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DONALDSON CO INC

FORM
DEF 14A
(Proxy Statement (definitive))

Filed 11/23/15 for the Period Ending 12/22/15


Address
Telephone
CIK
Symbol
SIC Code
Industry
Sector
Fiscal Year

1400 W. 94TH ST.


MINNEAPOLIS, MN 55431
6128873131
0000029644
DCI
3564 - Industrial and Commercial Fans and Blowers and Air Purification Equipment
Auto & Truck Parts
Consumer Cyclical
07/31

http://www.edgar-online.com
Copyright 2015, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
FiledbytheRegistrant[X]

FiledbyaPartyotherthantheRegistrant[__]

Checktheappropriatebox:

[__] PreliminaryProxyStatement

[__] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

[X] DefinitiveProxyStatement

[__] DefinitiveAdditionalMaterials

[__] SolicitingMaterialPursuantto240.14a-12

Donaldson Company

Inc.

(NameofRegistrantasSpecifiedInItsCharter)

(NameofPerson(s)FilingProxyStatement,ifotherthantheRegistrant)

PaymentofFilingFee(Checktheappropriatebox):

[X] Nofeerequired

[__] FeecomputedontablebelowperExchangeActRules14a-6(i)(1)and0-11.

(1)
Titleofeachclassofsecuritiestowhichtransactionapplies:

(2)
Aggregatenumberofsecuritiestowhichtransactionapplies:

(3)
PerunitpriceorotherunderlyingvalueoftransactioncomputedpursuanttoExchangeActRule0-11(Setforththeamountonwhichthefilingfeeis
calculatedandstatehowitwasdetermined):

(4)
Proposedmaximumaggregatevalueoftransaction:

(5)
Totalfeepaid:

[__] Feepaidpreviouslywithpreliminarymaterials.

[__] CheckboxifanypartofthefeeisoffsetasprovidedbyExchangeActRule0-11(a)(2)andidentifythefilingforwhichtheoffsettingfeewaspaid
previously.Identifythepreviousfilingbyregistrationstatementnumber,ortheFormorScheduleandthedateofitsfiling.

(1)
AmountPreviouslyPaid:

(2)
Form,ScheduleorRegistrationStatementNo.:

(3)
FilingParty:

(4)
DateFiled:


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DONALDSON COMPANY, INC.


1400 West 94th Street
Minneapolis, Minnesota 55431-2370
www.donaldson.com
NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS

TIME:

9:00a.m.(localtime)onTuesday,December22,2015

PLACE:

Donaldson Company, Inc. (Donaldson or the Company) Corporate Offices, Campus West, 2001 West 94th Street, Minneapolis,
Minnesota55431.

ITEMSOFBUSINESS:(1)

ToelectfourDirectors;

(2)

Tore-approvethematerialtermsoftheperformancegoalsundertheDonaldsonCompany,Inc.2010MasterStockIncentivePlan;

(3)

ToratifytheappointmentofPricewaterhouseCoopersLLPastheCompanysindependentregisteredpublicaccountingfirmforthe
fiscalyearendingJuly31,2016;and

(4)

Totransactanyotherbusinessthatproperlycomesbeforethemeeting.

RECORDDATE:

YoumayvoteifyouareaStockholderofrecordatthecloseofbusinessonNovember16,2015.

PROXYVOTING:

It is important that your shares be represented and voted at the Annual Meeting. If you received paper copies of the proxy materials,
instructionsonthedifferentwaystovoteyoursharesarefoundontheenclosedproxycard.Youshouldvotebyproxyevenifyouplanto
attendtheAnnualMeeting.Yoursupportisappreciated,andyouarecordiallyinvitedtoattendtheAnnualMeeting.

PLEASE PROMPTLY VOTE YOUR PROXY TO SAVE US THE EXPENSE OF ADDITIONAL SOLICITATION.

Notice of Internet Availability of Proxy Materials for the Stockholder Meeting to be held on December 22, 2015: Our 2015 Proxy
Statement and our Fiscal 2015 Annual Report to Stockholders are available at www.proxyvote.com.

ByOrderoftheBoardofDirectors

AmyC.Becker
Secretary

Dated:November23,2015


TABLE OF CONTENTS
QUESTIONSANDANSWERSABOUTTHEANNUALMEETINGANDVOTING
WhydidIreceivethisProxyStatement?
WhatamIvotingonandwhatdoestheBoardrecommend?
HowdoIvoteifIamaStockholderofrecord?
HowdoIvoteifIholdstockthroughaDonaldsonEmployeebenefitplan?
HowdoIvoteifmysharesareheldinabrokerageaccountinmybrokersname(i.e.
,streetname)?
WhatdoesitmeanifIreceivemorethanoneproxycard?
WhatifIchangemymindafterIvotemyshares?
Howarethevotescounted?
WhatifIdonotspecifyhowIwantmysharesvoted?
Howmanysharesmustbepresenttoholdthemeeting?
Howmanyvotesareneededtoapproveeachitem?
Howwillvotingonanyotherbusinessbeconducted?
Whomayattendthemeeting?
WheredoIfindthevotingresultsofthemeeting?
HowdoIsubmitaStockholderproposal?
Whopaysforthecostofproxypreparationandsolicitation?
SECURITYOWNERSHIP
SECTION16(a)BENEFICIALOWNERSHIPREPORTINGCOMPLIANCE
ITEM1:ELECTIONOFDIRECTORS
BoardRecommendation
InformationRegardingDirectors
CORPORATEGOVERNANCE
BoardOversightandDirectorIndependence
PolicyandProceduresRegardingTransactionswithRelatedPersons
BoardLeadershipStructure
RiskOversightbyBoardofDirectors
MeetingsandCommitteesoftheBoardofDirectors
AuditCommittee
HumanResourcesCommittee
CorporateGovernanceCommittee
CorporateGovernanceGuidelines
CodeofBusinessConductandEthics
BoardCompositionandQualifications
DirectorSelectionProcess
IndependentDirectorExecutiveSessionsandEvaluations
CommunicationswithDirectors
AuditCommitteeExpertise;Complaint-HandlingProcedures
DIRECTORCOMPENSATION
AnnualRetainer
StockOptions
DeferredCompensation
Fiscal2015DirectorCompensation
EXECUTIVECOMPENSATION
CompensationCommitteeReport
CompensationDiscussionandAnalysis
CompensationRiskAnalysis
SummaryCompensationTable
Fiscal2015GrantsofPlan-BasedAwardsTable
PensionBenefits
Non-QualifiedDeferredCompensation
PotentialPaymentsUponTerminationorChangeinControl
ITEM2:RE-APPROVALOFPERFORMANCEGOALSUNDERTHEDONALDSONCOMPANY,INC.
2010MASTERSTOCKINCENTIVEPLAN

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INFORMATIONREGARDINGTHEINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM
AuditCommitteeReport
IndependentAuditorsFees
AuditCommitteePre-ApprovalPoliciesandProcedures
ITEM3:RATIFICATIONOFAPPOINTMENTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM
BoardRecommendation
AppendixA

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A-1

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DONALDSON COMPANY, INC.


1400 West 94th Street
Minneapolis, Minnesota 55431-2370

PROXY STATEMENT

Mailing Date: November 23, 2015

PROPOSALS YOU ARE ASKED TO VOTE ON


Item 1: Election of Directors
Four current Directors, Andrew Cecere, William Cook, James Owens and Trudy Rautio, are recommended for election to the Board of Directors at the
AnnualMeeting.Informationonthenomineesisprovidedonpage8.Directorsareelectedforathree-yeartermsothatapproximatelyone-thirdareelectedateach
AnnualMeetingofStockholders.
TheBoardofDirectorsunanimouslyrecommendsavoteFOR theelectionofeachDirectornominee.
Item 2: Re-approval of the material terms of the performance goals under the Donaldson Company, Inc. 2010 Master Stock Incentive Plan
InordertomaintaintheCompanysability todeductperformance-based compensationgrantedundertheCompanys2010MasterStockIncentivePlan
underInternalRevenueCodeSection162(m),Stockholdersmustre-approvethematerialtermsoftheperformancegoalssetforthinthePlaneveryfiveyears.
The Board of Directors unanimously recommends a vote FOR the re-approval of the material terms of the performance goals as described in this Proxy
Statement.
Item 3: Ratification of the Appointment of Independent Registered Public Accounting Firm
TheAuditCommitteehasappointedPricewaterhouseCoopersLLPastheCompanysindependentregisteredpublicaccountingfirmtoaudittheCompanys
financialstatementsforthefiscalyearendingJuly31,2016,andisrequestingratificationbytheStockholders.
The Board of Directors unanimously recommends a vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Companys
independentregisteredpublicaccountingfirmforthefiscalyearendingJuly31,2016.

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Why did I receive this Proxy Statement?
Because the Board of Directors of the Company is soliciting proxies for use at the Annual Meeting to be held on December 22, 2015 and you were a
DonaldsonStockholderasofthecloseofbusinessontherecorddateofNovember16,2015.OnlyStockholdersofrecordareentitledtovoteattheAnnualMeeting
andtheBoardofDirectorsissolicitingyourproxytovoteatthemeeting.Wehad132,680,334sharesofCommonStockoutstandingasofthecloseofbusinessonthe
recorddate.Eachshareentitlesitsholdertoonevote,andthereisnocumulativevoting.
This Proxy Statement summarizes the information you need to know to vote. We first mailed or otherwise made available to Stockholders the Proxy
StatementandformofproxyonoraboutNovember23,2015.
What am I voting on and what does the Board recommend?
1.

TheelectionoffourDirectors;

2.

Re-approvalofthematerialtermsoftheperformancegoalsundertheDonaldsonCompany,Inc.2010MasterStockIncentivePlan;and

3.

TheratificationoftheappointmentofourindependentregisteredpublicaccountingfirmforthefiscalyearendingJuly31,2016.

The Board recommends a vote:

FOR each of the Directors;

FOR the re-approval of the material terms of the performance goals; and

FOR the ratification of the appointment of our independent registered public accounting firm.

How do I vote if I am a Stockholder of record?


IfyouareaStockholderofrecordyoumayvoteusinganyONEofthefollowingmethods:

VOTEBYPHONETOLLFREE1-800-690-6903

VOTEBYINTERNEThttp://www.proxyvote.com

VOTEBYPROMPTLYCOMPLETING,SIGNING,ANDMAILINGYOURPROXYCARD

VOTEBYCASTINGYOURVOTEINPERSONATTHEMEETING

Ifyouparticipate intheDonaldsonDividendReinvestment ProgramorintheDonaldsonEmployee StockPurchase Programadministered bythe transfer


agent,yoursharesinthoseprogramshavebeenaddedtoyourotherholdingsandareincludedinyourproxymaterials.
How do I vote if I hold stock through a Donaldson Employee benefit plan?
WehaveaddedthesharesofCommonStockheldbyparticipantsinDonaldsonsEmployeebenefitplanstotheparticipantsotherholdingsshownontheir
proxymaterials.DonaldsonsEmployeebenefitplansaretheEmployeeStockOwnershipPlan,thePAYSOP,andtheDonaldsonCompany,Inc.RetirementSavings
Plan(the401(k)Plan).
If you hold stock through Donaldsons Employee benefit plans, voting your proxy using one of the first three methods above also serves as confidential
voting instructions to the plan trustee, Fidelity Management Trust Company (Fidelity). Fidelity will vote your Employee benefit plan shares as directed by you
providedthatyourproxyvoteisRECEIVED BY DECEMBER 18, 2015.
Fidelityalsowillvotethesharesallocatedtoindividualparticipantaccountsforwhichithasnotreceivedinstructions,aswellassharesnotsoallocated,in
thesameproportionasthedirectedsharesarevoted.
How do I vote if my shares are held in a brokerage account in my brokers name ( i.e. , street name)?
If your shares are held in a brokerage account in your brokers name (street name), you should follow the voting directions provided by your broker or
nominee.Ifyoudoso,yourbrokerornomineewillvoteyoursharesasyouhavedirected.
What does it mean if I receive more than one proxy card?
Itmeansthatyouhavemultipleaccountswithbanksorstockbrokersorwiththetransferagent.PLEASE VOTE ALL OF YOUR SHARES.
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What if I change my mind after I vote my shares?


IfyouareaStockholderofrecordyoucanrevokeyourproxyatanytimebeforeitisvotedatthemeetingby:

SendingwrittennoticeofrevocationtotheCompanySecretary;

Submittingaproperlysignedproxycardwithalaterdate;

Votingbytelephoneorinternetatatimefollowingyourpriortelephoneorinternetvote;or

VotinginpersonattheAnnualMeeting.

Ifyoursharesareheldinabrokerageaccountinyourbrokersname(streetname),youshouldcontactyourbrokerornomineeforinformationonhowto
revokeyourvotinginstructionsandprovidenewvotinginstructions.
How are the votes counted?

ForItem1,theelectionofDirectors,youmayvoteforallofthenominees,withholdyourvotefromallofthenomineesorwithholdyourvotefroma
specificallydesignatednominee.

ForItem2,there-approvalofmaterialtermsoftheperformancegoals,youmayvote(orabstain)bychoosingFor,Against,orAbstain.

ForItem 3,the ratification oftheappointment ofourindependent registered public accounting firm,youmayvote(orabstain) bychoosingFor,
AgainstorAbstain.

IfyouabstainfromItems2and3yourshareswillbecountedaspresentatthemeetingforthepurposesofdeterminingaquorum,andtheywillbetreatedas
sharesnotvotedonthespecificproposal.ThismeansthatforItems2and3,abstentionshavethesameeffectasavoteagainstsuchitem.
Ifyouholdsharesinstreetname anddonot provide votinginstructions toyourbroker, your broker willnotvoteyourshares onanyproposal wherethe
brokerdoesnothavediscretionaryauthoritytovote.Insuchasituation,theshareswillbeconsideredpresentatthemeetingforpurposesofdeterminingaquorum,but
willnotbeconsideredtoberepresented atthemeetingforpurposesofcalculating thevotewithrespect tothematter requiring discretionary authority. NewYork
StockExchange(NYSE)rulespermitbrokersdiscretionaryauthoritytovoteonItem3iftheydonotreceiveinstructionsfromthestreetnameholderoftheshares.
Asaresult,ifyoudonotvoteyourstreetnameshares,yourbrokerhasauthoritytovoteonItem3onyourbehalf.
Weuseanindependentinspectorofelections,BroadridgeInvestorCommunicationSolutions,Inc.,whichtabulatesthevotesreceived.
What if I do not specify how I want my shares voted?
Ifyoudonotspecifyonyourreturnedproxycardorthroughthetelephoneorinternetpromptshowyouwanttovoteyourshares,yourshareswillbevoted
FORtheelectionofallDirectornominees,FORthere-approvalofthematerialtermsoftheperformancegoals,andFORtheratificationoftheappointmentofthe
independentregisteredpublicaccountingfirm.
How many shares must be present to hold the meeting?
Aquorummustbepresentforthemeetingtobevalid.Thismeansthatatleastamajorityofthesharesoutstandingasoftherecorddatemustbepresent.We
willcountyouaspresentifyou:

Haveproperlyvotedyourproxybytelephone,internet,ormailingoftheproxycard;

Arepresentandvoteinpersonatthemeeting;or

Holdyoursharesinstreetname(asdiscussedabove)andyourbrokerusesitsdiscretionaryauthoritytovoteyoursharesonItem3.

How many votes are needed to approve each item?


OurBylawsprovideforamajorityvotingstandardfortheelectionofDirectorsinuncontestedDirectorelections.AnomineeforDirectorinanuncontested
electionwillbeelectedtotheBoardifthevotescastFORsuchnomineeselectionexceed50%ofthenumberofvotescastwithrespecttosuchnominee.Votescast
withrespecttoanomineeincludevotestowithholdauthority.DirectorswillbeelectedbyapluralityvoteataStockholdermeetingif:

TheSecretaryoftheCompanyreceivesanoticethataStockholderhasnominatedapersonforelectiontotheBoardincompliancewiththeadvance
noticerequirementsforStockholdernomineessetforthintheBylaws;and

SuchnominationhasnotbeenwithdrawnbysuchStockholderpriortothe10thdayprecedingthedatetheCompanyfirstmailsitsnoticeofmeeting
totheStockholders.
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Inorderfortheproposaltore-approvethematerialtermsoftheperformancegoalsandtheproposaltoratifytheappointmentoftheindependentregistered
publicaccountingfirmtobeapproved,theaffirmativevoteofamajorityofthesharesoftheCompanysCommonStockentitledtovoteandrepresentedatthemeeting
inpersonorbyproxyisrequired.
How will voting on any other business be conducted?
Wedonotknowofanybusinesstobeconsideredatthe2015AnnualMeetingofStockholdersotherthantheproposalsdescribedinthisProxyStatement.If
anyotherbusinessisproperlypresentedattheAnnualMeeting,yourshareswillbevotedbytheholdersoftheproxiesintheirdiscretion.
Who may attend the meeting?
AllDonaldsonStockholdersofrecordasofthecloseofbusinessonNovember16,2015mayattend.
Where do I find the voting results of the meeting?
WewillpublishthevotingresultsinaForm8-KtobefiledwiththeSECwithinfourbusinessdaysofthemeeting.
How do I submit a Stockholder proposal?
The date of the Companys 2015 Annual Meeting of Stockholders was delayed this year due to unique circumstances. The Company expects that it will
resumeitstypicalschedulenextyearandholdits2016AnnualMeetingofStockholdersonthethirdFridayofNovember,whichisNovember18,2016.Accordingly,
theCompanyhascalculatedthedeadlinesforshareholderproposalsusingthedateonwhichthisyearsmeetingwouldhavenormallybeenheld.
IfyouwishtoincludeaproposalintheCompanysProxyStatementforits2016AnnualMeetingofStockholders,youmustsubmittheproposalinwritingso
that it isreceived nolater thanJune9,2016.Please sendyourproposal toAmyBecker, Company Secretary, DonaldsonCompany, Inc.,MS101,P.O.Box1299,
Minneapolis,MN55440-1299.
Under our Bylaws, if you wish to nominate a Director or bring other business before the Stockholders at our 2016 Annual Meeting without having your
proposalincludedinourProxyStatement:

YoumustnotifytheCompanySecretaryoftheCompanyinwritingbetweenJuly23,2016andAugust22,2016.

YournoticemustcontainthespecificinformationrequiredinourBylaws.IfyouwouldlikeacopyofourBylaws,wewillsendyouonewithout
charge.PleasewritetotheCompanySecretaryattheaddressshownabove.

Who pays for the cost of proxy preparation and solicitation?


Wepayforthecostofproxypreparationandsolicitation,includingthereasonablechargesandexpensesofbrokeragefirms,banks,orothernomineesfor
forwardingproxymaterialstostreetnameholders.Wearesolicitingproxiesprimarilybymail,email,andtheinternet.Inaddition,ourDirectors,Officers,andother
Employeesmaysolicitproxiesbyemail,telephone,facsimile,orpersonally.Theseindividualswillreceivenoadditionalcompensationfortheirservicesotherthan
theirregularsalaries.
SECURITY OWNERSHIP
Set forth below is information regarding persons known by the Company to own beneficially more than 5% of the outstanding Common Stock of the
CompanybasedonthenumberofsharesofCommonStockoutstandingonOctober30,2015.

8.5

ColumbiaWangerAssetManagement,LLC
227WestMonroeStreet,Suite3000
Chicago,IL60606

Amount and Nature


of Beneficial Ownership
11,323,400(2)

StateFarmMutualAutomobileInsuranceCompany
OneStateFarmPlaza
Bloomington,IL61710

10,838,165(3)

8.2

TheVanguardGroup
100VanguardBoulevard
Malvern,PA19355

9,200,201(4)

6.9

BlackRock,Inc.

7,700,763(5)

5.8

55East52ndStreet
NewYork,NY10022

Name and Address of Beneficial Owner

(1)

Percent of Class

TableofContents

_______________
(1)

Fidelity Management Trust Company, as the trustee of the Companys Retirement Savings Plan - 401(k) Profit Sharing and ESOP/PAYSOP Plan, held
6,274,788shares,or4.7%,oftheCompanysCommonStockasofOctober30,2015.Fidelitydisclaimsbeneficialownershipofthesharesclaimingthatit
holdsthesharessolelyforthebenefitoftheEmployeeparticipants,andthatitdoesnothavethepowertovoteordisposeofthosesharesexceptasdirectedby
theEmployeeparticipants.Fidelitysbusinessaddressis82DevonshireStreet,Boston,MA,02109.

(2)

Based on information provided in a Schedule 13G/A filed jointly with the SEC on February 11, 2015, Columbia Wanger Asset Management, LLC
(CWAM),aninvestmentadvisor,reportedthatithassolepowertovoteordirectthevoteof10,627,500sharesandsolepowertodisposeofordirectthe
disposition of 11,323,400 shares. The shares reported include shares held by Columbia Acorn Fund, a Massachusetts business trust, that is advised by
CWAM. According to the Schedule 13G, Columbia Acorn Fund held 5.7% of the shares of the Company as of December 31, 2014. CWAM disclaims
beneficialownershipofanysharesreported.

(3)

BasedoninformationprovidedinaSchedule13G/AjointlyfiledwiththeSEConFebruary4,2015byStateFarmMutualAutomobileInsuranceCompany,
aninsurancecompany(AutoCompany)andcertainofitssubsidiariesandaffiliates:AutoCompanyreportedthatithassolepowertovoteordirectthevote
ofandsolepowertodisposeofordirectthedispositionof6,054,000shares;StateFarmLifeInsuranceCompany,aninsurancecompany(SFLIC),reported
that it has sole power to vote or direct the vote of and sole power to dispose of or direct the disposition of 609,600 shares; State Farm Investment
ManagementCorp.,aninvestmentadviserandregisteredtransferagent(SFIMC),reportedthatithassolepowertovoteordirectthevoteofandsolepower
todisposeofordirectthedispositionof228,600shares;StateFarmInsuranceCompaniesEmployeeRetirementTrust(SFRetirementTrust)reportedthat
ithassolepowertovoteordirectthevoteofandsolepowertodisposeofordirectthedispositionof3,033,525shares;andStateFarmInsuranceCompanies
SavingsandThriftPlanforU.S.Employees(SFThriftPlan)reportedthatithassolepowertovoteordirectthevoteofandsolepowertodisposeofor
directthedispositionof912,440shares.AutoCompanyistheparentcompanyofmultiplewholly-ownedinsurancecompanysubsidiaries,includingSFLIC.
Auto Company is also the parent company of SFIMC. SFIMC serves as transfer agent and investment adviser to three Delaware business trusts that are
registeredinvestmentcompanies.AutoCompanyalsosponsorsSFRetirementTrustandSFThriftPlan,twoqualifiedretirementplans,forthebenefitofits
employees.AutoCompanyhasestablishedaninvestmentdepartmentthatisdirectlyorindirectlyresponsibleformanagingoroverseeingthemanagementof
theinvestment andreinvestment of assets owned by each entity that has joined in filing the Schedule 13G. The investment department is responsible for
votingproxiesoroverseeingthevotingofproxiesrelatedtothesharesofeachentitythatjoinedinthefiling.Eachinsurancecompanyincludedinthefiling
and SFIMC have established an investment committee that oversees the activities in managing that firms assets and the trustees of the qualified plans
performasimilarroleinoverseeingtheinvestmentofeachplansassets.Eachofthereportingpersonsexpresslydisclaimsbeneficialownershipastoall
sharesastowhichsuchpersonhasnorighttoreceivetheproceedsofsaleofthesharesanddisclaimsthatitispartofagroup.

(4)

Based on information provided in a Schedule 13G/A filed with the SEC on February 10, 2015 by The Vanguard Group, Inc., an investment adviser
(Vanguard)reportedthatithadsolepowertovote89,314shares,solepowertodisposeof9,122,487sharesandsharedpowertodisposeof77,714shares.
Each of Vanguard Fiduciary Trust Company (Vanguard Trust) and Vanguard Investments Australia, Ltd. (Vanguard Investments) are wholly owned
subsidiariesofVanguard.VanguardTrustisthebeneficialownerof77,714shares,asaresultofitsserviceasinvestmentmanagerofcollectivetrustaccounts
andVanguardInvestmentsisthebeneficialownerof11,600shares,asaresultofitsservingasinvestmentmanagerofAustralianinvestmentofferings.

(5)

BasedoninformationprovidedinaSchedule13G/AfiledwiththeSEConFebruary2,2015,BlackRock,Inc.,aparentholdingcompany,reportedthatithas
solepowertovoteordirectingthevoteof7,295,005sharesandsolepowertodisposeofordirectthedispositionof7,700,763shares.

ThefollowingtableshowsinformationregardingthebeneficialownershipoftheCompanysCommonStockandinformationconcerningdeferredrestricted
stock units, deferred share units under stock option exercises, and phantom stock units beneficially owned, as of October 30, 2015, by each Director, each of the
NamedExecutiveOfficers(NEOsasidentifiedonpage20)andallExecutiveOfficers(Officers)andDirectorsoftheCompanyasagroup.Theshareslistedinthe
tableasbeneficiallyownedinclude(i)sharesoverwhichapersonhassoleorsharedvotingpower,orsoleorsharedpowertoinvestordisposeoftheshares,whether
ornotapersonhasanyeconomicinterestintheshares;(ii)deferredstockunitsthathavevestedandbeendeferred,astowhichthebeneficialownerhasnovotingor
investmentpower;and(iii)shares
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subjecttooptionsexercisablewithin60daysofOctober30,2015.Exceptasotherwiseindicated,thenamedbeneficialownerhassolevotingandinvestmentpower
withrespecttothesharesheldbysuchbeneficialowner,andthesharesarenotsubjecttoanypledge.

Name of Beneficial Owner

WilliamM.Cook
TodE.Carpenter
JamesF.Shaw
JayL.Ward
WimVermeersch
ThomasR.Scalf
JeffreyNoddle
JohnP.Wiehoff
PaulD.Miller
MichaelJ.Hoffman
WillardD.Oberton
AjitaG.Rajendra
JamesJ.Owens
AndrewCecere
TrudyA.Rautio
AllOtherOfficers
DirectorsandOfficersasaGroup
_______________

Total
Amount and
Nature of
Beneficial
Ownership
of Common
Shares
(1)(2)(3)(4)(5)

2,267,475
239,376
89,063
286,317
64,133
40,512
188,898
138,791
112,978
139,627
105,255
52,219
13,272
7,057
1,405
198,618
3,944,996

Percent
of
Common
Shares

1.7
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
3.0

Deferred
Stock
Units
Included in
Total
Amount
Column (3)

663,387

8,332
671,719

Exercisable
Options
Included in
Total
Amount
Column

959,767
166,434
73,501
193,631
53,501
27,667
99,800
99,800
79,207
114,200
92,800
42,200
11,000
6,200
0
133,357
2,153,065

*Lessthan1%
(1)

Includesallbeneficiallyownedshares,includingrestrictedshares,sharesforNon-EmployeeDirectorsheldintrust,sharesunderlyingtheunitslistedunder
theDeferredStockUnitscolumn,andthesharesunderlyingoptionsexercisablewithin60days,aslistedundertheExercisableOptionscolumn.

(2)

IncludesthefollowingsharesheldintheEmployeeStockOwnershipandRetirementSavingsPlantrust:Cook,98,698shares;Carpenter,8,355shares;Shaw,
3,816shares;Ward,15,214shares;Vermeersch,0shares;Scalf,5,770shares;andallDirectorsandOfficersasagroup,143,428shares.Votingofsharesheld
inthe Employee Stock OwnershipandRetirement Savings Plan trust is passed through to the participants. Alsoincludes the following shares held in the
DeferredCompensationand401(k)ExcessPlantrust:Cook,40,597shares;Carpenter,2,762shares;Shaw,1,118shares;Ward,2,874shares;Vermeersch,0
shares;Scalf,682shares;andallDirectorsandOfficersasagroup,57,408shares.VotingofsharesheldintheDeferredCompensationand401(k)Excess
Plantrustispassedthroughtotheparticipants.

(3)

Deferredstockunitsthathavevestedandbeendeferredareincludedinthebeneficialownershiptotalsandinthepercentofownership(columns1and2),
however,thebeneficialownerhasnovotingorinvestmentpower.TheDeferredStockUnitscolumnincludesphantomstockunitsallocatedtoEmployees
earninginexcessofthelimitsestablishedbytheInternalRevenueCodeforthequalifiedEmployeeStockOwnershipPlanthatdistributedsharesintrustfor
Employeesduringtheperiodfrom1987to1996.Phantomstockunitsareheldinthefollowingamounts:Cook,11,828units;andallDirectorsandOfficersas
agroup,11,828units.
TheDeferred StockUnitscolumn also includes deferred restricted stockunits under the Deferred Compensation and401(k)Excess Planin the following
amounts:Cook,55,685units;andallDirectorsandOfficersasagroup,64,017units.
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TheDeferredStockUnitscolumnalsoincludesdeferredstockunitsundertheDeferredCompensationand401(k)ExcessPlanforexercisesofstockoptions
wheretheexecutivehaspreviouslyelectedtodeferthereceiptoftheunderlyingshares.Deferredstockoptiongainunitsareheldinthefollowingamounts:
Cook,410,430units;andallDirectorsandOfficersasagroup,410,430units.
TheDeferredStockUnitscolumnalsoincludesdeferredstockunitsundertheDeferredCompensationand401(k)ExcessPlanfordeferralofsharesawarded
underthelongtermcompensationplanunderthe1991MasterStockCompensationPlanandthe2001MasterStockIncentivePlan,wheretheexecutivehas
previouslyelectedtodeferthereceiptoftheunderlyingshares.Deferredstockunitsareheldinthefollowingamounts:Cook,185,444units;andallDirectors
andOfficersasagroup,185,444units.
(4)

Includes the following shares held in the Non-Employee Directors deferred stock account trust: Noddle, 47,433 shares; Wiehoff, 38,591 shares; Miller,
32,971shares;Hoffman,25,427shares;Oberton,10,455shares;Rajendra,9,819shares;Owens,2,272shares;Cecere,857shares;Rautio,1,405shares;and
allDirectorsandOfficersasagroup,169,230shares.Votingofsharesheldinthedeferredstockaccounttrustispassedthroughtotheparticipants.

(5)

Includes316,430sharesheldinafamilylimitedliabilitylimitedpartnershipindirectlycontrolledbyMr.Cookforwhichhehasvotingandinvestmentpower.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section16(a)oftheSecuritiesExchangeActof1934requirestheCompanysDirectorsandOfficerstofileinitialreportsofownershipandreportsofchanges
inownershipwiththeSEC.TotheCompanysknowledge,basedonareviewofcopiesofsuchformsandrepresentationsfurnished totheCompanyduringFiscal
2015,allSection16(a)filingrequirementsapplicabletotheCompanysDirectorsandOfficersweresatisfied.
ITEM 1: ELECTION OF DIRECTORS
TheBylawsoftheCompanyprovidethattheBoardofDirectorsshallconsistofnotlessthan3normorethan15DirectorsandthatthenumberofDirectors
maybechangedfromtimetotimebytheaffirmativevoteofamajorityoftheDirectors.TheBoardofDirectorscurrentlyconsistsof11Directors.Vacanciesand
newlycreateddirectorshipsresultingfromanincreaseinthenumberofDirectorsmaybefilledbyamajorityoftheDirectorstheninofficeandtheDirectorssochosen
willholdofficeuntilthenextelectionoftheclassforwhichsuchDirectorsshallhavebeenchosenanduntiltheirsuccessorsareelectedandqualified.Directorsare
electedforatermofthreeyearswithpositionsstaggeredsothatapproximatelyone-thirdoftheDirectorsareelectedateachAnnualMeetingofStockholders.
TheDirectorswithtermsexpiringatthe2015AnnualMeetingofStockholdersareAndrewCecere,WilliamM.Cook,AdmiralPaulDavidMiller,JamesJ.
Owens,andTrudyA.Rautio.InaccordancewiththepolicyinourCorporateGovernanceGuidelinesthataNon-EmployeeDirectorshallnotbere-nominatedasa
Directorafterattainingtheageof72,AdmiralMiller(whois73yearsold)willberetiringfromtheBoardandwillnotbestandingforelectionatthe2015Annual
MeetingofStockholders.TheBoardofDirectorshasdecidedtodecreasethesizeoftheBoardto10(from11)DirectorsupontheexpirationofAdmiralMillersterm
atthemeeting.
TheCorporateGovernanceCommitteeandtheBoardofDirectorsreviewedandconsideredthequalificationsandserviceofthefourremainingDirectorsin
theclassofDirectorswhosethree-yeartermsexpireatthe2015AnnualMeetingofStockholdersandapprovedtheirnominationtostandforre-electiontotheBoard.
Each of the nominees has agreed to serve as a Director if elected. The Board of Directors has no reason to believe that any of the nominees will be
unavailableorunabletoserve,butintheeventanomineeisnotacandidateatthemeeting,thepersonsnamedintheproxyintendtovoteinfavoroftheremaining
nomineeornomineesandsuchotherpersonorpersons,ifany,astheymaydetermine.
Board Recommendation
TheBoardofDirectorsrecommendsthatStockholdersvoteFOR theelectionofAndrewCecere,WilliamM.Cook,JamesJ.OwensandTrudyA.Rautiofor
three-yeartermsexpiringin2018.
Information Regarding Directors
TheDirectornomineesandtheDirectorswhoseterminofficewillcontinueafterthemeetinghaveprovidedinformationaboutthemselvesinthefollowing
section.SECrulesrequireustodiscussbrieflythespecificexperience,qualifications,attributes,orskillsthatledtheBoardtoconcludethateachDirectornomineeand
DirectorshouldserveonourBoardofDirectors.ThisdiscussionisprovidedinaseparateparagraphfollowingeachDirectorsbiographyinthefollowingsections.
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Directors with Terms Expiring in 2015

Name

Principal Occupation and Business Experience


and Key Attributes and Skills

AndrewCecere
Age55
Directorsince2013

ViceChairmanandChiefOperatingOfficer(2015)ofU.S.Bancorp,afinancialservicesprovider.Previously,ViceChairman
andChiefFinancialOfficer(2007-2015);ViceChairman,WealthManagement(20012007);ChiefFinancialOfficerofthe
formerU.S.Bancorp(20002001);andViceChairmanofU.S.Bank(19992000).

JamesJ.Owens
Age51
Directorsince2013

President and Chief Executive Officer (2010) of H.B. Fuller Company, a leading global adhesives provider. Previously,
Senior Vice President, Americas (2010); and Senior Vice President, North America (20082010). Also a Director of H.B.
FullerCompany.

WilliamM.Cook
Age62
Directorsince2004

TrudyA.Rautio
Age63
Directorsince2015

Andy Cecere brings to the Board his valuable financial and management experience as Vice Chairman and COO of U.S.
Bancorp,theparentcompanyofU.S.BankNationalAssociation,the5 thlargestcommercialbankintheUnitedStates.U.S.
Bank provides banking, brokerage, insurance, investment, mortgage, trust, and payment services products to consumers,
businesses,andinstitutions.Andyhasover30yearsofexperiencewithU.S.Bancorp,includingservingasViceChairmanof
Wealth Management and leading key banking, trust, insurance, and advisory businesses. He currently serves on U.S.
Bancorps Managing Committee and is Chairman of the Asset Liability Policy Committee and the Market Risk
Committee. He also serves on the Board of Overseers of the Carlson School of Management at the University of
Minnesota.AndyhasaBachelorsdegreeinBusinessAdministrationandFinancefromtheUniversityofSt.Thomas,andan
M.B.A.degreefromtheCarlsonSchoolofManagementattheUniversityofMinnesota.
Chairman(2005).Previously,PresidentandChiefExecutiveOfficer(2004-2015);SeniorVicePresident,International(2000
2004); Chief Financial Officer (20012004); and Senior Vice President, Commercial and Industrial (19942000). Also a
DirectorofIDEXCorporationandValsparCorporation.
BillCookbringstotheBoardhisindustryexperienceforthepast34yearsatDonaldsonCompanywherehehasheldawide
rangeoffinancialandbusinesspositionswithglobalresponsibilities.BillisanexperiencedpubliccompanyBoardmember
havingservedontheDonaldsonBoardsince2004andasanindependentpubliccompanyDirectorforIDEXsince2008and
Valsparsince2010.BillalsohasvaluableBoardexperiencefromhispastservicetovariouscharitableorganizations.Billhas
aB.S.degreeinBusinessManagementandanM.B.A.degreefromVirginiaTech.

JimOwensbringstotheBoardhis29plusyearsofexperienceinglobalmanufacturingbusinesses.Hespent22yearswith
National Starchs adhesives business, a division of ICI (Imperial Chemical Industries Limited), in a variety of positions,
includingservingasCorporateVicePresidentandGeneralManager(20042008)andasVicePresidentandGeneralManager
of the Europe/Middle East and Africa adhesives business. As President and CEO of H.B. Fuller Company, Jim has global
leadership experience and public company Board experience. Jim also currently serves on the Board of Overseers of the
CarlsonSchoolofManagementattheUniversityofMinnesota.JimhasaBachelorsdegreeinChemicalEngineeringfrom
theUniversityofDelawareandanM.B.A.degreefromTheWhartonSchool,UniversityofPennsylvania.
Retired President and Chief Executive Officer (20122015) of Carlson, a privately held global hospitality and travel
company.Previously,ExecutiveVicePresidentandChiefAdministrativeOfficer(2011-2012);andExecutiveVicePresident
and Chief Financial Officer (2005-2011). Also a Director of The Rezidor Hotel Group, Merlin Entertainment,Cargill,and
SecurianFinancialGroup.

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TrudyRautiobringstotheBoardherleadershipexperienceinherpositionastheformerPresidentandChiefExecutiveOfficer
of Carlson. Prior to her appointment as CEO, Trudy served as Executive Vice President and Chief Financial and
Administrative Officer and has valuable experience in various categories, including business, financial, and information
technologyoperations.Previously,Trudyhasglobalexperienceleadingbusinessesandoperations.

Directors with Terms Expiring in 2016

Name

MichaelJ.Hoffman
Age60
Directorsince2005

WillardD.Oberton
Age57
Directorsince2006

JohnP.Wiehoff
Age54
Directorsince2003

Principal Occupation and Business Experience


and Key Attributes and Skills

Chairman (2006) and Chief Executive Officer (2005) of The Toro Company, a provider of outdoor maintenance and
beautification products. Previously, President (20042015); Group Vice President (20012004); and Vice President and
GeneralManager(20002001).

MikeHoffmanbringstotheBoardhisexpertiseasapubliccompanyleaderatTheToroCompanywherehestartedin1977
andisnowCEOandChairmanoftheBoard.Mikeaddsvaluablemarketingandstrategicplanningexperienceworkingfora
companythathasastronglybrandedidentity.MikeisanexperiencedpubliccompanyBoardmemberhavingservedonthe
BoardsofDonaldsonandTorosince2005.MikealsocurrentlyservesontheBoardofOverseersoftheCarlsonSchoolof
ManagementattheUniversityofMinnesota.HeisapastBoardmemberoftheGreaterTwinCitiesUnitedWay.Mikehasa
BachelorsdegreeinMarketingManagementfromtheUniversityofSt.ThomasandanM.B.AdegreefromtheUniversityof
MinnesotaCarlsonSchoolofManagement.

Chairman(2014),PresidentandChiefExecutiveOfficer(2015)ofFastenalCompany,anindustrialandconstructionsupplies
company. Previously, Chief Executive Officer (2002-2014); President (20012012); Chief Operating Officer (19972002);
andExecutiveVicePresident(20002001).AlsoaDirectorofFastenalCompany.
WillObertonbringstotheBoardhisexpertiseasapubliccompanyleaderatFastenalCompany.WillstartedatFastenalin
1980 and served in various sales, operational, and management roles until he was named President in 2001 and CEO in
2002.Willwasnamed2006CEOoftheYearbyMorningstar,Inc.WillisanexperiencedpubliccompanyBoardmember
havingservedonDonaldsonsBoardsince2006andtheFastenalBoardsince1999.WillalsoservesontheBoardofWincraft
Inc.,aprivatelyheldcompany.WillhasaMarketingdegreefromSt.CloudTechnicalandCommunityCollege.

Chairman(2007),ChiefExecutiveOfficer(2002),andPresident(1999)ofC.H.RobinsonWorldwide,Inc.,atransportation,
logistics,andsourcingcompany.AlsoaDirectorofPolarisIndustriesInc.
John Wiehoff brings to the Board his expertise as a public company leader at C.H. Robinson. John has significant public
company financial experience, first as a CPA at a large public accounting firm and subsequently in various leadership
positions in the financial organization at C.H. Robinson, including serving as its CFO prior to becoming CEO. John adds
valuable supply chain, logistics, and international expertise working for a company that is a global provider of multimodal
transportationservicesandlogisticsservices.JohnisanexperiencedpubliccompanyBoardmemberhavingservedontheC.H.
RobinsonBoardsince2001,theDonaldsonBoardsince2003,andthePolarisIndustriesBoardsince2007.JohnhasaB.S.
degreefromSt.JohnsUniversity.

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Directors with Terms Expiring in 2017
Name

Principal Occupation and Business Experience


and Key Attributes and Skills

TodE.Carpenter
Age56
Directorsince2014

President and Chief Executive Officer (2015). Previously, Chief Operating Officer (20142015); Senior Vice President,
Engine Products (2011-2014); Vice President, Europe and Middle East (2008-2011); and Vice President, Global Industrial
FiltrationSystems(2006-2008).

JeffreyNoddle
Age69
Directorsince2000

RetiredExecutive Chairman (20092010) of SUPERVALU INC., a food retailer and provider of distribution and logistics
supportservices.Previously,ChairmanandChiefExecutiveOfficer(20022009).AlsoaDirectorofAmeripriseFinancial,
Inc.andtheCloroxCompany.

Jeff Noddle brings to the Board his public company expertise in growing and leading one of the largest grocery retail
companiesandleadingfooddistributorsintheUnitedStatesasitsCEOandChairman.Jeffprovidesvaluableoperationaland
supply chain insights as well as strategic leadership and human resources guidance from his more than 30 years with
SUPERVALU.JeffisanexperiencedpubliccompanyDirectorhavingservedasChairmanandDirectorofSUPERVALUand
asaDirectorofDonaldsonCompanysince2000,Ameriprisesince2005,andtheCloroxCompanysince2013.Jeffpreviously
servedontheBoardofOverseersoftheCarlsonSchoolofManagementattheUniversityofMinnesotaandservedasChairof
the2009GreaterTwinCitiesUnitedWaycampaign.JeffholdsaBachelorsdegreefromtheUniversityofIowa.

AjitaG.Rajendra
Age64
Directorsince2010

TodCarpenterbringstotheBoardawealthofgeneralmanagementandgloballeadershipexperience.TodjoinedDonaldson
in 1996.Since then, his roles have included driving strategic growth initiatives, launching innovative proprietary products,
andstrengtheningrelationshipswiththeCompanyskeyglobalCustomers.TodcurrentlyservesontheBoardofOverseersof
the Carlson School of Management at the University of Minnesota, and served on the Board of the American Chamber of
Commerce in Belgium. Tod has a Bachelors Degree in Manufacturing Technology from Indiana State University and an
M.B.A.fromLongBeachStateUniversity.

Chairman (2014), President and Chief Executive Officer (2013) of A.O. Smith Corporation, a global water technology
companyandmanufacturerofresidentialandcommercialwaterheatingequipment.Previously,PresidentandChiefOperating
Officer(20112013);ExecutiveVicePresident(20062011);SeniorVicePresident(20052006);andPresident,A.O.Smith
WaterProductsCompany(20052011).AlsoaDirectorofA.O.SmithCorporationandtheTimkenCompany.

Ajita Rajendra brings to the Board his public company leadership experience in his position as President and Chief
Executive Officer of A.O. Smith. Ajita has valuable manufacturing experience in various categories, including consumer
durables, industrial products, and appliances. Previously, Ajita has been the President of the A.O. Smith Water Products
Companywithglobalexperienceleadingbusinessesandnegotiatingacquisitionsandjointventures.Ajitaisoriginallyfrom
Sri Lanka, received a B.S. degree in Chemical Engineering at the Indian Institute of Technology, Madras, India, and an
M.B.A.degreefromCarnegieMellonUniversity.

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CORPORATE GOVERNANCE
Board Oversight and Director Independence
DonaldsonsBoardbelievesthataprimaryresponsibilityoftheBoardofDirectorsistoprovideeffectivegovernanceoverDonaldsonsbusiness.TheBoard
selectstheChairmanoftheBoardandtheChiefExecutiveOfficerandmonitorstheperformanceofseniormanagementtowhomithasdelegatedtheconductofthe
business.TheBoardhasadoptedasetofCorporateGovernanceGuidelinestoassistinitsgovernance,andthecompletetextofDonaldsonsCorporateGovernance
GuidelinesisavailableontheInvestorRelationspageofourwebsiteatwww.donaldson.comunderCorporateGovernance.
Our Corporate Governance Guidelines provide that a significant majority of our Directors will be Non-Employee Directors who meet the independence
requirements of the NYSE. The Corporate Governance Guidelines also require that our Corporate Governance, Audit, and Human Resources Committees be
comprisedentirelyofNon-EmployeeDirectorswhomeetalloftheindependenceandexperiencerequirementsoftheNYSEandSEC.
TheBoardhasestablishedthefollowingindependencestandardsconsistentwiththecurrentlistingstandardsoftheNYSEfordeterminingindependence:

ADirectorwillnotbeconsideredindependentif,withintheprecedingthreeyears:

TheDirectorwasanEmployeeofDonaldson,oranimmediatefamilymemberoftheDirectorwasanExecutiveOfficerofDonaldson;

The Director or an immediate family member of the Director has received during any 12-month period more than $120,000 in direct
compensation from Donaldson (other than Director and Committee fees and pension or other forms of deferred compensation for prior
service);

AnExecutiveOfficerofDonaldsonwasontheCompensationCommitteeofacompanywhich,atthesametime,employedtheDirectoror
animmediatefamilymemberoftheDirectorasanExecutiveOfficer;

The Director was an Executive Officer or Employee of, or an immediate family member of the Director was an Executive Officer of,
another company that does business with Donaldson and the annual revenue derived from that business by either company exceeds the
greaterof(i)$1,000,000or(ii)2%oftheannualgrossrevenuesofsuchcompany;or

The Director or an immediate family member of the Director has been affiliated with or employed in a professional capacity by
Donaldsonsindependentregisteredpublicaccountingfirm.

TheBoardhasevaluatedthetransactionsandrelationshipsbetweeneachofourNon-EmployeeDirectorsandtheCompany,includingthosecompanieswhere
DirectorsserveasanOfficer.Alltransactionsandrelationshipsweresignificantlybelowthethresholdsdescribedaboveandallinvolvedonlytheordinarycourseof
businesspurchaseandsaleofgoodsandservicesatcompanieswhereDirectorsserveasanOfficer.Basedonthisreviewandtheinformationprovidedinresponseto
annualquestionnairescompletedbyeachindependentDirectorregardingemployment,business,familial,compensation,andotherrelationshipswiththeCompanyand
management, the Board has determined that every Director, with the exceptions of Bill Cook and Tod Carpenter who are Employee Directors, (i) has no material
relationshipwithDonaldson,(ii)satisfiesalloftheSECandNYSEindependencestandardsandourBoard-approvedindependencestandardsand(iii)isindependent.
TheBoardalsohasdeterminedthateachmemberofitsCorporateGovernance,Audit,andHumanResourcesCommitteesisanindependentDirector.
Policy and Procedures Regarding Transactions with Related Persons
OurBoardofDirectors,upontherecommendationoftheCorporateGovernanceCommittee,hasadoptedawrittenRelatedPersonTransactionPolicy.This
policy delegates to our Audit Committee responsibility for reviewing, approving, or ratifying transactions with certain related persons that are required to be
disclosedundertherulesoftheSEC.Underthepolicy,arelatedpersonincludesanyoftheDirectorsorOfficersoftheCompany,certainStockholdersandmembers
oftheirimmediatefamily.
OurRelatedPersonTransactionPolicyappliestotransactionsthatinvolvearelatedpersonwhereweareaparticipantandtherelatedpersonhasamaterial
directorindirectinterest.CertaintypesoftransactionshavebeenevaluatedandpreapprovedbytheBoardunderthepolicy:

Anytransactionintheordinarycourseofbusinessinwhichtheaggregateamountinvolvedwillnotexceed$120,000;
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AnytransactionwheretherelatedpersonsinterestarisessolelyfrombeingaStockholderandallStockholdersreceivethesamebenefitonaprorata
basis;and

AnytransactionwithanothercompanyatwhicharelatedpersonsonlyrelationshipisasanEmployee,Director,orbeneficialowneroflessthan
10% of that companys shares, if the aggregate amount involved does not exceed the greater of (i) $500,000 or (ii) 1% of that companys or
Donaldsonstotalannualrevenues.

Board Leadership Structure


OurCorporateGovernanceGuidelinesprovidethattheBoardisnotrequiredtoseparatetheofficesofChairmanoftheBoardandCEO.OurBoardhasthe
righttoexerciseitsjudgmenttochoosetheChairmanasitdeemsbestfortheCompanyatanypointintime.
AspartoftheCEOsuccessionprocessdevelopedbytheBoard,onApril1,2015TodCarpenterwaselectedasCEOandPresident.TheBoarddetermined
thatitwasinthebestinterestsoftheCompanyanditsStockholdersforBillCooktoremainasChairmanoftheBoardandtocontinuetoserveasanExecutiveOfficer
oftheCompany.Therefore,theBoardseparatedthepositionsofChairmanandCEO,effectiveApril1,2015.BillCookhasextensiveyearsofservicetotheCompany
andexperienceguidingtheBoardasChairman.BycontinuinginthatroleBillCookwillenableTodCarpentertofocusonexecutingthestrategicandoperational
plansoftheCompany.
As Chairman, Bill Cook will work with the other Board members, the Committee Chairs, and management to develop the meeting agendas, set meeting
schedules,andpresideoverthemeetingsoftheBoard.AsCEOandPresident,TodCarpenterisbestsituatedtoprovidestrategicinputandleadershiptoourExecutive
OfficersandtheCompany.
TheCompanysCorporateGovernanceGuidelinesprovidethat,wheneverthepositionofChairmanisnotheldbyanindependentDirector,theBoardwill
appointanindependentDirectortoserveastheLeadDirector.EffectiveJanuary1,2015,theBoardelectedJeffNoddleastheLeadDirectortoreplacethepriorLead
Director,whohadretiredfromtheBoard.
TheLeadDirectorsdutiesincludecoordinatingtheactivitiesoftheindependentDirectors,settingtheagendaforandmoderatingexecutivesessionsofthe
Boards independent Directors, and facilitating communications among the independent members of the Board. In performing these duties, the Lead Director is
expectedtoconsultwiththeCommitteeChairoftheappropriateCommitteesandsolicittheirparticipationinordertoavoiddilutingtheauthorityorresponsibilitiesof
suchCommitteeChairs.
TheBoardanditsCorporateGovernanceCommitteehavecarefullyassessedthedivisionoftheresponsibilitiesbetweentheChairmanandCEOandhave
determinedthatourcurrentBoardstructureensuresastrongandindependentBoardofDirectors,provideseffectivegovernance,andcreatesappropriateoversightfor
thelong-termbenefitofourStockholders.OurBoardincludesnineindependentDirectors,allofwhomhaveservedinsignificantmanagementand/orBoardcapacities
atotherpubliccompanies.BillCookandTodCarpenteraretheonlyEmployeeDirectorsontheBoard.AllofourCommitteesarecomprisedsolelyofindependent
Directors.
EachroleofChairmanandCEOarefullyaccountabletotheBoard,itsCommittees,andtheLeadDirector.OurBoardbelievesthatthisdivisionofauthority
andresponsibilityiseffectiveinensuringthatgoodprinciplesofcorporategovernancewillcontinuetobefollowed.
The independent Directors meet in executive session at every Board and Committee meeting, and have the authority to ensure that the proper balance of
power,authority, and transparency is maintained in all aspects of governance at the Company. We further believe that our Board leadership structureeffectively
supportstheriskoversightfunctionofourBoard.
Risk Oversight by Board of Directors
OurBoardofDirectorshasresponsibilityfortheoversightofriskmanagement.TheBoard,eitherasawholeorthroughitsCommittees,regularlydiscusses
withmanagementtheCompanysriskassessmentsandriskmanagementproceduresandcontrols.

TheAuditCommitteehasresponsibilityinitsChartertoreviewtheCompanysstrategies,processes,andcontrolswithrespecttoriskassessment
andriskmanagementandassiststheBoardinitsoversightofriskmanagement.

The Human Resources Committee has responsibility in its Charter to review and assess risk with respect to the Companys compensation
arrangementsandpractices,includingwithrespecttoincentivecompensation.
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The Corporate Governance Committee oversees risks associated with its areas of responsibility, including the risks associated with Director and
CEOsuccessionplanning,Non-EmployeeDirectorcompensation,andtheCompanyscorporategovernancepractices.

OurBoardiskeptabreastoftheriskoversighteffortsbyitsCommitteesthroughregularreportstoourfullBoardbyourCommitteeChairs.
Meetings and Committees of the Board of Directors
ThereweresixmeetingsoftheBoardofDirectorsinFiscal2015.EachDirectorattendedatleast75%oftheaggregateofallmeetingsoftheBoardandits
Committees on which she or he served during the year. It is our policy that Directors are expected to attend our Annual Meeting of Stockholders. Last year, all
individualsthenservingasDirectorsattendedtheAnnualMeetingofStockholders.
TheBoardofDirectorshasthreeCommittees:

AuditCommittee

HumanResourcesCommittee

CorporateGovernanceCommittee
Each of the Board Committees has a written Charter, approved by the Board, establishing the authority and responsibilities of the Committee. Each
CommitteesCharterispostedontheInvestorspageofourwebsiteatwww.donaldson.comundertheGovernancecaption.Thefollowingtablesprovideasummary
ofeachCommitteeskeyareasofoversight,thenumberofmeetingsofeachCommitteeduringthelastfiscalyear,andthenamesoftheDirectorsservingoneach
Committee.
Audit Committee

Responsibilities

Directors who serve on the Committee:


JohnP.Wiehoff,Chair
AndrewCecere
PaulDavidMiller
JamesJ.Owens
AjitaG.Rajendra

Appointsandreplacestheindependentregisteredpublicaccountingfirmandoverseesitswork.

Pre-approves all auditing services and permitted non-audit services to be performed by the
independentauditor,includingrelatedfees.

Reviewswithmanagementandtheindependentauditorourannualauditedfinancialstatementsand
recommends to the Board whether the audited financial statements should be included in the
CompanysAnnualReportonForm10-K.

Reviewswithmanagement andtheindependent auditorourquarterly financial statements andthe


associatedearningsnewsreleases.

Reviewswithmanagementandtheindependentauditorsignificantreportingissuesandjudgments
relatingtothepreparationofourfinancialstatements,includinginternalcontrols.

Reviews with management and the independent auditor our critical accounting policies and
practicesandmajorissuesregardingaccountingprinciples.

ReviewstheCompanysstrategies,processes,andcontrolswithrespecttoriskassessmentandrisk
managementandassiststheBoardinitsoversightofriskmanagement.

Reviewstheappointment,performance,andreplacementoftheseniorinternalauditexecutiveand
reviewstheCEOsandCFOscertificationofinternalcontrolsanddisclosurecontrols.

Reviews the Companys compliance programs and procedures for the receipt, retention, and
handlingofcomplaintsregardingaccounting,internalcontrols,andauditingmatters.

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Number of Meetings in Fiscal 2015: 8

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Human Resources Committee

Responsibilities

Reviews and approves the CEOs compensation, leads an annual evaluation of the CEOs
performance,anddeterminestheCEOscompensationbasedonthisevaluation.

Reviewsandapprovesexecutivecompensationplansandallequity-basedplans.

Reviews and approves incentive compensation goals and performance measurements applicable to
ourOfficers.

ReviewstheCompanyscompensationriskanalysis.

Reviews and recommends that the Compensation Discussion and Analysis be included in the
CompanysProxyStatementandForm10-K.

Number of Meetings in Fiscal 2015: 4

Directors who serve on the Committee:


JeffreyNoddle,Chair
MichaelJ.Hoffman
JamesJ.Owens
AjitaG.Rajendra

TheHumanResourcesCommitteehastheauthoritytoretainindependentcompensationconsultantstoassistintheanalysisofourexecutivecompensation
program.TheCommitteehasengagedanindependentcompensationconsultanttodoanannualbenchmarkingreviewofourexecutivecompensationprogramandto
beavailableforCommitteemeetingsasneeded.TheCommitteeengagedMercer,anationallyknownconsultingfirm,astheirexecutivecompensationconsultant.In
itscapacityasacompensationconsultanttotheCommittee,MercerreportsdirectlytotheCommitteeandtheCommitteeretainssoleauthoritytoretainandterminate
theconsultingrelationship.
MercercompletedareviewofourexecutivecompensationprogramduringFiscal2015.Mercerreceivedapproximately$35,800infeesfromDonaldsonin
Fiscal2015inconnectionwithservicesrelatedtoexecutivecompensation.MercerdisclosedtotheCommitteeotherservicesthatitprovidestotheCompany.OurAsia
PacificregionengagedMercerinFiscal2015asacompensationconsultantforwhichMercerreceivedapproximately$54,600infees.Inaddition,Mercerisaffiliated
withothercompanieswhosebusinessesareunrelatedtotheprovisionofcompensation-relatedconsulting services, including providing actuarial andother pension
related services. These affiliated companies have been engaged by management as the Companys actuary since 2002. We paid these affiliated companies
approximately $275,300 for such services in Fiscal 2015. All of the additional services performed by Mercer and its affiliated companies were approved by
managementandperformedatthedirectionofmanagementintheordinarycourseofbusiness.InassessingtheindependenceofMercer,theCommitteeconsideredthe
factorscontainedintheapplicableSECandNYSErules,includingtheamountandnatureoftheadditionalconsultingworkprovidedtotheCompanybyMercer.The
CommitteeconcludedthatnoconflictofinterestexiststhatwouldpreventMercerfromindependentlyadvisingtheCommittee.
Corporate Governance Committee

Responsibilities

Reviews and establishes the process for the consideration and selection of Director candidates and
recommendsDirectorcandidatesforelectiontotheBoard.

ReviewsandrecommendsthesizeandcompositionoftheBoard.

Reviewsandrecommendsthesize,composition,andresponsibilitiesofallBoardCommittees.

Reviews and recommends policies and procedures to enhance the effectiveness of the Board,
includingthoseintheCorporateGovernanceGuidelines.

OverseestheBoardsannualself-evaluationprocess.

Reviews and recommends to the Board the compensation paid to the independent Non-Employee
Directors.
14

Number of Meetings in Fiscal 2015: 2

Directors who serve on the Committee:


WillardD.Oberton,Chair
MichaelJ.Hoffman
PaulDavidMiller
TrudyA.Rautio

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Corporate Governance Guidelines
OurBoardhasadoptedasetofCorporateGovernanceGuidelinestoassistitincarryingoutitsoversightresponsibilities.Theseguidelinesaddressabroad
rangeoftopics,includingDirectorqualifications,Directornominationprocesses,termlimits,BoardandCommitteestructureandprocess,Boardevaluations,Director
education,CEOevaluation,CEOandmanagementsuccessionanddevelopmentplanning,andconflictsofinterest.Thecompletetextoftheguidelinesisavailableon
theInvestorRelationspageofourwebsiteatwww.donaldson.comundertheCorporateGovernancecaption.
Code of Business Conduct and Ethics
AllofourDirectorsandEmployees,includingourChiefExecutiveOfficer,ChiefFinancialOfficer,andotherseniormanagement,arerequiredtocomply
withourCodeofConducttohelpensurethatourbusinessisconductedinaccordancewiththehigheststandardsoflegalandethicalbehavior.Employeesarerequired
tobringanyviolationsandsuspectedviolationsofthecodetoDonaldsonsattentionthroughmanagement,theCompanysComplianceCommittee,theCompanys
legalcounsel,orbyusingourconfidentialcompliancehelpline.Ourtoll-freeU.S.compliancehelplinenumberis888-366-6031.Informationonaccessingthehelpline
fromourinternationallocationsisavailableatwww.donaldson.com.ThefulltextofourCodeofConductisavailableonourwebsiteatwww.donaldson.com.
Board Composition and Qualifications
OurCorporateGovernanceCommitteeoverseestheprocessforidentifyingandevaluatingcandidatesfortheBoardofDirectors.Directorsshouldpossessthe
highestpersonalandprofessionalethics,integrityandvalues,andbecommittedtorepresentingthelong-terminterestsoftheCompanysStockholders.Generaland
specificguidelinesforDirectorselectionandqualificationstandardsaredetailedintheCorporateGovernanceGuidelines.TheCommitteewillconsidernominations
fromStockholdersunderthesestandardsifthenominationsaretimelyreceivedasdescribedinthisProxyStatement.
Director Selection Process
TheBylawsoftheCompanyprovidethattheBoardofDirectorsshallconsistofnotlessthan3normorethan15DirectorsandthatthenumberofDirectors
maybechangedfromtimetotimebytheaffirmingvoteofamajorityoftheDirectors.TheBoardofDirectorshasestablishedthenumberofDirectorsfollowingthe
2015 Annual Meeting of Stockholders at 10. Vacancies and newly created Directorships resulting from an increase in the number of Directors may be filled by a
majorityoftheDirectorstheninofficeandtheDirectorssochosenwillholdofficeuntilthenextelectionoftheclassforwhichsuchDirectorsshallhavebeenchosen
and until their successors are elected and qualified. Directors are elected for a term of three years with positions staggered so that approximately one-third of the
Directors are elected at each Annual Meeting of Stockholders. Based on a recommendation from the Corporate Governance Committee, each year the Board will
recommendaslateofDirectorstobepresentedforelectionattheAnnualMeetingofStockholders.
TheCorporateGovernanceCommitteewillconsidercandidatessubmittedbymembersoftheBoard,Directorsearchfirms,executives,andourStockholders,
andtheCommitteewillreviewsuchcandidatesinaccordancewithourBylaws,CorporateGovernanceGuidelines,andapplicablelegalandregulatoryrequirements.
TheCommitteesprocessincludestheconsiderationofthequalitieslistedintheCorporateGovernanceGuidelines,includingthatDirectorsshouldpossessthehighest
personal and professional ethics, integrity, and values and be committed to representing the long-term interests of the Companys Stockholders. The Committee
reviewsanddiscussesDirectorcandidatesonaregularbasisatitsCommitteemeetings.InidentifyingandrecommendingcandidatesfornominationbytheBoardasa
DirectorofDonaldson,theCommitteewillconsiderappropriatecriteriaincludingcurrentorrecentexperienceasaChairmanofaBoard,ChiefExecutiveOfficeror
otherseniormanagement,businessexpertise,anddiversityfactors.Diversityismeanttobeinterpretedbroadly.Itincludesrace,gender,andnationaloriginandalso
includesdifferencesofprofessionalexperience,globalexperience,education,andotherindividualqualitiesandattributes.TheCommitteealsowillconsidergeneral
criteriasuchasindependence,ethicalstandards,aprovenrecordofaccomplishment,andtheabilitytoprovidevaluableperspectivesandmeaningfuloversight.The
CommitteewillworkperiodicallywithoneormorenationallyrecognizedsearchfirmstoassistinidentifyingstrongDirectorcandidates.Candidatesrecommendedby
Stockholdersareevaluatedinaccordancewiththesamecriteriaasothercandidatesandrecommendationsshouldbesubmittedbyfollowingthesameproceduresas
requiredtoformallynominateacandidate.
AndrewCecere,JamesJ.Owens,andTrudyA.RautioareeachstandingforelectionbyStockholdersforthefirsttimeattheAnnualMeeting.AndrewCecere
wasidentified as a candidate by a former non-management Director, James Owens was identified as a candidate by a former member of management,andTrudy
Rautio was identified as a candidate by a former non-management Director. The Corporate Governance Committee performed a thorough evaluation of each
candidatesqualificationsfollowingtheCompanysspecificguidelinesandqualificationstandardspriortotheirelectiontotheBoard.
15

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OurBylawsprovidethatifaStockholderproposestonominateacandidateattheAnnualMeetingofStockholders,theStockholdermustgivewrittennotice
ofthenominationtoourCorporateSecretaryincompliancewiththeapplicabledeadlineforsubmittingStockholderproposalsfortheapplicableAnnualMeeting.The
Stockholdermustattendthemeetinginpersonorbyproxy.TheStockholdersnoticemustsetforthastoeachnomineeallinformationrelatingtothepersonwhomthe
StockholderproposestonominatethatisrequiredtobedisclosedinsolicitationsofproxiesforelectionofDirectorsinanelectioncontest,orisotherwiserequired,in
eachcasepursuanttoRegulation14AundertheSecuritiesExchangeActof1934,asamendedthereunder(includingsuchpersonswrittenconsenttobeingnamedin
theproxystatementasanomineeandtoservingasaDirectorifelected).NoStockholderssubmittedDirectornominationsinconnectionwiththisyearsmeeting.
Independent Director Executive Sessions and Evaluations
The Chair of our Human Resources Committee currently is designated as Lead Director and presides over all meetings or executive sessions of the
independentDirectors.OurCorporateGovernanceGuidelinesprovidethattheLeadDirectorshallbeselectedfromtheindependentDirectorsservingontheBoard.
OurindependentDirectorsmeetinexecutivesessionwithoutmanagementpresentateachBoardmeeting.Likewise,allBoardCommitteesregularlymeetinexecutive
sessionwithoutmanagement.TheBoardandeachCommitteeconductedanevaluationofitsrespectiveperformanceinFiscal2015.
Communications with Directors
The Companys compliance helpline is in place for our Employees and others to direct their concerns to the Audit Committee, on a confidential and
anonymousbasis,regardingaccounting,internalaccountingcontrols,andauditingmatters.
In addition, we have adopted procedures for our Stockholders, Employees, and other interested parties to communicate directly with the members of the
BoardofDirectors.YoucancommunicatebywritingtotheLeadDirector,theChairoftheAuditCommittee,theChairoftheCorporateGovernanceCommittee,the
independent Directors as a group, or the full Board, in the care of the office of the Company Secretary, Donaldson Company, Inc., MS 101, P.O. Box 1299,
Minneapolis,MN55440-1299.
Written communications about accounting, internal accounting controls, and auditing matters should be addressed to the Chair of the Audit Committee.
Pleaseindicateifyouwouldlikeyourcommunicationtobekeptconfidentialfrommanagement.TheproceduresforcommunicationwiththeBoardofDirectorsalso
arepostedontheInvestorspageofourwebsiteatwww.donaldson.comunderCorporateGovernance.
Audit Committee Expertise; Complaint-Handling Procedures
InadditiontomeetingtheindependencerequirementsoftheNYSEandtheSEC,allmembersoftheAuditCommitteehavebeendeterminedbytheBoardto
meet the financial literacy requirements of the NYSEs listing standards. The Board also has designated John Wiehoff and Andrew Cecere as Audit Committee
financialexpertsasdefinedbySECregulations.
In accordance with federal law, the Audit Committee has adopted procedures governing the receipt, retention, and handling of complaints regarding
accountingandauditingmatters.TheseproceduresincludeameansforEmployeestosubmitconcernsonaconfidentialandanonymousbasis,throughtheCompanys
compliancehelpline.
DIRECTOR COMPENSATION
AnnualcompensationforourNon-EmployeeDirectorsisdesignedtoattractandretainhighlyqualifiedNon-EmployeeDirectorsandtoprovideequity-based
compensationinordertoalignDirectorcompensationwiththelong-terminterestsofourStockholders.Directorsaresubjecttoastockownershiprequirementwhich
requiresthemtoownsharesequaltofivetimestheirannualretainerwithinfiveyearsoftheirelectionasaDirector.AsoftheendofFiscal2015,eachNon-Employee
DirectorwhohadbeenaDirectorforfiveyearshadmethisorherownershiprequirement.Non-EmployeeDirectorcompensationiscomprisedofannualretainersand
anannualstockoptiongrant.
OurCorporateGovernanceCommitteeassiststheBoardofDirectorsinprovidingoversightonDirectorcompensation.TheCommitteeoversees,reviews,and
reports to the Board on Director compensation. The Committee annually reviews competitive market data for Non-Employee Director compensation and makes
recommendations to the Board of Directors for its approval. The Committee is assisted in performing its duties by our Human Resources Department, and when
needed,anindependentoutsideexecutivecompensationconsultant.TheCommitteeengagedMercertoconductareviewoftheNon-EmployeeDirectorcompensation
programduringFiscal2014andwillengageMercertoconductthenextreviewinFiscal2016.
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DuringFiscal 2015,amarket analysis wascompleted byourHumanResources Department andreviewedbytheCorporate Governance Committee. This
reviewconsistedofananalysisofcompetitivemarketdatafromaselectedpeergroupofcompanies.ThepeergroupisconsistentwiththepeergroupMercerusedfor
theexecutivecompensationreviewconductedduringFiscal2015(seetheCompensationProcesssectionoftheCompensationDiscussionandAnalysisforadditional
details).
Overall,thereviewshowedthatourDirectorcompensationprogramisalignedwithmarkettrends.Cashcompensationisbelowthe25 th percentileofthe
peergroupandequitycompensationisabovethe75thpercentileofthepeergroup.Totaldirectcompensationisslightlyabovethe75thpercentileofthepeergroup.
Annual Retainer
Non-EmployeeDirectorsreceiveanannualretainerof$53,000.$15,000oftheannualretainerisautomaticallydeferredintoadeferredstockaccount.The
numberofsharesofstockdeferredisequaltotheamountoftheretainerdeferreddividedbythemostrecentclosingstockpriceonthedateoftheretainerpayment,
whichisJanuary1 st .TheremainderoftheretainerispaidincashunlesstheDirector elects,priortotheyeartheretainerispaid,todeferalloraportionofthe
remainingretainerintotheDonaldsonCompany,Inc.CompensationPlanforNon-EmployeeDirectors.
ANon-Employee Director whoisnewlyappointed to theBoardduringtheyear willreceive aprorated annual retainer basedonthe effective date ofthe
DirectorselectiontotheBoard.
An additional annual retainer of $15,000 was added for the Lead Director effective January 1, 2015. This change was made based on Mercers Director
compensationreviewcompletedduringFiscal2014.
TheChairsoftheBoardCommitteesreceiveanadditionalannualretainer:

$22,000fortheAuditCommitteeChair

$15,000fortheHumanResourcesCommitteeChair

$15,000fortheCorporateGovernanceCommitteeChair

BoardCommitteemembersreceivethefollowingadditionalannualretainers:

$12,000forAuditCommitteemembership

$3,000forHumanResourcesCommitteemembership

$2,000forCorporateGovernanceCommitteemembership

These additional retainers are also paid in cash unless the Director elects to defer all or a portion of the retainer into the Donaldson Company, Inc.
CompensationPlanforNon-EmployeeDirectors.
Stock Options
TheCompanysNon-QualifiedStockOptionProgramforNon-EmployeeDirectorsprovidesanannualgrantofanon-qualifiedstockoptiontoeachNonEmployeeDirectorwhoisamemberoftheBoardonthefirstbusinessdayfollowingJanuary1stofeachyear.
Theannualgrantisbasedonafixedvalueof$140,000.ThenumberofoptionsgrantedisdeterminedbydividingthefixedvaluebytheBlackScholesvalue
oftheCompanystockasofthedateofthegrant(theshareswillberoundedtothenearest100shares).ThedateofthestockoptiongrantinFiscal2015wasJanuary2,
2015. The number of options granted to each Non-Employee Director was 14,000. The grant price is the closing stock price onthe date ofgrant. The options are
subjecttoa3-yearvestingschedulesothatone-thirdofthesharesvestonthefirstyearanniversary,one-thirdvestonthesecondyearanniversary,andone-thirdvest
onthethirdyearanniversary,andtheoptionshaveaten-yearterm.
ANon-EmployeeDirectorwhoisnewlyappointedtotheBoardduringtheyearwillreceiveaproratedstockoptiongrantbasedonthenumberofcompleted
monthstheDirectorisontheBoardduringtheyear.
Deferred Compensation
TheCompany sponsors the Donaldson Company, Inc. Compensation Plan for Non-Employee Directors, a non-qualified deferred compensation plan. The
planpermitstheDirectorstoelecttoreceivetheirannualretainersinoneormoreofthefollowingmethods:

Incashonacurrentbasis;

Incashonadeferredbasis(deferredcashaccount);or

InCompanystockonadeferredbasis(deferredstockaccount).
17

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Annual retainers are paid on January 1 st . As predetermined by the Board, the number of shares deferred into the deferred stock account for theannual
retainersisequaltotheamountoftheretainerdeferreddividedbytheclosingstockpriceonthepreviousbusinessday.
AnyamountdeferredintoadeferredcashaccountpriortoJanuary1,2011willbecreditedwithinterestatarateequaltotheten-yearTreasuryBondrateplus
twopercent.EffectivefordeferralsmadeafterDecember31,2010,theinterestratewillbetheten-yearTreasuryBondrate.
Theamountsdeferred intoa deferred stock account will be credited with any quarterly dividends paid on the Companys Common Stock. The Company
contributessharesinanamountequaltothedeferredstockaccountstoatrustandaDirectorisentitledtodirectthetrusteetovoteallsharesallocatedtotheDirectors
account.TheCommonStockwillbedistributedtoeachDirectorfollowingretirementpursuanttotheDirectorsdeferralpaymentelection.Thetrustassetsremain
subjecttotheclaimsoftheCompanyscreditors,andbecomeirrevocableintheeventofaChangeinControlasdefinedunderthe1991MasterStockCompensation
Plan,the2001MasterStockIncentivePlan,andthe2010MasterStockIncentivePlan.
Fiscal 2015 Director Compensation
TheFiscal2015compensationforourNon-EmployeeDirectorsisshowninthefollowingtable.

Fees
Earned or
Paid in
Cash (1)
($)

Name

AndrewCecere
MichaelJ.Hoffman
PaulDavidMiller
JeffreyNoddle
WillardD.Oberton
JamesJ.Owens
AjitaG.Rajendra
TrudyA.Rautio
JohnP.Wiehoff
_______________

50,000
43,000
0
68,000
53,000
53,000
0
0
0

Stock
Awards (2)(3)
($)

15,027
14,988
67,023
14,998
15,027
15,027
67,989
50,599
74,981

Option
Awards (4)
($)

Non-Equity
Incentive Plan
Compensation ($)

0
0
0
0
0
0
0
0
0

140,238
140,238
140,238
140,238
140,238
140,238
140,238
128,444
140,238

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)

All Other
Compensation
($)

0
0
0
0
0
0
0
0
0

Total
($)

0
0
0
0
0
0
0
0
0

205,265
198,226
207,261
223,226
208,265
208,265
208,227
179,043
215,219

(1)

ThecolumnshowstheportionoftheannualretainerforChairsandMembersofaBoardCommitteeforFiscal2015thateachDirectorhaselectedtoreceive
incash.EachDirectorhadtheoptiontoelecttoreceivethisamountincash,deferredcash,oradeferredstockaward.

(2)

Thiscolumnrepresents theaggregate grantdate fair value ofdeferred stockawardsgrantedduring Fiscal2015computedinaccordancewithFASBASC


Topic718.Thiscolumnincludestheportionoftheannualretainerthatispayableinadeferredstockaward.Italsoincludesalloraportionoftheremainder
oftheannualretainer,Chairretainers,andCommitteememberretainerswhichtheDirectorselectedtoreceiveinadeferredstockaward.Thefollowingtable
listsforeachDirectorthenumberofdeferredstockawardsgrantedduringFiscal2015inlieuofretainersandthegrantdatefairvalueofeachdeferredstock
award:

Name

AndrewCecere(b)
MichaelJ.Hoffman
PaulDavidMiller
JeffreyNoddle
WillardD.Oberton
JamesJ.Owens
AjitaG.Rajendra
TrudyA.Rautio
JohnP.Wiehoff

18

Retainer Fees (a)

Deferred
Stock
Grant Date Fair
(#)

Value ($)

389
388
1,735
388
389
389
1,760
1,384
1,941

15,027
14,988
67,023
14,988
15,027
15,027
67,989
50,599
74,981

TableofContents

_______________

(3)

(4)

a.

TheFiscal2015deferredstockawardsfortheannualretainersweremadeeffectiveJanuary1,2015,thedatepreviouslyestablishedbytheBoardof
Directors.Thegrantdatefairvaluesforthoseawardsarebasedontheclosingmarketpriceofthestockonthepreviousbusinessday,December31,
2014.

b.

Ms.RautiobecameaDirectoreffectiveJanuary30,2015.Shereceivedaproratedannualretainerfor2015andthedeferredstockawardforthat
retainerwasmadeeffectiveJanuary30,2015.Thegrantdatefairvalueforthatawardisbasedontheclosingmarketpriceofthestockonthatdate.

ThefollowingtablelistsforeachDirectorthedeferredstockawardsthatarevestedandwillbepaidoutatthedeferralelectiondatemadebytheDirectoras
ofJuly31,2015,subjecttotheapprovaloftheBoard:

AndrewCecere
MichaelJ.Hoffman
PaulDavidMiller
JeffreyNoddle
WillardD.Oberton
JamesJ.Owens
AjitaG.Rajendra
TrudyA.Rautio
JohnP.Wiehoff

852
25,289
32,792
47,175
10,398
2,260
9,766
1,397
38,381

Deferred Stock

Thiscolumnrepresentstheaggregategrantdatefairvalueofstockoptionawardstopurchase14,000sharesofCommonStockgrantedduringFiscal2015to
each Non-Employee Director computed in accordance with FASB ASC Topic 718. Refer to Footnote I to the Consolidated Financial Statements in our
AnnualReportonForm10-KforFiscal2015forourpolicyandassumptionsmadeinthevaluationofshare-basedpayments.
TheamountincludedinthiscolumnforeachNon-EmployeeDirectorincludes$140,238,reflectingthegrantdatefairvalueofoptionstopurchase14,000
sharesofCommonStockgrantedonJanuary2,2015,thegrantdatepreviouslyestablishedbytheBoardofDirectors.Theexercisepriceforthoseoptionswas
theclosingmarketpriceofthestockonthatdate.AdmiralMillerelectedtotransfer6,985ofhistotal14,000awardtomembersofhisimmediatefamily.
Ms.Rautioreceivedtheannualstockoptiongrantof14,000shareseffectiveJanuary30,2015basedonherappointmenttotheBoardeffectivethatdate.The
exercisepriceforthisoptionwastheclosingmarketpriceofthestockonthegrantdate.
AsofJuly31,2015,eachoftheNon-EmployeeDirectorshadthefollowingstockoptionsoutstanding:

AndrewCecere
MichaelJ.Hoffman
PaulDavidMiller
JeffreyNoddle
WillardD.Oberton
JamesJ.Owens
AjitaG.Rajendra
TrudyA.Rautio
JohnP.Wiehoff

Exercisable

19

5,000shares
114,200shares
79,207shares
114,200shares
92,800shares
11,000shares
42,200shares
0shares
114,200shares

Unexercisable

24,000shares
26,400shares
13,128shares
26,400shares
26,400shares
25,200shares
26,400shares
14,000shares
26,400shares

TableofContents
EXECUTIVE COMPENSATION
Compensation Committee Report
The Human Resources Committee (Committee) of the Board of Directors of Donaldson, acting in its capacity as the Compensation Committee of the
Company, has reviewed and discussed the following Compensation Discussion and Analysis with management and, based on such review and discussions, the
CommitteerecommendedtotheBoardofDirectorsthattheCompensationDiscussionandAnalysisbeincludedinthisProxyStatementandinourAnnualReporton
Form10-KforthefiscalyearendedJuly31,2015.
Submitted by the Human Resources Committee
JeffreyNoddle,Chair
MichaelJ.Hoffman
JamesJ.Owens
AjitaG.Rajendra
Compensation Discussion and Analysis
Executive Summary
The Compensation Discussion and Analysis provides information on the Companys executive compensation program and the compensation awarded for
Fiscal2015toourExecutiveOfficers(NamedExecutiveOfficersorNEOs).
DuringFiscal2015,aspartoftheCEOsuccessionprocessdevelopedbytheBoard,TodCarpentersucceededWilliamCookasPresidentandChiefExecutive
OfficeronApril1,2015.Mr.CookremainsouremployeeandChairmanoftheBoard.Mr.CookhadbeenourChairman,President,andChiefExecutiveOfficersince
August1,2004.
OurNamedExecutiveOfficersforFiscal2015werethefollowingExecutiveOfficers:

TodCarpenter,PresidentandChiefExecutiveOfficer(CEO)

WilliamCook,ChairmanoftheBoard

JamesShaw,VicePresidentandChiefFinancialOfficer(CFO)

ThomasScalf,SeniorVicePresident,EngineProducts

WimVermeersch,VicePresident,Europe,MiddleEastandAfrica

JayWard,SeniorVicePresident,IndustrialProducts

ThisCompensationDiscussionandAnalysisshouldbereviewedinconjunctionwiththetablesandnarrativesthatfollowit.
Principles
and
Objectives
of
the
Companys
Executive
Compensation
Program
The Committee establishes and administers the Companys executive compensation program. The key principles of the executive compensation strategy
include:

Aligning compensation to financial measures that balance both the Companys annual financial resultsandsuperiorlong-termShareholdervalue
creation

EmphasizingCompanyfinancialperformancebylinkingasignificantportionofExecutiveOfficercompensationtotheactualfinancialperformance
oftheCompany

Providingsignificantamountsofequity-basedcompensationinordertotieExecutiveOfficercompensationtoourShareholderslong-terminterests

Targeting total Executive Officer compensation by comparison to proxy disclosure data for our established peer group (as recommended by an
outsideindependentconsultant)andpublishedmarketsurveydata

RequiringsignificantlevelsofCompanystockownershipbytheExecutiveOfficers

The Companys objective is to create long-term Shareholder value through superior share price appreciation. Our executive compensation program is
designedtosupportthisobjectiveandensurethattheinterestsofourExecutiveOfficers(Officers)areproperlyalignedwithourShareholderslong-terminterests.
Ourprogramemphasizes variable performance-based compensation thatpromotesthe achievement of bothshort-term and long-term business objectives which are
alignedwiththeCompanysbusinessstrategy,andrewardsperformancewhenthoseobjectivesareactuallyachieved.Themixofbasesalary,annualcashincentives,
andlong-termincentivesisdesignedtoensurethelong-termgrowthoftheCompanywhiledeliveringconsistentlystrongfinancialresultsandreturnoninvestment
(ROI).WebelieveourexecutivecompensationprogramhaseffectivelycontributedtoourCompanysstrongsales,earningsgrowth,andROIoverthepast25years.
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Thekeyobjectivesoftheexecutivecompensationprograminclude:

AligningtheinterestsofourOfficerswiththelong-terminterestsofourShareholders

Providingcompetitivepaywhichenablesustoattract,retain,reward,andmotivatetopleadershiptalent

ConsistentlyincreasingShareholdervalue

TheCommitteebelievestheexecutivecompensationprogramassiststheCompanyinretainingastrongexecutiveleadershipteamwhichworkstogetherto
createmaximum Shareholder value.OurNEOsalsohavehighstockownershiprequirements, rangingfromthreetotentimesbasesalary,whichfurtheralignsthe
interestsofourNEOswiththelong-terminterestsofourShareholders.
Fiscal
2015
Financial
Performance
and
Performance-based
Compensation
Implications
ManyfactorscontributedtoourresultsforeachreportablesegmentforFiscal2015.Wesawchallengingconditionsinmostofouroff-roadOEMfirst-fit
equipmentendmarkets.Firstfiton-roadOEMproductssaleswasanexceptionwithgrowthinnewtrucksalesdrivingdemandforourproducts.TheCompanyalso
sawcontinuedstrengthindemandforreplacementfiltersinbothitsEngineandIndustrialproductsegmentsthroughthefirsthalfoftheyear,butdemandweakenedas
thefiscalyearwenton.Comparedtotheprioryear,weexperienceda19.2%increaseinGasTurbinesalesfromlastyearssalesof$157million.Ourresultswere
significantlynegativelyimpactedbythestrengtheningoftheU.S.dollarwhichreducedourCompanyssalesby$135millioncomparedtothepreviousyear.Wealso
continued to make investments including our Global ERP Project and new distribution centers in Europe and Latin America. We incurred restructuring, asset
impairmentandpensioncurtailmentchargeswhichreducedourEPSby$0.09.Thedeclinesinourendmarkets,restructuringcharges,aswellasthenegativeimpactof
currenciesresultedinourGAAPEPSof$1.49being15%lowerthanourFiscal2014EPSof$1.76.
OurcompensationprogramforourNEOsisdesignedtolinkdirectlytoourCompanyperformance.Someofourkeybusinessresultswhichrelatetokey
performancemeasuresinourperformance-basedcompensationplansincluded:

NetSalesof$2.371billion,adecreaseof4%fromourFiscal2014netsalesof$2.473billionand11%belowourFinancialPlan

OperatingIncomepercentageof12.2%,adecreasefromourFiscal2014OperatingIncomepercentageof14.4%andbelowourFinancialPlanof
14.6%

DilutedEPSof$1.49,adecreasefromourFiscal2014EPSof$1.76,andbelowourFinancialPlanof$1.94

ROIof17.2%,adecreasefromourFiscal2014ROIof21.4%andbelowourFinancialPlanof21.9%

OurFiscal2015annualcashincentivewasstructuredsothatactualcompensationreceivedbyourNEOswasalignedwithCompanyperformancebasedon
ourkeyfinancialmetricsofEPS,netsales,operatingincomepercentage(netincomepercentageforourCFO),andROI.Asoutlinedabove,theCompanysFiscal
2015performanceresultedinourkeymetricsfallingshortofourFinancialPlan.

DuringFiscal2015,weinitiatedorganizationalrestructuringactionswhichwillhaveapositivelong-termimpact.Therestructuringincludestheclosingof
ourGrinnell,Iowaplant,whichwillbecompletedduringFiscal2016aswellasorganizationalreductionsthatoccurredduringthethirdandfourthquartersofFiscal
2015.WealsoimplementedalumpsumofferingtocertainparticipantsinourU.S.pensionplans.TheCommitteeapprovedtheexclusionoftheseunusualcharges
fromtheFiscal2015annualcashincentivecalculation.TheCommitteebelievedthatthesewereone-timeexpensesthatwillhavepositivelong-termresultsforthe
Company.ThetotalimpactoftheseexclusionstotheNEOsannualincentivepaymentswas$52,000.
OurEPSandnetsaleswerebelowthethresholdlevelandoperatingincomepercentandROIwerebelowtarget.Asaresult,theoverallannualcashincentive
payoutsbasedontheCompanyfinancialresultsweresignificantlybelowtargetandrangedfrom10%to14%oftargetandvariedbasedonthespecificperformance
measuresandweightingsfortheNEOs.TheannualcashincentiveforourNEOswithbusinesssegmentorregionalresponsibilityisbasedprimarilyontheirbusiness
segmentorregionalresults.FortheseNEOs,thepayoutsrangedbetween6%and52%oftargetbasedontheirbusinessorregionalresults.Formoredetailsrefertothe
AnnualCashIncentivesection.
OurFiscal2015long-termincentivesweredesignedtodirectlylinkourNEOscompensationtoourlongertermfinancialsuccess.Ourlong-termincentives
(describedinmoredetailintheLong-TermIncentivessection)forFiscal2015consistedofstockoptionsandperformancesharesprovidedthroughourLong-Term
Compensation Plan. The stock options granted to our NEOs for Fiscal 2015 will only provide value to our NEOs if our stock price appreciates over time and we
believethisdirectlylinkstheinterestsofourNEOstothoseofourShareholders.
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PayoutsunderourLong-TermCompensationPlanwerebasedontheCompanysachievementofROIandnetsalesgrowthfinancialobjectivesoverathreeyearcycle.Forthethree-yearcyclebeginningAugust1,2012andendingJuly31,2015,ouraveragenetsalesdecreasedby1.7%,thereforenetsalesgrowthwasbelow
theminimumthreshold.OuraverageROIoverthatperiodwas20.0%,whichwasslightlyabovetarget.Theseachievementsresultedinbelowtargetpayoutsunderthe
Long-Term Compensation Plan for our NEOs that ranged from 27% to 29% of target. The variation is based on the NEOs specific business segment or regional
results.
2014
Say-on-Pay
Results
Atour2011AnnualMeeting,ourShareholdersvotedtoholdtheadvisoryvoteonthecompensationforourNEOseverythreeyears.Thereforeatour2014
AnnualMeeting,ourShareholdershadtheopportunitytoprovidethisadvisoryvoteonthecompensationforourNEOs.91%ofthevotescastbyourShareholders
voted in favor of our executive compensation proposal. The Committee believes that this strong support by our Shareholders of our approach to executive
compensationreinforcestheoverallphilosophyandstructureofourprogramandconfirmsthatitisinalignmentwiththelong-terminterestsofourShareholders.
Conclusion
OurexecutivecompensationprogramprovidesincentivestoattainstrongfinancialperformanceandtoensurealignmentwithourShareholderslong-term
interests. The Committee believes that our executive compensation program, with its continued strong emphasis on performance-based compensation and stock
ownership,properlymotivates ourOfficers toproduce strongreturns forourShareholders andtocreate long-termShareholdervalue.Additionally,theCommittee
believesthatinchallengingfinancialperiods,ourlowerannualcashincentiveandLong-TermCompensationPlanpayoutlevelsappropriatelyalignexecutivepaywith
ourCompanysactualperformance.
Compensation Process
The Committee assists the Board of Directors in providing oversight on executive compensation. The Committee reviews and approves our overall
compensation philosophy, strategy, and policies. The Committee annually reviews and approves all compensation for our Officers. As part of that review, the
CommitteetakesintoaccountcompetitivemarketanalysisandrecommendationsbyourChairman,ourCEO,ourHumanResourcesDepartment,andanindependent
compensationconsultant.FormoreinformationontheCommittee,refertotheMeetingsandCommitteesoftheBoardofDirectorssectionofthisProxyStatement.
Compensation
Consultant
TheCommitteehastheauthoritytoretain independent compensation consultants toassist inthe analysisofourexecutive compensation program. During
Fiscal2014,theCommitteeengagedanindependentcompensationconsultanttodoanannualbenchmarkingreviewofourexecutivecompensationprogramandtobe
available for Committee meetings as needed. The Committee is also assisted in performing its duties by the Chairman, the CEO and our Human Resources
Department.
TheCommitteehasengagedMercer,anationallyknownconsultingfirm,asitsexecutivecompensationconsultantonanongoingbasistoattendCommittee
meetingsandconducttheannualbenchmarkingreviewofourexecutivecompensationprogram.MercerdisclosedtotheCommitteetheotherservicesthatitprovides
totheCompany.MercerhasalsobeenengagedbymanagementastheCompanysactuarysince2002andasacompensationconsultantforourAsiaPacificregion.In
assessingtheindependenceofMercer,theCommitteeconsideredthefactorscontainedintheapplicableSECandNYSErules,includingtheamountandnatureofthe
additional consulting work provided to the Company by Mercer and concluded that no conflict of interest exists that would prevent Mercer from independently
advisingtheCommittee.
Competitive
Market
During Fiscal 2015, Mercer completed the market analysis of our executive compensation and presented the results to the Committee at its meeting in
September2014.Thisreviewconsistedofamarketreviewofourprogramagainstapeergroupofpubliccompanies.ThisoriginalpeergroupwasestablishedinFiscal
2010andisreviewedandupdatedbytheCommitteeannually.ThepeergroupconsistsofcompanieswithmedianrevenuesapproximatingtheCompanysrevenue.
ThispeergroupwasintendedtoberepresentativeofthemarketinwhichtheCompanycompetesforexecutivetalentandconsistsofthefollowingcompanies:

ActuantCorporation
AMETEK,Inc.
Briggs&StrattonCorporation
CLARCORInc.
CraneCompany
FlowserveCorporation
H.B.FullerCompany
HubbellInc.

IDEXCorporation
ITT
KennametalInc.
ModineManufacturingCo.
NordsonCorporation
PallCorporation
PolarisIndustries,Inc.
Regal-BeloitCorporation

22

RexnordCorporation
RoperIndustries
Snap-OnInc.
TheTimkenCompany
ToroCompany
TrimasCorporation
ValsparCorporation
WattsWaterTechnologies,Inc.

TableofContents

Mercer utilized this information to inform the Committee of competitive pay practices and to benchmark the base salary, target annual and long-term
incentives,andtotaltargetcompensationforourOfficers.TotalTargetCompensationisgenerallytargetedatthemedianofthepeergroup.
Compensation
Mix
at
Target
It is the intention of the Committee and a key principle of our executive compensation program that a significant portion of an Officers total direct
compensationbeperformance-basedandthattheportionofperformance-basedcompensationshouldincreasebylevelofpositionintheCompany.ForFiscal2015,
theperformance-basedportionoftotaltargetdirectcompensationwasapproximately77%forourCEO,65%forSeniorVicePresidents,and60%forVicePresidents.
TheCompanysresultsdirectlyimpactedtheactualtotaldirectcompensationpaidtoourNEOs.TheAnnualCashIncentiveforFiscal2015paidoutbelow
targetandrangedfrom6%to55%oftargetforourNEOs.TheCompanysLong-TermCompensationPlanpayoutstotheNEOsforthethree-yearcycleconcludingin
Fiscal2015werebelowtargetandrangedfrom27%to29%oftarget.Asaresult,actualtotaldirectcompensationforFiscal2015wasbelowthetargetlevelsforour
NEOs.ThefollowingtableshowstheFiscal2015actualtotaldirectcompensationversustargetforourNEOs:

Named Executive Officer

TodCarpenter
WilliamCook
JamesShaw
ThomasScalf***
WimVermeersch****
JayWard
_______________

Target Total Direct


Compensation *

$
$
$
$
$
$

2,420,310
3,708,342
871,507
799,533
629,882
1,135,919

Actual Total Direct


Compensation **

$
$
$
$
$
$

1,743,538
2,520,390
606,216
611,315
566,656
777,214

TargetTotalDirectCompensationconsistsofbasesalary,targetannualcashincentiveforFiscal2015,targetvalueatthebeginningofthecycleLong-Term
CompensationPlanawardwiththethree-yearperiodendingJuly31,2015,andthevalueofFiscal2015annualstockoptionaward.

**

ActualTotalDirectCompensationconsistsofbasesalary,annualcashincentiveforFiscal2015,valueonJuly31,2015ofLong-TermCompensationPlan
awardforthethree-yearperiodendingJuly31,2015,andthevalueofFiscal2015annualstockoptionaward.

***

Mr.ScalfwasnoteligiblefortheLong-TermCompensationPlancyclewhichendedonJuly31,2015.

****

Mr. Vermeersch was not eligible for the Long-Term Compensation Plan cycle which ended on July 31, 2015. Mr. Vermeerschs compensation is paid in
EurosandwasconvertedfromEurostoU.S.dollarsusingtheexchangerateof1Euroequalto$1.1745,theaverageexchangerateforFiscal2015.
Executive
Compensation
Program
Elements
TheprimaryelementsofourexecutivecompensationprogramforFiscal2015were:

BaseSalary

AnnualCashIncentive

Long-TermIncentives(includesLong-TermCompensationAwards,StockOptions,andRestrictedStock)

Benefits

ChangeinControlAgreements

TheCommitteebelieveseachcompensationelementissupportedbytheprinciplesandobjectivesdescribedpreviouslyinthePrinciplesandObjectivesofthe
CompanysExecutiveCompensationProgramsection.

23

TableofContents
Base
Salary
The base salaries paid to our Officers are designed to provide a market competitive level of compensation for each Officer based on position, scope of
responsibility,businessandleadershipexperience,andindividualperformance.Basesalariesaretheleastvariableelementofcompensationandaregenerallytargeted
atthemedianofourpeergroup.TheCommitteereviewstheOfficersbasesalariesannuallyandmayadjustthembasedonmarketcompetitivenessandindividual
performance.
During Fiscal 2015, we executed a leadership transition with Mr. Carpenter succeeding Mr. Cook as President and CEO. Based on the market analysis
completed by Mercer, at the time of Mr. Carpenters succession to the CEO, the Committee increased his base salary effective April 1, 2015 from $525,000 to
$700,000.
TheCommitteereviewedthebasesalaryforMr.CookatitsDecember2014meetingandbasedonthemarketanalysiscompletedbyMercer,theCommittee
adjustedMr. Cooks base salary effective January 1, 2015 from $950,000 to $978,500, which was a 3.0% increase. Effective April 1, 2015, the Committee then
adjustedMr.Cooksbasesalaryfrom$978,500to$650,000.ThisadjustmentwastoreflectthechangeinhisresponsibilitiesashetransitionedtoChairmanonly.
During Fiscal 2015 the Committee also reviewed the base salaries of each of the other NEOs. Based on the market analysis completed by Mercer and
recommendationsfromourCEO,theCommitteeapprovedthefollowingbasesalaryincreasesforourNEOs.

Mr.Scalf,SeniorVicePresident,EngineProducts,receiveda4.7%increaseeffectiveOctober1,2014.

Mr.Vermeersch,VicePresident,Europe,MiddleEastandAfricareceivedanincreaseof4.4%effectiveOctober1,2014.

Mr.Ward,SeniorVicePresident,IndustrialProducts,receiveda3%increaseeffectiveOctober1,2014.

Annual
Cash
Incentive
TheannualcashincentiveawardisdesignedtorewardOfficersfortheircontributionstowardtheCompanysachievementofspecificgoalsandtolinkthe
interestsofourOfficerswiththeCompanysBoardapprovedFinancialPlan.ThisincentivecompensationelementfocusesattentionontheCompanysactualfinancial
performanceandprovidesasignificantfinancialperformance-basedvariablecomponentofourtotalcompensationpackage.
Each year, the Committee establishes the annual cash incentive target opportunities as a percentage of base salary based on our peer group market data.
Effective April 1, 2015, the Committee increased the target opportunity for Mr. Carpenter from 80% to 100% of base salary. ThischangewasbasedonMercers
market review and was made in recognition of his succession to CEO. His target opportunity for the entire fiscal year was 86.6% of base salary. If the maximum
performancehadbeenachievedthepayoutforourCEOwouldhavebeen200%oftargetopportunityor173.2%ofbasesalary.
ThetargetopportunityforMr.Cook,ourCEOuntilApril1,2015,was110%ofbasesalaryforthefullyear.Ifthemaximumperformancehadbeenachieved
thepayoutwouldhavebeen200%oftargetopportunityor220%ofbasesalary.TheannualcashincentivetargetopportunityforourotherNEOsrangedfrom40%to
60%ofbasesalary,basedonposition.IfmaximumperformancehadbeenachievedfortheseNEOs,thepayoutswouldhaverangedfrom180%to200%oftarget
opportunityorrangedfrom72%to120%ofbasesalary.
Performance Goals .PredeterminedperformancemeasuresandgoalsaresetbytheCommitteeeachyear.Theannualcashincentiveawardsarecalculated
based on predetermined ranges for the achievement of the established performance measures. The goals reflect our strong performance-based philosophy, and the
Committeebelievesthemeasureschosenarekeytoourfinancialsuccess.
ForFiscal2015,theCommitteehaddiscussionstodeterminetheappropriateperformancemeasurestohelpdrivetheCompanytoreachourlong-termgrowth
objectives.TheCommitteedecidedtocontinuetoemphasizesalesasaperformancemeasureutilizedintheannualcashincentivebymaintainingthepercentageofthe
annualincentivebasedonsalesat40%.
ForFiscal2015,thepredetermined financial performance measures andthepercentage oftheincentive basedontarget performance ofthesemeasures as
establishedbytheCommitteefortheNEOswereasfollows:

Performance Measure

NetSales
OperatingIncomePercentofSales
NetIncomePercentofSales
EarningsperShare(EPS)
ReturnonInvestment(ROI)

24

CEO

40%
15%

30%
15%

CFO and
VP, Europe,
Middle East and Africa

40%

25%
20%
15%

Other
Officers

40%
25%

20%
15%

TableofContents

TheEPSperformancemeasureforFiscal2015wasbasedonachievingarecordattainmentofEPSatthethresholdanda10%increaseoverpriorrecordEPS
attarget.TheotherperformancemeasuresforFiscal2015werebasedontheCompanysBoardapprovedFiscal2015FinancialPlan.Foreachperformancemeasure,
achievementoftheFinancialPlantargetwouldhaveresultedinapayoutatthe100%level,achievementbelowtheFinancialPlantargetbutaboveathresholdamount
wouldhaveresultedinalowerpayout,andachievementabovetheFinancialPlantargetwouldhaveresultedinahigherpayoutuptoapre-determinedmaximum.
OurAnnualIncentivePlanstatesthattheincentivetargetsandachievementcanexcluderestructuringexpensesifpre-approvedbytheCommittee.During
Fiscal2015,webeganorganizationalrestructuringwhichwebelievewillbenefittheCompanyslong-termcoststructure.Thesewere:

theclosingofourGrinnell,Iowaplant,whichwillbecompletedduringFiscal2016,

organizationalrestructuringinitiativesduringthethirdandfourthquartersofFiscal2015,and

alumpsumsettlementthatwasacceptedbycertainparticipantsinourU.S.pensionplans.

TheCommitteeapprovedtheexclusionoftheserestructuringchargesandexpensesfromtheFiscal2015annualcashincentivecalculation.TheCommittee
believedthatthesewereone-timeexpensesthatwillhavepositivelong-termresultsfortheCompany.TheexclusionsimpactedtheachievementlevelsforEPS,ROI,
operatingincomepercentofsales,andnetincomepercentofsales.ThetotalimpacttotheNEOsannualincentivepaymentsforFiscal2015was$52,000.
AnnualcashincentiveawardsforNEOswithcorporateresponsibilityarebasedontheCompanysoverallfinancialresults.Theannualcashincentiveawards
forNEOswithbusinesssegmentresponsibilityarebasedontheirspecificbusinesssegmentresultsfornetsales,operatingincomepercentofsales,operatingincome,
andROI(calculatedasnetoperatingprofitaftertaxesdividedbytheaveragenetoperatinginvestmentfortheperiod).
ForFiscal2015,thenetsalescorporatetarget(100%achievement)was$2.675billion.Actualachievementwas$2.371billionwhichwasbelowthethreshold
levelof$2.493billionresultinginnopayoutforthisgoal.ThenetsalestargetfortheEngineProductsbusinesssegmentwas$1.679billion.Actualachievementwas
$1.484 billion which was below the threshold of $1.584 billion resulting in no payout. The net sales target forthe Industrial Productsbusiness segment was $996
million.Actualachievementwas$887millionwhichwasbelowthethresholdof$896millionresultinginnopayout.ThenetsalestargetfortheEurope,MiddleEast
andAfricaregionwas661million.Actualachievementwas646millionresultinginapayoutof76.7%.
TheCompanysoperatingincome percent ofsales target forFiscal 2015(100% achievement) was14.6%.Achievement was12.2%prior totheapproved
exclusionsand12.7%withtheCommitteeapprovedexclusions,resultinginapayoutat4%oftargetlevel.TheoperatingincomepercentofsalestargetforourEngine
Productsbusinesssegment was14.9%withachievement adjusted forthe approved exclusions belowthe thresholdat12.9%,resulting innopayout.Theoperating
incomepercentofsalestargetforourIndustrialProductsbusinesssegmentwas15.5%andachievementadjustedfortheapprovedexclusionswas14.2%,forapayout
at37.0%oftargetlevel.
Thenetincomepercentofsales goaltarget (100%achievement) forourCFOforFiscal 2015was10.4%.Achievement withtheapproved exclusions for
Fiscal2015was9.2%,forapayoutat16.7%ofthetargetlevel.ThenetincomepercentofsalestargetforourEurope,MiddleEastandAfricaregionwas10.9%and
achievementadjustedfortheapprovedexclusionswas10.2%,forapayoutat54.7%oftargetlevel.
ThetargetEPSgoal(100%achievement)was$1.94.TheEPSachievementforFiscal2015was$1.49priortotheapprovedexclusionsand$1.55withthe
Committeeapprovedexclusions.Bothwerebelowthethresholdof$1.76resultinginnopayoutforthismeasure.
ForFiscal2015,theROIperformancemeasuretargetfortheCompany(100%achievement)was21.9%.TheactualROIforFiscal2015was17.2%priorto
theapprovedexclusionsand17.9%withtheCommitteeapprovedexclusions,resultinginapayoutat66.6%ofthetargetlevel.AsestablishedbytheCommittee,a
business segment or region may have a higher ROI target based on the dynamics of the particular business and exclusions of certain corporate accounts from the
business segment or region ROI calculation. For Fiscal 2015, the worldwide ROI targets for our Engine Products and Industrial Products business segments and
Europe,MiddleEastandAfricaregionrangedbetween21%and25%.TheROIachievementwiththeapprovedexclusionsforourEngineProductsbusinesssegment
was20.1%,forapayoutat42.7%oftargetlevel.TheROIachievementwiththeapprovedexclusionsforourIndustrialProductsbusinesssegmentwas19.6%,fora
payoutat55.9%oftargetlevel.TheROIachievementwiththeapprovedexclusionsforourEurope,MiddleEastandAfricaregionwas18.6%,forapayoutat68.8%
oftargetlevel.
25

TableofContents
Payouts .GiventhechallengingbusinessenvironmentduringFiscal2015actualpayoutsforourNEOsrangedfrom6%to55%oftarget.Theoverallannual
cashincentivepaymentforFiscal2015foreachofourNEOsissetforthbelow:

Named Executive Officer


TodCarpenter(1)

WilliamCook
JamesShaw
ThomasScalf
WimVermeersch(2)
JayWard
_______________

Target Payment
as a % of Base
Salary

100%
110%
60%
60%
40%
60%

Target
Award

$
$
$
$
$
$

606,200
715,000
210,000
201,024
139,049
247,200

Actual
Award

$
$
$
$
$
$

63,956
73,141
29,304
12,806
75,823
42,630

(1)

TargetpercentagechangedeffectiveApril1,2015from80%to100%.Thetargetpayoutasapercentofbasesalaryisbasedoneightmonthsat80%targetand
fourmonthsat100%target.

(2)

Mr.VermeerschsincentiveispaidinEurosandwasconvertedfromEurostoU.S.dollarsusingtheannualaverageexchangerateasoftheendofFiscal2015of
1equalto$1.1745.
U.S.Officersmayelecttodeferupto100%oftheirannualcashincentiveintotheDonaldsonCompany,Inc.DeferredCompensationand401(k)ExcessPlan.
Long-Term
Incentives

WebelievethatLong-TermIncentivestiedtoourcommonstockhelpaligntheinterestsofourExecutiveOfficerstotheinterestsofourShareholders.We
deliverourlong-termincentivesprimarilythroughstockoptionawardsandperformanceshareawardsthataregrantedannually.
Our long-term incentive awards are based on a competitive market value by position level targeted at the market median. Each year the Committee
determinestheLong-TermIncentivevaluesforeachofourExecutiveOfficersbasedonthemarketdataprovidedintheMercerreview.
Approximatelyone-half of that value will be provided in stock options and one-half in performance share awards through our Long-Term Compensation
Plan.
Long-Term Compensation Plan .ThepurposeofourLong-TermCompensationPlanistoprovidealong-termincentiveforourOfficerswhichwillreward
them for the Companys achievement of predetermined levels of long-term Company financial performance. The Long-Term Compensation Plan measures
performanceoverathree-yearperiodandtheawardispaidoutattheendoftheperiodbasedontheattainmentofthepre-establishedCommittee-approvedfinancial
performancegoals.ThisawardispaidoutinCompanystockwhichhelpstoaligntheinterestsofourOfficerstotheinterestsofourShareholders.
Anewthree-yearperformancecycleisestablishedeachyear.Basedonourpeergroupmarketdata,theCommitteeestablisheseachnewaward,includingthe
financialperformanceobjectives,theawardmatrix,andpayouttargets(thenumberofperformanceunits)foreachOfficer.
For the award granted in Fiscal 2015, the target number of performance units is approximately one-half of the long-term incentives by position level as
determinedbytheCommittee.Thetargetnumberofperformanceunitsisbasedonthatvaluedividedbythetwelve-monthweightedaverageCompanystockpriceas
oftheendofthefiscalyearinwhichtheannualgrantwasmade.
The potential payouts under the Long-Term Compensation Plan range from 0% to 200% of the target shares based on the predetermined levels of
achievementoverthethree-yearperiod.
TheperformanceobjectivesarebasedontwometricswhichtheCommitteebelievesarekeytoourlong-termfinancialsuccess:growthinnetsalesandROI.
Exceptasprovidedbelow,resultsforgrowthinnetsalesandROImustmeetthethresholdperformancelevelforbothmeasuresinorderforapayouttobeachieved.
ThesetargetsaresetbytheCommitteepriortothebeginningofeachthree-yearcycle.TheCommitteebelievesitisakeyobjectivefortheCompanytomaintaina
certainlevelofROIforourShareholderswheneconomicconditionsresultinsalesgrowththatisbelowthethreshold.Therefore,apayoutrangingfrom10%to50%
oftargetisavailablebasedonachievementofpredeterminedROIresultswhenthepredeterminedsalesgrowthisbelowthreshold.
26

TableofContents
AwardsforOfficerswithcorporateresponsibilityarebasedonoverallCompanygrowthinnetsalesandROI.AwardsforOfficerswithbusinesssegmentor
regionalresponsibilityarebased50%ontheirbusinesssegmentorregionresultsfornetsalesandROIand50%onoverallCompanyresults.Asestablishedbythe
Committee,businesssegmentsandregionscanhavedifferentnetsalesandROItargetgoalsfromtheoverallCompanygoals.
Fortheperformancecyclewiththethree-yearperiodthatendedJuly31,2015,theCompanyexperiencedadecreaseinnetsalesduetothechallengingglobal
businessconditions,therefore therewasnopayoutforthegrowthinnetsalesperformance measure. TheCompanys averageannualtargetROIforthatcyclewas
19.0%.ActualCompanyROIachievementforthatcyclewas20.0%.ThecombinationofthesetworesultedinanachievementforCorporategoalsof29%ofthetarget
level.
Our Engine Products business segment also experienced a decrease in net sales over the three-year period and they achieved an average ROI of 23.9%,
resultinginachievementof25%ofthetargetlevel.ForourIndustrialProductsbusinesssegment,salesdeclinedoverthethree-yearperiodandtheaverageROIwas
24.1%,resultinginachievementof29%ofthetargetlevel.
ThetargetsharesandtheactualsharepayoutfortheNEOswere:

Named Executive Officer

TodCarpenter
WilliamCook
JimShaw
JayWard

Target Shares

5,100
21,300
3,300
6,000

Actual Share Payout

1,377
6,220
964
1,743

ThepayoutsarebasedonthepositiontheNEOheldatthebeginningofthecycle.Therefore,Mr.CarpenterreceivedapayoutbasedontheEngineProducts
businesssegmentresults.
Mr.ScalfandMr.VermeerschwerenoteligiblefortheLong-TermCompensationPlanperformancecyclethatendedonJuly31,2015.
AU.S.OfficermayelecttodeferhisorherLong-TermCompensationPlanpayoutintotheDonaldsonCompany,Inc.DeferredCompensationand401(k)
ExcessPlan.
Stock Options .TheCommitteemakesannualstockoptionawardstoourOfficers.Stockoptionsvestoverathree-yearperiodfromthedateofthegrantin
one-thirdincrementseachyearandhaveaten-yearterm.ThedateofthegrantisthedatethegrantsareapprovedbytheCommitteeandthegrantpriceistheclosing
priceonthedateofthegrant.Onanannualbasis,theCommitteedecidesthenumberofoptionsgrantedtoourOfficers.
Thenumberofoptionsisbasedonapproximatelyone-halfofthelong-termincentivevaluebypositionlevelasapprovedbytheCommitteedividedbythe
BlackScholesvalueasdescribedinNoteItotheConsolidatedFinancialStatementsinourAnnualReportonForm10-KforFiscal2015.
Stockoptiongrantsaremadeunderthe2010MasterStockIncentivePlanandalloptionsarenon-qualifiedstockoptions.Forstockoptionsgrantedpriorto
Fiscal2011,grantsprovidedtoanOfficerwithinthefirstfiveyearsofbeingnamedanOfficerhadareloadprovision.Thisprovisionprovidedanewoptiongranttobe
establisheduponexerciseoftheoriginalgrant.Reloadstockoptionsareautomaticallygrantedunderthetermsoftheoriginalstockoptionagreementtowhichthey
relateandnofurtheractionoftheCommitteeisrequired.Thereloadstockoptionisgrantedforthenumberofsharestenderedaspaymentfortheexercisepriceandtax
withholdingobligation.Theoptionpriceofthereloadoptionisequaltothemarketpriceofthestockonthedateofexerciseandwillexpireonthesamedateasthe
originaloption.StockoptionsthatarecurrentlygrantedtoOfficersdonothaveareloadprovision.
Restricted Stock .RestrictedstockawardsaregrantedtoOfficersinspecialcircumstances.TheCommitteemaygrantarestrictedstockawardaspartofthe
hiringofanewOfficer,inrecognitionofasignificantchangeinrolesandresponsibilitiesforanOfficer,orasaretentionvehicleforacurrentOfficer.Restrictedstock
grants generally have a five-year cliff vesting schedule. Dividend equivalents are paid in cash on restricted stock during the vesting period. The following are the
outstandingrestrictedstockgrantsforourNEOs.

Named Executive Officer

TodCarpenter
JamesShaw
JamesShaw
ThomasScalf
WimVermeersch
JayWard

Grant Date

9/21/2012
9/17/2010
9/21/2012
11/25/2013
1/9/2012
2/25/2014

27

Shares

2,000
4,000
2,000
3,000
3,000
20,000

Vesting Date

9/21/2017
9/17/2015
9/21/2017
11/25/2018
1/9/2017
2/25/2017

TableofContents
Benefits
Toensurethatweprovideacompetitivetotalcompensationprogramwhichsupportsoureffortstoattractandretainkeyexecutiveleadership,theCompany
providesindirectcompensation,suchashealthandwelfarebenefitsandretirementbenefits,toitsOfficers.ThefollowingarethebenefitsprovidedtotheNEOsother
thanMr.Vermeersch.
Health and Welfare Benefits .OurU.S.OfficersparticipateinthesamehealthandwelfareprogramsasallotherCompanyU.S.salariedEmployees.
Retirement Benefits .OurU.S.OfficersparticipateinthefollowingretirementplanswhichareprovidedtomostotherCompanyU.S.salariedEmployees:

Salaried
Employees
Pension
Plan
isadefinedbenefitpensionplanwhichprovidesretirementbenefitstoeligibleU.S.Employeesthroughacash
balancebenefit.ItisdesignedtomeettherequirementsofaqualifiedplanunderERISAandtheInternalRevenueCode.SeethePensionBenefits
Tableandnarrativeformoreinformationonthisplan.
InJuly2013,theCompanyannouncedthateffectiveAugust1,2013,theplanisfrozentoanyEmployeeshiredonorafterAugust1,2013.Effective
August1,2016,EmployeeshiredpriortoAugust1,2013willnolongercontinuetoaccrueCompanycontributioncreditsundertheplan.

Retirement
Savings
and
Employee
Stock
Ownership
Plan
isadefinedcontributionplandesignedtomeettherequirementsofaqualifiedplanunder
ERISA and the Internal Revenue Code and to encourage our Employees to save for retirement. Most of our U.S. Employees are eligible to
participateinthisplan.Participantscancontributeonapretaxbasisupto50%oftheirtotalcashcompensation,uptotheIRSannualdeferrallimits.
The Company matches 100% of the first 3% of compensation that a participant contributes plus 50% of the next 2% of compensation that a
participantcontributes.
In July 2013, the Company announced that Employees hired on or after August 1, 2013 are eligible for a 3% annual Company retirement
contributioninadditiontotheCompanymatchdescribedabove.EffectiveAugust1,2016,EmployeeshiredpriortoAugust1,2013willbeeligible
forthe3%annualCompanyretirementcontribution.

BecauseMr.VermeerschisnotbasedintheU.S.,hedidnotparticipateinthebenefitprogramsdiscussedabove.Heparticipatedinthehealth,welfareand
retirement programs provided to Employees at the Companys Leuven, Belgium location. These benefits included disability, life insurance, and health insurance.
Leuven, Belgium Employees also participate in a defined benefit pension plan, the Defined Benefit Plan for the Benefit of Donaldson Europe BVBA. This plan
providesalumpsumbenefitatretirementof2.4timesbasesalaryuptotheComputationCeiling(46,657.55throughJune30,2015and47,117.80beginningJuly1,
2015)plus8.4timesbasesalaryovertheComputationCeiling.Thelumpsumvalueisproratedbyyearsofservicelessthan40.
Executive Benefits .Inordertoattractandretainkeyexecutiveleadership,theCompanyalsoprovidesthefollowingexecutiveretirementplansanddeferred
compensationplansforourNEOsotherthanMr.Vermeersch:

ExcessPensionPlan

DeferredCompensationand401(k)ExcessPlan

SupplementalExecutiveRetirementPlan(frozentonewparticipantsasofJanuary1,2008)

DeferredStockOptionGainPlan(frozentonewdeferralelections)

ESOPRestorationPlan(frozenplan)

Mr.VermeerschparticipatedintheSwissLife MultiPlan,whichisadefined contribution planforexecutive leadership inBelgium. Thecontributions are


madesolelybytheCompanyandareequalto0.6%ofbasesalaryuptotheContributionCeiling(46,657.55throughJune30,2015and47,117.80beginningJuly1,
2015)plus1.6%ofbasesalaryabovetheContributionCeiling.PerBelgianlaw,thecontributionshaveaminimumguaranteedreturnof3.25%.
Fordetailsontheseplans,refertothePensionBenefitsTableandnarrativeandtheNon-QualifiedDeferredCompensationTableandnarrative.
28

TableofContents
Perquisites
EffectiveJanuary1,2011,theCompanydoesnotprovideanyperquisitestoourNEOsbasedintheU.S.
Mr. Vermeersch is located in Belgium and has a Company-provided automobile and 850 annually for tax filing assistance. The Company believes it is
necessarytoprovidethesebenefitswhichareconsistentwithnormalmarketpracticeinhiscountryofresidence.
Change
in
Control
Agreements
TheCompanyhasenteredintoaChangeinControlAgreement(CICAgreement)witheachofourOfficers.OtherthantheCICAgreements,wedonot
haveanyemploymentcontractswithourNEOs,exceptthatwehaveanemploymentcontractwithMr.Vermeerschthatisconsistentwiththetermsofemployment
contractsfordirectorlevelemployeesoftheCompanyinBelgium.
TheCommitteebelievesthatourCICAgreements,whichcontainadouble-triggerassistusinretainingourexecutiveleadershipandaredesignedtoenable
ourOfficerstomaintainobjectivityintheeventofachangeincontrolsituationandtobetterprotecttheinterestsofourShareholders.TheCommitteealsobelieves
thatthechangeincontrolprovisionsinourstockoptionawards,Long-TermCompensationPlan,anddeferredcompensationplans,whicharetriggeredbythechange
incontrolitselfandarenotdependentuponanyqualifyingterminationofemploymentevent,areimportantbecausetheyprovideretentionincentivesduringwhatcan
beanuncertaintimeforOfficersandalsoprovideadditionalassurancestotheCompanythatitwillbeabletocompleteatransactionthattheBoardbelievesisinthe
bestinterestsofourShareholders.
TheCICAgreementineffectduringFiscal2015providesthat,uponachangeincontrol,iftheOfficersemploymentwiththeCompanyisterminatedwithin
24months:

ofthechangeincontrolwithoutcause,or

ofthechangeincontrol,orundercertaincircumstancesapotentialchangeincontrol,bytheOfficerforgoodreason,

thentheCompanyshallpayorprovidethefollowingseverancepaymentstotheOfficer:

AcashlumpsumequaltoamultipleofthesumoftheOfficersbasesalaryplustheOfficerstargetcashincentivefromtheAnnualCashIncentive
Planthenineffect.ThemultipleisbasedonlevelwithintheCompanyasfollows:

ChairmanandCEOthreetimesthesumofbasesalaryandtargetannualincentive

SeniorVicePresidentstwotimesthesumofbasesalaryandtargetannualincentive

VicePresidentsonetimesthesumofbasesalaryandtargetannualincentive

Thirty-sixmonthsofhealth,life,accident,anddisabilitycoverage

Acashlumpsumequalto:

ThevalueofthebenefitundereachpensionplanassumingthebenefitisfullyvestedandtheOfficerhadthreeadditionalyearsofbenefit
accrual;less

Thevalueofthevestedbenefitaccruedundereachpensionplan

TheCICAgreementprovidesthattheOfficerspaymentswillbereducedtothemaximumamountthatcanbepaidwithouttriggeringanexcisetax
liability.Thisreductionwouldonlyoccurifthenetamountofthosepaymentsisgreaterthanthenetamountofpaymentswithoutthereduction.

Outplacementservices,suitabletotheOfficersposition,foruptothreeyears

UndertheCompanysnon-qualifieddeferredcompensationplansandtheexcessplansdescribedabove,thepaymenttotheOfficerofhisorhervestedbenefit
isacceleratedtobepayableintheformofalumpsumimmediatelyfollowingachangeincontrolfollowedbyaqualifyingtermination.
29

TableofContents
Stock Ownership Requirements
InordertoensurecontinualalignmentwithourShareholders,theCommitteehasestablishedstockownershiprequirementsforourOfficers.TheCommittee
believesthatlinkingasignificantportionoftheOfficerspersonalholdingstotheCompanyslong-termsuccess,asreflectedinthestockprice,providesOfficersa
stake similar to that of our Shareholders. Therefore, Officers are expected to acquire and hold a significant amount of the Companys stock. The Committee has
establishedstockownershiprequirements(basedonallsharesofCompanystockownedbyanOfficer,includingunvestedrestrictedstock,butexcludingunexercised
stockoptions)forourOfficersasfollows:

TentimesbasesalaryforourChairmanandourCEO

FivetimesbasesalaryforourSeniorVicePresidents

ThreetimesbasesalaryforourVicePresidents

Inaddition,onceinitialownershiprequirementsaremet,Officersmustretain25%ofallnetsharesreceivedfromstockoptionexercises.
NewOfficersareexpectedtomeettheirownershiprequirementwithinfiveyearsofbeingnamedanOfficer.AsoftheendofFiscal2015,alltheNEOswho
hadbeeninOfficerrolesattheCompanyforatleastfiveyearshadmettheirownershiprequirements.
Stock Hedging and Pledging Policy
TheCompanyHedgingandPledgingPolicyprohibitstheCompanysDirectorsandExecutiveOfficersfromengaginginahedgeofCompanystock,which
includesanyinstrumentortransactionthroughwhichtheDirectororExecutiveOfficeroffsetsorreducesexposuretotheriskofpricefluctuationsinCompanystock.
ThepolicyalsoprohibitspledgesofCompanystock(e.g.ascollateralforaloanorbyholdingCompanysecuritiesinamarginaccount)byDirectorsorExecutive
Officers.
Named Executive Officer Compensation
Thedeterminationofthebasesalary,annualincentive,andequitycompensationforFiscal2015forourCEOuntilApril1,2015,WilliamCook,andourCEO
asofApril1,2015,TodCarpenter,wasmadeasdescribedaboveintheCompensationProcesssectionofthisCompensationDiscussionandAnalysis.
Mr. Carpenters Compensation. EffectiveApril1,2015whenMr.CarpenterbecameCEO,hisbasesalarywasincreasedto$700,000.
Mr.CarpenterearnedanannualcashincentiveforFiscal2015of$63,956whichwillbepaidinNovember2015.Thisamountwascalculatedasdescribed
aboveundertheAnnualCashIncentivesection.Mr.Carpentersannualcashincentivewasbasedona4%oftargetlevelachievementofoperatingincomepercentage,
a66.6%oftargetlevelachievementofROI,andabelowthresholdachievementforbothEPSandnetsales.
Mr. Carpenter earned a Long-Term Compensation Plan award payout for the three-year cycle that ended July 31, 2015 of 1,377 shares, based on an
achievementlevelof29%oftargetfortheCompanyand25%fortheEngineProductsbusinesssegment.Thisawardwasdeterminedasdescribedaboveunderthe
Long-TermCompensationPlansection.
Mr.CarpenterreceivedanannualstockoptiongrantinDecember2014of54,000shares.Thisoptiongrantvestsoverathree-yearperiodfromthedateof
grantinone-thirdincrementsandhasaten-yearterm.Theoptionpricewas$38.78,whichwastheclosingstockpriceonthegrantdate.Theamountoftheoptiongrant
wasdeterminedasdescribedaboveintheStockOptionssection.Mr.CarpenteralsoreceivedastockoptiongrantonJanuary30,2015of55,000shares.Thisoption
wasgrantedbytheCommitteeinrecognitionofMr.CarpenterssuccessiontoPresidentandCEO.Thegrantvestsoverathree-yearperiodfromthegrantdateinonethirdincrementsandhasaten-yearterm.Theoptionpricewas$36.56,whichwastheclosingstockpriceonthegrantdate.
Mr. Cooks Compensation. EffectiveJanuary1,2015,Mr.Cooksbasesalarywasincreasedto$978,500(reflectinga3%increase)andwasdecreasedto
$650,000effectiveApril1,2015whenhetransitionedfromPresidentandCEOtoChairmanoftheBoard.
Mr.CookearnedanannualcashincentiveforFiscal2015of$73,141whichwillbepaidinNovember2015.Thisamountwascalculatedasdescribedabove
undertheAnnualCashIncentivesection.Mr.Cooksannualcashincentivewasbasedona4%oftargetlevelachievementofoperatingincomepercentage,a66.6%of
targetlevelachievementofROI,andabelowthresholdachievementforbothEPSandnetsales.
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TableofContents
Mr.CookearnedaLong-TermCompensationPlanawardpayoutforthethree-yearcyclethatendedJuly31,2015of6,220shares,basedonanachievement
levelof29%oftarget.ThisawardwasdeterminedasdescribedaboveundertheLong-TermCompensationPlansection.Mr.Cookreceivedanannualstockoption
grantinDecember2014of134,500shares.Thisoptiongrantvestsoverathree-yearperiodfromthedateofgrantinone-thirdincrementsandhasaten-yearterm.The
optionpricewas$38.78,whichwastheclosingstockpriceonthegrantdate.TheamountoftheoptiongrantwasdeterminedasdescribedaboveintheStockOptions
section.
EachoftheotherNEOsispaidthesamecomponentsofcompensationastheCEO,andtheyaredeterminedasdescribedinthisCompensationDiscussionand
Analysis. The determination of each of the other NEOs base salary, annual incentive, and equity compensation was determined as described above in the
CompensationProcesssection.
Tax Considerations
TheCommitteemonitorsanychangesinregulationswhenreviewingthevariouselementsofourexecutivecompensationprogram.Section162(m)ofthe
InternalRevenueCodegenerallydisallowsfederaltaxdeductionsforcompensationinexcessof$1millionpaidtotheCEOandthenextthreehighestpaidOfficers
(other than the CFO) whose compensation is required to be reported in the Summary Compensation Table of the Proxy Statement. Certain performance-based
compensationisnotsubjecttothisdeductionlimitation.
The1991MasterStockCompensationPlanandthe2001MasterStockIncentivePlan,bothofwhichhaveexpired,wereapprovedbyShareholdersin1991
and2001,respectively.The2010MasterStockIncentivePlanwasapprovedbyShareholdersatthe2010annualmeeting.Theseplanslimitthenumberofsharesunder
astockoptionortheLong-TermCompensationPlanthatcanbegrantedinanyoneyeartoanyoneindividualtofurtherthepolicyofpreservingthetaxdeductionfor
compensation paidtoexecutives. OurOfficer AnnualCashIncentive andourLong-TermCompensationPlanswereadoptedbytheCommitteeassub-plansofthe
2010 Master Stock Incentive Plan, subject to all the terms and limits of that Plan. The awards provided by these sub-plans are intended to qualify as qualified
performance-based compensation under Section 162(m) of the Internal Revenue Code. The Committee reviewed the potential consequences for the Company of
Section162(m)andbelievesthatthisprovisiondidnotaffectthedeductibilityofcompensationpaidtoourOfficersinFiscal2015.
TheCommitteereservestheright,inappropriatecircumstancesandforthebenefitofShareholders,toawardcompensationthatmayresultinalossoftax
deductibilityunderSection162(m).
TheCommitteedesignsandadministersourequitycompensation,ournon-qualifieddeferredcompensation,andCICAgreementstobeincompliancewith
Section409A,thefederaltaxrulesaffectingnon-qualifieddeferredcompensation.
Compensation Risk Analysis
The Company has reviewed and assessed its compensation plans. To complete this review, the Company completed an inventory and analysis of its
compensationprogramsgloballyandreviewedthiswiththeCommittee.Throughthisreview,wedeterminedthatourcompensationprograms,policies,andpractices
forourEmployeesarenotreasonablylikelytohaveamaterialadverseeffectontheCompany.Inmakingthisdetermination,wetookintoaccountthecompensation
mix for our Employees along with the various risk control features of our programs, including balanced performance targets, our stock ownership guidelines, and
appropriateincentivecaps.

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TableofContents
Summary Compensation Table
The following table provides summary information concerning compensation paid or accrued by the Company to or on behalf of the Companys Named
ExecutiveOfficers(NEOs):ourCEO,ourCFO,andeachofourthreeothermosthighlycompensatedOfficerswhoservedinsuchcapacitiesasoftheendofFiscal
2015forservicesrenderedduringthe2013,2014,and2015fiscalyears.

Salary
($)

(1)

Stock
Awards (2)
($)

Option
Awards (3)
($)

63,956
387,114
63,775

158,192
100,523
36,361

All Other
Compensation (6)
($)

122,986
198,539
97,792

Total
($)

Year

2015
2014
2013

580,865
429,062
326,308

William Cook (7)


Chairman
oftheBoard

2015
2014
2013

861,246
937,077
900,789

0
1,398,532
762,014

1,377,011
1,298,286
873,798

73,141
1,028,418
168,808

1,348,517
319,391
24,777

79,151
47,799
94,312

3,739,066
5,029,503
2,824,498

James Shaw
VicePresidentand
CFO

2015
2014
2013

350,000
341,621
297,741

178,080
198,058
194,344

194,522
153,434
102,587

29,304
213,151
35,328

68,663
56,760
14,231

24,926
16,616
18,871

845,495
979,640
663,102

Thomas Scalf (8)


SeniorVicePresident,
EngineProducts

2015

332,321

245,280

266,188

12,806

79,035

20,214

955,844

Wim Vermeersch (9)


VicePresident,Europe,Middle
EastandAfrica

2015
2014

342,382
383,742

87,360
240,472

148,451
153,434

75,823
188,869

85,117
78,991

53,237
45,495

792,370
1,091,003

Jay Ward
SeniorVicePresident,
IndustrialProducts
_______________

2015
2014
2013

409,831
391,119
346,373

266,188
391,572
227,475

42,630
161,280
33,069

37,386
22,369
29,198

1,289,092
2,108,840
854,875

PresidentandCEO

1,052,450
518,393
218,555

Non-Equity
Incentive
Plan
Compensation (4)
($)

Change in
Pension
Value and
NonQualified
Deferred
Compensation
Earnings (5)
($)

Name and Principal Position


Tod Carpenter (7)

1,333,920
561,838
278,202

3,312,369
2,195,469
1,020,993

245,280
1,112,814
218,760

287,777
29,686
0

(1)

NEOsareeligibletodeferaportionoftheirbasesalaryintotheDeferredCompensationand401(k)ExcessPlan.ForFiscal2015,Mr.Cookdeferred$40,192
of his base salary into the Plan and for Fiscal 2014, Mr. Cook deferred $54,785 of his base salary into the Plan. The Plan allows participants to choose
differentinvestmentalternatives.Mr.Cookchose to allocate his deferral to be credited with a fixed rate of return. For more information on the Deferred
Compensationand401(k)ExcessPlan,seetheNon-QualifiedDeferredCompensationsection.

(2)

This column represents the aggregate grant date fair value of performance-based stock awards granted during the fiscal year under our Long-Term
CompensationPlanforourNEOsanddoesnotreflectcompensationactuallyreceivedbytheNEOs.Theperformanceperiodfortheawardgrantedduring
Fiscal2015isAugust1,2015throughJuly31,2018.TheperformanceperiodfortheawardgrantedduringFiscal2014isAugust1,2014throughJuly31,
2017. The performance period for the award granted during Fiscal 2013 is August 1, 2013 through July 31, 2016. The aggregate grant date fair value is
computedinaccordancewithFASBASCTopic718.RefertoNoteIoftheConsolidatedFinancialStatementsinourAnnualReportonForm10-KforFiscal
2015forourpolicyandassumptionsmadeinthevaluationofshare-basedpayments.
For2014, this column includes an additional Long-Term Compensation Planaward made to Mr.Vermeersch onDecember 6,2013.Mr. Vermeersch had
previouslynotbeeneligibleforthisplan.ThisawardisforthecyclebeginningonAugust1,2013andpayoutwillbeproratedbasedonhiseffectivedatein
theplan.
Thegrantdatefairvalueisbasedontheprobableoutcomeoftheperformanceconditionswhichisthetargetpayoutundereachawardincludedinthecolumn.
Thegrantdatefairvaluebasedonthemaximumpayoutawardsgrantedduringeachfiscalyearisthefollowing:

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TableofContents

Name

TodCarpenter
WilliamCook
JamesShaw
ThomasScalf
WimVermeersch
JayWard

$
$
$

Long-Term Compensation Plan Award Granted during:


Fiscal 2013

Fiscal 2014

Fiscal 2015

415,644
1,524,028
247,928
N/A
N/A
437,520

$
$
$

$
$

1,123,676
2,797,064
396,116
N/A
480,944
541,628

$
$
$
$

2,667,840
N/A
356,160
490,560
174,720
490,560

Mr.CookdidnotreceiveaLong-TermCompensationPlanawardduringFiscal2015.
For2014, this column also reflects the aggregate grant date fair value of $842,000 for a restricted stock grant of 20,000 shares awarded to Mr. Ward on
February25,2014.
(3)

Thiscolumnrepresentstheaggregategrantdatefairvalueofstockoptionawardsgrantedduringthe fiscal year under the Companys 2010Master Stock


Incentive Plan and 2001 Master Stock Incentive Plan. These amounts were calculated in accordance with FASB ASC Topic 718. Refer to Note I of the
ConsolidatedFinancialStatementsinourAnnualReportonForm10-KforFiscal2015forourpolicyandassumptionsmadeinthevaluationofshare-based
payments.TheannualstockoptiongrantsforourNEOsweremadeonDecember5,2014forFiscal2015,December9,2013forFiscal2014,andDecember
7,2012forFiscal2013,thedatesonwhichtheywereapprovedbytheCommittee.Thegrantpriceforthoseoptionswastheclosingmarketpriceofthestock
onthosedates.
TheFiscal2015valueforMr.Carpenterincludes$499,598reflectingthegrantdatefairvalueofastockoptiongrantgrantedbytheCommitteeonJanuary
30, 2015 in recognition of his succession to CEO. The Fiscal 2014 value for Mr. Carpenter includes $241,032 reflecting the grant date fair value of a
promotionaloptiongrantedbytheCommitteeonApril1,2014.
TheFiscal2014valueforMr.Wardincludes$63,669and$50,542reflectingthegrantdatefairvalueofreloadoptionsgrantedonSeptember12,2013and
March27,2014.
TheFiscal2013valueforMr.Cookincludes$44,183,reflectingagrantdatefairvalueofareloadoptiongrantedonAugust28,2012.

(4)

(5)

ThisistheamountearnedunderourAnnualCashIncentivePlanasdescribedintheCompensationDiscussionandAnalysisforthefiscalyear.TheFiscal
2015amountwaspaidtoMr.ScalfonOctober9,2015andwillbepaidtotheotherNEOsinNovember2015,theFiscal2014amountwaspaidonOctober
10, 2014, and the Fiscal 2013 amount was paid on October 11, 2013. Our NEOs can elect to defer all or a portion of their annual cash incentive to the
DeferredCompensationand401(k)ExcessPlan.ForFiscal2013,2014and2015,thefollowingdeferralsoftheannualcashincentiveweremade:

Name

WilliamCook
JayWard

$
$

Fiscal 2013

0
3,307

Fiscal 2014

$
$

514,209
16,128

Fiscal 2015

$
$

0
4,263

Thiscolumnincludestheannualchange,ifpositiveonanaggregatebasis,inthevalueofourU.S.NEOspensionbenefitsforthefollowingplans:

SalariedEmployeesPensionPlan

ExcessPensionPlan

SupplementalExecutiveRetirementPlan

For Mr. Vermeersch, this column includes the annual change in value of his pension benefits in the Swiss Life Defined Benefit Plan for the Benefit of
DonaldsonEuropeBVBA.TheamountwasdeterminedinEurosandwasconvertedtoU.S.dollarsusingtheannualaverageexchangerateforFiscal2015of
1equalto$1.1745.
Thiscolumnalsoincludesthe amounts for the dollar value of the interest accrued that is above the market interest rates determined under SEC rules for
compensationdeferredpriortoJanuary1,2011undertheDeferredCompensationand401(k)ExcessPlan.FordeferralsmadepriortoJanuary1,2011,the
interestrateforthePlanassetbytheCommitteewastheten-yearTreasuryBondrateplustwopercent.EffectivefordeferralsmadeafterDecember31,2010,
theinterestrateassetbytheCommitteeistheten-yearTreasuryBondrate.

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TableofContents

TheFiscal2015changeinpensionvalueandabovemarketinterestamountsareasfollows:

Name

Change in
Pension Value

TodCarpenter
WilliamCook
JamesShaw
ThomasScalf
WimVermeersch
JayWard

$
$
$
$
$
$

(6)

158,192
1,323,014
68,663
79,035
85,117
287,777

Above Market
Interest

$
$
$
$
$
$

0
25,503
0
0
0
0

ThefollowingcomponentscomprisetheamountsinthiscolumnforFiscal2015:

TodCarpenter
WilliamCook
JamesShaw
ThomasScalf
WimVermeersch
JayWard
______________

Retirement
Contributions (a)

Name

$
$
$
$
$
$

38,405
75,587
20,126
17,409
5,132
22,844

Life
Insurance (b)

$
$
$
$
$
$

2,322
3,564
810
810
0
1,242

Restricted
Stock
Dividend

$
$
$
$
$
$

1,990
0
3,990
1,995
1,995
13,300

80,269(c)
0
0
0
46,110(d)
0

$
$
$
$
$
$

Other

$
$
$
$
$
$

Total

122,986
79,151
24,926
20,214
53,237
37,386

a.

ForU.S.NEOs,thisincludestheCompanymatchtotheRetirementSavingsandEmployeeStockOwnershipPlanandtheDeferredCompensation
and401kExcessPlan.ForMr.Vermeersch,thisincludestheCompanycontributiontotheSwissLifeMultiPlan.ThecontributionismadeisEuros
andwasconvertedtoU.S.dollarsusingtheannualaverageexchangerateforFiscal2015of1equalto$1.1745.

b.

TheimputedincomeontheCompany-providedbasiclifeinsuranceinexcessof$50,000

c.

Mr.CarpenterwasanexpatriateonassignmentinBelgiumfromAugust1,2008throughSeptember 30,2011.Mr.Carpenterreceivedexpatriate
compensationandbenefitsthatareavailableonthesamebasistoallU.S.Employeesonexpatriateassignments.AlthoughMr.Carpenterhasnot
workedinEuropesinceSeptember2011,itoftentakesafewyearsafteranEmployeesreturntotheU.S.beforethetaxequalizationpaymentscan
be finally settled. The $80,269 reported in the Summary Compensation Table for Fiscal 2015 was due to Mr. Carpenters expatriate status as
follows:

d.

ForeignTaxPayment
TaxGross-Up
TaxPreparation
TaxEqualization
Total

$
$
$
$
$

48,376
1,176
500
30,217
80,269

Mr.VermeerschisaBelgiumEmployee.Thiscolumnincludesstatutoryvariablevacationpayof$25,195,taxpreparationassistanceof$998,anda
company-providedautomobileof$19,917.

(7)

Mr.CookandMr.CarpenterarealsoDirectors.NeitherMr.CooknorMr.CarpenterreceivedcompensationforhisserviceasaDirector.

(8)

Mr.ScalfwasnotaNEOinFiscal2013orFiscal2014;therefore,hisinformationisonlyprovidedforFiscal2015.

(9)

Mr.VermeerschwasnotaNEOinFiscal2013;therefore,hisinformationisonlyprovidedforFiscal2014andFiscal2015.Theseamountsaresetforthin
Mr.Vermeerschsemploymentcontract.
ThemonthlyamountspaidtoMr.VermeerschinEuroswereconvertedtoU.S.dollarsusingtheaverageexchangerateforthemonththecompensationwas
paid.TheotheramountsthatwerepaidtoMr.VermeerschinEuroswereconvertedtoU.S.dollarsusingtheannualaverageexchangerateforFiscal2014of
1to$1.3607andforFiscal2015of1equalto$1.1745.

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TableofContents
Fiscal 2015 Grants of Plan-Based Awards Table
ThistableprovidesinformationregardingeachgrantofanawardmadetoourNEOsduringFiscal2015.Thisincludesthefollowingawards:

Fiscal2015AnnualCashIncentivewhichwasapprovedbytheCommitteeduringFiscal2015pursuanttotheAnnualCashIncentivePlan;

StockawardspursuanttotheLong-TermCompensationPlanforthethree-yearincentivecyclebeginningAugust1,2015whichwasapprovedby
theCommitteeduringFiscal2015;

AnnualStockoptionsgrantedpursuanttothe2010MasterStockIncentivePlanduringFiscal2015;

Name and
Award Type

Tod Carpenter
AnnualCash
Incentive
StockAwards
AnnualStock
Option
StockOption

William Cook (5)


AnnualCash
Incentive
AnnualStock
Option

James Shaw
AnnualCashIncentive
StockAwards
AnnualStock
Option

Thomas Scalf
AnnualCashIncentive
StockAwards
AnnualStock
Option

Wim Vermeersch
AnnualCash
Incentive
StockAwards
AnnualStock
Option

Jay Ward
AnnualCash
Incentive
StockAwards
AnnualStock
Option

Grant Date

Estimated Future Payouts


Under Non-Equity Incentive
Plan Awards (1)
Threshold
Target
Maximum
($)

($)

($)

Estimated Future Payouts


Under Equity Incentive
Plan Awards (2)
Threshold
Target
Maximum
(#)

(#)

(#)

All Other
Stock
Awards:
Number
of Shares of
Stock or
Units
(#)

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)

Exercise
Grant
or
Date
Base
Fair Value
Price
of Stock
of
and

Option
Option
Awards
Awards

($/Sh)
($)

606,200

1,212,400

7/31/2015

3,970

39,700

79,400

1,333,920

12/5/2014

54,000(3)

38.78

552,852

1/30/2015

55,000(4)

36.56

499,598

715,000

1,430,000

210,000

420,000

530

5,300

10,600

134,500(3)

38.78

1,377,011

178,080

19,000(3)

38.78

194,522

245,280

38.78

266,188

12/5/2014

7/31/2015

12/5/2014

7/31/2015

201,024

402,048

730

7,300

14,600

12/5/2014

26,000(3)

139,049

250,287

7/31/2015

260

2,600

5,200

87,360

12/5/2014

38.78

148,451

7/31/2015

247,200

444,960

730

7,300

14,600

245,280

12/5/2014

38.78

266,188

14,500(3)

26,000(3)

_______________
(1)

The Threshold, Target, and Maximum represent the range of potential payments for Fiscal 2015 under the Annual Cash Incentive Plan described in the
Compensation Discussion and Analysis based on the NEOs base salary as of July 31, 2015. The amount actually earned and paid out is based on the
attainmentofpre-establishedperformancegoalsandisreflectedintheSummaryCompensationTable.

(2)

TheThreshold,Target,andMaximumrepresenttherangeofpaymentsundertheLong-TermCompensationPlandescribedintheCompensationDiscussion
andAnalysiswhichareforthethree-yearcycleapprovedbytheCommitteeduringFiscal2015andbeginningAugust1,2015.Theamountsinthesecolumns
reflectsharesofstockandarebasedontheattainmentofpre-establishedperformancegoals.

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TableofContents

(3)

TheAnnualStockOptionGrantsweregrantedtoourNEOsonDecember5,2014asdescribedintheCompensationDiscussionandAnalysis.Thesegrants
wereapprovedbytheCommitteeonthegrantdate.AlloptionsaregrantedwithanexercisepriceequaltotheclosingstockpriceoftheCompanyscommon
stockonthedateofthegrant,December5,2014,andvestoverathree-yearperiodfromdateofgrant,inone-thirdincrements.

(4)

ThisisaStockOptionGranttheCommitteemadetoMr.CarpenterinrecognitionofhisappointmentasCEO.Thisoptionhasanexercisepriceequaltothe
closingstockpriceoftheCompanyscommonstockonthedateofthegrant,January30,2015,andvestsoverathree-yearperiodfromdateofgrant,inonethirdincrements.

(5)

AsMr.CooktransitionedfromCEOtotheChairmanonlyrole,hedidnotreceivetheLong-TermCompensationPlanawardapprovedbytheCommittee
duringFiscal2015forthethree-yearcyclebeginningAugust1,2015.

Outstanding Equity Awards at 2015 Fiscal Year-End


ThefollowingtablesummarizestheequityawardsheldbyourNEOsasofthelastdayofFiscal2015.

Name
TodCarpenter

WilliamCook

JamesShaw

ThomasScalf

Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)

5,000
1,000
10,000
11,000
17,600
18,000
15,000
24,000
16,333
7,834
6,667
0
0
109,000
112,000
142,600
153,000
116,000
116,000
62,000
36,667
0
5,000
5,000
6,000
6,000
6,000
6,000
13,000
7,667
4,334
0
1,000
4,000
4,667
3,500
0

Option Awards

Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)

0
0
0
0
0
0
0
0
8,167(5)
15,666(6)
13,333(7)
54,000(8)
55,000(9)
0
0
0
0
0
0
31,000(5)
73,333(6)
134,500(8)
0
0
0
0
0
0
0
3,833(5)
8,666(6)
19,000(8)
0
0
2,333(5)
7,000(6)
26,000(8)

Option
Exercise
Price
($)

16.495
16.075
17.550
23.000
17.275
21.200
29.070
34.880
33.580
42.070
42.680
38.780
36.560
17.550
23.000
17.275
21.200
29.070
34.880
33.580
42.070
38.780
16.400
17.550
23.000
17.275
21.200
29.070
34.880
33.580
42.070
38.780
29.070
34.880
33.580
42.070
38.780

Option
Expiration
Date

1/23/2016
7/26/2016
12/5/2016
12/4/2017
12/9/2018
12/11/2019
12/10/2020
12/9/2021
12/7/2022
12/9/2023
4/1/2024
12/5/2024
1/30/2025
12/5/2016
12/4/2017
12/9/2018
12/11/2019
12/10/2020
12/9/2021
12/7/2022
12/9/2023
12/5/2024
12/16/2015
12/5/2016
12/4/2017
12/9/2018
12/11/2019
12/10/2020
12/9/2021
12/7/2022
12/9/2023
12/5/2024
12/10/2020
12/9/2021
12/7/2022
12/9/2023
12/5/2024

36

Number of
Shares of
Stock or
Units Held
That Have
Not Vested
(#)

2,000(10)

4,000(11)
2,000(12)

3,000(13)

Stock Awards

Market
Value of
Shares
of
Stock or
Units
That
Have
Not
Vested (1)
($)

67,200

134,400
67,200

100,800

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)

5,700(2)
(3)
13,900
39,700(4)

20,900(2)
34,600(3)

3,400(2)
4,900(3)
5,300(4)

6,700(3)
7,300(4)

Equity
Incentive Plan
Awards:
Market
Value of
Unearned
Shares,
Units, or
Other Rights
That Have
Not
Vested (1)
($)
191,520
467,040
1,333,920

702,240
1,162,560

114,240
164,640
178,080

225,120
245,280

TableofContents

Name
WimVermeersch

JayWard

Option Awards

Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)

1,500
2,000
1,000
3,000
2,500
16,000
9,333
4,334
0
5,000
9,422
7,732
17,246
10,788
14,486
6,788
6,335
33,000
33,000
17,000
7,834
0

Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)

0
0
0
0
0
0
4,667(5)
8,666(6)

14,500(8)
0
0
0
0
0
0
0
0
0
0
8,500(5)
15,666(6)
26,000(8)

Option
Exercise
Price
($)

16.495
19.825
15.865
21.135
29.070
34.880
33.580
42.070
38.780
16.495
22.315
41.790
22.060
23.125
29.965
33.425
38.270
29.070
34.880
33.580
42.070
38.780

Option
Expiration
Date

1/23/2016
1/15/2018
1/15/2019
1/14/2020
12/10/2020
12/9/2021
12/7/2022
12/9/2023

12/5/2024
1/23/2016
12/5/2016
12/4/2017
12/9/2018
12/9/2018
12/11/2019
12/11/2019
12/11/2019
12/10/2020
12/9/2021
12/7/2022
12/9/2023
12/5/2024

Stock Awards

Number of
Shares of
Stock or
Units Held
That Have
Not Vested
(#)

3,000(14)

20,000(15)

Market
Value of
Shares
of
Stock or
Units
That
Have
Not
Vested (1)
($)

100,800

672,000

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)

2,835(2)
3,000(3)
2,600(4)

6,000(2)
6,700(3)
7,300(4)

Equity
Incentive Plan
Awards:
Market
Value of
Unearned
Shares,
Units, or
Other Rights
That Have
Not
Vested (1)
($)
95,256
100,800
87,360

201,600
225,120
245,280

_______________
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)

ThemarketvalueiscalculatedusingtheclosingstockpriceontheNYSEattheendofFiscal2015.
ThisamountistheTargetpayoutfortheperformance-basedstockawardspursuanttotheLong-TermCompensationPlanforthethree-yearincentivecycle
endingJuly31,2016iftheperformancegoalsdescribedintheCompensationDiscussionandAnalysisaremet.
ThisamountistheTargetpayoutfortheperformance-basedstockawardspursuanttotheLong-TermCompensationPlanforthethree-yearincentiveperiod
endingJuly31,2017iftheperformancegoalsdescribedintheCompensationDiscussionandAnalysisaremet.
ThisamountistheTargetpayoutfortheperformance-basedstockawardspursuanttotheLong-TermCompensationPlanforthethree-yearincentiveperiod
endingJuly31,2018iftheperformancegoalsdescribedintheCompensationDiscussionandAnalysisaremet.
ThisstockoptionwasgrantedonDecember7,2012andvestsoverathree-yearperiodfromthegrantdateinone-thirdincrementseachyear.Thisgrantwill
be100%vestedonDecember7,2015.
ThisstockoptionwasgrantedonDecember9,2013andvestsoverathree-yearperiodfromthegrantdateinone-thirdincrementseachyear.Thisgrantwill
be100%vestedonDecember9,2016.
ThisstockoptionwasgrantedonApril1,2014andvestsoverathree-yearperiodfromthegrantdateinone-thirdincrementseachyear.Thisgrantwillbe
100%vestedonApril1,2017.
ThisstockoptionwasgrantedonDecember5,2014andvestsoverathree-yearperiodfromthegrantdateinone-thirdincrementseachyear.Thisgrantwill
be100%vestedonDecember5,2017.
ThisstockoptionwasgrantedonJanuary30,2015andvestsoverathree-yearperiodfromthegrantdateinone-thirdincrementseachyear.Thisgrantwillbe
100%vestedonJanuary30,2018.
Mr.Carpentersrestrictedstockgrantof2,000sharesvestsonSeptember21,2017.
Mr.Shawsrestrictedstockgrantof4,000sharesvestsonSeptember17,2015.
Mr.Shawsrestrictedstockgrantof2,000sharesvestsonSeptember21,2017.
Mr.Scalfsrestrictedstockgrantof3,000sharesvestsonNovember25,2018.
Mr.Vermeerschsrestrictedstockgrantof3,000sharesvestsonJanuary9,2017.
Mr.Wardsrestrictedstockgrantof20,000sharesvestsonFebruary25,2017.

37

TableofContents

Fiscal 2015 Option Exercises and Stock Vested Table


ThefollowingtablesummarizesinformationonstockoptionawardsexercisedduringFiscal2015,theLong-TermCompensationPlanpayoutsforthecycle
endingJuly31,2015,andrestrictedstockawardsthatvestedduringFiscal2015forourNEOs.

Name

Option Awards
Number of
Shares Acquired
on Exercise (#)

TodCarpenter
WilliamCook
JamesShaw
ThomasScalf
WimVermeersch
JayWard
_______________

0
159,500
3,000
0
1,500
0

Value Realized
on Exercise (1)
($)

0
3,652,345
80,475
0
34,505
0

Stock Awards
Number of
Shares Acquired
on Vesting (#)

5,377
6,220
964
0
0
1,743

Value Realized
on Vesting (2)
($)

203,078
183,925
28,505
0
0
51,541

(1)

Amountreportedrepresentsthemarketpriceofourcommonstockontheexercisedate,lesstheexerciseprice,multipliedbythenumberofsharesexercised.

(2)

Amountreportedrepresentstheclosingpriceofourcommonstockasofthevestingdatemultipliedbythenumberofsharesacquiredonvesting.

Pension Benefits
TheCompanyprovidespensionbenefitstoourU.S.Officersthroughthefollowingplans:

SalariedEmployeesPensionPlan

ExcessPensionPlan

SupplementalExecutiveRetirementPlan

AsaresidentofBelgium,Mr.Vermeerschisnoteligiblefortheplanslistedabove.HeparticipatesintheplantheCompanyprovidestoEmployeesatour
Leuven,Belgiumlocation:theSwissLifeDefinedBenefitPlanfortheBenefitofDonaldsonEuropeBVBA.
Salaried Employees Pension Plan
TheSalariedEmployeesPensionPlanisadefinedbenefitplanthatprovidesretirementbenefitstooureligibleEmployeesthroughacashbalancebenefit.
Participants accumulate a benefit in a hypothetical account from interest credits and Company contribution credits. The Company contribution credits vary with
service,age,andcompensation.Aparticipantsbenefitis100%vestedafterthreeyearsofservice.Atretirementortermination,aparticipantwhohasavestedbenefit
canreceivethebenefitintheformofalumpsumoranactuariallyequivalentannuity.
AnEmployeesaccountearnsinteresteachyearbasedontheaverageyieldonone-yearTreasuryConstantMaturitiesduringthemonthofJunepriortothe
planyearplus1%.ThisistheInterestCreditingRate.TheminimumannualInterestCreditingRateis4.83%.
TheCompanycontributioncreditconsistsofabasicCompanycreditandanexcessCompanycredit.ThebasicCompanycreditisequaltothebasicCompany
creditpercentage(seetablebelow)multipliedbyaparticipantscompensationduringtheplanyear.TheexcessCompanycreditisequaltotheexcessCompanycredit
percentage(seetablebelow)multipliedbyaparticipantscompensationduringtheplanyearwhichexceedsthesocialsecuritytaxablewagebase.Thecompensation
usedinthecalculationistotalcashcompensationpaidduringtheplanyearwhichisAugust1July31.
Companycontributioncreditsarecreditedtotheaccountbalanceattheendofeachplanyear.ThebasicandexcessCompanycontributioncreditpercentages
arebasedonthesumofaparticipantsageplusyearsofserviceattheendoftheplanyear.AsofJuly31,2015,thesumofageplusyearsofservicefortheNEOswas
asfollows:Mr.Carpenter,75;Mr.Cook,96;Mr.Shaw,57;Mr.Scalf,73;andMr.Ward,68.ThefollowingaretheCompanycreditpercentages:

38

TableofContents

Age Plus Years of Service

Lessthan40
4049
5059
6069
70ormore

Company Credit Percentages


Basic

Excess

3.0%
4.0%
5.0%
6.5%
8.5%

3.0%
4.0%
5.0%
5.0%
5.0%

InJuly2013,theCompanyannouncedthateffectiveAugust1,2013,theplanwillbefrozentoanyEmployeeshiredonorafterAugust1,2013.Effective
August1,2016,EmployeeshiredpriortoAugust1,2013willnolongercontinuetoaccrueCompanycontributioncreditsundertheplan.
Excess Pension Plan
The Excess Pension Plan mirrors the Salaried Employees Pension Plan. This Plan is an unfunded, non-qualified plan that primarily provides retirement
benefits that cannot be paid under the Salaried Employees Pension Plan due to the Internal Revenue Code limitations on qualified plans for compensation and
benefits.VestedbenefitsarepaidoutofthisPlanonorafterterminationorretirementinupto20annualinstallmentsoralumpsumaccordingtoelectionsmadebythe
participantinaccordancewithapplicableIRSregulations.EffectiveAugust1,2016,Employeeswillnolongercontinuetoaccruebenefitsunderthisplan.
Supplemental Executive Retirement Plan (SERP)
The SERP is designed to guarantee our Officers a minimum lump sum retirement benefit from all Company funded retirement programs (including any
retirementbenefitsfromapreviousemployer)equalto30%oftheparticipantsaveragecompensation(averageofthethreehighestconsecutiveyears)multipliedby
yearsofservice(maximumof20years).TodetermineifanyportionofthisbenefitwouldbepayableundertheSERP,allCompany-providedretirementbenefitsfrom
theSalariedEmployeesPensionPlan,theExcessPensionPlan,theRetirementSavingsandEmployeeStockOwnershipPlan,andtheDeferredCompensationand
401(k)ExcessPlan,plusanyretirementbenefitsthatareprovidedfromapreviousemployerarecombinedtooffsettheformuladescribedabove.
Thisbenefitispayableatage62withtenyearsofservice.Compensationinthisplanisdefinedasbasesalaryearnedduringtheplanyearplustheannualcash
incentiveearnedduringtheplanyear.Areducedbenefitisavailableatage55with15yearsofservice.Thebenefitisreducedby2%foreachyearthebenefitprecedes
age62.
EffectiveJanuary1,2008,theCommitteedecidedtofreezetheSERPtonewentrants.Therefore,Mr.Carpenter,Mr.ScalfandMr.Shawarenoteligiblefor
theSERP.
EffectiveAugust1,2016,participantswillnolongeraccrueabenefitunderthisplan.
Defined Benefit Plan for the Benefit of Donaldson Europe BVBA
Thisplanprovidesparticipantswithalumpsumbenefitatretirementof2.4timespensionsalary(limitedtotheComputationCeilingwhichis46,657.55
through June 30, 2015 and 47,117.80 for beginning July 1, 2015) plus 8.4 times the pension salary over the Computation Ceiling. This amount is proportionally
reducedforservicelessthan40yearsatretirement.Thisbenefitispayableatage65andcanbepaidinalumpsum,apartiallumpsumandapensionannuity,orafull
pensionannuity.Areducedlumpsumisavailableatage60.

39

TableofContents
ThefollowingtablesummarizesinformationwithrespecttoPensionPlansforeachNEO.
FISCAL 2015 PENSION BENEFITS

Name

TodCarpenter

WilliamCook

JamesShaw

ThomasScalf

WimVermeersch

JayWard

_______________
(1)

Plan Name

SalariedEmployeesPensionPlan
ExcessPensionPlan

SalariedEmployeesPensionPlan
ExcessPensionPlan
SupplementalExecutiveRetirementPlan(2)

SalariedEmployeesPensionPlan
ExcessPensionPlan

SalariedEmployeesPensionPlan
ExcessPensionPlan

DefinedBenefitPlanfortheBenefitof
DonaldsonEuropeBVBA

SalariedEmployeesPensionPlan
ExcessPensionPlan
SupplementalExecutiveRetirementPlan(2)

Number
of Years
of
Credited
Service (#)

19
19

35
35
35

10

11
11
26
26

17
17
17

Present
Value of
Accumulated
Benefit (1) ($)

Payments
During Last
Fiscal Year ($)

493,131
284,579

993,239
3,240,400
2,641,743

229,938
111,783

474,224
87,475

386,258

400,562
272,476
284,022

0
0

0
0
0
0
0
0
0

0
0
0
0

The present value of the accumulated benefit for the Salaried Employees Pension Plan and the Excess Pension Plan was determined by projecting the
August1,2015cashbalanceamountstoage65usinga5.0%interestcreditrateanddiscountingitusinga4.25%interestrate.
ThepresentvalueoftheSupplementalExecutiveRetirementPlanasofAugust1,2015wasdeterminedbyprojectingthecashbalanceplanstoage62usinga
5.0%interestrateandprojectingthedefinedcontributionplanstoage62usinga9.75%interestrate.Thisamountwasthendiscountedusinga4.25%interest
rate.
The present value of the accumulated benefit for the Defined Benefit Plan for the Benefit of Donaldson Europe BVBA was determined using a 2.35%
discountrate.
TheactualaccruedbalancesasoftheendofFiscal2015wereasfollows:

Name

TodCarpenter
WilliamCook
JamesShaw
ThomasScalf
JayWard

Salaried
Employees
Pension Plan

$
$
$
$
$

463,150
971,527
201,741
422,836
363,397

Excess
Pension
Plan

$
$
$
$
$

267,277
3,169,563
98,075
77,996
247,195

Foradditionalassumptionsusedinthiscalculation,refertoNoteFoftheConsolidatedFinancialStatementsinourAnnualReportonForm10-KforFiscal
2015.
(2)

TobeeligibleforabenefitundertheSupplementalExecutiveRetirementPlan,aparticipantmustbeatleastage55andmeettheservicerequirements.Asof
theendofFiscal2015,Mr.Cookmetthateligibilityrequirementforabenefit,ifany,underthisplan.

40

TableofContents
Non-Qualified Deferred Compensation
TheCompanyallowsU.S.Officerstodefercompensationthroughthefollowingplans:

DeferredCompensationand401(k)ExcessPlan

DeferredStockOptionGainPlan(EffectiveJanuary1,2008,thisPlanwasfrozentonewdeferralelections.DeferralsarestillmadeintothePlan
basedondeferralelectionsmadepriortoJanuary1,2008.)

ThroughtheDeferredCompensationand401(k)ExcessPlan,theparticipantsareeligibletodeferthefollowing:

Upto75%ofBaseSalary

Upto100%ofAnnualCashIncentive

Upto100%oftheLong-TermCompensationPlanstockaward

Upto25%ofcompensationinexcessofthequalifiedplancompensationlimits($255,000for2013,$260,000for2014and$265,000for2015)

Any deferred cash (base salary and annual cash incentive) will receive a matching Company contribution as described under the Retirement Savings and
EmployeeStockOwnershipPlanintheCompensationDiscussionandAnalysis.
Participantshavethefollowingtwoinvestmentalternativesforthedeferralsofbasesalaryandannualcashincentive:

Allocatetheaccounttobecreditedwithafixedrateofreturn(thisrateisapprovedannuallybytheCommittee).FordeferralsmadepriortoJanuary
1,2011,therateofreturnisequaltotheten-yearTreasuryBondrate plustwopercent,andfordeferralsmadeafterJanuary1,2011,therateof
returnisequaltotheten-yearTreasuryBondrate.

Allocatetheaccounttooneormoremeasurementfunds.Severalmutualfundinvestmentsareavailable,andfundsmaybereallocatedamongthe
investmentalternativesatanytime.ThesefundsmirrorthefundsutilizedinourRetirementSavingsandEmployeesStockOwnershipPlan.These
amountsarefundedthroughanon-qualifiedrabbitrust.

Allstockdeferrals(Long-TermCompensationPlanawards,RestrictedStockGrants,andStockOptionGains)remaininstock,arefundedthroughanonqualifiedrabbitrust,andarepaidoutinstock.ThesedeferralsearnanyquarterlydividendsthatarepaidontheCompanysCommonStock.
TheCompanyalsosponsorstheESOPRestorationPlan,whichisanon-qualifiedsupplementaldeferredcompensationplanthatwasestablishedonAugust1,
1990andisfundedthroughanon-qualifiedrabbitrust.ThisPlanprovidedbenefitsthatwerenotpayableundertheCompanysEmployeeStockOwnershipPlandue
toIRSlimitsoncompensation.TheEmployeeStockOwnershipPlanwasaleveragedESOPandcontributionsweremadetothePlanfromAugust1987throughJuly
1997.Currently,theonlynewcontributionsmadetotheESOPRestorationPlanareforanyquarterlydividendequivalents.Thesequarterlydividendequivalentsare
basedondividendspaidontheCompanysCommonStock.
Paymentsaremadeundertheseplansintheformofalumpsumorannualinstallmentsofupto20years.Thedeferralelectionsandpaymentelectionsare
madeinaccordancewiththetimingrequirementsofapplicableIRSregulations.
ThefollowingtablesummarizesinformationwithrespecttotheparticipationofourNEOsinourDeferredCompensationand401(k)ExcessPlanandour
DeferredStockOptionGainPlan.
FISCAL 2015 NON-QUALIFIED DEFERRED COMPENSATION

Name

TodCarpenter
WilliamCook
JamesShaw
ThomasScalf
WimVermeersch(5)
JayWard

Executive
Contributions
in Last FY (1)
($)

49,209
629,319
24,252
14,878
0
30,531

Registrant
Contributions
in Last FY (2)
($)

41

28,119
64,987
12,126
5,951
0
12,167

Aggregate
Earnings in
Last FY (3)
($)

(5,442)
330,059
4,753
(1,685)
0
(11,762)

Aggregate
Withdrawals/
Distributions
($)

0
0
0
0
0
0

Aggregate
Balance
at Last
FYE (4) ($)

246,304
28,270,897
133,172
66,370
0
229,956

TableofContents

_______________
(1)
Includesamountsdeferredintothenon-qualifieddeferredcompensationplansasfollows:

DeferredBaseSalaryof$40,192forMr.CookasreportedintheSummaryCompensationTable.

DeferredAnnualCashIncentiveof$514,209forMr.Cookand$16,128forMr.WardasreportedintheSummaryCompensationTable.

401(k)Excesscontributionsof$49,209forMr.Carpenter,$74,918forMr.Cook,$24,252forMr.Shaw,$14,878forMr.Scalf,and$14,403for
Mr.Ward.

(2)

This reflects the company match for deferred salary, deferred annual incentive, and 401(k) Excess contributions. These amounts were reported under All
OtherCompensationintheSummaryCompensationTable.

(3)

This includes amounts listed in the Summary Compensation Table in the Change in Pension Value and Non-Qualified Deferred Compensation Earnings
columnforAboveMarketInterest(seeFootnote5oftheSummaryCompensationTable).

(4)

ThisincludesbalancesforourNEOsfromthenon-qualifieddeferredcompensationplansasfollows:

Name

TodCarpenter
WilliamCook
JamesShaw
ThomasScalf
WimVermeersch
JayWard

Deferred
Compensation
and 401(k)
Excess Plan
Balance at FYE

$
$
$
$
$
$

246,304
14,160,147
133,172
66,370
0
229,956

Deferred Stock
Option Gain
Plan Balance at
FYE

$
$
$
$
$
$

0
13,715,476
0
0
0
0

ESOP
Restoration
Plan
Balance at FYE

$
$
$
$
$
$

0
395,274
0
0
0
0

ThisalsoincludesthefollowingamountsthatwerereportedascashcompensationtoourNEOsintheSummaryCompensationTableforcurrentandprevious
years:Mr.Carpenter,$56,144;Mr.Cook,$1,295,463;Mr.Shaw,$27,336;Mr.Scalf,$5,951;andMr.Ward,$107,932.
(5)

AsaresidentofBelgium,Mr.VermeerschisnoteligiblefortheNon-qualifiedDeferredCompensationPlans.

Potential Payments Upon Termination or Change in Control


ThefollowingdiscussionandtablesreflecttheamountofcompensationthatwouldbepaidtotheNEOsintheeventofterminationofemploymentofthe
Officerunderseveraldifferentterminationscenarios.
Potential Payments upon Termination Absent a Change in Control
Retirement
OurOfficersareeligibleforretirementatage55withfiveyearsofvestingservice.AsoftheendofFiscal2015,Mr.CarpenterandMr.Cookwereeligible
forretirement.
Uponretirement,alloutstandingstockoptionswillcontinuetoremainoutstandingandareexercisableastheyvestfortheremainderoftheirrespectivetenyearterm(inaccordancewiththetermsofthestockoptionplandocument).Time-basedrestrictedstockgrantsthathavenotvestedwouldbeproratedatretirement.
AsoftheendofFiscal2015,Mr.Carpenterhadoneunvestedrestrictedstockaward.Mr.Carpenterwouldhavereceived1,133sharesofhisrestrictedstock
grantshadheretiredatfiscalyear-end.Thevalueofthosesharesatfiscalyear-endwas$38,069.
Intheeventofretirementduringthefiscalyearaftertheendofthefirstquarter,theOfficerwouldreceiveaproratedannualcashincentiveattheendofthe
applicable performance period for the period of the year when actively employed. If Mr. Carpenter or Mr. Cook had retired at fiscal year-end, each would have
receivedhisfullannualcashincentive(asshownintheSummaryCompensationTable).
ForanyLong-TermCompensationPlanawardsthatarenotvested(i.e.,theyarestillwithinthethree-yearincentivecycle),aparticipantwhoretiresreceives
aproratedpaymentattheendofthethree-yearincentivecyclebasedontheportionoftheperiodduringwhichtheparticipantwasactivelyemployed.Theawardsare
paidoutattheendoftheperformancecycle.IfMr.CarpenterorMr.Cookhadretiredatfiscalyear-end,eachwouldhavereceived1/3oftheawardforthecycle
whichendsJuly31,2017and2/3oftheawardforthecyclewhichendsJuly31,2016.Thefollowingarethesharesandvalueatfiscalyear-endassumingatarget
payout:

42

TableofContents

Name

TodCarpenter
WilliamCook

Shares

8,433
25,466

Value at Fiscal Year-end

$
$

283,349
855,658

PaymentsunderourNon-QualifiedDeferredCompensationPlansandExcessPensionPlanwouldbepaidaccordingtothepaymentelectionsmadebythe
NEO. The amounts reflected in the Non-Qualified Deferred Compensation Table and Pension Benefits Table would have been payable according to the Officers
payment elections inthe event ofaretirement attheendofFiscal2015.If Mr.Cookhadretired atfiscal year-end, thefollowingSERPbenefitswouldhavebeen
payable(pertheirpaymentelection).

Name

WilliamCook

SERP Benefit

2,685,860

Form of Payments

10yearannualinstallments

Mr.CarpenterisnoteligiblefortheSERP.
Involuntary
Termination
Intheeventofaninvoluntaryterminationnotforcause,theCommitteehasthesolediscretiontodeterminetheamount,ifany,ofseverancepaymentsand
benefitsthatwillbeofferedtoaNEO.WehavenoformalemploymentagreementswithourOfficersandtheyarenotcoveredbyourCompanySeverancePlan.Under
ourSeverancePlanforU.S.salariedEmployees,theCompanygenerallypaysseveranceequaltooneweekofbasesalaryforeachyearofserviceuptoamaximumof
26weeks(aminimumof8weeksfordirectorlevel)andaproratedincentiveattarget.Wegenerallypayforcontinuedcoverageforelectedmedicalanddentalbenefits
for a period of one or two months based on years of service. Our NEOs would receive two months of benefit continuation based on their years of service. If the
CommitteeweretofollowourU.S.SeverancePlan,thefollowingpaymentswouldhavebeenmadetoourU.S.NEOsiftheyhadbeeninvoluntarilyterminatedatthe
endofFiscal2015:

Name

TodCarpenter
WilliamCook
JamesShaw
ThomasScalf
JayWard

Severance

$
$
$
$
$

955,769
1,040,000
284,038
368,544
381,892

Benefit Continuation

$
$
$
$
$

1,638
1,628
1,276
2,052
2,272

Per Belgium legislation that pertains to Belgium Employees, Mr. Vermeersch would be eligible for fourteen months plus ten weeks of severance pay or
$380,973,basedontheconversionrateofEurostoU.S.attheendofFiscal2015of1to$1.0988.
Upon involuntary termination, outstanding vested stock options must be exercised within one month of such termination. Unvested stock options and
restrictedstockgrantsthathavenotvestedwouldbeforfeited.
ForanyLong-TermCompensationPlanawardsthatarenotvested(i.e.,theyarestillwithinthethree-yearincentivecycle),theparticipantwillnotreceive
anypaymentforthosecycles.
The amounts reflected in the Non-Qualified Deferred Compensation Table and the Pension Benefits Table would have been payable according to the
Officerspayment elections in the event of a termination at the end of Fiscal 2015. Under the SERP, a participant must be at least age 55 and meet the service
requirementatterminationofemploymenttobeeligibletoreceiveabenefitfromthePlan.HadMr.Cookbeenterminatedattheendofthefiscalyear,thefollowing
SERPbenefitwouldhavebeenpayable:

Name

WilliamCook

SERP Benefit

2,685,860

Form of Payments

10yearannualinstallments

Since Mr. Ward was not age 55 as of the end of Fiscal 2015, there would not have been any SERP benefit payable to him if he had been involuntarily
terminatedattheendofthefiscalyear.Mr.Carpenter,Mr.Scalf,Mr.Shaw,andMr.VermeerscharenoteligiblefortheSERP.

43

TableofContents
Death
IntheeventofthedeathofanOfficer,alloutstandingvestedstockoptionswouldcontinuetoremainoutstandingandwouldbeexercisablebythenamed
beneficiaryforaperiodof36monthsfollowingthedeath.Unvestedstockoptionswouldbeforfeited.
Time-basedrestrictedstockgrantsthathavenotvestedwouldbeproratedatdeath,perthetermsoftheapplicablerestrictedstockawardagreement.Asofthe
endofFiscal2015,fiveofourNEOshaverestrictedstockawards.Theirnamedbeneficiarieswouldhavereceivedthefollowingsharesofrestrictedstockhadthey
diedatthefiscalyear-end.

Name

TodCarpenter
JamesShaw
ThomasScalf
WimVermeersch
JayWard

Shares

1,133
5,000
1,000
2,100
9,444

Value at Fiscal Year-end

$
$
$
$
$

38,069
168,000
33,600
70,560
317,318

Intheeventofdeathduringthefiscalyear,theOfficersbeneficiarywouldreceive,attheendoftheapplicableperformanceperiod,aproratedannualcash
incentive for the period of the year when actively employed. If a death occurred at fiscal year-end for each of our NEOs, the amount listed in the Summary
CompensationTablefortheannualcashincentiveforeachNEOwouldbepaidtohis/herbeneficiary.
For any Long-Term Compensation Plan awards that are not vested (i.e., they are still within the three-year incentive cycle), the participants beneficiary
wouldreceiveaproratedpaymentattheendofthethree-yearincentivecyclebasedontheportionoftheperiodduringwhichtheparticipantwasactivelyemployed.
Thepaymentsaremadeattheendoftheperformancecycle.HadadeathofourNEOsoccurredatfiscalyear-end,theirbeneficiarieswouldhavereceived1/3ofthe
long-termcompensationcyclewhichendsonJuly31,2017and2/3ofthelong-termcompensationcyclewhichendsonJuly31,2016.Mr.Scalfdoesnothavean
awardforthecyclesendingJuly31,2017orJuly31,2016.Thefollowingarethesharesandvalueatfiscalyear-endassumingapayoutattarget.

Name

TodCarpenter
WilliamCook
JamesShaw
WimVermeersch
JayWard

Shares

8,433
25,466
3,900
2,890
6,233

Value at Fiscal Year-end

$
$
$
$
$

283,349
855,658
131,040
97,104
209,429

UponthedeathofaNEO,paymentsunderourNon-QualifiedDeferredCompensationPlansandExcessPensionPlanwouldbeaccelerated.Theamounts
reflectedintheNon-Qualified Deferred Compensation Table andPensionBenefits Tablewouldhavebeenpayable tothenamedbeneficiary asalumpsuminthe
eventofthedeathofaNEOattheendofFiscal2015.
UndertheSERP,ifaparticipantdiesafter15yearsofserviceandpriortoage62,hisorhernamedbeneficiarywillreceivealumpsumbenefitfromthe
SERP.IftheNEOshaddiedattheendofFiscal2015,theirbeneficiarieswouldhavereceivedthefollowinglumpsumfromtheSERP:

Name

WilliamCook
JayWard

SERP Benefit

$
$

2,685,860
1,110,009

Mr.Carpenter,Mr.Shaw,Mr.Scalf,andMr.VermeerscharenoteligiblefortheSERP.
Disability
IntheeventofthedisabilityofanOfficer,alloutstandingstockoptionswouldremainoutstanding,continuetovest,andbeexercisableforaperiodof36
monthsfollowingthedisability.
Time-basedrestrictedstockgrantsthathavenotvestedwouldbeproratedatdisability,perthetermsoftheapplicablerestrictedstockawardagreement.Asof
theendofFiscal2015,fourofourNEOshavearestrictedstockaward.Theywouldhavereceivedthefollowingsharesofrestrictedstockhadtheybecomedisabledat
fiscalyear-end:

44

TableofContents

Name

TodCarpenter
JamesShaw
ThomasScalf
WimVermeersch
JayWard

Shares

1,133
5,000
1,000
2,100
9,444

Value at Fiscal Year-end

$
$
$
$
$

38,069
168,000
33,600
70,560
317,318

Upontheoccurrenceofadisability,eachU.S.Officerwhoparticipatesinourlong-termdisabilityprogramwillreceiveanannualbenefitequalto60%of
totalcashcompensationuntiltheearlierof:(a)age65;(b)recoveryfromthedisability;or(c)death.Theportionofcompensationupto$200,000isfullyinsuredand
payable by our insurance company and the portion of compensation in excess of $200,000 is self-insured and payable by the Company. Had our NEOs become
disabledatfiscalyear-end,theywouldhavereceivedannualdisabilitybenefitsasfollows:

Name

TodCarpenter
WilliamCook
JamesShaw
ThomasScalf
WimVermeersch
JayWard

Annual Disability Benefit


Fully Insured Portion

Self Insured Portion

$
$
$
$
$
$

120,000
120,000
120,000
120,000
200,243
120,000

$
$
$
$
$
$

300,000
543,531
106,154
81,024
0
134,513

Mr.VermeerschsdisabilitybenefitispursuanttotheplanofferedemployeesinBelgium.Thedisabilitybenefitunderthatplanwhichwouldbepayableto
Mr.Vermeerschis182,237,whichwasconvertedtoU.S.dollarsusingtheexchangerateasoftheendofthefiscalyearof1Euroto$1.0988.

Intheeventofdisabilityduringthefiscalyear,theOfficerwouldreceiveaproratedannualcashincentivefortheperiodoftheyearwhenactivelyemployed
perthetermsofthePlan.Ifadisabilityhadoccurredatfiscalyear-endforeachofourNEOs,theamountlistedintheSummaryCompensationTablefortheannual
cashincentivewouldbepaidtothem.
ForanyLong-Term CompensationPlan awards that are not vested (i.e., they are still within the three-year incentive cycle), a disabled participant would
receiveaproratedpaymentattheendofthethree-yearincentivecyclebasedontheportionoftheperiodduringwhichtheparticipantwasactivelyemployed.Hada
disabilityofourNEOsoccurredatfiscalyear-end,theywouldhavereceived1/3ofthelong-termcompensationcyclewhichendsonJuly31,2017and2/3ofthelongtermcompensationcyclewhichendsonJuly31,2016(seetheOutstandingEquityAwardsatFiscalYear-Endtable).Mr.Scalfdoesnothaveanawardforthecycles
endingJuly31,2017andJuly31,2016.Thefollowingarethesharesandvalueatfiscalyear-endassumingapayoutattarget.

Name

TodCarpenter
WilliamCook
JamesShaw
WimVermeersch
JayWard

Shares

8,433
25,466
3,900
2,890
6,233

Value at Fiscal Year-end

$
$
$
$
$

283,349
855,658
131,040
97,104
209,429

Intheeventofaqualifyingdisability,paymentsunderourNon-QualifiedDeferredCompensationPlansandExcessPensionPlanwouldbeaccelerated.The
amounts reflected in the Non-Qualified Deferred Compensation Table and Pension Benefits Table would have been payable as a lump sum in the event of the
disabilityofaNEOattheendofFiscal2015.
UndertheSERP,ifaparticipantbecomesdisabledafter15yearsofserviceandpriortoage62,heorshewillreceivealumpsumbenefitfromtheSERP.If
theNEOshadbecomedisabledattheendofFiscal2015,theywouldhavereceivedthefollowinglumpsumfromtheSERP:

Name

WilliamCook
JayWard

Mr.Carpenter,Mr.Shaw,Mr.Scalf,andMr.VermeerscharenoteligiblefortheSERP.

45

SERP Benefit

$
$

2,685,860
1,110,009

TableofContents
Voluntary
Termination
and
Termination
for
Cause
ANEOisnotentitledtoreceiveanyadditionalformsofseverancepaymentsorbenefitsuponhisvoluntarydecisiontoterminateemploymentoruponhis
terminationbytheCompanyforcausepriortobeingeligibleforretirement.
PaymentsunderourNon-Qualified Deferred CompensationPlansandExcessPensionPlanwouldbepaidaccording tothepaymentelection madebythe
NEO.TheamountsreflectedintheNon-QualifiedDeferredCompensationTableandthePensionBenefitsTablewouldhavebeenpayableaccordingtotheOfficers
paymentelectionsintheeventofaterminationattheendofFiscal2015.UndertheSERP,aparticipantmustbeatleastage55andmeettheservicerequirementat
terminationofemploymenttobeeligibletoreceiveabenefitfromthePlan.HadMr.CookvoluntarilyterminatedorbeenterminatedbytheCompanyforcauseatthe
endofthefiscalyear,thefollowingSERPbenefitwouldhavebeenpayableaccordingtohispaymentelection:

Name

WilliamCook

SERP Benefit

2,685,860

Form of Payments

10yearannualinstallments

SinceMr.Wardwasnotage55asoftheendofFiscal2015,therewouldnothavebeenanySERPbenefitpayabletohimifhehadvoluntarilyterminated
employmentorhadbeenterminatedforcauseattheendofthefiscalyear.Mr.Carpenter,Mr.Shaw,Mr.Scalf,andMr.VermeerscharenoteligiblefortheSERP.
Potential Payments and Benefits Upon Termination Following or in Connection with a Change in Control
Upontheoccurrenceofachangeincontrol,asgenerallydefinedbelow,whetherornotthereisaqualifyingterminationofemployment:

All outstanding unvested stock options will immediately vest and become exercisable. As of the end of Fiscal 2015, the December 7, 2012, the
December9,2013,andtheDecember5,2014stockoptiongrantswerenotfullyvestedfortheNEOs.Mr.CarpenteralsohasanApril1,2014anda
January30,2015stockoptiongrantwhicharenotfullyvested.SeeOutstandingEquityAwardsat2015FiscalYear-Endtable.

Allsharesoftime-basedrestrictedstockwillimmediatelyvestandbecomeunrestricted.AsoftheendofFiscal2015,allNEOsexceptMr.Cook
haveunvestedtime-basedrestrictedstock.SeetheOutstandingEquityAwardsat2015FiscalYear-Endtable.

AnyLong-TermCompensationPlanawardswillimmediatelyvestandbepaidoutinalumpsumattarget.SeetheOutstandingEquityAwardsat
2015FiscalYear-Endtable.

AnyunvestedbenefitsundertheSalariedEmployeesPensionPlanwillimmediatelyvest.AsoftheendofFiscal2015,allU.S.NEOswere100%
vestedintheSalariedEmployeesPensionPlan.

WehavealsoenteredintoChangeinControlAgreements(CICAgreements)witheachoftheNEOs.Generally,achangeincontrolincludestheoccurrence
ofanyofthefollowingeventsorcircumstances:
(a)

The acquisition of 25% or more of the combined voting power of the Companys outstanding shares, other than any acquisition from or by the
CompanyoranyCompany-sponsoredEmployeebenefitplan.

(b)

Consummation of a merger or other business consolidation of the Company other than a transaction where the Companys pre-transaction
Shareholdersretainatleast60%ownershipofthesurvivingentity.

(c)

AchangeintheBoardofDirectorscompositioninwhichtheincumbentDirectors,meaningthoseDirectorswhowerenotelectedinacontested
fashion, are no longer a majority of the Board. The CIC Agreements specify the circumstances under which a Director is deemed to have been
electedinacontestedfashion.

(d)

ApprovalofaplanofliquidationordissolutionoraconsummatedagreementforthesaleofallorsubstantiallyalloftheCompanysassetstoan
entity,unlesstheCompanyspre-transactionShareholdersretainatleast60%ownershipofthesurvivingentity.

TheCICAgreementsprovidethatuponaqualifyingterminationofemploymentinconnectionwithachangeincontrol(seetheCompensationDiscussionand
AnalysisunderChangeinControlAgreementsformoreinformationonaqualifyingtermination),inadditiontotheacceleratedvestingofstockoptionsandrestricted
stockandtheLong-TermCompensationPlanstockawardsdescribedabove,eachOfficerwillreceiveseverancepaymentsequalto:

AcashlumpsumequaltoamultipleofthesumoftheOfficersbasesalaryplustheOfficerstargetcashincentivefromtheAnnualCashIncentive
Planthenineffect.Themultipleisbasedonlevelasfollows:

ChairmanandCEOthreetimesthesumofbasesalaryandtargetannualincentive

SeniorVicePresidentstwotimesthesumofbasesalaryandtargetannualincentive

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TableofContents

VicePresidentsonetimesthesumofbasesalaryandtargetannualincentive

Alumpsumofadditionalpensionbenefitsequalto:

ThevalueofthebenefitundereachpensionplanassumingthebenefitisfullyvestedandtheOfficerhadthreeadditionalyearsofbenefit
accrual;less

Thevalueofthevestedbenefitaccruedundereachpensionplan.

EachOfficerwillalsobeentitledto:

36monthsofcontinuedmedical,dental,vision,life,disability,andaccidentbenefits

OutplacementservicessuitabletotheOfficerspositionforaperiodofthreeyearsoruntilthefirstacceptanceofanemploymentofferifearlierthan
threeyears

For all Officers, the CIC Agreement provides that the Officers payments will be reduced to the maximum amount that can be paid without
triggeringanexcisetaxliability.Thisreductionwouldonlyoccurifthenetamountofthosepaymentsisgreaterthanthenetamountofpayments
withoutthereduction.

ThistablereflectstheadditionalamountsperourCICAgreementsineffectforFiscal2015thatwouldhavebeenpayabletotheNEOsifachangeincontrol
hadoccurredandtheOfficerhadaqualifyingterminationofemploymenteffectiveJuly31,2015.Thetablealsoshowstheacceleratedvestingofstockoptions,timebasedrestrictedstock,Long-TermCompensationPlanstockawards,andretirementplanbenefitsthatwouldbepaidtoourNEOsifachangeincontrolhadoccurred
andtheOfficerhadaqualifyingterminationofemploymenteffectiveJuly31,2015:

Named Executive
Officer

TodCarpenter
WilliamCook
JamesShaw
ThomasScalf
WimVermeersch(6)
JayWard
_______________
(1)

Cash
Severance (1)

$ 4,200,000
$ 4,095,000
$
560,000
$
906,855
$
455,303
$ 1,318,400

Equity (2)

$
$
$
$
$
$

350,723
856,300
332,717
100,847
171,537
881,610

Retirement
Program
Payments (3)

$
504,346
$ 1,414,438
$
204,854
$
214,512
$
145,372
$
675,030

Benefit
Continuation (4)

$
$
$
$
$
$

31,428
31,140
24,912
38,880
0
42,840

Outplacement (5)

$
$
$
$
$
$

75,000
75,000
75,000
75,000
68,295
75,000

Excise Tax
Gross-Up

$
$
$
$
$
$

0
0
0
0
0
0

Total

$
$
$
$
$
$

5,161,497
6,471,878
1,197,483
1,336,094
840,508
2,992,880

UndertheCICAgreement,thisamountisalumpsumequalto:

ThreetimesthesumofbasesalaryandtheannualincentiveattargetforMr.CarpenterandMr.Cook

TwotimesthesumofbasesalaryandtheannualincentiveattargetforMr.ScalfandMr.Ward

OnetimesthesumofbasesalaryandtheannualincentiveattargetforMr.ShawandMr.Vermeersch

(2)

This amount represents the accelerated vesting of the two Long-Term Compensation Plan stock award cycles that are in process as of July 31, 2015 and
assumespaymentattargetachievement.Thisamountalsorepresentstheacceleratedvestingoftheunvestedtime-basedrestrictedstockgrantattheclosing
stockpriceattheendofthefiscalyearforallNEOsexceptMr.Cook.Thisamountalsorepresentstheintrinsicvalueofunvestedstockoptionsthathave
vestingaccelerateduponachange-in-control.

(3)

Thisamountrepresentsthelumpsumvalueofadditionalpensionbenefitsequalto:

ThevalueofthebenefitundereachpensionplanassumingthebenefitisfullyvestedandtheOfficerhadthreeadditionalyearsofbenefitaccrual;
less

Thevalueofthevestedbenefitaccruedundereachpensionplan.

(4)

Thisamountrepresentsthevalueofbenefitcontinuationforthreeyearsbasedonourcurrentpremiumlevels.

(5)

ThisamountisbasedontheassumptionthattheU.S.NEOwouldutilize$25,000peryearinoutplacementservicesforthefullthreeyears.Thisamountfor
Mr.VermeerschisbasedontheaveragecostinBelgiumforoutplacementservices.

(6)

ThecashpaymentsforMr.VermeerschwouldbepaidinEurosandwereconvertedtoU.S.dollarsbasedontheexchangerateasoftheendofthefiscalyear
of1to$1.0988.

UndertheCICAgreementthepaymentcouldbereducedinsituationswheretheOfficerwouldotherwisebesubjecttotheexcisetaxliabilityunderSection
208GoftheInternalRevenueCode.Theamountsinthetableabovedonotreflectanyreductionsthatmightbemade.
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TableofContents
Withachangeincontrolfollowedbyaterminationwithin24months,anypaymentsundertheNon-QualifiedDeferredCompensationPlansdescribedinthe
Compensation Discussion and Analysis and the narrative before the Non-Qualified Deferred Compensation Table would become immediately payable to the
participantintheformofalumpsum.
Withachangeincontrolfollowedbyaterminationwithin24months,anypaymentsundertheExcessPensionPlanandSERPdescribedintheCompensation
DiscussionandAnalysisandthenarrativebeforethePensionBenefitsTablewouldalsobecomeimmediatelypayabletotheparticipantintheformofalumpsum.
UndertheSalariedEmployeesPensionPlanandtheExcessPensionPlan,uponachangeincontrolanyaccruedbenefitsbecomeimmediatelyvested.Asoftheendof
Fiscal2015,allU.S.NEOswere100%vestedundertheseplans.
ITEM 2: RE-APPROVAL OF PERFORMANCE GOalS uNDER THE
DONALDSON COMPANY, INC. 2010 MASTER STOCK INCENTIVE PLAN
Thisisaproposaltore-approvethematerialtermsoftheperformancegoalsavailableundertheDonaldsonCompany,Inc.2010MasterStockIncentivePlan
(2010StockIncentivePlan),asrequiredbytheperformance-basedcompensationrulesunderSection162(m)oftheInternalRevenueCode(Section162(m)).The
2010StockIncentivePlanwaspreviouslyapprovedbyStockholdersonNovember19,2010andhasnotbeenamendedsincethelastapproval.
Background
Section162(m)generallydoesnotallowapubliclyheldcompanytoobtainataxdeductionforcompensationofmorethan$1millionpaidinanyfiscalyear
to certain covered employees unless, among other exceptions, such compensation is considered performance-based in accordance with Section 162(m). Under
Section162(m)ascurrentlyinterpretedbytheInternalRevenueService,thegroupofcoveredemployeesasoftheendofanytaxableyearconsistsofacompanys
ChiefExecutiveOfficeranditsthreeothermosthighlycompensatedexecutiveofficers,otherthantheChiefFinancialOfficer.
The2010StockIncentivePlanisdesignedtopermittheHumanResourcesCommitteetoissuebothequityandcashawardsthatqualifyasperformancebasedcompensation under Section 162(m), provided the grant and payout of the awards comply with all of the procedural requirements of Section 162(m). For
purposesofSection162(m),anawardisperformance-basedifitiseither(i)valuedsolelyonanincreaseinthevalueofsharesafterthedateofgrantofsuchaward
(e.g.,stockoptionsandstockappreciationrights)or(ii)isnotvaluedsolelyonanincreaseinthevalueofsharesafterthegrantofsuchaward,butisnonetheless
conditionedupontheachievementofcertainperformancegoalsduringaspecifiedperformanceperiod(e.g.,performanceshareawardsorannualcashbonus).
Inorder fortheCompany tocontinuetomakeawardsunderthe2010StockIncentivePlanthatwillqualifyasperformance-basedcompensation thatis
exemptfromthe$1milliondeductionlimitunderSection162(m),thematerialtermsoftheperformancegoals,includingtheemployeeswhoareeligibletoreceive
awardsunderthe2010StockIncentivePlan,theperformancemeasuresonwhichperformancegoalsmaybebasedandthemaximumamountsthatmaybeawardedor
paidtoanycoveredemployee,mustbere-approvedbytheCompanysStockholderseveryfiveyears.
The nature of the performance goals and $5,000,000 maximum dollar limit (for awards denominated in cash) are discussed more fully below in the
Description of the 2010 Stock Incentive Plan under Performance Awards. No person may be granted under the 2010 Stock Incentive Plan in any calendar year
awards denominated in shares for more than 1,000,000 shares in the aggregate. If the material terms of the performance goals are not re-approved by the
affirmative vote of a majority of the shares of common stock present in person or by proxy and entitled to vote at the annual meeting, the Company will
continue to use the 2010 Stock Incentive Plan but awards under the 2010 Stock Incentive Plan will not qualify as performance-based compensation.
Description of the 2010 Stock Incentive Plan
Thefollowingisasummaryofthematerialtermsofthe2010StockIncentivePlanandisqualifiedinitsentiretybyreferencetothe2010StockIncentive
Plan.Acopyofthe2010StockIncentivePlanisattachedasAppendixAtothisproxystatement.
Administration
TheHumanResourcesCommittee will administer the 2010Stock Incentive Plan and will have full power and authority to determine whenand to whom
awards will be granted, and the type, amount, form of payment and other terms and conditions of each award, consistent with the provisions of the 2010 Stock
Incentive Plan. In addition, the Human Resources Committee can specify whether, and under what circumstances, awards to be received under the 2010 Stock
Incentive Plan or amounts payable under such awards may be deferred automatically or at the election of either the holder of the award or the Human Resources
Committee.Subjecttotheprovisionsofthe2010StockIncentivePlan,theHumanResourcesCommittee
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TableofContents
mayamendorwaivethetermsandconditions,oracceleratetheexercisability,ofanoutstandingaward.TheHumanResourcesCommitteehasauthoritytointerpret
the2010StockIncentivePlanandestablishrulesandregulationsfortheadministrationofthe2010StockIncentivePlan.
TheHumanResourcesCommitteemaydelegatetoOfficersandDirectorsitspowerstograntawardsunderthe2010StockIncentivePlan,exceptthatthe
HumanResources Committee may not delegate its authority (i) to grant awards to Executive Officers or Directors who are subject toSection16oftheSecurities
Exchange Act of 1934, (ii) in a manner that would violate Section 162(m) of the Internal Revenue Code or (iii) in a manner that would contravene the Delaware
GeneralCorporationLaw.TheBoardofDirectorsmayalsoexercisethepowersanddutiesoftheHumanResourcesCommitteeatanytime,solongasitsactions
wouldnotviolateSection162(m)oftheInternalRevenueCode.
Eligible Participants
AnyEmployee,Officer, consultant,independent contractor, advisor orNon-Employee Director providing services totheCompanyoranyofits affiliates,
whoisselectedbytheHumanResourcesCommittee,iseligibletoreceiveanawardunderthe2010StockIncentivePlan.AsofAugust2015,approximately12,500
Employees,Officers,consultants,independentcontractors,advisorsandNon-EmployeeDirectors,asaclass,wouldhavebeeneligibletoparticipateinthe2010Stock
IncentivePlan.
Shares Available For Awards
Theaggregatenumberofsharesofourcommonstockthatmaybeissuedunderallstock-basedawardsmadeunderthe2010StockIncentivePlanwillbe
(i)9,200,000plus(ii)thenumberofsharessubjecttoawardsoutstandingunderthe2001StockIncentivePlanthat,aftertheeffectivedateofthe2010StockIncentive
Plan,arenotpurchasedorareforfeitedorreacquiredbyDonaldson,orotherwisenotdeliveredtotheparticipantduetoterminationorcancellationofsuchaward.
Certainawardsunderthe2010StockIncentivePlanaresubjecttolimitationsasfollows:

Nopersonmaybegrantedunderthe2010StockIncentivePlaninanycalendaryearawardsdenominatedinsharesformorethan1,000,000sharesin
theaggregate.

Themaximumnumberofsharesthatmaybeawardedunderthe2010StockIncentivePlanpursuanttograntsofawardsotherthanoptionsandstock
appreciationrightsis2,000,000plusthenumberofsharessubjecttoawardsotherthanoptionsandstockappreciationrightsoutstandingunderthe
2001StockIncentivePlanthat,aftertheeffectivedateofthe2010StockIncentivePlan,areforfeitedorreacquiredbyDonaldson,orotherwisenot
deliveredtotheparticipantduetoterminationorcancellationofsuchaward.

TheHumanResourcesCommittee willadjustthenumberofsharesandsharelimits described aboveinthecaseofastockdividendorotherdistribution,


recapitalization,stocksplit,reversestocksplit,reorganization,merger,consolidation,split-up,spin-off,combination,repurchaseorexchangeofshares,issuanceof
warrantsorotherrightsorothersimilarcorporatetransactionoreventthataffectssharesoftheCompanyscommonstock,inordertopreventdilutionorenlargement
ofthebenefitsorpotentialbenefitsintendedtobeprovidedunderthe2010StockIncentivePlan.
Types of Awards and Terms and Conditions
The2010StockIncentivePlanpermitsgrantsof:

stockoptions(includingbothincentiveandnon-qualifiedstockoptions);

stockappreciationrights(SARs);

restrictedstockandrestrictedstockunits;

performanceawardsofcash,stockorproperty;

dividendequivalents;

stockawards;and

otherstock-basedawards.

Awardsmaybegrantedalone,inadditionto,incombinationwithorinsubstitutionfor,anyotherawardgrantedunderthe2010StockIncentivePlanorany
other compensation plan. Awards can be granted for no cash consideration or for any cash or other consideration as may be determined by the Human Resources
Committeeorasrequiredbyapplicablelaw.Awardsmayprovidethatuponthegrant,exerciseorpayoutthereof,theholderwillreceivecash,sharesofCompany
commonstock,promissorynotes,othersecurities,otherawardsorotherproperty,oranycombinationoftheseinasinglepayment,installments,oronadeferredbasis.
TheexercisepricepershareunderanystockoptionandthegrantpriceofanySARmaynotbelessthanthefairmarketvalueofthecommonstockonthedateofgrant
ofsuchoptionorSARexcepttosatisfylegalrequirementsofforeignjurisdictionsoriftheawardisinsubstitutionforanawardpreviouslygrantedbyan
49

TableofContents
entity acquired by Donaldson. Determinations of fair market value under the 2010 Stock Incentive Plan will be made in accordance with methods and procedures
establishedbytheHumanResourcesCommittee.Thetermofawardsmaynotbelongerthantenyearsfromthedateofgrant.AwardswillbeadjustedbytheHuman
ResourcesCommitteeinthecaseofastockdividendorotherdistribution,recapitalization,stocksplit,reversestocksplit,reorganization,merger,consolidation,splitup,spin-off,combination,repurchaseorexchangeofshares,issuanceofwarrantsorotherrightsorothersimilarcorporatetransactionoreventthataffectssharesofthe
Companyscommonstockinordertopreventdilutionorenlargementofthebenefitsorpotentialbenefitsintendedtobeprovidedunderthe2010StockIncentivePlan.
Stock Options. Theholderofanoptionwillbeentitledtopurchaseanumberofsharesofcommonstockataspecifiedexercisepriceduringaspecifiedtime
period,allasdeterminedbytheHumanResourcesCommittee.Theoptionexercisepricemaybepayable,atthediscretionoftheHumanResourcesCommittee,in
cash,sharesofcommonstock,othersecurities,otherawards,orotherpropertyhavingafairmarketvalueontheexercisedateequaltotheexerciseprice.The2010
StockIncentivePlanprovidesthatthetermofanyoptionwillbefixedbytheHumanResourcesCommitteebutwillnotbelongerthantenyearsfromthegrantdateof
theoption.
Stock Appreciation Rights. The holder of an SAR is entitled to receive the excess of the fair market value (calculated as of the exercise date or, at the
HumanResourcesCommitteesdiscretion,asofanytimeduringaspecifiedperiodbeforeoraftertheexercisedate)ofaspecifiednumberofsharesofcommonstock
overthegrantpriceoftheSAR.SARsvestandbecomeexercisableinaccordancewithavestingscheduleestablishedbytheHumanResourcesCommittee.The2010
StockIncentivePlanprovidesthatthetermofanySARwillbefixedbytheHumanResourcesCommitteebutwillnotbelongerthantenyearsfromthegrantdateof
theSAR.
Restricted Stock and Restricted Stock Units. TheholderofrestrictedstockwillownsharesofcommonstocksubjecttorestrictionsimposedbytheHuman
ResourcesCommittee (including, for example, restrictions on the right to vote the restricted shares or to receive any dividends with respect to the shares) for a
specifiedtimeperioddeterminedbytheHumanResourcesCommittee.Theholderofrestrictedstockunitswillhavetheright,subjecttoanyrestrictionsimposedby
theHumanResourcesCommittee,toreceivesharesofcommonstock,oracashpaymentequaltothefairmarketvalueofthoseshares,atsomefuturedatedetermined
bytheHumanResourcesCommittee.IftheparticipantsemploymentorserviceasaDirectorterminatesduringthevestingperiodforanyotherreason,therestricted
stock and restricted stock units will be forfeited, unless the Human Resources Committee determines that it would be in our best interest to waive the remaining
restrictions.
Performance Awards. TheHumanResourcesCommitteemaygrantperformanceawardsunderthe2010StockIncentivePlan.Aperformanceawardmaybe
denominatedandpayable incash, shares ofcommon stock,other securities, other awards, orother property andwillbe conditioned, inwhole orinpart,uponthe
achievement of one or more objective performance goals established by the Human Resources Committee in accordance with the 2010 Stock Incentive Plan. The
Human Resources Committee will determine the length of the performance period, establish the performance goals for the performance period, and determine the
amountsoftheperformanceawardsforeachparticipant.Certainperformanceawardsgrantedunderthe2010StockIncentivePlanthatareconditionedsolelyuponthe
achievementofoneormoreobjectiveperformancegoalsareintendedtoqualifyasperformance-basedcompensationwithinthemeaningofSection162(m)ofthe
InternalRevenueCode(QualifiedPerformanceAwards).
Performancegoalsmustbebasedsolelyononeormoreofthefollowingbusinesscriteria,eitherindividually,alternativelyorinanycombination,appliedon
acorporate,subsidiary,division,businessunit,orlineofbusinessbasis:earningspershare;returnoninvestment;revenues,includingnetsalesgrowth;earnings,net
operating profit; return on equity; profit margins; cost reductions; inventory levels; delivery performance; safety performance; quality performance; core operating
earnings;totalStockholderreturn;cashflow,includingoperatingcashflows,freecashflow,discountedcashflowreturnoninvestment,andcashflowinexcessof
cost of capital; economic value added; Stockholder value added; market share; price to earnings ratio; expense ratios; workforce goals; total expenditures, or
completion of key projects. The measure of performance may be set by reference to an absolute standard or a comparison to specified companies or groups of
companies.TheHumanResourcesCommitteemayprovidethat,indeterminingwhethertheperformancegoalhasbeenachieved,theeffectofcertaineventsmaybe
excluded.Theseeventsinclude,butarenotlimitedto,anyofthefollowing:restructurings,acquisitions,divestitures,discontinuedoperations,extraordinaryitems,and
other unusual or non-recurring charges; an event either not directly related to the operations of Donaldson or not within the reasonable control of the Companys
management;orthecumulativeeffectsoftaxoraccountingchangesinaccordancewithU.S.generallyacceptedaccountingprinciples(orotheraccountingprinciples
whichmaythenbeineffect).
Underthe2010StockIncentivePlan, the maximum amount that may be paid with respect to Qualified Performance Awardsdenominated in cash to any
participantintheaggregateinanytaxableyearis$5,000,000invalue,whetherpayableincash,stockorotherproperty.Inaddition,QualifiedPerformanceAwards
mustcomplywiththerequirementsofSection162(m)oftheInternalRevenueCode.
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Dividend Equivalents. Theholderofadividendequivalent willbeentitled toreceive payments(incash,sharesofcommonstock,othersecurities, other


awardsorotherproperty)equivalenttotheamountofcashdividendspaidbyDonaldsontoitsStockholders,withrespecttothenumberofsharesdeterminedbythe
HumanResourcesCommittee.DividendequivalentswillbesubjecttoothertermsandconditionsdeterminedbytheHumanResourcesCommittee,buttheHuman
ResourcesCommitteemaynotgrantdividendequivalentsinconnectionwithgrantsofoptionsorSARs.Inaddition,the2010StockIncentivePlanprovidesthatno
dividendequivalentpaymentswillbemadeonanyperformanceawardunderthe2010StockIncentivePlanpriortothedateonwhichallconditionsorrestrictions
relatingtosuchawardhavebeensatisfied,waivedorlapsed.
Stock Awards. TheHumanResourcesCommitteemaygrantunrestrictedsharesofcommonstock,subjecttotermsandconditionsdeterminedbytheHuman
ResourcesCommitteeandthelimitationsinthe2010StockIncentivePlan.
Other Stock-Based Awards. TheHumanResourcesCommitteeisalsoauthorizedtograntothertypesofawardsthataredenominatedorpayablein,valued
in whole or in part by reference to, or otherwise based on or related to Donaldsons common stock, subject to terms and conditions determined by the Human
ResourcesCommitteeandthelimitationsinthe2010StockIncentivePlan.
Accounting for Awards
Ifanawardentitlestheholdertoreceiveorpurchasesharesofcommonstock,thesharescoveredbysuchawardortowhichtheawardrelateswillbecounted
onthedateofgrantagainsttheaggregatenumberofsharesavailableforawardsunderthe2010StockIncentivePlan.ForSARssettledinsharesuponexercise,the
aggregatenumberofshareswithrespecttowhichtheSARisexercised,ratherthanthenumberofsharesactuallyissueduponexercise,willbecountedagainstthe
numberofsharesavailableforawardsunderthe2010StockIncentivePlan.Awardsthatdonotentitletheholdertoreceiveorpurchasesharesandawardsthatare
settledincashwillnotbecountedagainsttheaggregatenumberofsharesavailableforawardsunderthe2010StockIncentivePlan.
The2010StockIncentivePlanprovidesthatsharescoveredbyanawardmadeunderthe2010StockIncentivePlan(ortowhichsuchanawardrelates)that
arenotpurchased,thatareforfeitedorarereacquiredbyDonaldson(includingsharesofrestrictedstock,whetherornotdividendshavebeenpaidonsuchshares),or
thataresubjecttoanawardthatotherwiseterminatesoriscancelledwithoutdeliveryofsuchsharesshallbeavailableforawardagainunderthe2010StockIncentive
Plantotheextentofanysuchforfeiture,reacquisition,termination,orcancellation.Inaddition,the2010StockIncentivePlanprovidesthatsharessubjecttoawards
granted under the 2001 Stock Incentive Plan shall be available for award under the 2010 Stock Incentive Plan if such shares are not purchased or areforfeitedor
reacquiredbyDonaldson,orotherwisearenotdeliveredtotheawardeesduetoterminationorcancellationofsuchawardaftertheeffectivedateofthe2010Stock
IncentivePlan.Thefollowingsharesofcommonstockwillnotagainbecomeavailableforissuanceunderthe2010StockIncentivePlan:(i)anysharesofcommon
stockwhichwouldhavebeenissueduponanyexerciseofanoptionbutforthefactthattheexercisepricewaspaidbyanetexerciseoranysharesofcommonstock
tenderedinpaymentoftheexercisepriceofanoption;(ii)anysharesofcommonstockwithheldbyDonaldsonorsharesofcommonstocktenderedtosatisfyanytax
withholdingobligationwithrespecttoanaward;(iii)sharesofcommonstockcoveredbyanSARissuedunderthe2010StockIncentivePlanthatarenotissuedin
connectionwithsettlementinsharesuponexerciseand(iv)sharesthatarerepurchasedbyDonaldsonusingoptionexerciseproceeds.
Duration, Termination and Amendment
No awards may be granted under the 2010 Stock Incentive Plan after the earlier of September 24, 2020 or the date the 2010 Stock Incentive Plan is
discontinuedorterminatedbytheBoardofDirectors.However,unlessotherwiseexpresslyprovidedinanapplicableawardagreement,anyawardgrantedunderthe
2010StockIncentivePlanpriortoexpirationmayextendbeyondtheexpirationofthe2010StockIncentivePlanthroughtheawardsnormalexpirationdate.The
BoardofDirectorsmayamend,alter,suspend,discontinue,orterminatethe2010StockIncentivePlanatanytime,althoughStockholderapprovalmustbeobtained
foranyamendmenttothe2010StockIncentivePlanthatwould:(1)requireStockholderapprovalundertherulesandregulationsoftheSECortheNYSEoranyother
securitiesexchangethatareapplicabletous;(2)increasethenumberofsharesofcommonstockavailableunderthe2010StockIncentivePlan,(3)increasetheaward
limits under the 2010 Stock Incentive Plan, (4) permit repricing of options or SARs, (5) permit awards of options or SARs at a price less than fair market value
contrary to the provisions of the plan or (6) cause Donaldson to be unable to grant incentive stock options under the plan or cause Section 162(m) of the Internal
RevenueCodetobecomeunavailablewithrespecttothe2010StockIncentivePlan.
Prohibition on Repricing Awards and Award Adjustments
NooptionorSARmaybeamended toreduceitsinitialexerciseprice,andnooptionorSARmaybecancelledandreplacedwithawardshavingalower
exerciseprice.However,theHumanResourcesCommitteemayadjusttheexercisepriceof,andthenumberofsharessubjectto,anyoutstandingoptionorSARin
connectionwithastockdividendorother
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distribution,recapitalization,stocksplit,reversestocksplit,reorganization,merger,consolidation,split-up,spin-off,combination,repurchaseorexchangeofshares,
issuanceofwarrantsorotherrightsorothersimilarcorporatetransactionoreventthataffectssharesofourcommonstock,inordertopreventdilutionorenlargement
ofthebenefits,orpotentialbenefitsintendedtobeprovidedunderthe2010StockIncentivePlan.
Transferability of Awards
Exceptincertainlimitedsituationspermittedunderthe2010StockIncentivePlan,awards(otherthanstockawards)underthe2010StockIncentivePlanmay
onlybetransferredbywillorbythelawsofdescentanddistribution.Undernocircumstancesmayoutstandingawards(otherthanstockawards)betransferredfor
value.
U.S. Federal Income Tax Consequences
Grant of Options and SARs. ThegrantofastockoptionorSARisnotexpectedtoresultinanytaxableincomefortherecipient.
Exercise of Options and SARs. Uponexercisinganon-qualifiedstockoption,theoptioneemustrecognizeordinaryincomeequaltotheexcessofthefair
marketvalueofthesharesofcommonstockacquiredonthedateofexerciseovertheexerciseprice,andtheCompanygenerallywillbeentitledatthattimetoan
incometaxdeductionforthesameamount.Theholderofanincentivestockoptiongenerallywillhavenotaxableincomeuponexercisingtheoption(exceptthatan
alternative minimum tax liability may arise), and the Company will not be entitled to an income tax deduction. Upon exercising a SAR, the amount of any cash
received and the fair market value on the exercise date of any shares of common stock received are taxable to the recipient as ordinary income and generally are
deductiblebyDonaldson.
Disposition of Shares Acquired Upon Exercise of Options and SARs. Thetaxconsequenceuponadispositionofsharesacquiredthroughtheexerciseof
anoptionorSARwilldependonhowlongtheshareshavebeenheldandwhethertheshareswereacquiredbyexercisinganincentivestockoptionorbyexercisinga
non-qualifiedstockoptionorSAR.Generally,therewillbenotaxconsequencetoDonaldsoninconnectionwiththedispositionofsharesacquiredunderanoptionor
SAR,exceptthatDonaldsonmaybeentitledtoanincometaxdeductioninthecaseofthedispositionofsharesacquiredunderanincentivestockoptionbeforethe
applicableincentivestockoptionholdingperiodssetforthintheInternalRevenueCodehavebeensatisfied.
Awards Other than Options and SARs. Ifanawardispayableinsharesofcommonstockthataresubjecttosubstantialriskofforfeiture,unlessaspecial
electionismadebytheholderoftheawardundertheInternalRevenueCode,theholdermustrecognizeordinaryincomeequaltotheexcessof(i)thefairmarketvalue
ofthesharesreceived(determined asofthefirsttimethesharesbecometransferable ornotsubjecttosubstantialriskofforfeiture,whicheveroccursearlier)over
(ii) the amount (if any) paid for the shares by the holder of the award. Donaldson will generally be entitled at that time to an income tax deduction for the same
amount.Astootherawardsgrantedunderthe2010StockIncentivePlanthatarepayableeitherincashorsharesofourcommonstocknotsubjecttosubstantialriskof
forfeiture,theholderoftheawardmustrecognizeordinaryincomeequalto(a)theamountofcashreceivedor,asapplicable,(b)theexcessof(i)thefairmarketvalue
ofthesharesreceived (determined asofthedatesuchsharesarereceived) over(ii)theamount(ifany)paidforthesharesbytheholderoftheaward.Donaldson
generallywillbeentitledatthattimetoanincometaxdeductionforthesameamount.
Income Tax Deduction. Subjecttotheusualrulesconcerningreasonablecompensation,includingDonaldsonsobligationtowithholdorotherwisecollect
certainincomeandpayrolltaxes,andassumingthat,asexpected,stockoptions,SARs,andcertainotherperformanceawardspaidunderthe2010StockIncentivePlan
arequalified performance-based compensationwithinthemeaningofSection162(m)oftheInternal RevenueCode,theCompanygenerallywillbeentitled toa
correspondingincometaxdeductionatthetimeaparticipantrecognizesordinaryincomefromawardsmadeunderthe2010StockIncentivePlan.
Special Rules for Executive Officers and Directors Subject to Section 16 of the Securities Exchange Act of 1934. Specialrulesmayapplytoindividuals
subjecttoSection16oftheSecuritiesExchangeActof1934.Inparticular,unlessaspecialelectionismadepursuanttotheInternalRevenueCode,sharesreceived
throughtheexerciseofastockoptionorSARmaybetreatedasrestrictedastotransferabilityandsubjecttoasubstantialriskofforfeitureforaperiodofuptosix
months after the date of exercise. Accordingly, the amount of any ordinary income recognized and the amount of Donaldsons income tax deduction will be
determinedasoftheendofthatperiod.
Delivery of Shares for Tax Obligation. Under the 2010 Stock Incentive Plan, the Human Resources Committee may permit participants receiving or
exercisingawards,subjecttothediscretionoftheHumanResourcesCommitteeanduponsuchtermsandconditionsasitmayimpose,todeliversharesofDonaldsons
commonstock(eithersharesreceiveduponthereceiptorexerciseoftheawardorsharespreviouslyownedbytheparticipant)toDonaldsontosatisfyfederal,stateor
localtaxobligations.
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Section 409A of the Internal Revenue Code. The 2010 Stock Incentive Plan contains provisions intended to prevent adverse tax consequences under
Section409AoftheInternalRevenueCodetoholdersofawardsgrantedunderthe2010StockIncentivePlan.
New Plan Benefits
2010 Master Stock Incentive Plan

Name and
Principal Position

Non-Qualified
Stock Options (1)

(Shares)

Tod Carpenter
PresidentandCEO
William Cook
ChairmanoftheBoard
James Shaw
VicePresidentandCFO
Thomas Scalf
SeniorVicePresident,
EngineProducts
Wim Vermeersch
VicePresident,
Europe,Middle
EastandAfrica
Jay Ward
SeniorVicePresident,
IndustrialProducts
All current Executive
Officers (including
those listed)
(8persons)
All current
non-employee
Directors
(9persons)
All non-Executive
Officer Employees

Restricted
Shares at
Stock (2)
(Shares) Target (3)

Performance Shares
Shares at
Dollar Value
Maximum (4) at Target (3)


Dollar Value
at Maximum (4)

Officer Annual
Cash Incentive (5)

109,000

39,700

79,400 $

1,333,920 $

2,667,840 $

63,956

134,500

0 $

73,141

19,000

5,300

10,600 $

178,080 $

356,160 $

29,304

26,000

7,300

14,600 $

245,280 $

490,560 $

12,806

14,500

2,600

5,200 $

87,360 $

174,720 $

75,823

26,000

7,300

14,600 $

245,280 $

490,560 $

42,630

358,000

70,800

141,600 $

2,378,880 $

4,757,760 $

322,685

126,000

8,763

451,500

12,000

_______________
(1)

ThiscolumnincludesthefollowingstockoptiongrantsmadeduringFiscal2015:
(a)

December5,2014stockoptionawardedtoourExecutiveOfficersasdescribedintheCompensationDiscussionandAnalysis

(b)

TheannualEmployeestockoptionawardedonDecember5,2014toournon-executiveOfficerEmployeesandtwoCEOdelegatedgrantsawarded
duringtheFiscal2015totwonon-executiveOfficerEmployees.

(c)

January2,2015stockoptionawardedtoourNon-EmployeeDirectorsasdescribedintheDirectorCompensationsection.

(d)

January20,2015stockoptionawardedtoMr.CarpenterasdescribedintheCompensationDiscussionandAnalysis.

(2)

ThiscolumnincludesdeferredstockforourNon-EmployeeDirectorsasdescribedintheDirectorCompensationsectionandCEOdelegatedrestrictedstock
grantsawardedduringFiscal2015tofivenon-executiveOfficerEmployees.

(3)

SharesandthedollarvalueonJuly31,2015atatargetattainmentoftheLong-TermCyclePlanawardforperformancecycleAugust1,2015throughJuly31,
2018asdescribedintheCompensationDiscussionandAnalysis.

(4)

SharesandthedollarvalueonJuly31,2015atmaximumpayoutoftheLong-TermCyclePlanawardforperformancecycleAugust1,2015throughJuly31,
2018asdescribedintheCompensationDiscussionandAnalysis.

(5)

TheactualpayoutoftheFiscal2015OfficerAnnualCashIncentiveasdescribedintheCompensationDiscussionandAnalysis.Thesepaymentsweremade
onOctober9,2015forMr.ScalfandallotherExecutiveOfficers.ThesepaymentswillbemadeforMr.Carpenter,Mr.Cook,Mr.Shaw,Mr.Vermeersch
andMr.WardinNovember2015.
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Weanticipatethatotherequity-basedawardsmaybegrantedattheHumanResourcesCommitteesdiscretionunderthePlan;however,thenumberofother
equity-basedawardsthatmaybesograntedwillbebaseduponvariousprospectivefactors,includingthenatureofservicestoberenderedbyourEmployees,Officers,
consultants, independent contractors, advisors and Non-Employee Directors, and their potential contributions to our success. Accordingly, the number, type and
grantee(s)ofsuchfutureawardscannotbedeterminedatthistime.
Equity Compensation Plan Information
ThefollowingtablesetsforthinformationasofJuly31,2015regardingtheCompanysequitycompensationplans:

Plan Category

Equity compensation plans approved by


security holders:
1980MasterStockCompensationPlan:
DeferredStockGainPlan

1991MasterStockCompensationPlan:
DeferredStockOptionGainPlan
DeferredLTC/RestrictedStock

2001MasterStockIncentivePlan:
StockOptions
DeferredLTC/RestrictedStock

2010MasterStockIncentivePlan:
StockOptions
DeferredLTC/RestrictedStock
StockOptionsforNon-EmployeeDirectors
Long-TermCompensation

Subtotal for plans approved by


security holders

Equity compensation plans not approved by


security holders:
Non-qualifiedStockOptionProgramfor
Non-EmployeeDirectors:
ESOPRestoration:

Subtotal for plans not approved by


security holders:

Total

Number of
securities to be
issued upon
exercise of
outstanding options,
warrants, and rights
(a)

Weighted
average exercise
price of outstanding
options, warrants,

and rights

(b)

Number of
securities remaining
available for future
issuance under equity
compensation plans
(excluding securities
reflected in column (a))

(c)

39,524

511,735
189,081

2,392,989
173,536

3,611,967
133
652,800
29,832

$
$

$
$

$
$
$
$

6.2096

2.4781
13.2575

20.2844
19.4722

35.8062
41.3750
35.5685
37.1990

SeeNote1

7,601,597

27.5738

533,686
30,679

$
$

19.1939
8.0991

564,365

8,165,962

18.5624

26.9510

SeeNote2
SeeNote3

Note1:The2010MasterStockIncentivePlanlimitsthenumberofsharesauthorizedforissuanceto9,200,000duringthe10-yeartermoftheplaninaddition
toanysharesforfeitedunderthe2001Plan.ThePlanallowsforthegrantingofnonqualifiedstockoptions,incentivestockoptions,restrictedstock,restrictedstock
units,SAR,dividendequivalents,andotherstock-basedawards.Therearecurrently4,501,821sharesofauthorizationremaining.
Note 2: The stock option program for Non-Employee Directors (filed as exhibit 10-H to Form 10-Q report filed for the quarter ended October 31, 2008)
providesfor each Non-Employee Director to receive annual option grants of 14,400 shares. The 2010 Master Stock Incentive Plan, which was approved by the
Companys Stockholders on November 19, 2010, provides for the issuance of stock options to Non-Employee Directors, and the stock option program for NonEmployeeDirectorshasbeenadoptedasasub-planunderthe2010MasterStockIncentivePlanandsharesissuedtoDirectorsafterDecember10,2010,willbeissued
underthe2010MasterStockIncentivePlan.BasedonMercersDirectorscompensationreview,theHumanResourcesCommitteeapprovedchangingtheannualstock
optiongrantfromafixed
54

TableofContents
number of shares to a fixed value of $140,000. This change is designed to maintain a stable value of equity grant for our Director compensation. The number of
optionsgrantedwillbedeterminedbydividingthefixedvalueof$140,000bytheBlack-Scholesvalueasofthedateofthegrant(theshareswillberoundedtothe
nearest100shares).ThischangewaseffectiveforstockoptiongrantedbeginninginJanuary2014.
Note3:TheCompanyhasanon-qualifiedESOPRestorationPlanestablishedonAugust1,1990(filedasexhibit10-DtotheCompanys2009Form10-K
report),tosupplementthebenefitsforexecutiveemployeesundertheCompanysEmployeeStockOwnershipPlanthatwouldotherwisebereducedbecauseofthe
compensationlimitationsundertheInternalRevenueCode.TheESOPs10-yeartermwascompletedonJuly1,1997,andtheonlyongoingbenefitsundertheESOP
RestorationPlanaretheaccrualofdividendequivalentrightstotheparticipantsinthePlan.
Board Recommendation
TheBoardofDirectorsrecommendsthatyouvoteFOR re-approvalofthematerialtermsoftheperformancegoalsdescribeinthisProxyStatement.
INFORMATION REGARDING THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Audit Committee Report
ThefollowingisthereportoftheAuditCommitteewithrespecttoDonaldsonsauditedfinancialstatementspresentedinitsAnnualReportonForm10-Kfor
thefiscalyearendedJuly31,2015.
TheAuditCommitteeoftheBoardofDirectors iscomposedentirely ofNon-EmployeeDirectors, allofwhomhavebeendetermined bytheBoardtobe
independentundertherulesoftheSECandtheNYSE.Inaddition,theBoardhasdeterminedthateachofJohnP.WiehoffandAndrewCecereisanAuditCommittee
financialexpert,asdefinedbytherulesoftheSEC.
TheAuditCommitteeactsunderawrittencharterapprovedbytheBoardofDirectors.TheAuditCommitteeassiststheBoardincarryingoutitsoversightof
theCompanysfinancialreportingprocess,auditprocess,andinternalcontrols.TheAuditCommitteeformallymeteighttimesduringthepastfiscalyearincarrying
outitsoversightfunctions.TheAuditCommitteehasthesoleauthoritytoappoint,terminate,orreplacetheCompanysindependentregisteredpublicaccountingfirm.
TheindependentregisteredpublicaccountingfirmreportsdirectlytotheAuditCommittee.
The Audit Committee reviewed and discussed the Companys Fiscal 2015 audited financial statements with management, the internal auditor, and
PricewaterhouseCoopersLLP (PwC), the Companys independent registered public accounting firm. The Audit Committee also met separately with the internal
auditorandtheindependentregisteredpublicaccountingfirmtodiscussandreviewthosefinancialstatementspriortoissuance.ManagementhasrepresentedandPwC
hasconfirmedinitsopiniontotheAuditCommitteethatthefinancialstatementswerepreparedinaccordancewithgenerallyacceptedaccountingprinciplesandfairly
present,inallmaterialrespects,thefinancialconditionoftheCompany.
Aspartofitsactivities,theAuditCommitteealso:
1.

DiscussedwithPwCthemattersrequiredtobediscussedunderAuditingStandardNo.16(CommunicationswithAuditCommittees)ofthePublic
CompanyAccountingOversightBoard;

2.

Received the written disclosures and letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board
regardingtheindependentaccountantscommunicationswiththeAuditCommitteeconcerningindependence;and

3.

DiscussedwithPwCitsindependence.

Basedonthereview anddiscussions with management and PwC,theAudit Committee recommended tothe BoardofDirectors that the audited financial
statementsbeincludedintheCompanysAnnualReportonForm10-KforthefiscalyearendedJuly31,2015.
Members of the Audit Committee

JohnP.Wiehoff,Chair
AndrewCecere
PaulDavidMiller

55

JamesJ.Owens
AjitaG.Rajendra

TableofContents
Independent Auditors Fees
Theaggregate feesbilledtotheCompanyforFiscal2015andFiscal2014byPwC,theCompanysindependent registered public accounting firm, areas
follows:

AuditFees
Audit-RelatedFees
TaxFees
AllOtherFees
TotalFees

Fiscal 2015

2,597,490
64,719
209,953
8,800
2,880,962

Fiscal 2014

2,566,755
77,810
32,000
4,500
2,681,065

Audit Fees include professional services rendered in connection with the audit of the Companys financial statements, including the quarterly reviews,
statutoryauditsofcertainoftheCompanysinternationalsubsidiaries,andtheauditofinternalcontroloverfinancialreportinginaccordancewithSection404ofthe
Sarbanes-OxleyActof2002.Audit-RelatedFeesincludeaccountingadvisoryfeesrelatedtofinancialaccountingmatters.
Audit Committee Pre-Approval Policies and Procedures
TheAuditCommitteepre-approvesallauditandpermittednon-auditservicesprovidedbytheindependentregisteredpublicaccountingfirm,includingthe
fees and terms for those services. The Audit Committee may delegate to one or more designated Committee members the authority to grant pre-approvals. This
designatedmemberistheChairoftheAuditCommittee.Anypre-approvalbytheChairmustbepresentedtothefullAuditCommitteeatitsnextscheduledmeeting.
AlloftheservicesprovidedbytheindependentregisteredpublicaccountingfirmduringFiscal2015andFiscal2014,includingservicesrelatedtotheAuditFees,
Audit-RelatedFees,TaxFeesandAllOtherFeesdescribedabove,wereapprovedbytheAuditCommitteeunderitspre-approvalpolicies.

ITEM 3: RATIFICATION OF APPOINTMENT OF


INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed PricewaterhouseCoopers LLP (PwC) as the Companys independent registered public accounting firm to audit the
booksandaccountsoftheCompanyforthefiscalyearendingJuly31,2016.PwChasauditedthebooksandaccountsoftheCompanysince2002.WhiletheCompany
is not required to do so, it is submitting the selection of PwC to serve as the Companys independent registered public accounting firm for the fiscal year ending
July31,2016forratificationinordertoascertaintheviewsoftheCompanysStockholdersonthisappointment.Whetherornottheappointmentisratified,theAudit
Committee,whichissolelyresponsibleforappointingandterminatingourindependentregisteredpublicaccountingfirm,mayinitsdiscretion,directtheappointment
of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the
CompanyanditsStockholders.RepresentativesofPwCareexpectedtobepresentatthemeetingandwillhavetheopportunitytomakeastatementandtorespondto
appropriatequestions.Intheeventthisappointmentisnotratified,theAuditCommitteewillreconsideritsselection.
Board Recommendation
The Audit Committee of the Board of Directors recommends that Stockholders vote FOR ratification of the appointment of PwC as the Companys
independentregisteredpublicaccountingfirmforthefiscalyearendingJuly31,2016.

ByOrderoftheBoardofDirectors

November23,2015

AmyC.Becker
Secretary

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TableofContents

APPENDIX A

DONALDSON COMPANY, INC.


2010 MASTER STOCK INCENTIVE PLAN

1400West94thStreet
Minneapolis,Minnesota55431-2370
(952)887-3131

A-1

TableofContents

APPENDIX A

Table of Contents
Section 1.
Purpose
Section 2.
Definitions
Section 3.
Administration
(a)PowerandAuthorityoftheCommittee
(b)Delegation
(c)PowerandAuthorityoftheBoardofDirectors
Section 4.
Shares Available for Awards
(a)SharesAvailable
(b)AccountingforAwards
(c)Adjustments
(d)AwardLimitationsUnderthePlan
Section 5.
Eligibility
Section 6.
Awards
(a)Options
(b)StockAppreciationRights
(c)RestrictedStockandRestrictedStockUnits
(d)PerformanceAwards
(e)DividendEquivalents
(f)StockAwards
(g)OtherStock-BasedAwards
(h)General
Section 7.
Amendment and Termination; Corrections
(a)AmendmentstothePlan
(b)AmendmentstoAwards
(c)CorrectionofDefects,OmissionsandInconsistencies
Section 8.
Income Tax Withholding
Section 9.
General Provisions
(a)NoRightstoAwards
(b)AwardAgreements
(c)PlanProvisionsControl
(d)NoRightsofStockholders
(e)NoLimitonOtherCompensationArrangements
(f)NoRighttoEmploymentorDirectorship
(g)GoverningLaw
(h)Severability
(i)NoTrustorFundCreated
(j)OtherBenefits
(k)NoFractionalShares
(l)Headings
(m)Forfeiture
Section 10.
Effective Date of the Plan
Section 11.
Term of the Plan

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DONALDSON COMPANY, INC.


2010 MASTER STOCK INCENTIVE PLAN

Section 1. Purpose

ThepurposeofthePlanistopromotetheinterestsoftheCompanyanditsstockholdersbyaidingtheCompanyinattractingandretainingemployees,
officers,consultants,independentcontractorsandnon-employeedirectorscapableofassuringthefuturesuccessoftheCompany,tooffersuchpersonsincentivesto
putforthmaximumeffortsforthesuccessoftheCompany'sbusinessandtoaffordsuchpersonsanopportunitytoacquireaproprietaryinterestintheCompany,
therebyaligningtheinterestsofsuchpersonswiththeCompany'sstockholders.

Section 2. Definitions

AsusedinthePlan,thefollowingtermsshallhavethemeaningssetforthbelow:

(a)Affiliate
shallmean(i)anyentitythat,directlyorindirectlythroughoneormoreintermediaries,iscontrolledbytheCompanyand(ii)anyentity
inwhichtheCompanyhasasignificantequityinterest,ineachcaseasdeterminedbytheCommittee.

(b)Award
shallmeananyOption,StockAppreciationRight,RestrictedStock,RestrictedStockUnit,PerformanceAward,DividendEquivalent,
StockAwardorOtherStock-BasedAwardgrantedunderthePlan.

(c)Award
Agreement
shallmeananywrittenagreement,contractorotherinstrumentordocumentevidencinganAwardgrantedunderthePlan
(includingadocumentinanelectronicmedium)executedinaccordancewiththerequirementsofSection9(b).

(d)Board
shallmeantheBoardofDirectorsoftheCompany.

(e)Code
shallmeantheInternalRevenueCodeof1986,asamendedfromtimetotime,andanyregulationspromulgatedthereunder.

(f)Committee
shallmeanthecommitteedesignatedbytheBoardtoadministerthePlan.TheCommitteeshallbecomprisedofnotlessthansuch
numberofDirectorsasshallberequiredtopermitAwardsgrantedunderthePlantoqualifyunderRule16b-3,andeachmemberoftheCommitteeshallbeanonemployeedirectorwithinthemeaningofRule16b-3andanoutsidedirectorwithinthemeaningofSection162(m).TheCompanyexpectstohavethePlan
administeredinaccordancewiththerequirementsfortheawardofqualifiedperformance-basedcompensationwithinthemeaningofSection162(m).

(g)Company
shallmeanDonaldsonCompany,Inc.,aDelawarecorporation,andanysuccessorcorporation.

(h)Director
shallmeanamemberoftheBoard.

(i)Dividend
Equivalent
shallmeananyrightgrantedunderSection6(e)ofthePlan.

(j)Eligible
Person
shallmeananyemployee,officer,consultant,independentcontractor,advisorornon-employeeDirectorprovidingservicesto
theCompanyoranyAffiliate.

(k)Exchange
Act
shallmeantheSecuritiesExchangeActof1934,asamended.

(l)Fair
Market
Value
shallmean,withrespecttoanyproperty(including,withoutlimitation,anySharesorothersecurities),thefairmarketvalue
ofsuchpropertydeterminedbysuchmethodsorproceduresasshallbeestablishedfromtimetotimebytheCommittee.Notwithstandingtheforegoing,unless
otherwisedeterminedbytheCommittee,theFairMarketValueofaShareasofagivendateshallbe,iftheSharesarethentradedontheNewYorkStockExchange,
theclosingpriceofoneShareasreportedontheNewYorkStockExchangeonsuchdateor,iftheNewYorkStockExchangeisnotopenfortradingonsuchdate,
onthemostrecentprecedingdatewhentheNewYorkStockExchangeisopenfortrading.
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APPENDIX A

(m)Full
Value
Award
shallmeananyAwardotherthananOptionorStockAppreciationRight,thevalueofwhichOptionorStockAppreciation
RightisbasedsolelyonanincreaseinthevalueoftheSharesafterthedateofgrantofsuchAward.
(n)Incentive
Stock
Option
shallmeananoptiongrantedunderSection6(a)ofthePlanthatisintendedtomeettherequirementsofSection422of
theCodeoranysuccessorprovision.
(o)Non-Qualified
Stock
Option
shallmeananoptiongrantedunderSection6(a)ofthePlanthatisnotintendedtobeanIncentiveStockOption.
(p)Option
shallmeananIncentiveStockOptionoraNon-QualifiedStockOptiontopurchasesharesoftheCompany.
(q)Other
Stock-Based
Award
shallmeananyrightgrantedunderSection6(g)ofthePlan.
(r)Participant
shallmeananEligiblePersondesignatedtobegrantedanAwardunderthePlan.
(s)Performance
Award
shallmeananyrightgrantedunderSection6(d)ofthePlan.
(t)Performance
Goal
shallmeanoneormoreofthefollowingperformancegoals,eitherindividually,alternativelyorinanycombination,applied
onacorporate,subsidiary,division,businessunitorlineofbusinessbasis:

earningspershare;returnoninvestment;
revenues,includingnetsalesgrowth;
earnings,includingnetoperatingprofitaftertaxes;
returnonequity;
profitmargins;
costreductions;
inventorylevels;
deliveryperformance;
safetyperformance;
qualityperformance;
coreoperatingearnings;
totalstockholderreturn;
cashflow,includingoperatingcashflows,freecashflow,discountedcashflowreturnoninvestment,andcashflowinexcessofcostof
capital;
economicvalueadded;
stockholdervalueadded;
marketshare;
pricetoearningsratio;
expenseratios;
workforcegoals;
totalexpenditures;
completionofkeyprojects.

Eachsuchperformancegoalmaybebased(i)solelybyreferencetoabsoluteresultsofindividualperformanceororganizationalperformanceatvariouslevels
(e.g.,theCompanysperformanceortheperformanceofasubsidiary,division,businesssegmentorbusinessunitoftheCompany)or(ii)uponorganizational
performancerelativetothecomparableperformanceofothercompaniesselectedbytheCommittee.TotheextentconsistentwithSection162(m),theCommittee
mayalsoexcludechargesrelatedtoaneventoroccurrencewhichtheCommitteedeterminesshouldappropriatelybeexcluded,including(X)restructurings,
discontinuedoperations,extraordinaryitems,andotherunusualornon-recurringcharges,(Y)aneventeithernotdirectlyrelatedtotheoperationsoftheCompany
ornotwithinthereasonablecontroloftheCompanysmanagement,or(Z)thecumulativeeffectsoftaxoraccountingchangesinaccordancewithU.S.generally
acceptedaccountingprinciples(orotheraccountingprincipleswhichmaythenbeineffect).TotheextentthatSection162(m)oftheCodeorapplicabletaxand/or
securitieslawschangetopermitCommitteediscretiontoalterthegoverningperformancemeasureswithoutdisclosingtostockholdersandobtainingstockholder
approvalofsuchchangesandwithouttherebyexposingtheCompanytopotentiallyadversetaxorotherlegalconsequences,theCommitteeshallhavethesole
discretiontomakesuchchangeswithoutobtainingstockholderapproval.
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APPENDIX A

(u)Person
shallmeananyindividualorentity,includingacorporation,partnership,limitedliabilitycompany,association,jointventureortrust.

(v)Plan
shallmeantheDonaldsonCompany,Inc.2010StockIncentivePlan,asamendedfromtimetotime.

(w)Prior
Plan
shallmeantheDonaldsonCompany,Inc.2001MasterStockIncentivePlan,asamendedfromtimetotime.Foravoidanceofdoubt,
anyreferencetoPriorPlanshallincludereferencetotheDonaldsonCompany,Inc.QualifiedPerformance-BasedCompensationPlan,whichwasestablishedunder
the2001MasterStockPlanforthepurposeofauthorizingtheissuanceofPerformanceAwardsspecificallyintendedtoqualifyasqualifiedperformance-based
compensationwithinthemeaningofSection162(m)oftheCode.

(x)Qualified
Performance
Award
shallmeanaPerformanceAwardthat(i)ismadetoanofficeroftheCompanywhomaybeacovered
employeeunderSection162(m),and(ii)isintendedtobequalifiedperformance-basedcompensationwithinthemeaningofSection162(m).

(y)Restricted
Stock
shallmeananySharegrantedunderSection6(c)ofthePlan.

(z)Restricted
Stock
Unit
shallmeananyunitgrantedunderSection6(c)ofthePlanevidencingtherighttoreceiveaShare(oracashpayment
equaltotheFairMarketValueofaShare)atsomefuturedate.

(aa)Rule
16b-3
shallmeanRule16b-3promulgatedbytheSecuritiesandExchangeCommissionundertheSecuritiesExchangeActof1934,asamended,
oranysuccessorruleorregulation.

(bb)Section
162(m)
shallmeanSection162(m)oftheCode,oranysuccessorprovision,andtheapplicableTreasuryRegulationspromulgatedthereunder.

(cc)Section
409A
shallmeanSection409AoftheCode,oranysuccessorprovision,andapplicableTreasuryRegulationsandotherapplicableguidance
thereunder.

(dd)Securities
Act
shallmeantheSecuritiesActof1933,asamended.

(ee)Shares
shallmeansharesofcommonstock,$5.00parvaluepershare,oftheCompanyorsuchothersecuritiesorpropertyasmaybecomesubjectto
AwardspursuanttoanadjustmentmadeunderSection4(c)ofthePlan.

(ff)Specified
Employee
shallmeanaspecifiedemployeeasdefinedinSection409A(a)(2)(B)oftheCodeorapplicableproposedorfinalregulationsunder
Section409A,determinedinaccordancewithproceduresestablishedbytheCompanyandapplieduniformlywithrespecttoallplansmaintainedbytheCompany
thataresubjecttoSection409A.

(gg)Stock
Appreciation
Right
shallmeananyrightgrantedunderSection6(b)ofthePlan.

(hh)Stock
Award
shallmeananySharegrantedunderSection6(f)ofthePlan.

Section 3. Administration

(a)PowerandAuthorityoftheCommittee.ThePlanshallbeadministeredbytheCommittee.SubjecttotheexpressprovisionsofthePlanandto
applicablelaw,theCommitteeshallhavefullpowerandauthorityto:(i)designateParticipants;(ii)determinethetypeortypesofAwardstobegrantedtoeach
ParticipantunderthePlan;(iii)determinethenumberofSharestobecoveredby(orthemethodbywhichpaymentsorotherrightsaretobecalculatedinconnection
with)eachAward;(iv)determinethetermsandconditionsofanyAwardorAwardAgreement;(v)amendthetermsandconditionsofanyAwardorAward
Agreement,subjecttothelimitationsunderSection7;(vi)acceleratetheexercisabilityofanyAwardorthelapseofanyrestrictionsrelatingtoanyAward,subjectto
thelimitationsunderSection7,(vii)determinewhether,towhatextentandunderwhatcircumstancesAwardsmaybeexercisedincash,Shares,promissorynotes
(subjecttothelimitationsinSection6(a)(iii)(A)),othersecurities,otherAwardsorotherproperty,orcanceled,forfeitedorsuspended;(viii)interpretandadminister
thePlanandanyinstrumentoragreement,includinganAwardAgreement,relatingtothePlan;(ix)establish,amend,suspendorwaivesuchrulesandregulations
andappointsuchagentsasitshalldeemappropriatefortheproperadministrationofthePlan;(x)makeanyotherdeterminationandtakeanyother

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APPENDIX A

actionthattheCommitteedeemsnecessaryordesirablefortheadministrationofthePlan;and(xi)adoptsuchmodifications,rules,proceduresandsubplansasmaybe
necessaryordesirabletocomplywithprovisionsofthelawsofnon-U.S.jurisdictionsinwhichtheCompanyoranAffiliatemayoperate,including,withoutlimitation,
establishinganyspecialrulesforAffiliates,EligiblePersonsorParticipantslocatedinanyparticularcountry,inordertomeettheobjectivesofthePlanandtoensure
theviabilityoftheintendedbenefitsofAwardsgrantedtoParticipantslocatedinsuchnon-UnitedStatesjurisdictions.UnlessotherwiseexpresslyprovidedinthePlan,
alldesignations,determinations,interpretationsandotherdecisionsunderorwithrespecttothePlanoranyAwardorAwardAgreementshallbewithinthesole
discretionoftheCommittee,maybemadeatanytimeandshallbefinal,conclusiveandbindinguponanyParticipant,anyholderorbeneficiaryofanyAwardor
AwardAgreement,andanyemployeeoftheCompanyoranyAffiliate.

(b)Delegation.TheCommitteemaydelegatetooneormoreofficersorDirectorsoftheCompany,subjecttosuchterms,conditionsandlimitationsas
theCommitteemayestablishinitssolediscretion,theauthoritytograntAwards;provided
,however
,thattheCommitteeshallnotdelegatesuchauthority(i)with
regardtograntsofAwardstobemadetoofficersormembersoftheboardofdirectorsoftheCompanyoranyAffiliatewhoaresubjecttoSection16ofthe
ExchangeAct,(ii)insuchamanneraswouldcausethePlannottocomplywiththerequirementsofSection162(m)or(iii)insuchamanneraswouldcontravene
Section157oftheDelawareGeneralCorporationLaw.

(c)PowerandAuthorityoftheBoardofDirectors.Notwithstandinganythingtothecontrarycontainedherein,theBoardmay,atanytimeandfrom
timetotime,withoutanyfurtheractionoftheCommittee,exercisethepowersanddutiesoftheCommitteeunderthePlan,unlesstheexerciseofsuchpowersand
dutiesbytheBoardwouldcausethePlannottocomplywiththerequirementsofSection162(m).

Section 4. Shares Available for Awards

(a)SharesAvailable.SubjecttoadjustmentasprovidedinSection4(c)ofthePlan,theaggregatenumberofSharesthatmaybeissuedunderall
AwardsunderthePlanshallbethesumof(i)4,600,000and(ii)anySharessubjecttoanyawardunderthePriorPlanthat,aftertheeffectivedateofthisPlan,are
notpurchasedorareforfeitedorreacquiredbytheCompany,orotherwisenotdeliveredtotheParticipantduetoterminationorcancellationofsuchaward.
NotwithstandingtheforegoingandsubjecttoadjustmentasprovidedinSection4(c)ofthePlan,thenumberofSharesavailableforgrantingFullValueAwards
shallnotexceedthesumof(i)1,000,000and(ii)anySharessubjecttoanyfullvalueawardunderthePriorPlanthat,aftertheeffectivedateofthisPlan,are
forfeitedorreacquiredbytheCompany,orotherwisenotdeliveredtotheParticipantduetoterminationorcancellationofsuchaward.IfanySharescoveredbyan
AwardortowhichanAwardrelatesarenotpurchasedorareforfeitedorarereacquiredbytheCompany(includingsharesofRestrictedStock,whetherornot
dividendshavebeenpaidonsuchshares),orifanAwardotherwiseterminatesoriscancelledwithoutdeliveryofanyShares,thenthenumberofSharescounted
pursuanttoSection4(b)ofthePlanagainsttheaggregatenumberofSharesavailableunderthePlanwithrespecttosuchAward,totheextentofanysuchforfeiture,
reacquisitionbytheCompany,terminationorcancellation,shallagainbeavailableforgrantingAwardsunderthePlan.Notwithstandinganythingtothecontraryin
thisSection4(a),thefollowingShareswillnotagainbecomeavailableforissuanceunderthePlan:(i)anyShareswhichwouldhavebeenissueduponanyexercise
ofanOptionbutforthefactthattheexercisepricewaspaidbyanetexercisepursuanttoSection6.4(a)(iii)(B)oranySharestenderedinpaymentoftheexercise
priceofanOption;(ii)anyShareswithheldbytheCompanyorSharestenderedtosatisfyanytaxwithholdingobligationwithrespecttoanAward;(iii)Shares
coveredbyaStockAppreciationRightissuedunderthePlanthatarenotissuedinconnectionwithsettlementinSharesuponexercise;or(iv)Sharesthatare
repurchasedbytheCompanyusingOptionexerciseproceeds.

(b)AccountingforAwards.ForpurposesofthisSection4,ifanAwardentitlestheholderthereoftoreceiveorpurchaseShares,thenumberofShares
coveredbysuchAwardortowhichsuchAwardrelatesshallbecountedonthedateofgrantofsuchAwardagainsttheaggregatenumberofSharesavailablefor
grantingAwardsunderthePlan.ForpurposesofdeterminingthenumberofSharescoveredonthedateofgrantbyaStockAppreciationRightthatistobesettledin
Shares,theaggregatenumberofShareswithrespecttowhichtheStockAppreciationRightistobeexercisedshallbecountedagainstthenumberofShares
availableforAwardsunderthePlan(withoutregardtothenumberofactualSharesissueduponsettlement).Awardsthatdonotentitletheholderthereoftoreceive
orpurchaseSharesshallnotbecountedagainsttheaggregatenumberofSharesavailableforAwardsunderthePlan.

(c)Adjustments.Intheeventthatanydividendorotherdistribution(whetherintheformofcash,Shares,othersecuritiesorotherproperty),
recapitalization,stocksplit,reversestocksplit,reorganization,merger,consolidation,split-up,spin-off,combination,repurchaseorexchangeofSharesorother
securitiesoftheCompany,issuanceofwarrantsorother
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APPENDIX A

rightstopurchaseSharesorothersecuritiesoftheCompanyorothersimilarcorporatetransactionoreventaffectstheSharessuchthatanadjustmentisnecessaryin
ordertopreventdilutionorenlargementofthebenefitsorpotentialbenefitsintendedtobemadeavailableunderthePlan,thentheCommitteeshall,insuchmanneras
itmaydeemequitable,adjustanyorallof(i)thenumberandtypeofShares(orothersecuritiesorotherproperty)thatthereaftermaybemadethesubjectofAwards,
(ii)thenumberandtypeofShares(orothersecuritiesorotherproperty)subjecttooutstandingAwards,(iii)thepurchasepriceorexercisepricewithrespecttoany
Awardand(iv)thelimitationscontainedinSection4(d)(i)below;provided
,however
,thatthenumberofSharescoveredbyanyAwardortowhichsuchAward
relatesshallalwaysbeawholenumber.SuchadjustmentshallbemadebytheCommitteeortheBoard,whosedeterminationinthatrespectshallbefinal,bindingand
conclusive.

(d)

AwardLimitationsUnderthePlan.

(i)

LimitationforAwardsDenominatedinShares.NoEligiblePersonmaybegrantedanyAwardorAwardsdenominatedinShares,formore
than500,000Shares(subjecttoadjustmentasprovidedforinSection4(c)ofthePlan),intheaggregateinanycalendaryear.

(ii)

Section162(m)LimitationforPerformanceAwardsDenominatedinCash.ThemaximumamountpayablepursuanttoallQualified
PerformanceAwardsdenominatedincashtoanyParticipantintheaggregateinanytaxableyearshallbe$5,000,000invalue,whether
payableincash,Sharesorotherproperty.ThislimitationcontainedinthisSection4(d)(ii)doesnotapplytoanyAwardorAwardssubject
tothelimitationcontainedinSection4(d)(i).ThelimitationcontainedinthisSection4(d)(ii)shallapplyonlywithrespecttoanyAwardor
AwardsgrantedunderthisPlan,andlimitationsonawardsgrantedunderanyotherstockholder-approvedincentiveplanmaintainedbythe
Companywillbegovernedsolelybythetermsofsuchotherplan.

Section 5. Eligibility

AnyEligiblePersonshallbeeligibletobedesignatedaParticipant.IndeterminingwhichEligiblePersonsshallreceiveanAwardandthetermsofany
Award,theCommitteemaytakeintoaccountthenatureoftheservicesrenderedbytherespectiveEligiblePersons,theirpresentandpotentialcontributionstothe
successoftheCompanyorsuchotherfactorsastheCommittee,initsdiscretion,shalldeemrelevant.Notwithstandingtheforegoing,anIncentiveStockOption
mayonlybegrantedtofull-timeorpart-timeemployees(whichtermasusedhereinincludes,withoutlimitation,officersanddirectorswhoarealsoemployees),
andanIncentiveStockOptionshallnotbegrantedtoanemployeeofanAffiliateunlesssuchAffiliateisalsoasubsidiarycorporationoftheCompanywithin
themeaningofSection424(f)oftheCodeoranysuccessorprovision.

Section 6. Awards

(a)Options.TheCommitteeisherebyauthorizedtograntOptionstoEligiblePersonswiththefollowingtermsandconditionsandwithsuch
additionaltermsandconditionsnotinconsistentwiththeprovisionsofthePlanastheCommitteeshalldetermine:

(i)

ExercisePrice.ThepurchasepriceperSharepurchasableunderanOptionshallbedeterminedbytheCommitteeandshallnotbeless
than100%oftheFairMarketValueofaShareonthedateofgrantofsuchOption;provided,
however,
thattheCommitteemaydesignate
apurchasepricebelowFairMarketValueonthedateofgrant(A)totheextentnecessaryorappropriate,asdeterminedbythe
Committee,tosatisfyapplicablelegalorregulatoryrequirementsofaforeignjurisdictionor(B)iftheOptionisgrantedinsubstitution
forastockoptionpreviouslygrantedbyanentitythatisacquiredbyormergedwiththeCompanyoranAffiliate.

(ii)

OptionTerm.ThetermofeachOptionshallbefixedbytheCommitteeatthetimebutshallnotbelongerthan10yearsfromthedateof
grant.

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(iii)

TimeandMethodofExercise.TheCommitteeshalldeterminethetimeortimesatwhichanOptionmaybeexercisedinwholeorinpart
andthemethodormethodsbywhich,andtheformorforms,including,butnotlimitedto,cash,Shares,othersecurities,otherAwardsor
otherproperty,oranycombinationthereof,havingaFairMarketValueontheexercisedateequaltotheapplicableexerciseprice,in
which,paymentoftheexercisepricewithrespecttheretomaybemadeordeemedtohavebeenmade.

(A)

PromissoryNotes.Notwithstandingtheforegoing,theCommitteemayacceptapromissorynoteasconsiderationonlyif(i)the
acceptanceofsuchnotedoesnotconflictwithSection402oftheSarbanes-OxleyActof2002,and(ii)theparvalueofany
Sharestobeissuedpursuanttosuchexerciseispaidintheformofcash,servicesrendered,personalproperty,realpropertyora
combinationthereof.

(B)

NetExercises.TheCommitteemay,initsdiscretion,permitanOptiontobeexercisedbydeliveringtotheParticipantanumber
ofShareshavinganaggregateFairMarketValue(determinedasofthedateofexercise)equaltotheexcess,ifpositive,ofthe
FairMarketValueoftheSharesunderlyingtheOptionbeingexercised,onthedateofexercise,overtheexercisepriceofthe
OptionforsuchShares.

(iv)

IncentiveStockOptions.NotwithstandinganythinginthePlantothecontrary,thefollowingadditionalprovisionsshallapplytothe
grantofstockoptionswhichareintendedtoqualifyasIncentiveStockOptions:

(A)

TheCommitteewillnotgrantIncentiveStockOptionsinwhichtheaggregateFairMarketValue(determinedasofthetimethe
Optionisgranted)oftheShareswithrespecttowhichIncentiveStockOptionsareexercisableforthefirsttimebyany
Participantduringanycalendaryear(underthisPlanandallotherplansoftheCompanyanditsAffiliates)shallexceed
$100,000.

(B)

AllIncentiveStockOptionsmustbegrantedwithintenyearsfromtheearlierofthedateonwhichthisPlanwasadoptedbythe
BoardorthedatethisPlanwasapprovedbythestockholdersoftheCompany.

(C)

Unlesssoonerexercised,allIncentiveStockOptionsshallexpireandnolongerbeexercisablenolaterthan10yearsafterthe
dateofgrant;provided
,however
,thatinthecaseofagrantofanIncentiveStockOptiontoaParticipantwho,atthetimesuch
Optionisgranted,owns(withinthemeaningofSection422oftheCode)stockpossessingmorethan10%ofthetotalcombined
votingpowerofallclassesofstockoftheCompanyorofitsAffiliates,suchIncentiveStockOptionshallexpireandnolonger
beexercisablenolaterthanfiveyearsfromthedateofgrant.

(D)

ThepurchasepriceperShareforanIncentiveStockOptionshallbenotlessthan100%oftheFairMarketValueofaShareon
thedateofgrantoftheIncentiveStockOption;provided
,however
,that,inthecaseofthegrantofanIncentiveStockOption
toaParticipantwho,atthetimesuchOptionisgranted,owns(withinthemeaningofSection422oftheCode)stockpossessing
morethan10%ofthetotalcombinedvotingpowerofallclassesofstockoftheCompanyorofitsAffiliates,thepurchaseprice
perSharepurchasableunderanIncentiveStockOptionshallbenotlessthan110%oftheFairMarketValueofaShareonthe
dateofgrantoftheIncentiveStockOption.

(E)

AnyIncentiveStockOptionauthorizedunderthePlanshallcontainsuchotherprovisionsastheCommitteeshalldeem
advisable,butshallinalleventsbeconsistentwithandcontainallprovisionsrequiredinordertoqualifytheOptionasan
IncentiveStockOption.

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(b)StockAppreciationRights.TheCommitteeisherebyauthorizedtograntStockAppreciationRightstoEligiblePersonssubjecttothetermsof
thePlanandanyapplicableAwardAgreement.AStockAppreciationRightgrantedunderthePlanshallconferontheholderthereofarighttoreceiveupon
exercisethereoftheexcessof(i)theFairMarketValueofoneShareonthedateofexercise(or,iftheCommitteeshallsodetermine,atanytimeduringa
specifiedperiodbeforeorafterthedateofexercise)over(ii)thegrantpriceoftheStockAppreciationRightasspecifiedbytheCommittee,whichpriceshallnot
belessthan100%oftheFairMarketValueofoneShareonthedateofgrantoftheStockAppreciationRight;provided,
however,
thattheCommitteemay
designateagrantpricebelowFairMarketValueonthedateofgrant(A)totheextentnecessaryorappropriate,asdeterminedbytheCommittee,tosatisfy
applicablelegalorregulatoryrequirementsofaforeignjurisdictionor(B)iftheStockAppreciationRightisgrantedinsubstitutionforastockappreciationright
previouslygrantedbyanentitythatisacquiredbyormergedwiththeCompanyoranAffiliate.SubjecttothetermsofthePlanandanyapplicableAward
Agreement,thegrantprice,term,methodsofexercise,datesofexercise,methodsofsettlementandanyothertermsandconditionsofanyStockAppreciation
RightshallbeasdeterminedbytheCommittee(exceptthatthetermofeachStockAppreciationRightshallnotbelongerthan10yearsfromthedateofgrant).
TheCommitteemayimposesuchconditionsorrestrictionsontheexerciseofanyStockAppreciationRightasitmaydeemappropriate.
(c)RestrictedStockandRestrictedStockUnits.TheCommitteeisherebyauthorizedtograntanAwardofRestrictedStockandRestrictedStock
UnitstoEligiblePersonswiththefollowingtermsandconditionsandwithsuchadditionaltermsandconditionsnotinconsistentwiththeprovisionsofthePlan
astheCommitteeshalldetermine:
(i)

Restrictions.SharesofRestrictedStockandRestrictedStockUnitsshallbesubjecttosuchrestrictionsastheCommitteemayimpose
(including,withoutlimitation,anylimitationontherighttovoteaShareofRestrictedStockortherighttoreceiveanydividendorother
rightorpropertywithrespectthereto),whichrestrictionsmaylapseseparatelyorincombinationatsuchtimeortimes,insuch
installmentsorotherwiseastheCommitteemaydeemappropriate.

(ii)

IssuanceandDeliveryofShares.AnyRestrictedStockgrantedunderthePlanshallbeissuedatthetimesuchAwardsaregrantedand
maybeevidencedinsuchmannerastheCommitteemaydeemappropriate,includingbook-entryregistrationorissuanceofastock
certificateorcertificates,whichcertificateorcertificatesshallbeheldbytheCompany.Suchcertificateorcertificatesshallberegistered
inthenameoftheParticipantandshallbearanappropriatelegendreferringtotherestrictionsapplicabletosuchRestrictedStock.Shares
representingRestrictedStockthatarenolongersubjecttorestrictionsshallbedelivered(includingbyupdatingthebook-entry
registration)totheParticipantpromptlyaftertheapplicablerestrictionslapseorarewaived.InthecaseofRestrictedStockUnits,no
SharesshallbeissuedatthetimesuchAwardsaregranted.Uponthelapseorwaiverofrestrictionsandtherestrictedperiodrelatingto
RestrictedStockUnitsevidencingtherighttoreceiveShares,suchSharesshallbeissuedanddeliveredtotheholderoftheRestricted
StockUnits.

(iii)

Forfeiture.ExceptasotherwisedeterminedbytheCommittee,uponaParticipantsterminationofemploymentorresignationor
removalasadirector(ineithercase,asdeterminedundercriteriaestablishedbytheCommittee)duringtheapplicablerestrictionperiod,
allSharesofRestrictedStockandallRestrictedStockUnitsheldbysuchParticipantatsuchtimeshallbeforfeitedandreacquiredbythe
Company;provided
,however
,thattheCommitteemay,whenitfindsthatawaiverwouldbeinthebestinterestsoftheCompany,
waiveinwholeorinpartanyorallremainingrestrictionswithrespecttoSharesofRestrictedStockorRestrictedStockUnits,exceptas
otherwiseprovidedintheAwardAgreement.

(d)PerformanceAwards.TheCommitteeisherebyauthorizedtograntPerformanceAwardstoEligiblePersons,subjecttothetermsofthePlan
andanyapplicableAwardAgreement.APerformanceAwardgrantedunderthePlan(i)maybedenominatedorpayableincash,Shares(including,without
limitation,RestrictedStockandRestrictedStockUnits),othersecurities,otherAwardsorotherpropertyand(ii)shallconferontheholderthereoftherightto
receivepayments,inwholeorinpart,upontheachievementofoneormoreobjectivePerformanceGoalsduringsuchperformanceperiodsastheCommitteeshall
establish.SubjecttothetermsofthePlan,thePerformanceGoalstobeachievedduringanyperformanceperiod,thelengthofanyperformanceperiod,theamount
ofanyPerformanceAwardgranted,theamountofanypaymentortransfertobemadepursuanttoanyPerformanceAwardandanyothertermsandconditionsof
anyPerformanceAwardshallbedeterminedbytheCommittee.QualifiedPerformanceAwardsshallbeconditionedsolelyontheachievementofoneormore
objectivePerformanceGoalsestablishedbytheCommitteewithinthetimeprescribedbySection162(m),andshallotherwisecomplywiththerequirementsof
Section162(m),asdescribedbelow.
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TableofContents

(i)

APPENDIX A

TimingofDesignations;DurationofPerformancePeriods.ForeachQualifiedPerformanceAward,theCommitteeshall,notlaterthan
90daysafterthebeginningofeachperformanceperiod,(i)designateallParticipantsforsuchperformanceperiodand(ii)establishthe
objectiveperformancefactorsforeachParticipantforthatperformanceperiodonthebasisofoneormoreofPerformanceGoals,the
outcomeofwhichissubstantiallyuncertainatthetimetheCommitteeactuallyestablishesthePerformanceGoal.TheCommitteeshall
havesolediscretiontodeterminetheapplicableperformanceperiod,providedthatinthecaseofaperformanceperiodlessthan12
months,innoeventshallaperformancegoalbeconsideredtobepre-establishedifitisestablishedafter25percentoftheperformance
period(asscheduledingoodfaithatthetimethePerformanceGoalisestablished)haselapsed.

(ii)

Certification.FollowingthecloseofeachperformanceperiodandpriortopaymentofanyamounttoaParticipantwithrespecttoa
QualifiedPerformanceAward,theCommitteeshallcertifyinwritingastotheattainmentofallfactors(includingtheperformance
factorsforaParticipant)uponwhichanypaymentstoaParticipantforthatperformanceperiodaretobebased.

(iii)

PaymentofQualifiedPerformanceAwards.CertifiedAwardsshallbepaidnolaterthantwoandone-halfmonthsfollowingthe
conclusionoftheapplicableperformanceperiod;provided,
however,
thattheCommitteemayestablishproceduresthatallowforthe
paymentofAwardsonadeferredbasis,subjecttotherequirementsofSection409A.TheCommitteemay,initsdiscretion,reducethe
amountofapayoutachievedandotherwisetobepaidinconnectionwithaQualifiedPerformanceAward,butmaynotexercisediscretion
toincreasesuchamount.

(iv)

CertainEvents.IfaParticipantdiesorbecomespermanentlyandtotallydisabledbeforetheendofaperformanceperiodorafterthe
performanceperiodandbeforeanAwardispaid,theCommitteemay,initsdiscretion,determinethattheParticipantshallbepaidaproratedportionoftheAwardthattheParticipantwouldhavereceivedbutforhisorherdeathordisability.

(e)DividendEquivalents.TheCommitteeisherebyauthorizedtograntDividendEquivalentstoEligiblePersonsunderwhichtheParticipantshall
beentitledtoreceivepayments(incash,Shares,othersecurities,otherAwardsorotherpropertyasdeterminedinthediscretionoftheCommittee)equivalenttothe
amountofcashdividendspaidbytheCompanytoholdersofShareswithrespecttoanumberofSharesdeterminedbytheCommittee.Subjecttothetermsofthe
PlanandanyapplicableAwardAgreement,suchDividendEquivalentsmayhavesuchtermsandconditionsastheCommitteeshalldetermine.Notwithstandingthe
foregoing,(i)theCommitteemaynotgrantDividendEquivalentstoEligiblePersonsinconnectionwithgrantsofOptionsorStockAppreciationRightstosuch
EligiblePersons,and(ii)noDividendEquivalentpaymentsshallbemadetoaParticipantwithrespecttoanyPerformanceAwardpriortothedateonwhichall
conditionsorrestrictionsrelatingtosuchAwardshavebeensatisfied,waivedorlapsed.

(f)StockAwards.TheCommitteeisherebyauthorizedtogranttoEligiblePersonsShareswithoutrestrictionsthereon,asdeemedbytheCommittee
tobeconsistentwiththepurposeofthePlan.SubjecttothetermsofthePlanandanyapplicableAwardAgreement,suchStockAwardsmayhavesuchtermsand
conditionsastheCommitteeshalldetermine.

(g)OtherStock-BasedAwards.TheCommitteeisherebyauthorizedtogranttoEligiblePersonssuchotherAwardsthataredenominatedorpayable
in,valuedinwholeorinpartbyreferenceto,orotherwisebasedonorrelatedto,Shares(including,withoutlimitation,securitiesconvertibleintoShares),asare
deemedbytheCommitteetobeconsistentwiththepurposeofthePlan.TheCommitteeshalldeterminethetermsandconditionsofsuchAwards,subjecttothe
termsofthePlanandanyapplicableAwardAgreement.SharesorothersecuritiesdeliveredpursuanttoapurchaserightgrantedunderthisSection6(g)shallbe
purchasedforconsiderationhavingavalueequaltoatleast100%oftheFairMarketValueofsuchShares,orothersecuritiesonthedatethepurchaserightis
granted.TheconsiderationpaidbytheParticipantmaybepaidbysuchmethodormethodsandinsuchformorforms,including,withoutlimitation,cash,Shares,
promissorynotes(subjecttothelimitationsin(a)(iii)(A)),othersecurities,otherAwardsorotherpropertyoranycombinationthereof,astheCommitteeshall
determine.

A-10

TableofContents

APPENDIX A

(h)General.

(i)
ConsiderationforAwards.Awardsmaybegrantedfornocashconsiderationorforanycashorotherconsiderationasmaybedetermined
bytheCommitteeorrequiredbyapplicablelaw.

(ii)
AwardsMayBeGrantedSeparatelyorTogether.Awardsmay,inthediscretionoftheCommittee,begrantedeitheraloneorinadditionto,
intandemwithorinsubstitutionforanyotherAwardoranyawardgrantedunderanyotherplanoftheCompanyoranyAffiliate.Awards
grantedinadditiontoorintandemwithotherAwardsorinadditiontoorintandemwithawardsgrantedunderanyotherplanofthe
CompanyoranyAffiliatemaybegrantedeitheratthesametimeasoratadifferenttimefromthegrantofsuchotherAwardsorawards.

(iii)
FormsofPaymentunderAwards.SubjecttothetermsofthePlanandofanyapplicableAwardAgreement,paymentsortransferstobe
madebytheCompanyoranAffiliateuponthegrant,exerciseorpaymentofanAwardmaybemadeinsuchformorformsasthe
Committeeshalldetermine(including,withoutlimitation,cash,Shares,promissorynotes(provided,however,thattheacceptanceofsuch
promissorynotesdoesnotconflictwithSection402oftheSarbanes-OxleyActof2002),othersecurities,otherAwardsorotherpropertyor
anycombinationthereof),andmaybemadeinasinglepaymentortransfer,ininstallmentsoronadeferredbasis,ineachcasein
accordancewithrulesandproceduresestablishedbytheCommittee.Suchrulesandproceduresmayinclude,withoutlimitation,provisions
forthepaymentorcreditingofreasonableinterestoninstallmentordeferredpaymentsorthegrantorcreditingofDividendEquivalents
withrespecttoinstallmentordeferredpayments.

(iv)
TermofAwards.SubjecttoSection6(a)(iv)(C),thetermofeachAwardshallbeforaperiodnottoexceed10yearsfromthedateofgrant.

(v)
LimitsonTransferofAwards.ExceptasotherwiseprovidedbytheCommitteeorinthisSection6(h)(v),noAward(otherthanaStock
Award)andnorightunderanysuchAwardshallbetransferablebyaParticipantotherthanbywillorbythelawsofdescentand
distribution.Notwithstandingtheimmediatelyprecedingsentence,noIncentiveStockOptionshallbetransferablebyaParticipantother
thanbywillorbythelawsofdescentanddistribution.TheCommitteemayestablishproceduresasitdeemsappropriateforaParticipantto
designateaPersonorPersons,asbeneficiaryorbeneficiaries,toexercisetherightsoftheParticipantandreceiveanypropertydistributable
withrespecttoanyAwardintheeventoftheParticipantsdeath.TheCommittee,initsdiscretionandsubjecttosuchadditionaltermsand
conditionsasitdetermines,maypermitaParticipanttotransferaNon-QualifiedStockOptiontoanyfamilymember(asdefinedinthe
GeneralInstructionstoFormS-8(oranysuccessortosuchInstructionsorsuchForm)undertheSecuritiesAct)atanytimethatsuch
ParticipantholdssuchOption;provided,howeverthatsuchtransfersmaynotbeforvalue(asdefinedintheGeneralInstructionstoForm
S-8(oranysuccessortosuchInstructionsorsuchForm)undertheSecuritiesAct)andthefamilymembermaynotmakeanysubsequent
transfersotherthanbywillorbythelawsofdescentanddistribution.EachAwardunderthePlanorrightunderanysuchAwardshallbe
exercisableduringtheParticipantslifetimeonlybytheParticipant(exceptasprovidedhereinorinanAwardAgreementoramendment
theretorelatingtoaNon-QualifiedStockOption)or,ifpermissibleunderapplicablelaw,bytheParticipantsguardianorlegal
representative.NoAward(otherthanaStockAward)orrightunderanysuchAwardmaybepledged,alienated,attachedorotherwise
encumbered,andanypurportedpledge,alienation,attachmentorencumbrancethereofshallbevoidandunenforceableagainstthe
CompanyoranyAffiliate.

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(vi)

APPENDIX A

Restrictions;SecuritiesExchangeListing.AllSharesorothersecuritiesdeliveredunderthePlanpursuanttoanyAwardortheexercise
thereofshallbesubjecttosuchrestrictionsastheCommitteemaydeemadvisableunderthePlan,applicablefederalorstatesecuritieslaws
andregulatoryrequirements,andtheCommitteemaycauseappropriateentriestobemadewithrespectto,orlegendstobeplacedonthe
certificatesfor,suchSharesorothersecuritiestoreflectsuchrestrictions.TheCompanyshallnotberequiredtodeliveranySharesorother
securitiescoveredbyanAwardunlessanduntiltherequirementsofanyfederalorstatesecuritiesorotherlaws,rulesorregulations
(includingtherulesofanysecuritiesexchange)asmaybedeterminedbytheCompanytobeapplicablearesatisfied.

(vii)

ProhibitiononOptionandStockAppreciationRightRepricing.ExceptasprovidedinSection4(c)hereof,theCommitteemaynot,
withoutpriorapprovaloftheCompanysstockholders,seektoeffectanyre-pricingofanypreviouslygranted,underwaterOptionby:
(i)amendingormodifyingthetermsoftheOptiontolowertheexerciseprice;(ii)cancelingtheunderwaterOptionandgrantingeither
(A)replacementOptionsorStockAppreciationRightshavingalowerexerciseprice;(B)RestrictedStock,RestrictedStockUnits,
PerformanceAwardorotherStockAwardinexchange;or(iii)repurchasingtheunderwaterOptions.AnOptionwillbedeemedtobe
underwateratanytimewhentheFairMarketValueoftheSharescoveredbysuchOptionislessthantheexercisepriceoftheOption.

(viii)

AccelerationofVestingorExercisability.NoAwardAgreementshallcontainadefinitionofchangeincontrolthathastheeffectof
acceleratingtheexercisabilityofanyAwardorthelapseofrestrictionsrelatingtoanyAwardupononlytheannouncementor
stockholderapprovalof(ratherthanconsummationof)anyreorganization,mergerorconsolidationof,orsaleorotherdispositionofall
orsubstantiallyalloftheassetsof,theCompany.

(ix)

Section409AProvisions.NotwithstandinganythinginthePlanoranyAwardAgreementtothecontrary,totheextentthatanyamountor
benefitthatconstitutesdeferredcompensationtoaParticipantunderSection409Aandapplicableguidancethereunderisotherwise
payableordistributabletoaParticipantunderthePlanoranyAwardAgreementsolelybyreasonoftheoccurrenceofachangeincontrol
orduetotheParticipantsdisabilityorseparationfromservice(assuchtermisdefinedunderSection409A),suchamountorbenefit
willnotbepayableordistributabletotheParticipantbyreasonofsuchcircumstanceunlesstheCommitteedeterminesingoodfaiththat
(i)thecircumstancesgivingrisetosuchchangeincontrol,disabilityorseparationfromservicemeetthedefinitionofachangein
ownershiporeffectivecontrol,disability,orseparationfromservice,asthecasemaybe,inSection409A(a)(2)(A)oftheCodeand
applicableproposedorfinalregulations,or(ii)thepaymentordistributionofsuchamountorbenefitwouldbeexemptfromthe
applicationofSection409Abyreasonoftheshort-termdeferralexemptionorotherwise.Anypaymentordistributionthatotherwise
wouldbemadetoaParticipantwhoisaSpecifiedEmployee(asdeterminedbytheCommitteeingoodfaith)onaccountofseparation
fromservicemaynotbemadebeforethedatewhichissixmonthsafterthedateoftheSpecifiedEmployeesseparationfromservice(or
ifearlier,upontheSpecifiedEmployeesdeath)unlessthepaymentordistributionisexemptfromtheapplicationofSection409Aby
reasonoftheshort-termdeferralexemptionorotherwise.

Section 7. Amendment and Termination; Corrections


(a)AmendmentstothePlan.TheBoardmayamend,alter,suspend,discontinueorterminatethePlanatanytime;provided
,however
,that,
notwithstandinganyotherprovisionofthePlanoranyAwardAgreement,priorapprovalofthestockholdersoftheCompanyshallberequiredforany
amendmenttothePlanthatwould:
(i)

requirestockholderapprovalundertherulesorregulationsoftheSecuritiesandExchangeCommission,theNewYorkStockExchange
oranyothersecuritiesexchangethatareapplicabletotheCompany;

(ii)

increasesthenumberofsharesauthorizedunderthePlanasspecifiedinSection4(a)ofthePlan;

(iii)

increasethenumberofsharesorvaluesubjecttothelimitationscontainedinSection4(d)ofthePlan;

(iv)

permitrepricingofOptionsorStockAppreciationRights,whichiscurrentlyprohibitedbySection6(h)(vii)ofthePlan;
A-12

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APPENDIX A

(v)

permittheawardofOptionsorStockAppreciationRightsatapricelessthan100%oftheFairMarketValueofaShareonthedateof
grantofsuchOptionorStockAppreciationRight,contrarytotheprovisionsofSection6(a)(i)andSection6(b)ofthePlan;or

(vi)

causetheCompanytobeunabletograntIncentiveStockOptionsunderthePlan,orwouldcauseSection162(m)tobecomeunavailable
withrespecttothePlan.

(b)AmendmentstoAwards.ExceptasotherwiseexpresslyprovidedinthePlan,theCommitteemaywaiveanyconditionsoforrightsofthe
CompanyunderanyoutstandingAward,prospectivelyorretroactively.ExceptasotherwiseexpresslyprovidedinthePlan(specificallyincludingthenexttwo
sentenceshereof),theCommitteemayamend,alter,suspend,discontinueorterminateanyoutstandingAward,prospectivelyorretroactively,butnosuchaction
mayadverselyaffecttherightsoftheholderofsuchAwardwithouttheconsentoftheParticipantorholderorbeneficiarythereof.IfanyprovisionofthePlan
oranAwardAgreementwouldresultinadversetaxconsequencesunderSection409A,theCommitteemayamendthatprovision(ortakeanyotheraction
reasonablynecessary)toavoidanyadversetaxresultsandnoactiontakentocomplywithSection409Ashallbedeemedtoimpairorotherwiseadverselyaffect
therightsofanyholderofanAwardorbeneficiarythereof.Intheeventofanyreorganization,merger,consolidation,split-up,spin-off,combination,
repurchaseorexchangeofSharesorothersecuritiesoftheCompanyoranyothersimilarcorporatetransactionoreventinvolvingtheCompany(orthe
Companyshallenterintoawrittenagreementtoundergosuchatransactionorevent),theCommitteeortheBoardmay,initssolediscretion,provideforanyof
thefollowingtobeeffectiveupontheconsummationoftheevent(oreffectiveimmediatelypriortotheconsummationoftheevent,providedthatthe
consummationoftheeventsubsequentlyoccurs):
(i)

either(A)terminationofanysuchAward,whetherornotvested,inexchangeforanamountofcashand/orotherproperty,ifany,equal
totheamountthatwouldhavebeenattainedupontheexerciseofsuchAwardorrealizationoftheParticipantsrights(and,forthe
avoidanceofdoubt,if,asofthedateoftheoccurrenceofthetransactionoreventdescribedinthisSection7(b)(i)(A),theCommitteeor
theBoarddeterminesingoodfaiththatnoamountwouldhavebeenattainedupontheexerciseofsuchAwardorrealizationofthe
Participantsrights,thensuchAwardmaybeterminatedbytheCompanywithoutanypayment)or(B)thereplacementofsuchAward
withotherrightsorpropertyselectedbytheCommitteeortheBoard,initssolediscretion;

(ii)

thatsuchAwardbeassumedbythesuccessororsurvivorcorporation,oraparentorsubsidiarythereof,orshallbesubstitutedforby
similaroptions,rightsorawardscoveringthestockofthesuccessororsurvivorcorporation,oraparentorsubsidiarythereof,with
appropriateadjustmentsastothenumberandkindofsharesandprices;

(iii)

thatsuchAwardshallbeexercisableorpayableorfullyvestedwithrespecttoallSharescoveredthereby,notwithstandinganythingto
thecontraryintheapplicableAwardAgreement;or

(iv)

thattheAwardcannotvest,beexercisedorbecomepayableafteradatecertaininthefuture,whichmaybetheeffectivedateofsuch
event.

(c)CorrectionofDefects,OmissionsandInconsistencies.TheCommitteemaycorrectanydefect,supplyanyomissionorreconcileany
inconsistencyinthePlanorinanyAwardorAwardAgreementinthemannerandtotheextentitshalldeemdesirabletoimplementormaintainthe
effectivenessofthePlan.
Section 8. Income Tax Withholding
Inordertocomplywithallapplicablefederal,state,localorforeignincometaxlawsorregulations,theCompanymaytakesuchactionasitdeems
appropriatetoensurethatallapplicablefederal,state,localorforeignpayroll,withholding,incomeorothertaxes,whicharethesoleandabsoluteresponsibilityof
aParticipant,arewithheldorcollectedfromsuchParticipant.InordertoassistaParticipantinpayingalloraportionoftheapplicabletaxestobewithheldor
collecteduponexerciseorreceiptof(orthelapseofrestrictionsrelatingto)anAward,theCommittee,initsdiscretionandsubjecttosuchadditionaltermsand
conditionsasitmayadopt,maypermittheParticipanttosatisfysuchtaxobligationby(a)electingtohavetheCompanywithholdaportionoftheShares
otherwisetobedelivereduponexerciseorreceiptof(orthelapseofrestrictionsrelatingto)suchAwardwithaFairMarketValueequaltotheamountofsuch
taxesor(b)deliveringtotheCompanySharesotherthanSharesissuableuponexerciseorreceiptof(orthelapseofrestrictionsrelatingto)suchAwardwithaFair
MarketValueequaltotheamountofsuchtaxes.Theelection,ifany,mustbemadeonorbeforethedatethattheamountoftaxtobewithheldisdetermined.
A-13

TableofContents

APPENDIX A

Section 9. General Provisions

(a)NoRightstoAwards.NoEligiblePerson,ParticipantorotherPersonshallhaveanyclaimtobegrantedanyAwardunderthePlan,andthereis
noobligationforuniformityoftreatmentofEligiblePersons,ParticipantsorholdersorbeneficiariesofAwardsunderthePlan.Thetermsandconditionsof
AwardsneednotbethesamewithrespecttoanyParticipantorwithrespecttodifferentParticipants.

(b)AwardAgreements.NoParticipantshallhaverightsunderanAwardgrantedtosuchParticipantunlessanduntilanAwardAgreementshall
havebeensignedbytheParticipant(ifrequestedbytheCompany),oruntilsuchAwardAgreementisdeliveredandacceptedthroughanelectronicmediumin
accordancewithproceduresestablishedbytheCompany.AnAwardAgreementneednotbesignedbyarepresentativeoftheCompanyunlessrequiredbythe
Committee.EachAwardAgreementshallbesubjecttotheapplicabletermsandconditionsofthePlanandanyothertermsandconditions(notinconsistent
withthePlan)determinedbytheCommittee.

(c)PlanProvisionsControl.IntheeventthatanyprovisionofanAwardAgreementconflictswithorisinconsistentinanyrespectwiththeterms
ofthePlanassetforthhereinorsubsequentlyamended,thetermsofthePlanshallcontrol.

(d)NoRightsofStockholders.ExceptwithrespecttoRestrictedStockandStockAwards(andsubjecttosuchconditionsastheCommitteemay
imposeonsuchAwardspursuanttoSection6(c)(i)orSection6(f)),neitheraParticipantnortheParticipantslegalrepresentativeshallbe,orhaveanyofthe
rightsandprivilegesof,astockholderoftheCompanywithrespecttoanySharesissuableupontheexerciseorpaymentofanyAward,inwholeorinpart,
unlessanduntilsuchShareshavebeenissued.

(e)NoLimitonOtherCompensationArrangements.NothingcontainedinthePlanshallpreventtheCompanyoranyAffiliatefromadoptingor
continuingineffectotheroradditionalcompensationplansorarrangements,andsuchplansorarrangementsmaybeeithergenerallyapplicableorapplicable
onlyinspecificcases.

(f)NoRighttoEmploymentorDirectorship.ThegrantofanAwardshallnotbeconstruedasgivingaParticipanttherighttoberetainedasan
employeeoftheCompanyoranyAffiliate,ortherighttoberetainedasadirector,norwillitaffectinanywaytherightoftheCompanyoranAffiliateto
terminateaParticipantsemploymentatanytime,withorwithoutcause,orremoveadirectorinaccordancewithapplicablelaw.Inaddition,theCompanyoran
AffiliatemayatanytimedismissaParticipantfromemployment,orremoveadirectorwhoisaParticipant,freefromanyliabilityoranyclaimunderthePlan
oranyAward,unlessotherwiseexpresslyprovidedinthePlanorinanyAwardAgreement.NothinginthisPlanshallconferonanypersonanylegalor
equitablerightagainsttheCompanyoranyAffiliate,directlyorindirectly,orgiverisetoanycauseofactionatlaworinequityagainsttheCompanyoran
Affiliate.UndernocircumstancesshallanypersonceasingtobeanemployeeordirectoroftheCompanyoranyAffiliatebeentitledtoanycompensationfor
anylossofanyrightorbenefitunderthePlanwhichsuchemployeeordirectormightotherwisehaveenjoyedbutforterminationofemploymentor
directorship,whethersuchcompensationisclaimedbywayofdamagesforwrongfulorunfairdismissal,breachofcontractorotherwise.Byparticipatinginthe
Plan,eachParticipantshallbedeemedtohaveacceptedalltheconditionsofthePlanandthetermsandconditionsofanyrulesandregulationsadoptedbythe
Committeeandshallbefullyboundthereby.

(g)GoverningLaw.Theinternallaw,andnotthelawofconflicts,oftheStateofDelawareshallgovernallquestionsconcerningthevalidity,
constructionandeffectofthePlanoranyAward,andanyrulesandregulationsrelatingtothePlanoranyAward.

(h)Severability.IfanyprovisionofthePlanoranyAwardisorbecomesorisdeemedtobeinvalid,illegalorunenforceableinanyjurisdictionor
woulddisqualifythePlanoranyAwardunderanylawdeemedapplicablebytheCommittee,suchprovisionshallbeconstruedordeemedamendedtoconform
toapplicablelaws,orifitcannotbesoconstruedordeemedamendedwithout,inthedeterminationoftheCommittee,materiallyalteringthepurposeorintentof
thePlanortheAward,suchprovisionshallbestrickenastosuchjurisdictionorAward,andtheremainderofthePlanoranysuchAwardshallremaininfull
forceandeffect.

A-14

TableofContents

APPENDIX A

(i)NoTrustorFundCreated.NeitherthePlannoranyAwardshallcreateorbeconstruedtocreateatrustorseparatefundofanykindora
fiduciaryrelationshipbetweentheCompanyoranyAffiliateandaParticipantoranyotherPerson.TotheextentthatanyPersonacquiresarighttoreceive
paymentsfromtheCompanyoranyAffiliatepursuanttoanAward,suchrightshallbenogreaterthantherightofanyunsecuredgeneralcreditorofthe
CompanyoranyAffiliate.

(j)OtherBenefits.NocompensationorbenefitawardedtoorrealizedbyanyParticipantunderthePlanshallbeincludedforthepurposeof
computingsuchParticipantscompensationorbenefitsunderanypension,retirement,savings,profitsharing,groupinsurance,disability,severance,termination
pay,welfareorotherbenefitplanoftheCompany,unlessrequiredbylaworotherwiseprovidedbysuchotherplan.

(k)NoFractionalShares.NofractionalSharesshallbeissuedordeliveredpursuanttothePlanoranyAward,andtheCommitteeshall
determinewhethercashshallbepaidinlieuofanyfractionalShareorwhethersuchfractionalShareoranyrightstheretoshallbecanceled,terminatedor
otherwiseeliminated.

(l)Headings.HeadingsaregiventothesectionsandsubsectionsofthePlansolelyasaconveniencetofacilitatereference.Suchheadings
shallnotbedeemedinanywaymaterialorrelevanttotheconstructionorinterpretationofthePlanoranyprovisionthereof.

(m)Forfeiture.AllAwardsunderthisPlanshallbesubjecttoforfeitureand/orpenaltyconditionsorprovisionsasdeterminedbythe
CommitteeandsetforthintheapplicableAwardAgreement.

Section 10. Effective Date of the Plan

ThePlanwasadoptedbytheBoardonSeptember24,2010.ThePlanshallbesubjecttoapprovalbythestockholdersoftheCompanyattheannualmeeting
ofstockholdersoftheCompanytobeheldonNovember19,2010,andthePlanshallbeeffectiveasofthedateofsuchstockholderapproval.Onandafter
stockholderapprovalofthePlan,noawardsshallbegrantedunderthePriorPlan,butalloutstandingawardspreviouslygrantedunderthePriorPlanshallremain
outstandingandsubjecttothetermsofthePriorPlan.

Section 11. Term of the Plan

NoAwardshallbegrantedunderthePlanaftertenyearsfromtheearlierofthedateofadoptionofthePlanbytheBoardorthedateofstockholder
approvaloranyearlierdateofdiscontinuationorterminationestablishedpursuanttoSection7(a)ofthePlan;provided,
however,
thatnoQualifiedPerformance
AwardshallbegrantedunderthePlanafterthefifthyearfollowingtheyearinwhichstockholdersapprovedthePerformanceGoalsunlessanduntilthe
PerformanceGoalsarere-approvedbythestockholders.UnlessotherwiseexpresslyprovidedinthePlanorinanapplicableAwardAgreement,anyAward
theretoforegrantedmayextendbeyondsuchdates,andtheauthorityoftheCommitteeprovidedforhereunderwithrespecttothePlanandanyAwards,andthe
authorityoftheBoardtoamendthePlan,shallextendbeyondtheterminationofthePlan.

A-15

TableofContents

DonaldsonCompany,Inc.AnnualMeetingofStockholders
Tuesday,December22,2015,at9:00a.m.
HeldattheCorporateOffices
ofDonaldsonCompany,Inc.,CampusWest
2001West94thStreet
Minneapolis,Minnesota

TableofContents

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Board of Directors recommends you vote
The
FOR the following:

1. ElectionofDirectors
Nominees

01 AndrewCecere

For
All

02 WilliamM.Cook

Withhold
All

03 JamesJ.Owens

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint owners should each sign
personally.Allholdersmustsign.Ifacorporationorpartnership,pleasesigninfullcorporateor
partnershipname,byauthorizedofficer.

Signature[PLEASESIGNWITHINBOX]

Date

Signature(JointOwners)


Date

Against Abstain

o o

o o

04 TrudyA.Rautio

The Board of Directors recommends you vote FOR proposals 2 and 3.


For

2 Re-approvalofthematerialtermsoftheperformancegoalsundertheDonaldsonCompany,Inc.2010MasterStockIncentivePlan.
o



3 RatificationoftheappointmentofPricewaterhouseCoopersLLPasDonaldsonCompany,Incsindependentregisteredpublicaccountingfirmforthefiscal
o
yearendingJuly31,2016.



NOTE: Intheirdiscretion,theproxiesareauthorizedtovoteuponsuchotherbusinessasmayproperlycomebeforethemeetingoranyadjournmentthereof.

withhold authority to vote for any individual nominee(s),


To
mark For All Except and write the number(s) of the
nominee(s)onthelinebelow.

For All
Except

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DONALDSON COMPANY, INC.


Annual Meeting of Stockholders
December 22, 2015 9:00 AM

This proxy is solicited by the Board of Directors

The undersigned appoints WILLIAM M. COOK, AMY C. BECKERand MELISSA A. OSLAND, andeach of them as proxies, each with the power to
appointasubstitute,torepresentandtovote,asdesignatedonthereverseside,allsharesofCommonstockofDONALDSONCOMPANY,INC.that
the stockholder is entitled to vote at the 2015 Annual Meeting of Stockholders at Donaldson Company, Inc., Campus West, 2001 West 94th Street,
Minneapolis,Minnesota,at9:00AM,LocalTime,onTuesday,December22,2015,andanyadjournmentthereof. Intheirdiscretion, theProxiesare
authorizedtovoteuponsuchotherbusinessasmayproperlycomebeforetheMeetingoranyadjournmentthereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR THE
ELECTION OF ALL DIRECTOR NOMINEES AND FOR PROPOSALS 2 AND 3.

Continued and to be signed on reverse side