemer 282,240 (E)
W. R. Schmitt 507
W. Seipp 2,000
P. S. Parker 470,333 (E)
D. E. Collins 121,885 (E)
D. W. Sullivan 176,307 (E)
M. J. Hiemstra 90,861 (E)
D. A. Zito 63,157 (E)
All Directors and executive 1,497,859 (E) 3.01%
officers as a group
(24 persons)
(A) Unless otherwise indicated, the beneficial owner has sole voting
and investment power.
(B) No Director or executive officer beneficially owned more than 1% of
the Corporation's Common Stock as of August 18, 1994.
(C) Pursuant to a statement filed by Society Corporation with the
Securities and Exchange Commission ("SEC") in accordance with Rule
13d of the Securities Exchange Act of 1934 (the "1934 Act") on
behalf of itself, Society National Bank, Society National Trust
Co., Society-Michigan and Society Asset Management Inc., Society
Corporation has reported that as of December 31, 1993 it has sole
voting power over 820,020 shares, 2,287,280 shares as to which it
shares voting power, 683,356 shares as to which it has sole
investment power and 2,442,331 shares as to which it shares
investment power.
(D) Pursuant to a statement filed by FMR Corp. with the SEC in
accordance with Rule 13d of the 1934 Act on behalf of itself,
Edward C. Johnson 3rd (Chairman of FMR Corp.), Fidelity Management
& Research Company, Fidelity Magellan Fund, Fidelity Management
Trust Company and Fidelity International Limited, FMR Corp. has
reported that as of June 30, 1994 it has sole voting power over
24,582 shares and sole investment power over 5,149,172 shares.
(E) These amounts include 206,000, 136,550, 84,500, 105,750, 87,500,
54,000, and 876,950 Common Shares subject to options exercisable on
or prior to October 17, 1994 granted under the Corporation's stock
option plans held by Messrs. Schloemer, Parker, Collins, Sullivan,
Hiemstra, Zito, 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 2,357, 7,999,
8,740, 3,071, 1,412, 3,781 and 57,099 Common Shares as to which
Messrs. Schloemer, Parker, Collins, Sullivan, Hiemstra, Zito, and
all Directors and executive officers as a group, respectively, hold
voting power pursuant to the Corporation's Employees' Savings Plus
Stock Ownership Plan as of June 30, 1994.
12
<PAGE>
As required by the Securities and Exchange Commission rules under
Section 16 of the Securities and Exchange Act of 1934, the Corporation
notes that during the fiscal year ended June 30, 1994, the following
four officers filed untimely reports on transactions in the
Corporation's Common Shares: Patrick S. Parker, Chairman of the Board,
one report regarding one transaction; Timothy K. Pistell, Treasurer, one
report regarding one Employees' Savings Plus Stock Ownership Plan
transaction; John L. Hanson, Vice President, one report regarding one
Employees' Savings Plus Stock Ownership Plan transaction; and Richard F.
Ferrel, Vice President, one report regarding one Employees' Savings Plus
Stock Ownership Plan transaction.
SHAREHOLDERS' PROPOSALS
The deadline for shareholders to submit proposals to be considered
for inclusion in the proxy statement for the 1995 Annual Meeting of
Shareholders is expected to be May 28, 1995.
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., 25 Broadway, New York, New York, to assist
in the solicitation of proxies at an anticipated cost of $12,000 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 four the number of Directors in the
class whose three-year term of office will expire in 1997 and for the
election of the nominees for Directors in such class and in favor of the
appointment of Coopers & Lybrand as independent public accountants for
the fiscal year ending June 30, 1995. 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, 1994, is being mailed to
shareholders with this Proxy Statement.
By Order of the Board of Directors
JOSEPH D. WHITEMAN
JOSEPH D. WHITEMAN
Secretary
September 26, 1994
13
<PAGE>
1994 PARKER-HANNIFIN CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON OCTOBER 26, 1994
P This Proxy is Solicited on behalf of the Board of Directors
R The undersigned hereby appoints PATRICK S. PARKER, DUANE E. COLLINS
and JOSEPH D. WHITEMAN, and any of them, as proxies to represent and
O to vote all shares of stock of Parker-Hannifin Corporation which the
undersigned is entitled to vote at the Annual Meeting of
X Shareholders of the Corporation to be held on October 26, 1994, and
at any adjournments thereof, on the proposals more fully described
Y in the Proxy Statement for the Meeting in the manner specified
herein and on any other business that may properly come before the
Meeting.
Election of Directors (change of address)
Proposal to fix at four the number _______________________________
of Directors in the class whose term _______________________________
of office will expire in 1997 and to _______________________________
elect the following to such class: _______________________________
(If you have written in the above
Duane E. Collins Allan L. Rayfield space, please mark the correspon-
Allen H. Ford Paul G. Schloemer ding box on the reverse side of
this card.)
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.
SEE REVERSE
SIDE
<PAGE>
[X] Please mark your SHARES IN YOUR NAME REINVESTMENT SHARES
votes as in this
example.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Appointment of [ ] [ ] [ ]
Directors Coopers & Lybrand
(see reverse) as auditors for FY95
For, except vote withheld
______________________________
The Board of Directors recommends a
vote FOR Items 1 and 2.
[ ] Change of Address
SIGNATURE(s) ___________________________________ DATE _____________________
SIGNATURE(s) ___________________________________ DATE _____________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
