Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 23, 2010
(Exact name of registrant as specified in its charter)
Ohio   1-1396   34-0196300
(State or other
jurisdiction of
File Number)
  (I.R.S. Employer
Identification No.)
Eaton Center
Cleveland, Ohio
(Address of principal executive offices)
  (Zip Code)
(216) 523-5000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 5.02   Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
1. At a meeting held on February 23, 2010, the Compensation and Organization Committee of the Board of Directors of the registrant (the “Committee”) established corporate performance criteria which will be used to determine the aggregate maximum amount of 2010 incentive compensation awards under the Senior Executive Incentive Compensation Plan (the “Plan”). The Plan participants consist of the Chief Executive Officer and those officers reporting directly to him. At the same meeting, the Committee established 2010 individual participant percentages of the aggregate incentive amount, corporate performance goals and individual incentive target amounts. Under the Plan, the Committee may use its discretion to reduce an individual participant’s share of the aggregate maximum amount based on the results under the corporate performance goals and individual performance ratings. For 2010, the aggregate maximum amount has been set by the Committee equal to 2% of the registrant’s 2010 net income, and the corporate performance goals established by the Committee for 2010 are specific Cash Flow Return on Gross Capital and Earnings Per Share targets, weighted equally. The individual percentage shares of the aggregate maximum amount for the currently serving executive officers who were named in the summary compensation table of the registrant’s 2009 Proxy Statement (the “Named Executive Officers”), range from 14% to 34.2%. Participants in the Plan are not eligible to participate in the registrant’s long-established Executive Incentive Compensation Plan which covers the remaining officers and approximately 1,800 other employees of the registrant.
2. Also on February 23, 2010, the Committee approved awards and established individual targets for the 2010-2013 Award Period under the Section 162(m) qualified long-term Executive Strategic Incentive Plan which was approved by the shareholders in 2008 (the “ESI Plan”). The aggregate amounts at target for the Named Executive Officers range from $750,000 to $3,250,000. Awards are expressed in the form of phantom common share units, although payouts, if any, will be made in cash, unless the participant has elected to defer receipt of such payment. On February 27, 2010, the Committee established corporate performance objectives for the 2010-2013 award period under the ESI Plan, consisting of specific Cash Flow Return on Gross Capital and Earnings Per Share targets. The actual amount of the payments will depend upon the performance of the registrant against these targets and the market value of the registrant’s common shares. The registrant has maintained the ESI Plan for many years in order to provide key senior executives with incentives to achieve demanding long-term corporate objectives and in order to attract and retain executives of outstanding ability.
3. Also at the February 23, 2010 meeting, the Committee approved goals under the Supplemental Executive Strategic Incentive Plan (the “Supplemental ESI Plan”) consisting of specific Cash Flow Return on Gross Capital and Earnings Per Share targets for 2010 of the 2007-2010 and 2008-2011 Award Periods with respect to incentive opportunities previously approved by the Committee and discussed in the registrant’s Current Form on Form 8-K dated March 2, 2009. The purpose of these awards is to ensure that the outstanding four-year awards previously granted under the ESI Plan continue to serve their intended retention and incentive purposes.



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
  Eaton Corporation
Date: March 1, 2010
  /s/ R. H. Fearon
  R. H. Fearon
Vice Chairman and
Chief Financial and Planning Officer