DEF 14A of Eaton Corp plc, Mar 17, 2017

DEF 14A of Eaton Corp plc

Filed Mar 17, 2017 · FY20160001193125-17-086453

Open on EDGAR

  1. Proxy Summary

    Proxy Summary This summary provides an overview of the items that you will find elsewhere in this proxy statement. We encourage you to read the entire proxy statement for more information about these topics before voting. This proxy statement, the accompanying proxy form, Eaton’s annual report for the year ended December 31, 2016 and our Irish Statutory Accounts for the year ended December 31, 2016 will be made available or sent to shareholders commencing on or about March 17, 2017. Throughout this proxy statement, all references to our Board of Directors (or its committees) or officers for periods prior to November 30, 2012, are references to the Board of Directors (or its committees) or officers of Eaton Corporation, our predecessor. Similarly, all references to the Company for such periods refer to Eaton Corporation. MEETING AGENDA VOTING MATTERS This year there are nine proposals on the agenda. Adoption of Proposals 1, 4, 5, 6, 7 and 9 requires the affirmative vote of a majority of ordinary shares represented at the meeting by person or by proxy. Adoption of Proposals 2, 3 and 8 requires the affirmative vote of at least 75% of ordinary shares represented at the meeting in person or by proxy.

  2. Proxy Summary

    | Proposals | Board Voting Recommendations | Page | | Proposal 1 To elect the 12 director nominees named in this Proxy Statement | ✓ FOR each nominee | 6 | | Proposal 2 To approve a proposal to amend the Company’s Articles of Association to implement proxy access | ✓ FOR | 18 | | Proposal 3 To approve a proposal to amend the Company’s Articles of Association regarding bringing shareholder business and making director nominations at an annual general meeting | ✓ FOR | 22 | | Proposal 4 To appoint Ernst & Young LLP as independent auditor for the 2017 fiscal year and to authorize the Audit Committee to set the auditor fees | ✓ FOR | 24 | | Proposal 5 To approve, on an advisory (non-binding) basis, our named executive officers’ compensation as described in this Proxy Statement | ✓ FOR | 26 | | Proposal 6 To approve, on an advisory (non-binding) basis, whether a shareholder vote to approve the compensation of named executive officers should occur every 1, 2 or 3 years | ✓ FOR | 66 | | Proposal 7 To approve a proposal to grant the Board authority to issue shares under Irish law | ✓ FOR | 69 | | Proposal 8 To approve a proposal to grant the Board authority to opt-out of pre-emption rights under Irish law | ✓ FOR | 70 | | Proposal 9 To authorize the Company and any subsidiaries of the Company to make overseas market purchases of Company shares | ✓ FOR | 72 |

  3. Proxy Summary

    | EATON 2017 Proxy Statement and Notice of Meeting | 1 |

  4. Proxy Summary

    Proxy Summary — Board and Governance Facts BOARD AND GOVERNANCE FACTS In addition to executive compensation practices that strongly link pay and performance, Eaton’s Code of Ethics and Board of Directors Governance Policies help to ensure that we “do business right.” For more information about our governance programs and Board of Directors, see Proposal 1 beginning on page 6.

  5. Proxy Summary

    | Board and Governance Information | 2016 | Board and Governance Information | 2016 | | Size of Board | 14 | Independent Directors Meet without Management Present | Yes | | Average Age of Directors | 62.4 | Director Stock Ownership Guidelines | Yes | | Number of Independent Directors | 12 | Mandatory Retirement Age | Yes | | Board Meetings Held in 2016 (average director attendance 95%) | 4 | Board Orientation and Continuing Education Program | Yes | | Annual Election of Directors | Yes | Code of Ethics for Directors, Officers and Employees | Yes | | Majority Voting For Directors | Yes | Succession Planning and Implementation Process | Yes | | Lead Independent Director | Yes | Comprehensive Sustainability Program | Yes |

  6. Proxy Summary

    | EATON 2017 Proxy Statement and Notice of Meeting | 2 |

  7. Proxy Summary

    Proxy Summary — Director Nominees DIRECTOR NOMINEES Each director nominee is elected annually by a majority of votes cast. For more information about our nominees, see page 6 of this proxy statement.

  8. Proxy Summary

    | | | | | Board Committee Memberships | | | | | | | Name | Age | Director Since | Independent | Audit | Compensation & Organization | Executive* | Finance | Governance | Other Public Company Boards | | Craig Arnold Chairman, Eaton Corporation plc and CEO, Eaton Corporation | 56 | 2015 | | | | l | | | 1 | | Todd M. Bluedorn Chairman and CEO, Lennox International Inc. | 53 | 2010 | ✓ | | ∎ | ∎ | ∎ | | 2 | | Christopher M. Connor Lead Director Retired Chairman and Chief Executive Officer, The Sherwin-Williams Company | 60 | 2006 | ✓ | | l | ∎ | ∎ | | 1 | | Michael J. Critelli Retired Chairman and Chief Executive Officer, Pitney Bowes Inc. | 68 | 1998 | ✓ | | ∎ | ∎ | | ∎ | - | | Richard H. Fearon Vice Chairman and Chief Financial and Planning Officer, Eaton Corporation | 61 | 2015 | | | | | | | 1 | | Charles E. Golden Retired Executive Vice President and CFO, Eli Lilly and Company | 70 | 2007 | ✓ | | ∎ | ∎ | | ∎ | 1 | | Arthur E. Johnson Retired Senior Vice President, Corporate Strategic Development, Lockheed Martin Corporation | 70 | 2009 | ✓ | | ∎ | ∎ | | l | 1 | | Deborah L. McCoy Independent aviation safety consultant | 62 | 2000 | ✓ | ∎ | | ∎ | | ∎ | - | | Gregory R. Page Retired Chairman and Chief Executive Officer, Cargill, Incorporated | 65 | 2003 | ✓ | ∎ | | ∎ | | ∎ | 2 | | Sandra Pianalto Retired President and CEO of the Federal Reserve Bank of Cleveland | 62 | 2014 | ✓ | ∎ | | ∎ | l | | 2 | | Gerald B. Smith Chairman and CEO, Smith Graham & Co. | 66 | 2012 | ✓ | l | | ∎ | ∎ | | - | | Dorothy C. Thompson Chief Executive, Drax Group plc | 56 | 2016 | ✓ | ∎ | | ∎ | ∎ | | - |

  9. Proxy Summary

    ∎ Member l Chair

  10. Proxy Summary

    | Mr. Arnold has been a member of the Executive Committee since June 1, 2016 and serves as Committee Chair.* |

  11. Proxy Summary

    | Each of the non-employee directors serves a four-month term. |

  12. Proxy Summary

    | EATON 2017 Proxy Statement and Notice of Meeting | 3 |

  13. Proxy Summary

    Proxy Summary — Linking Pay with Performance LINKING PAY WITH PERFORMANCE

  14. Proposal 1: Election of Directors

    Proposal 1: Election of Directors Our Board of Directors is currently comprised of 13 members, all of whom serve for a term of one year or until a respective successor is elected and has been qualified. Effective at the annual general meeting, our board size will be reduced to 12 members as Linda A. Hill has decided not to stand for re-election. Ms. Hill informed the Governance Committee chair that she would not stand for re-election due to scheduling conflicts between her responsibilities as a director and her other commitments such as teaching and other academic responsibilities. All nominees are currently Eaton directors who were elected by shareholders at the 2016 annual general meeting, except Dorothy C. Thompson, who was elected by the Board of Directors effective July 29, 2016. If any of the nominees becomes unable or declines to serve, the individuals named as proxies in the enclosed proxy form will have the authority to vote for any substitutes who may be nominated in accordance with our Articles of Association. However, we have no reason to believe that this will occur.

  15. Proposal 1: Election of Directors

    | OUR NOMINEES |

  16. Proposal 1: Election of Directors

    | Craig Arnold Chairman, Eaton Corporation plc and Chief Executive Officer, Eaton Corporation Craig Arnold is Chairman of the Company and Chief Executive Officer of Eaton Corporation. Mr. Arnold joined Eaton in 2000 as senior vice president and group executive of the Fluid Power Group. He was Vice Chairman and Chief Operating Officer of the Industrial Sector until August 2015 and President and Chief Operating Officer until June 2016. He currently serves on the boards of Medtronic plc and University Hospitals Health System and is a member of The Business Roundtable and The Business Council. Mr. Arnold serves as a director of The Greater Cleveland Partnership and the United Way of Greater Cleveland, and as an advisory board member of the Salvation Army of Greater Cleveland. Director Qualifications: Mr. Arnold’s years of senior management and executive leadership experience at Eaton provide important insight into the Company to the benefit of the Board of Directors. Mr. Arnold has gained detailed knowledge of Eaton’s businesses, customers, end markets, sales and marketing, technology innovation and new product development, supply chains, manufacturing operations, talent development, policies and internal functions through his service in a wide range of management roles with the Industrial Sector, and as President and Chief Operating Officer of the Company. Further, he possesses significant corporate governance knowledge developed by current and past service on the boards of other publicly traded companies, most notably for Medtronic plc, a publicly traded company domiciled in Ireland. | | | | Director Since 2015 Age 56 |

  17. Proposal 1: Election of Directors

    | Todd M. Bluedorn Chairman and Chief Executive Officer, Lennox International Inc. Todd M. Bluedorn is Chairman and Chief Executive Officer of Lennox International Inc., a global provider of climate control solutions for heating, air conditioning and refrigeration markets. Prior to joining Lennox International in 2007, Mr. Bluedorn served in numerous senior management positions for United Technologies Corporation since 1995, including President, Americas — Otis Elevator Company; President, North America — Commercial Heating, Ventilation and Air Conditioning for Carrier Corporation; and President, Hamilton Sundstrand Industrial. He is a director of Texas Instruments Incorporated and a trustee of Washington University in St. Louis. Director Qualifications: Mr. Bluedorn has executive leadership experience in original equipment and aftermarket business and distributor/dealer-based commercial channels. He also has senior leadership experience with two major industrial corporations. His experience with industrial companies in responding to dynamic market conditions benefits Eaton as a global manufacturing company with product distribution through numerous commercial channels. | | | | Director Since 2010 Age 53 |

  18. Proposal 1: Election of Directors

    | EATON 2017 Proxy Statement and Notice of Meeting | 6 |

  19. Proposal 1: Election of Directors

    | Christopher M. Connor Retired Chairman and Chief Executive Officer, The Sherwin-Williams Company Christopher M. Connor is the retired Chairman and Chief Executive Officer of The Sherwin-Williams Company, a global manufacturer of paint, architectural coatings, industrial finishes and associated supplies. Mr. Connor held a number of executive positions at Sherwin-Williams since 1983. He became Chief Executive Officer in 1999, Chairman and Chief Executive Officer in 2000, and Executive Chairman in 2016. He currently serves on the boards of The Sherwin-Williams Company, University Hospitals Health System, Playhouse Square Foundation and The Rock and Roll Hall of Fame. Director Qualifications: As the retired Chairman and former CEO of a Fortune 500 company, Mr. Connor has leadership experience and is thoroughly knowledgeable in marketing, talent development, planning, operational and financial processes. In particular, he has had extensive sales and marketing experience in both direct and distribution channels, and brings broad knowledge of construction, automotive and industrial markets, all areas of strategic importance to Eaton. His background and experience with human resources, talent development, compensation and management are of particular benefit to Eaton in his role as Chair of the Compensation and Organization Committee. His background and broad experience are of particular benefit to Eaton in his role as Lead Director. | | | | Lead Director Director since 2006 Age 60 |

  20. Proposal 1: Election of Directors

    | Michael J. Critelli Retired Chairman and Chief Executive Officer, Pitney Bowes Inc. Michael J. Critelli served as Chief Executive and President and a director of Dossia Services Corporation, a personal and population health management systems company, from 2011 until 2016. Mr. Critelli is the retired Chairman and Chief Executive Officer of Pitney Bowes Inc., a provider of global mailstream solutions. He served as Chairman and Chief Executive Officer of Pitney Bowes from 1997 to 2007 and as Executive Chairman from 2007 to 2008. Mr. Critelli served as a director of ProHealth Physicians, Inc. from 2012 until 2015. He currently serves as a director of CloudParc. Director Qualifications: Mr. Critelli has extensive experience in risk management, cybersecurity, industry-wide leadership in transportation, logistics, online and social media marketing and communications issues. In addition to broad business experience gained while leading a global Fortune 500 company, he is a thought leader on transportation strategy and regulatory reform, as well as innovative approaches to healthcare. His background and experience are valuable to our Board as it oversees management’s efforts to develop and maintain talent, assess and evaluate enterprise risk management and cybersecurity issues, and navigate the regulatory environment. | | | | Director since 1998 Age 68 |

  21. Proposal 1: Election of Directors

    | Richard H. Fearon Vice Chairman and Chief Financial and Planning Officer, Eaton Corporation Richard H. Fearon has served as Chief Financial and Planning Officer of Eaton since April 2002 and Vice Chairman since January 2009. He is responsible for the accounting, control, corporate development, information systems, internal audit, investor relations, strategic planning, tax and treasury functions of Eaton. Prior to Eaton, Mr. Fearon worked at several large diversified companies, including Transamerica Corporation, NatSteel Limited and The Walt Disney Company. He currently is the lead director for PolyOne Corporation and also serves on the boards of Playhouse Square Foundation, The Cleveland Museum of Art, and Manufacturers Alliance, a trade organization of leading manufacturing companies. Director Qualifications: Mr. Fearon’s years of experience as Eaton’s Chief Financial Officer provide the Board with important insight. He has comprehensive knowledge of financial accounting standards and extensive experience in financial statement preparation, corporate finance, corporate development, risk management and investor relations. Further, given his experience as Lead Director at PolyOne, he also provides significant governance expertise. | | | | Director since 2015 Age 61 |

  22. Proposal 1: Election of Directors

    | EATON 2017 Proxy Statement and Notice of Meeting | 7 |

  23. Proposal 1: Election of Directors

    | Charles E. Golden Retired Executive Vice President and Chief Financial Officer, Eli Lilly and Company Charles E. Golden served as Executive Vice President and Chief Financial Officer and a director of Eli Lilly and Company, an international developer, manufacturer and seller of pharmaceutical products, from 1996 until his retirement in 2006. Prior to joining Eli Lilly, he had been associated with General Motors Corporation since 1970, where he held a number of positions, including Corporate Vice President, Chairman and Managing Director of the Vauxhall Motors subsidiary and Corporate Treasurer. He is currently on the board of Hill-Rom Holdings, Inc. and was a past director of Unilever NV/PLC. Mr. Golden also serves as a director of the Lilly Endowment and Indiana University Health. Director Qualifications: Mr. Golden has a comprehensive knowledge of both U.S. and international financial accounting standards. He has extensive experience in financial statement preparation, accounting, corporate finance, risk management and investor relations both in the U.S. and internationally. His broad financial expertise enables him to provide expert guidance and oversight to the Board. Mr. Golden also has significant experience in global vehicle markets. | | | | Director since 2007 Age 70 |

  24. Proposal 1: Election of Directors

    | Arthur E. Johnson Retired Senior Vice President, Corporate Strategic Development, Lockheed Martin Corporation Arthur E. Johnson is the retired Senior Vice President, Corporate Strategic Development of Lockheed Martin Corporation, a manufacturer of advanced technology systems, products and services. Mr. Johnson was elected a Vice President of Lockheed Martin Corporation and named President of Lockheed Martin Federal Systems in 1996. He was named President and Chief Operating Officer of Lockheed Martin’s Information and Services Sector in 1997 and Senior Vice President, Corporate Strategic Development in 1999. Mr. Johnson currently is a director of Booz Allen Hamilton and during the past five years was a director of AGL Resources, Inc.. He is an independent trustee of the Fixed Income and Asset Allocation Funds of Fidelity Investments. Director Qualifications: Mr. Johnson’s role in strategic development with a leading company in the defense industry has given him an understanding of doing business with governments, strategic planning, regulatory compliance, and legislative and public policy matters. His knowledge of the global aerospace and defense industry are of particular benefit to our Board in connection with these businesses. Mr. Johnson’s service as lead director of a New York Stock Exchange listed company, as well as his service on other boards, provides Eaton with valuable corporate governance expertise, which is of particular benefit to Eaton in his role as Chair of the Governance Committee. | | | | Director since 2009 Age 70 |

  25. Proposal 1: Election of Directors

    | Deborah L. McCoy Independent aviation safety consultant Deborah L. McCoy is an independent aviation safety consultant. She retired from Continental Airlines, Inc. in 2005, where she had served as Senior Vice President, Flight Operations since 1999. During part of 2005, Ms. McCoy also briefly served as the Chief Executive Officer of DJ Air Group, a start-up commercial airline company. Director Qualifications: Ms. McCoy has extensive experience in the commercial aerospace markets and brings an understanding of aircraft design and performance, global airline operations and the strategic issues and direction of the aerospace industry. In addition, Ms. McCoy has extensive experience in safety initiatives, Federal regulatory compliance, labor relations, talent management, and risk analysis and mitigation. All of these attributes are of benefit to Eaton’s Board in its oversight role across the enterprise. | | | | Director since 2000 Age 62 |

  26. Proposal 1: Election of Directors

    | EATON 2017 Proxy Statement and Notice of Meeting | 8 |

  27. Proposal 1: Election of Directors

    | Gregory R. Page Retired Chairman and Chief Executive Officer, Cargill, Incorporated Gregory R. Page is the retired Chairman and Chief Executive Officer of Cargill, Incorporated, an international marketer, processor and distributor of agricultural, food, financial and industrial products and services. He was named Corporate Vice President & Sector President, Financial Markets and Red Meat Group of Cargill in 1998, Corporate Executive Vice President, Financial Markets and Red Meat Group in 1999, and President and Chief Operating Officer in 2000. He became Chairman and Chief Executive Officer in 2007 and was named Executive Chairman in 2013. Mr. Page subsequently served as Executive Director from 2015 to 2016, after which he retired from the Cargill Board. Mr. Page is a director of 3M Company and Deere & Company, and a director and past non-executive Chair of the Board of Big Brothers Big Sisters of America. He is a former director of Carlson and the immediate past President and a board member of the Northern Star Council of the Boy Scouts of America. Director Qualifications: As the retired Chairman and former Chief Executive Officer of one of the largest global corporations, Mr. Page brings extensive leadership and global business experience, in-depth knowledge of commodity markets, and a thorough familiarity with the key operating processes of a major corporation, including financial systems and processes, global market dynamics and succession management. Mr. Page’s experience and expertise provide him valuable insight on financial, operational and strategic matters. | | | | Director since 2003 Age 65 |

  28. Proposal 1: Election of Directors

    | Sandra Pianalto Retired President and Chief Executive Officer of the Federal Reserve Bank of Cleveland Sandra Pianalto served as President and Chief Executive Officer of the Federal Reserve Bank of Cleveland from February 2003 until her retirement in June 2014. She joined the Bank in 1983 as an economist in the research department. She was appointed Assistant Vice President of public affairs in 1984, Vice President and Secretary to the board of directors in 1988, and Vice President and Chief Operating Officer in 1993. Before joining the Bank, Ms. Pianalto was an economist at the Federal Reserve Board of Governors and served on the staff of the Budget Committee of the U.S. House of Representatives. She is currently a director of The J.M. Smucker Company and Prudential Financial, Inc., chair of the board of directors of University Hospitals Health System, and past chair and life director of the board of United Way of Greater Cleveland. She holds the FirstMerit Chair in Banking at the University of Akron. Ms. Pianalto is also an advisory trustee at the University of Akron and serves on the board of College Now Greater Cleveland. Director Qualifications: Ms. Pianalto has extensive experience in monetary policy and financial services, and brings to Eaton wide-ranging leadership and operating skills through her former roles with the Federal Reserve Bank of Cleveland. As Chief Executive Officer of the Bank, she developed expertise in economic research, management of financial institutions, and payment services to banks and the U.S. Treasury. Ms. Pianalto’s comprehensive experience qualifies her to provide substantial guidance and oversight to the Board in her role as Chair of the Finance Committee. | | | | Director since 2014 Age 62 |

  29. Proposal 1: Election of Directors

    | EATON 2017 Proxy Statement and Notice of Meeting | 9 |

  30. Proposal 1: Election of Directors

    Proposal 1: Election of Directors — How Nominees are Chosen

  31. Proposal 1: Election of Directors

    | Gerald B. Smith Chairman and Chief Executive Officer, Smith Graham & Co., and former lead independent director of Cooper Industries plc Gerald B. Smith was a director of Cooper Industries plc from 2000 until 2012 and served as lead independent director of Cooper Industries plc since 2007. Mr. Smith joined the Board effective upon the close of the Cooper acquisition. He is Chairman and Chief Executive Officer of Smith Graham & Co., an investment management firm that he founded in 1990. Prior to launching Smith Graham, he served as Senior Vice President and Director of Fixed Income for Underwood Neuhaus & Company. He is a member of the Board of Trustees and chair of the Investment Oversight Committee for The Charles Schwab Family of Funds. Mr. Smith also serves as a director and chair of the Investment Committee of the New York Life Insurance Company. In the past five years, Mr. Smith was a director of ONEOK Inc. and ONEOK Partners MLP. He serves as Chairman of the Texas Southern University Foundation and is a former director of the Federal Reserve Bank of Dallas, Houston branch. Director Qualifications: Mr. Smith has expertise in finance, portfolio management and marketing through executive positions in the financial services industry, including being founder, Chairman and Chief Executive Officer of Smith Graham & Co. His experience as a director of companies in the oil and gas and energy services businesses has provided him with valuable insight into markets in which Eaton also participates. Mr. Smith’s experience as lead independent director of Cooper Industries plc since 2007 has benefited the process of integrating Cooper into Eaton. His experience and expertise provide him valuable insight on financial, operational and strategic matters in his role as Chair of the Audit Committee. | | | | Director since 2012 Age 66 |

  32. Proposal 1: Election of Directors

    | Dorothy C. Thompson Chief Executive, Drax Group plc Dorothy C. Thompson CBE is Chief Executive and a director of Drax Group plc, a U.K.-based power retail and generation company. She was appointed CEO of Drax Group plc in September 2005 and to the company’s Board of Directors in October 2005. Prior to joining Drax, Ms. Thompson was vice president of InterGen NV, an independent power-company jointly owned by Shell and Bechtel. She joined InterGen in 1998 from PowerGen plc where she was assistant group treasurer. In addition to her leadership at Drax, she is a member of the Board of Directors of the Court of the Bank of England and was a director of Johnson Matthey Plc until 2016. Director Qualifications: As Chief Executive of Drax, Ms. Thompson has unique insight into the sourcing, generation and supply of sustainable and renewable energy. She also brings to the Board vast experience in all aspects of finance as well as an international business perspective. | | | | Director since 2016 Age 56 |

  33. Proposal 1: Election of Directors

    HOW NOMINEES ARE CHOSEN

  34. Executive Compensation Philosophy

    | ∎ | Caps on potential payouts under our short- and long-term incentive plans; |

  35. Executive Compensation Philosophy

    | ∎ | Shareholder-approved short-term and long-term incentive plans; |

  36. Executive Compensation Philosophy

    | ∎ | Double-trigger equity vesting upon a change in control. |

  37. Pay for Performance Culture

    | There was no payout under the long-term performance-based plan (ESIP) in 2012.* |

  38. Summary of 2016 Performance-Based Incentive Plan Payouts

    Summary of 2016 Performance-Based Incentive Plan Payouts SHORT-TERM INCENTIVES Goals under our short-term, performance-based incentive plan were achieved at 92% of target but the Committee elected to reduce the payout to 85%. The Committee’s decision to reduce the award, along with other efforts such as restructuring actions, reducing discretionary spending, and tightening inventory controls helped fulfill our commitments to our investors despite the impact that sluggish market conditions had on Eaton’s earnings and revenue in 2016. A bonus pool equal to 1.5% of Annual Net Income served as the initial funding mechanism for our Senior Executive Incentive Compensation Plan (Senior EIC Plan). In addition, the Committee established Operating Earnings Per Share (EPS) (which exclude acquisition integration charges) and Cash Flow Return on Gross Capital (CFR) goals that also are used in determining actual awards. For 2016, the target EPS and CFR objectives were $4.30 and 16.8%, respectively. Actual EPS and CFR were $4.22 and 16.1%. LONG-TERM INCENTIVES Our long-term, performance-based Executive Strategic Incentive Plan (“ESIP”) achieved a 25% payout for the 2013-2016 award period. The target cumulative EPS and CFR goals for the 2013-2016 award period were $21.34 and 20.4%, respectively. Our actual cumulative EPS over the four-year award period of $17.32 was below the threshold level necessary to earn a payment for the EPS growth metric but actual average CFR of 16.8% exceeded the CFR threshold of 8%. 2013-2016 ESIP opportunities took the form of phantom share units based on our share price at the beginning of the award period in 2013 and were settled in cash based on the share price at the end of the award period in 2016. Therefore, appreciation in Eaton’s share price over the four-year award period impacted the value that our executives realized from the ESIP awards, which is consistent with our policy of aligning their interests with those of our shareholders.

  39. Summary of 2016 Performance-Based Incentive Plan Payouts

    | 2013-2016 EXECUTIVE STRATEGIC INCENTIVE PLAN GOALS AND RESULTS |

  40. Summary of 2016 Performance-Based Incentive Plan Payouts

    Additional information about our annual and long-term incentive plans begins on page 39.

  41. Summary of 2016 Performance-Based Incentive Plan Payouts

    | EATON 2017 Proxy Statement and Notice of Meeting | 30 |

  42. Review of 2016 Advisory Vote on Executive Compensation

    | Change to Performance-Based Long-Term Incentive Performance Criteria |

  43. Review of 2016 Advisory Vote on Executive Compensation

    Compensation Discussion and Analysis — 2016 CEO Realized Pay and Our Performance 2016 CEO REALIZED PAY AND OUR PERFORMANCE Our compensation programs for Mr. Arnold and the other named executive officers are heavily weighted toward performance-based opportunities that are at-risk and subject to our performance. The table below illustrates the relationship between Mr. Arnold’s and Mr. Cutler’s target award opportunity and the amounts each actually earned based on our performance against the metrics established for the short- and long-term incentive plans that matured on December 31, 2016. Short- and long-term incentive plan metrics are intended to drive results that create value for our shareholders. This table supplements, but does not substitute, the information contained in the Summary Compensation Table on page 52. Further, each pay component shown below is discussed in more detail in the CD&A that follows.

  44. Membership and Responsibilities

    | Compensation-related Tasks | Organizational Tasks | | • Reviews, approves, and administers all of our executive compensation plans, including our stock plans; • Establishes performance objectives under our short- and long-term incentive compensation plans; • Determines the attainment of those performance objectives and the awards to be made to our senior officers under our short- and long-term incentive compensation plans; • Determines the compensation for our senior officers, including salary and short- and long-term incentive opportunities; • Reviews compensation practices relating to key employees to confirm that these practices remain equitable and competitive; and • Reviews new employee benefit plans or significant changes in such plans or changes with a disproportionate effect on our officers or primarily benefiting key employees. | • Evaluates the performance of the CEO, with input from all non-employee directors; • Reviews the performance capabilities of the other senior officers based on input from the CEO; • Reviews succession planning for officer positions including the position of the CEO; • Reviews proposed organization or responsibility changes at the senior officer level; and • Reviews our practices for the recruitment and development of a diverse talent pool. |

  45. Use of Consultants

    | Change in Long-Term Performance Plan Performance Criteria |

  46. Use of Consultants

    Prior to 2016, awards were determined based on company performance versus operating EPS growth and CFR goals. In setting the EPS growth and CFR goals for the prior periods, the Board would evaluate our Strategic Plan projections and analysts’ estimates of peer company performance; however, the impact of changes in market growth rates has had a disproportionate impact on actual versus forecasted results and it has become increasingly difficult to forecast absolute performance against our peers. Effective with the 2016-2018 ESIP period, awards will be determined based on our total return to shareholders (TSR) ranked against that of the TSR Peer Group described on pages 36 and 42. Consistent with our historical practice, awards under this plan design are capped at 200% of target. Additionally, if our TSR is positive but ranks the lowest among the TSR Peer Group, the maximum payout that can be earned is 25% of target. If our TSR is the highest when compared to that of the peer companies, but is negative, then the maximum payout that can be earned is 100% of target. The companies in the TSR Peer Group are listed on page 36. Fourteen of the companies in the TSR Peer Group are direct peers in either the Electrical, Hydraulics, Aerospace or Vehicle segments. The number of directly competitive peers in each segment roughly equates to the percentage of that segment’s revenue as a percent of total Eaton revenues. We have also identified six indirect but relevant peers, which when combined with the Electrical peers represent the Electrical sector weightings within all of Eaton. Rationale: The change in performance criteria will alleviate the market calibration issue and introduce a stronger sense of relative peer performance. We and the Committee believe a short-term plan with an earnings growth and return on assets orientation (via the EPS and CFR goals) complemented by a TSR-driven long-term plan is an effective combination that will enhance shareholder value. This new peer group will not be the primary compensation peer group that we use to set individual pay targets. Instead, we will continue to use the data reported in third-party surveys (as described on page 35) as our primary resource in setting pay for our executives.

  47. Use of Consultants

    Effective March 1, 2016, equity grants may continue to vest according to the terms of the grant agreement for employees who are age 55 or older with 10 or more years of service who either (1) retire in good-standing or (2) who are terminated through no fault of their own due to a company action. (All scenarios are referred to as “retirement” for purposes of this topic.) Additionally, retirees will be able to exercise outstanding stock options for the remaining term of the grant. The Committee will retain its discretion to cancel shares in the event that (1) an executive does not provide proper notice of retirement or (2) retires and begins working for a competitor or (3) for any other reason the Committee determines is in Eaton’s best interest. Previously, all shares or options that would have otherwise vested within 12 months of retirement would have vested at retirement and all other outstanding equity grants were forfeited. Additionally, executives could exercise outstanding stock options for the lesser of five years or the remaining term of the stock option. The continued vesting applies to time-based awards. We are not making changes to vesting practices for performance-based ESIP awards which are subject to proration for time worked in the performance period and to the company achieving the performance metrics for each respective award period. Any prorated ESIP awards earned by retired executives will be paid after the award period has ended and actual performance has been measured. All long-term incentive plan participants will be eligible for this treatment. As of January 31, 2016, there were approximately 680 employees who were eligible for long-term incentive awards. Rationale: The Committee reviewed surveys of external market practices which report that the majority of companies allow shares to vest beyond retirement. This change was made to align our practice with the most common practice in the market.

  48. Evaluating Pay

    Evaluating Pay In July of each year, the Committee evaluates pay relative to external market data to validate the individual compensation opportunities that were established in February, and also considers whether we are setting appropriate performance hurdles. This process involves collecting and reviewing peer group information and third party survey data and analyzing it as described below. PEER GROUP ANALYSIS Peer Group Selection — We do not use a comparator group of companies to set individual compensation targets. However, in 2016, the Board of Directors selected a strategic peer group of twenty-two companies whose performance is considered in the context of setting our Strategic and Annual Profit Plans. Effective with the three-year award period that began on January 1, 2016, the twenty publicly traded companies in this group serve as the TSR Peer Group for purposes of determining relative TSR performance and payouts under ESIP, which is described on page 42. Fourteen of the twenty public companies in the peer group are direct peers in either the Electrical, Hydraulics, Aerospace or Vehicle segments. The number of directly competitive peers in each segment roughly equates to the percentage of that segment’s revenue as a percent of total Eaton revenues. We have also identified six indirect but relevant peers, which when combined with the Electrical peers, approximately represent the Electrical Sector’s weightings across all of Eaton. The strategic peer group includes:

  49. Evaluating Pay

    Peer Pay Analysis — Although the strategic peer group does not serve as a compensation peer group, we do provide the Committee with an analysis that includes the compensation reported by each publicly traded peer in its annual proxy statement and market survey data for positions that are equivalent to positions held by our named executive officers. The Committee uses this analysis in reviewing and establishing our stretch incentive plan goals and in answering whether our compensation targets are appropriate relative to market comparators. In 2016, this review of survey and peer proxy data confirmed that Eaton’s compensation opportunities were aligned with the external data points. The Committee also affirmed that it would continue to use the data reported in the two previously mentioned compensation surveys as the basis for setting individual compensation opportunities, but would use the peer proxy data as a secondary data point if an executive’s compensation was well below or above the survey comparator group median. In prior years, we also conducted a peer pay targeting and performance hurdle study that analyzed our peers’ pay for performance profiles relative to that of their own peer groups. This helped the Committee to determine if we were setting rigorous and appropriate performance hurdles. This analysis was irrelevant in 2016 because (a) we adopted relative TSR as our long-term incentive performance criteria and are no longer setting performance hurdles and (b) the strategic peer group does not serve as a compensation peer group. The peers were chosen based on their industry segment, among other considerations, so that the overall revenue of each segment would approximate Eaton’s revenues for each segment (Aerospace, Electrical, Hydraulics, Vehicle) versus overall revenue for the entire enterprise. The revenue of many companies in the strategic peer group is smaller than Eaton’s and given that there is a correlation between the revenue size of a company and the pay it delivers, the Committee determined that the strategic peer group would not serve as an appropriate peer group for purposes of setting pay.

  50. OVERVIEW OF OUR PRIMARY COMPENSATION COMPONENTS

    | Component | | Description | Form/Timing of Payout | | Base salary | | Levels reflect job responsibilities and market competition | Paid in cash throughout the year | | Short-term incentive | | Senior EIC Plan – Cash incentive tied to the following performance metrics: • Net income generates a pool that determines the maximum award amount. This maximum award may be reduced by the Committee. • The Committee considers performance relative to Operating Earnings Per Share (EPS) and Cash Flow Return on Gross Capital (CFR) goals as well as business unit and individual performance in making its final award determination. Meets the requirements of Section 162(m) of the Internal Revenue Code | Paid in cash after the year has ended and performance has been measured Executives can choose to defer payments under our Deferred Incentive Compensation Plan II. | | Long-term incentives | | Tied to the following performance metrics: Effective January 1, 2016: • Relative Total Shareholder Return | Awards are distributed after the award period has ended and performance has been measured. For periods that began prior to January 1, 2015 – Awards are paid in cash. For periods that began on or after January 1, 2015 – awards are settled in Eaton ordinary shares. Executives can choose to defer payments for periods that began prior to 2015 under our Incentive Compensation Deferral Plan II. | | | 50% Performance- Based Long- Term Incentive (ESIP) | For periods that began prior to January 1, 2016: • Compound growth rate in operating EPS and • Average annual CFR ESIP opportunities for award periods that began prior to January 1, 2015 are settled in cash but awarded in the form of phantom share units; therefore, value realization is affected by our stock performance. ESIP opportunities for award periods that began on or after January 1, 2015 are denominated in performance share units and settled in Eaton ordinary shares; therefore, value realization depends on our stock performance. Meets the requirements of Section 162(m) of the Internal Revenue Code | | | | 50% Equity • 25% RSUs • 25% stock options | RSUs and stock options Value realization depends on our stock performance | Vesting in approximately equal installments over 3 years | | Restructuring performance grants | | Performance RSUs Value realization depends on achieving performance criteria as determined by the Committee and our stock performance. See page 44 for a description of opportunities established in 2016. | Vesting periods are a minimum of three years | | Retention grants | | Restricted Stock Awards granted on rare occasions to foster engagement and retention Value realization depends on our stock performance | Vesting periods range from four to ten years |

  51. Short-Term Performance-Based Compensation

    Short-Term Performance-Based Compensation We establish a competitive annual cash incentive opportunity for our executives. The Committee determines target opportunities for each executive in February during its Total Compensation Analysis and Planning Process. As we previously discussed, the average of the median short-term incentive values as reported in two compensation surveys is used as the basis for determining our executives’ targets. Metrics, Goals and Results — In February 2016, the Committee established a bonus pool under the Senior EIC Plan equal to 1.5% of our Annual Net Income. The Committee also considered, among other metrics, EPS growth rate guidance for us and our peers as a key starting point for setting aggressive performance hurdles for our short-term incentive plan. The short-term objectives historically have been tied to EPS and CFR metrics and serve as subordinate metrics that the Committee considers when exercising negative discretion to determine actual award amounts under the Senior EIC Plan. The EPS metric measures earnings growth, while the CFR objective is an internal measure of return on capital. We and the Committee believe these are appropriate metrics because of their link to shareholder value creation. For 2016, the Committee established the subordinate EPS and CFR goals based on its review of market analyses, our annual profit plan as approved by the Board of Directors, external research reports, and analyses of peer group data. We cap EPS and CFR goals at 200% of target. The Committee believes that the target levels established at the beginning of 2016 for the EPS and CFR goals were demanding but attainable. The following table shows the 2016 goals and our actual results for the year. Actual EPS and CFR results were 92% of target, but the Committee exercised its discretion to reduce the calculated payout to 85% of target. The Committee’s decision to reduce the award, along with other efforts such as restructuring actions, reducing discretionary spending, and tightening inventory controls helped fulfill our commitments to our investors despite the effect that sluggish market conditions had on Eaton’s earnings and revenue in 2016.

  52. Short-Term Performance-Based Compensation

    | EATON 2017 Proxy Statement and Notice of Meeting | 39 |

  53. Short-Term Performance-Based Compensation

    2016 SHORT-TERM INCENTIVE AWARDS In February 2016, in addition to establishing the Senior EIC Plan Net Income Pool, the Committee also assigned a percentage of this pool to each participant, setting the maximum amount that the participant could receive under the Plan for 2016. For the named executive officers, these percentages ranged from 8% to 20% of the Annual Net Income Incentive Pool. Under the terms of the plan, no participant may be assigned a percentage share of the pool that is worth more than $7,500,000. The Committee also established an individual target award opportunity for each executive that reflected the median annual incentive opportunity reported in the compensation surveys that are used to establish individual compensation targets. At the end of the award period, the Committee considered the following items in determining individual payouts:

  54. Short-Term Performance-Based Compensation

    | • | The maximum award generated by the Net Income Pool for each participant. |

  55. Short-Term Performance-Based Compensation

    | • | The Company’s actual performance relative to subordinate EPS and Cash Flow Return on Gross Capital performance objectives and the Committee’s decision to adjust the payout to 85% of target as described above. |

  56. Short-Term Performance-Based Compensation

    | • | An individual performance factor that is based on the achievement of the individual performance goals described below: |

  57. Short-Term Performance-Based Compensation

    | • | Financial Goals: Achieving the Company’s annual financial plan, as well as the annual financial plan for the executive’s business unit. |

  58. Short-Term Performance-Based Compensation

    | • | Growth Goals: Building our brand; outgrowing the markets in which we operate; introducing new products and services. |

  59. Short-Term Performance-Based Compensation

    | • | Operational Excellence: Workplace safety and emissions reduction; advancements in quality; supply chain improvement; and operational efficiency/productivity. |

  60. Short-Term Performance-Based Compensation

    | • | Building Organizational Capacity: Reinforcing our ethical standards; attracting and developing talent; developing a diverse and inclusive organization; promoting a learning culture. |

  61. Short-Term Performance-Based Compensation

    | • | Acquisition Integration Goals: Successfully integrating acquisitions; recent acquisitions and meeting our synergy targets. |

  62. Short-Term Performance-Based Compensation

    The following table illustrates each named executive officer’s 2016 award opportunity and his or her actual Senior EIC Plan award relative to that opportunity:

  63. Short-Term Performance-Based Compensation

    | Executive | Senior EIC Net Income Pool Allocation | Senior EIC Target as a % of Salary | Senior EIC Target $ | EPS and CFR Results | Individual Performance Factor | | Award | Award as % of Target | | C. Arnold (as CEO of Eaton Corp - 7 months) | $5,766,000 | 150% | $962,500x | 85%x | 105% | = | $859,031 | 89% | | C. Arnold (as COO of Eaton Corp - 5 months) | $5,766,000 | 125% | $520,834x | 85%x | 110% | = | $486,980 | 94% | | R. Fearon | $4,324,500 | 100% | $867,000x | 85%x | 110% | = | $810,645 | 94% | | R. Advaithi | $4,324,500 | 100% | $714,000x | 85%x | 105% | = | $637,245 | 89% | | U. Yadav | $2,883,000 | 95% | $584,250x | 85%x | 105% | = | $521,443 | 89% | | M. McGuire | $2,883,000 | 75% | $446,742x | 85%x | 105% | = | $398,717 | 89% | | A. Cutler | $5,766,000 | 63% | $812,500x | 85%x | 110% | = | $759,688 | 94% |

  64. Short-Term Performance-Based Compensation

    Each named executive officer’s eligible salary for purposes of determining his or her short-term incentive award was prorated based on the effective date of the merit increases described on page 39. Mr. Arnold’s target and salary were prorated based on the effective date of his appointment to his position as Chief Executive Officer. His targets prior to and after his promotion were 125% and 150% of base salary, respectively. Mr. Cutler’s target was prorated based on his retirement date. Each named executive officer’s short-term incentive award is reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.

  65. Long-Term Performance-Based Compensation

    Long-Term Performance-Based Compensation For 2016, the Committee established a long-term incentive target opportunity for each executive that was intended to align with the market median values reported in the two surveys we use to establish individual compensation plans. We provide long-term incentive compensation to our executive officers in two components that generally are weighted as follows:

  66. Long-Term Performance-Based Compensation

    | ∎ | 50% in Performance-Based Long-Term Compensation: ESIP periods that began prior to January 1, 2016 were based upon performance against EPS compound growth rate goal and CFR goals. Effective January 1, 2016, relative total shareholder return serves as the performance criteria for ESIP. ESIP award periods that began prior to January 1, 2015 span four years and award periods that began on or after January 1, 2015 are three years long. The amount earned by executives depends on actual EPS growth and CFR results relative to these performance metrics for periods prior to January 1, 2016. For periods that began on or after January 1, 2016, we will rank our total return to shareholders |

  67. Long-Term Performance-Based Compensation

    | EATON 2017 Proxy Statement and Notice of Meeting | 40 |

  68. Long-Term Performance-Based Compensation

    | against that of the TSR Peer Group to determine awards. Share price appreciation or depreciation over the award period also affects the value realized by our executives, thereby providing a direct link to shareholder value creation. |

  69. Long-Term Performance-Based Compensation

    | ∎ | 50% in Time Based Equity Awards: The named executive officers receive an equal mix of stock options and restricted stock units (RSUs) which also provide a link to external performance. |

  70. Long-Term Performance-Based Compensation

    We believe that this “portfolio approach” to structuring long-term incentives provides an appropriate balance that focuses executives on both an external and internal measure of our success. In limited circumstances, the Committee also provides restricted share awards (RSAs) to foster engagement and retention. The Committee’s independent compensation consultant has confirmed that this approach is appropriate to delivering long-term compensation and is consistent with market practices. No named executive officers received retention grants in 2016. PERFORMANCE BASED LONG-TERM INCENTIVES FOR THE PERIOD ENDING DECEMBER 31, 2016 2013-2016 ESIP — In February 2013, the Committee established challenging EPS compound growth rate and CFR performance goals for the 2013-2016 ESIP. The CFR objective focused management on driving attractive returns on the capital we employ over the multi-year award period, while the EPS goal focused management on driving earnings growth throughout the multi-year cycle. The Committee used a comprehensive report that analyzed publicly available peer group financial data to establish the CFR and EPS objectives. Our Board also used this report in reviewing our Strategic and Profit Plans. The report includes:

  71. Long-Term Performance-Based Compensation

    | • | A comparison of our past performance across a range of performance metrics, compared to those same metrics as reported for our peer group; |

  72. Long-Term Performance-Based Compensation

    | • | Our estimated financial results and those for each peer group company as projected by sell-side analysts who follow these companies; and |

  73. Long-Term Performance-Based Compensation

    | • | A review of our strategic objectives and annual business plans for the multi-year performance period. |

  74. Long-Term Performance-Based Compensation

    The EPS growth and CFR goals for the award period were weighted equally. The Committee set performance hurdles at levels such that our executives would receive payment of approximately 100% of the target incentive opportunity if our performance over the award period was at or above the projected median of performance compared to that of our peer group that was in place at the time the opportunity was established, and payment at or above 150% of the target incentive opportunity if our performance over the award period was at or above the projected top 25th percentile of performance of our peer group. We capped CFR and EPS growth goals under ESIP at 200% of target. This cap is consistent with the maximum incentive opportunity as reported by the companies that respond to the compensation surveys to which we subscribe. The key to achieving an above-target payout for this ESIP period was to fully meet our annual operating plans, exceed our targeted operating margins and our earnings per share targets, closely manage our working capital and fully achieve our committed integration and synergy targets. In addition to setting ESIP goals, in February 2013, the Committee also set individual ESIP target award opportunities for each named executive officer that represented approximately 50% of his or her total long-term incentive opportunity that was established in 2013. Individual target opportunities were expressed as a cash value and then converted to phantom share units based on the average New York Stock Exchange price of Eaton ordinary shares over the first 20 trading days of the award period, which was $56.27. Phantom share units align the interests of the executives with those of the shareholders because the units reflect appreciation or depreciation and earnings on our ordinary shares during the performance period. Payout of 2013-2016 ESIP — The CFR component of the 2013-2016 ESIP was achieved at 16.8%, which was above the threshold level of 8.0% needed to generate a payout under the plan. Actual EPS growth of $17.32 was below the minimum level of $18.95 that was necessary to generate a payout for the EPS component of the award. The combined results generated a payout of 25% of target.

  75. Long-Term Performance-Based Compensation

    | EATON 2017 Proxy Statement and Notice of Meeting | 41 |

  76. 2013-2016 LONG-TERM EXECUTIVE STRATEGIC INCENTIVE PLAN GOALS AND RESULTS

    2013-2016 LONG-TERM EXECUTIVE STRATEGIC INCENTIVE PLAN GOALS AND RESULTS Final awards were determined by multiplying the target number of phantom share units by the adjusted performance factor of 25%. The earned number of phantom share units was then converted to cash based on the average New York Stock Exchange price of Eaton ordinary shares over the last 20 trading days of the award period, which was $68.26, and dividend equivalents were added based on the aggregate dividend paid over the period ($8.12) and the final number of share units that were earned. The combination of the cash value from the earned phantom share units and the accumulated dividend approximates the total shareholder return over that period. Awards earned by our named executive officers for the 2013-2016 ESIP Period are shown below:

  77. 2013-2016 LONG-TERM EXECUTIVE STRATEGIC INCENTIVE PLAN GOALS AND RESULTS

    | Executive | 2013- 2016 Target | Target Units (based on $56.27 in 2013) | Earned Share Units (based on 25% payout) | Earned Award (based on $68.26 in 2016) | Accumulated Dividends (based on $8.12) | Total Award + Dividend Equivalents | Total Award as % of Target | | C. Arnold | $1,050,000 | 18,700 | 4,675 | $319,116 | $37,961 | $357,077 | 34% | | R. Fearon | $1,050,000 | 18,700 | 4,675 | $319,116 | $37,961 | $357,077 | 34% | | R. Advaithi | $800,000 | 14,250 | 3,563 | $243,210 | $28,932 | $272,142 | 34% | | U. Yadav | $340,000 | 6,050 | 1,513 | $103,277 | $12,286 | $115,563 | 34% | | M. McGuire | $650,000 | 11,600 | 2,900 | $197,954 | $23,548 | $221,502 | 34% | | A. Cutler | $3,630,208 | 64,532 | 16,133 | $1,101,239 | $131,000 | $1,232,239 | 34% |

  78. 2013-2016 LONG-TERM EXECUTIVE STRATEGIC INCENTIVE PLAN GOALS AND RESULTS

    | How Our CFR and EPS Goals Used in Short- and Long-Term Incentive Plans Prior to 2016 Differ | | We and the Committee believe that Earnings Per Share and Cash Flow Return on Gross Capital are appropriate metrics to use in our short-term and long-term incentive plans because of the impact these items have on creating shareholder value. Although we used an earnings per share (EPS) metric in both our short- and long-term incentive plans prior to 2016, the two metrics were different: • The short-term plan metric is tied to annual EPS. A goal is set in February of each year based on items such as EPS guidance for the year, market analyses and our annual profit plan. • The long-term ESIP metric was tied to EPS growth and the corresponding CFR over a four- or three-year period, as applicable. This multi-year goal was set based on the Board’s review of our Strategic Plan and the long-term, five-year financial goals that we shared with investors. • In 2016, relative TSR became the performance criteria for ESIP, thereby eliminating the concern that we use the “same” metrics in our short- and long-term incentive plans. |

  79. Long-Term Incentives Granted in 2016

    Long-Term Incentives Granted in 2016 Establishment of Performance Criteria for the 2016-2018 ESIP — The Committee adopted relative TSR as the performance criteria for the 2016-2018 ESIP period. Prior to 2016, awards were determined based on company performance versus operating EPS growth and CFR goals. In setting the EPS growth and CFR goals for the prior periods, the Board would evaluate our Strategic Plan projections and analysts’ estimates of peer company performance; however, the impact of changes in market growth rates has had a disproportionate impact on actual versus forecasted results. Therefore, the Committee chose TSR as the metric to alleviate the increasingly difficult market calibration issues and to introduce a stronger sense of relative peer performance. The change also eliminates any concern about the use of overlapping criteria in our Senior EIC and EIC and our ESIP program. We and the Committee believe a short-term plan

  80. Long-Term Incentives Granted in 2016

    | EATON 2017 Proxy Statement and Notice of Meeting | 42 |

  81. Long-Term Incentives Granted in 2016

    with an earnings growth and return on assets orientation (via the EPS and CFR goals) complemented by a TSR-driven long-term plan is an effective combination that will enhance shareholder value. Awards for the 2016-2018 award period will be determined based on our total return to shareholders (TSR) relative to that of the TSR Peer Group. TSR is calculated by taking the total of share price appreciation and dividends (assuming immediate reinvestment of dividends) over the three year period compared to our share price at the beginning of the period. Our TSR rank among the TSR Peer Group will determine an adjustment factor which can range from 0% to 200%. Consistent with our historical practice, awards under this plan design are capped at 200% of target. Additionally, if our TSR is positive but ranks the lowest among the peer group, the maximum payout that can be earned is 25% of target. If our TSR is the highest when compared to that of the peer companies, but is negative, then the maximum payout that can be earned is 100% of target. The TSR Peer Group for the 2016-2018 award period includes nineteen companies, thirteen of whom are direct peers in either the Electrical, Hydraulics, Aerospace or Vehicle segments. The number of directly competitive peers in each segment roughly equates to the percentage of that segment’s revenue as a percent of total Eaton revenues. The remaining six peers are indirect but relevant peers. The companies included in the TSR Peer Group are: Direct Peers: ABB, Ltd., Allison Transmission Holdings, Inc., BorgWarner, Inc., Cummins Inc., Emerson Electric Co., Hubbell Inc.,Legrand S.A., Moog Inc., Parker-Hannifin Corporation, Rockwell Automation Inc., Schneider Electric SE, Siemens AG, and Woodward, Inc. (Federal-Mogul Corporation was also originally included in the Direct Peer Group but has been removed because the company is no longer publicly traded.) Indirect Peers: Deere & Company, Dover Corporation, Honeywell International Inc., Illinois Tool Works Inc., Ingersoll-Rand plc, and United Technologies Corporation. Establishment of ESIP Award Opportunities for the 2016-2018 ESIP — In February 2016, the Committee established total long-term incentive opportunities, expressed as a cash value, for each executive. Targets are intended to align with the median long-term incentive value reported in the external market. Half of the long-term incentive target was converted to a number of performance share units based on our 30-day average stock price at the beginning of the award period. At the end of the award period, the number of performance share units will be adjusted up or down based on achievement of our TSR rank relative to that of the peers as described above. The adjusted number of share units, if any, will be distributed to participants in the form of our ordinary shares. An accumulated dividend equivalent covering the performance period will be paid in cash based on the number of share units actually earned. The combination of the value realized from the earned performance shares and the accumulated dividend approximates the total shareholder return over that period. Equity Component of Long-Term Compensation — The named executive officers receive the equity component of their long-term incentive opportunity in both RSUs and stock options. The Committee considers alignment with the external market median and individual performance and potential when making equity grants. We typically grant equity awards in February. The Committee has the authority to fix the date and all terms and conditions of equity grants to executive officers and other employees under our various stock plans, all of which have been approved by our shareholders. Our equity program adheres to the following best practices:

  82. Long-Term Incentives Granted in 2016

    | ∎ | Stock options and RSUs generally vest over, or upon the conclusion of, at least a three-year period. The vesting of RSUs and stock options is contingent upon continued service with us over the vesting period. |

  83. Long-Term Incentives Granted in 2016

    | ∎ | The aggregate number of shares or share units underlying options or related to other awards that may be granted to any employee during any three consecutive calendar year period may not exceed 2,400,000 under our 2015 Stock Plan. |

  84. Long-Term Incentives Granted in 2016

    | ∎ | No more than 5% of the total number of shares authorized for delivery under the Plan may vest within less than one year after the grant date (except for awards granted to non-employee directors, in the event of a change of control of the Company, in the event of a divestment of a business or upon an employee’s death, disability, or retirement). |

  85. Long-Term Incentives Granted in 2016

    | ∎ | We set the strike price for all of our stock options at the fair market value of our shares on the date of the grant. Our current shareholder-approved stock plans define “fair market value” as the “closing price” as quoted on the New York Stock Exchange on the date of the grant. |

  86. Long-Term Incentives Granted in 2016

    RSUs Granted in 2016 — In February 2016, the Committee approved RSU grants that represented approximately 25% of each named executive officer’s target long-term incentive opportunity. These RSUs vest in approximately equal installments over three years. We do not pay dividend equivalents on RSUs that are granted to our executives or other employees.

  87. Long-Term Incentives Granted in 2016

    | EATON 2017 Proxy Statement and Notice of Meeting | 43 |

  88. Long-Term Incentives Granted in 2016

    In addition, in June 2016, the Committee granted Mr. Arnold an additional grant of RSUs in recognition of his promotion to Chief Executive Officer. Stock Options Granted in 2016 — Stock options make up the remaining 25% of each named executive officer’s total target long-term incentive opportunity. The stock options granted in 2016 will vest in substantially equal installments over three years, subject to the executive’s continued employment with us, and have a strike price equal to the closing price of our ordinary shares on the date of the grant. Performance Restricted Share Units Granted in 2016 — The Committee recognizes that the efforts of our leadership team are particularly critical to pursuing profitability and our competitive advantage during periods of decline and softening in our end markets and while managing a significant leadership transition. Therefore, the Committee granted an additional performance-based long term compensation opportunity to the named executive officers. The grants took the form of performance share units that if earned, will vest after three years. In order for any of these units to vest, the company must achieve at least 80% of the publicly announced three-year restructuring plan savings of $418 million prior to the end of the three-year period. If at least 80% but less than 100% of the goal is achieved, executives may earn 80% of the performance share unit grant. If 100% or more of the goal is achieved, executives may earn 100% of the performance share units. If less than 80% of the goal is achieved, no shares will be earned and the performance share units will be forfeited. Earned performance share units, if any, earn accumulated dividends which will be paid in cash at the end of the three-year period. These awards are not intended to meet the requirements to qualify the payments as deductible compensation under Internal Revenue Code Section 162(m). 2016 Long-Term Incentive Grants — Each named executive officer’s long-term incentive opportunity and the mix of long-term vehicles is shown below. The target total long-term incentive values in this table are based on the market median survey data for each position. The amounts shown below differ from the amounts reported in the Summary Compensation Table, which reports the grant date fair value determined in accordance with FASB ASC Topic 718.

  89. Long-Term Incentives Granted in 2016

    | Executive | ESIP Target ($) (50% of LTI) | RSU Target $ (25% of LTI) | Stock Option Target (25% of LTI) | Target Total Long-Term Incentive ($) | Promotional Grant ($) | Performance Grant ($) | | C. Arnold | $2,500,000 | $1,250,000 | $1,250,000 | $5,000,000 | $1,000,000 | $1,314,780 | | R. Fearon | $1,500,000 | $750,000 | $750,000 | $3,000,000 | - | $1,314,780 | | R. Advaithi | $1,000,000 | $500,000 | $500,000 | $2,000,000 | - | $1,002,405 | | U. Yadav | $900,000 | $450,000 | $450,000 | $1,800,000 | - | $426,615 | | M. McGuire | $650,000 | $325,000 | $325,000 | $1,300,000 | - | $814,980 | | A. Cutler | $4,250,000 | $2,125,000 | $2,125,000 | $8,500,000 | - | - |

  90. Long-Term Incentives Granted in 2016

    | EATON 2017 Proxy Statement and Notice of Meeting | 44 |

  91. Long-Term Incentives Granted in 2016

    | Prior Year Change in the Form of ESIP Distorts the Summary Compensation Table | | ESIP opportunities for periods that began prior to January 1, 2015 were not reported as Stock Awards in the Summary Compensation Table because there was no embedded right to stock settlement (however, these ESIP opportunities were reported in the Grants of Plan Based Awards Tables for the year in which the opportunities were established). Instead, these awards have been reported in the Summary Compensation Table as “Non-Equity Incentive Plan Compensation” in the year in which the award period matured. The “Non-Equity Incentive Plan” column of this proxy statement includes payouts from our 2013-2016 ESIP. The long-term performance-based incentive opportunities for periods that began on or after January 1, 2015 will settle in shares and therefore will be reported as “Stock Awards” in the Summary Compensation Table. The “Stock Awards” column of this proxy statement includes the value of the performance shares granted in 2016 under our 2016-2018 ESIP. As a result of reporting grants and payouts in the same year, our Summary Compensation Table Total Compensation will be distorted until the final cash-settled ESIP period matures at the end of 2017. The illustration below highlights the impact the change in the form of ESIP had on this proxy statement using Mr. Arnold’s actual earned 2013-2016 ESIP award and 2016-2018 ESIP grant as an example. “Changes in Pension Values and Above-Market Earnings on Non-Qualified Deferred Compensation” and “All Other Compensation” are included in the Summary Compensation Table but are not included in the following illustration because they do not have a material impact for purposes of this illustration. |

  92. Long-Term Incentives Granted in 2016

    | EATON 2017 Proxy Statement and Notice of Meeting | 45 |

  93. Long-Term Incentives Granted in 2016

    Compensation Discussion and Analysis — Health and Welfare, Retirement and Other Benefit Plans HEALTH AND WELFARE, RETIREMENT AND OTHER BENEFIT PLANS

  94. Other Retirement and Compensation Arrangements

    Other Retirement and Compensation Arrangements The 2016 Pension Benefits table on page 59 reports retirement benefits for Mr. Arnold and the other named executive officers. Certain provisions of the Internal Revenue Code limit the annual benefits that may be paid from a tax-qualified retirement plan. As permitted under the Code, the Board of Directors has authorized plans under which payment will be made for any benefits that may exceed those limits. If these nonqualified benefits accrued before 2005, executives may choose a lump sum payment or an annuity (unless otherwise determined by the Committee), except that if there is a change of control of the Company, they will be paid at the time of the event (unless otherwise determined by the Board of Directors) in a lump sum. These benefits that accrued after January 1, 2005 will be paid in the form of a single sum at retirement. In response to market practices and to enhance our ability to attract and retain key executives, the Board of Directors also adopted plans that provide supplemental annual retirement income to certain executives whom we hire mid-career, because they do not have the opportunity to accumulate significant credited service with us under our tax-qualified retirement income or nonqualified restoration plans. These supplemental plans deliver a benefit if the executive either retires at 55 or older with at least 10 years of service, or at 65 or older regardless of the years of service. No new participants have been added to this plan since 2011. The tax-qualified pension plans that we maintain for our U.S. salaried and non-union employees define the term compensation to include base salary, overtime pay, pay premiums and awards under any short-term variable pay or incentive compensation plans (including amounts deferred for receipt at a later date). We use this same definition for calculating pension benefits under the nonqualified executive retirement income arrangements described above. These qualified and nonqualified retirement income plans are the only compensation or benefit plans or programs that we provide to executive officers that consider base salary and earned annual incentive awards in the calculation of the executives’ account balances. Long-term incentives, including cash and amounts realized upon the exercise of stock options and/or vesting or RSUs or RSAs, are not factored into these calculations.

  95. Employment Contracts and Change of Control Agreements

    Employment Contracts and Change of Control Agreements We do not provide our executive officers with employment contracts; however, we do enter into Change of Control Agreements with each executive officer. The agreements do not contain tax gross-up provisions, but do contain double-trigger severance provisions and restrictive covenants. These agreements provide benefits if an executive’s employment is terminated or materially changed for certain reasons following a change of control. We believe that these agreements are in the best interest of our shareholders because they help ensure that we will have the continued dedication and focus of key executives in the event of a change of control of the Company. Details of our Change of Control Agreements may be found in the narrative discussion accompanying the Potential Payments Upon Termination beginning on page 61.

  96. Compensation and Organization Committee Annual Risk Assessment

    | ∎ | Whether performance goals were balanced and potential payments were reasonable based on potential achievement of those goals at the threshold, target and maximum levels; |

  97. Compensation and Organization Committee Annual Risk Assessment

    | ∎ | When applicable, whether the relationship between performance objectives under the short-term incentive programs was consistent with the performance objectives tied to the long-term incentive plans; |

  98. Compensation and Organization Committee Annual Risk Assessment

    | ∎ | How our performance objectives and target award opportunities compared to the objectives and target awards underlying our peers’ incentive programs. |

  99. Compensation and Organization Committee Annual Risk Assessment

    | Our Executive Compensation Strategies and Programs Are Structured to Reduce Risk | | The Committee and management also concluded that our executive compensation strategy and programs are structured in the best interest of the Company and its stakeholders and do not create a material risk due to a variety of mitigating factors, such as: • An emphasis on long-term compensation that utilizes a balanced portfolio of compensation elements and delivers rewards based on sustained performance over time; • The Committee’s sole power to set performance objectives for our incentive plans. These objectives have included CFR and operating EPS financial goals and qualitative goals under the short-term plan, such as leadership development, growth, operational excellence, and building organizational capacity. We believe all of these items contribute to increased shareholder value; • Our long-term performance plan (ESIP) focuses on cumulative EPS and CFR for overlapping multi-year award periods that began prior to 2016. This creates a focus on driving sustained performance over multiple award periods that mitigates the potential for executives to take excessive risks to drive one-time, short-term performance spikes in any one period; • The use of equity awards to foster retention and align our executives’ interests with those of our shareholders; • Capping the potential payouts under the short- and long-term incentive plans to eliminate the potential for windfalls; • A clawback policy that allows us to recover compensation in the case of a material restatement of financial results and/or employee misconduct; • Share ownership guidelines; and • A broad array of benefit programs that offer employees and executives an opportunity to build meaningful retirement assets throughout their careers. |

  100. Compensation Tables

    | | 2016 | 2015 | 2014 | | Restricted Stock Units | ✓ | ✓ | ✓ | | ESIP Performance Share Units | ✓ | ✓ | None granted | | Restructuring Performance Units | ✓ | None granted | None granted |

  101. Compensation Tables

    | | • Option Awards — Reports the grant date fair value of stock options awarded in each respective year. The grant date fair value of stock options is based on the Black-Scholes option pricing model. | | Non-Equity Incentive Plan Compensation | Reports the amount earned for 2016 under the Senior EIC Plan and 2013-2016 ESIP. The incentive payments reported in this column were approved by the Committee at its February 21, 2017 meeting and, to the extent not deferred by the executive, will be paid on March 15, 2017. | | Changes in Pension Value and Nonqualified Deferred Compensation Earnings | Contains two distinct components. • “Changes in Pension Value ” represents the total change in the actuarial present value of each named executive officer’s accumulated benefit under all of our defined benefit pension plans (both tax qualified and nonqualified) from the measurement date used for financial reporting purposes. The change in this column from year-to-year reflects items such as: changes in compensation as defined under the pension plan in which the executive participates, an additional year of service, and changes in the discount and interest rates used to determine the actuarial present value of the accumulated benefit reported in each respective year. • “Nonqualified Deferred Compensation Earnings” include earnings on deferred compensation that exceed 120% of a specified rate of interest for long-term debt instruments established by the Internal Revenue Service, when applicable. Under the disclosure rules, earnings on deferred compensation are considered to be “above-market” if the rate or formula used to calculate the interest under the plan in which the executive participates exceeded a rate of interest established by the Internal Revenue Service. | | All Other Compensation | Consists of compensation that does not fit within any of the foregoing definitions of compensation. This compensation includes items such as personal benefits, our contributions to defined contribution plans and the value of insurance premiums paid by us. |

  102. 2016 SUMMARY COMPENSATION TABLE

    2016 SUMMARY COMPENSATION TABLE

  103. 2016 SUMMARY COMPENSATION TABLE

    | Name and Principal Position | Year | Salary(1) | Bonus | Stock Awards(2) | Option Awards(2) | Non-Equity Incentive Plan Compensation(3) | Changes In Pension Value and Nonqualified Deferred Compensation Earnings(4) | All Other Compensation(5) | Total Compensation | | C. Arnold Chairman of the Company, Chief Executive Officer of Eaton Corporation | 2016 | $1,040,389 | - | $7,434,517 | $1,453,379 | $1,703,088 | $1,376,872 | $28,864 | $13,037,109 | | | 2015 | $842,636 | - | $1,657,124 | $548,193 | $1,665,083 | $575,817 | $46,296 | $5,335,149 | | | 2014 | $768,529 | - | $513,190 | $525,578 | $2,022,819 | $1,745,286 | $52,735 | $5,628,137 | | R. Fearon Vice Chairman and Chief Financial and Planning Officer of Eaton Corporation | 2016 | $852,550 | - | $4,482,911 | $871,918 | $1,167,722 | $1,267,762 | $31,076 | $8,673,939 | | | 2015 | $790,162 | - | $1,657,124 | $548,193 | $1,549,645 | $751,795 | $37,714 | $5,334,633 | | | 2014 | $768,298 | - | $513,190 | $525,578 | $1,983,752 | $2,143,506 | $50,046 | $5,984,370 | | R. Advaithi COO — Electrical Sector of Eaton Corporation | 2016 | $700,001 | - | $3,127,456 | $581,461 | $909,387 | $648,546 | $12,291 | $5,979,142 | | | 2015 | $609,012 | - | $1,611,431 | $417,635 | $905,758 | $269,803 | $61,499 | $3,875,138 | | U. Yadav COO — Industrial Sector of Eaton Corporation | 2016 | $602,885 | - | $2,289,733 | $523,479 | $637,006 | $710,822 | $21,116 | $4,785,041 | | M. McGuire Executive Vice President, General Counsel and Secretary of Eaton Corporation | 2016 | $583,976 | - | $2,213,171 | $377,977 | $620,219 | $664,789 | $27,488 | $4,487,620 | | | 2015 | $564,241 | - | $1,025,688 | $339,758 | $780,991 | $426,121 | $36,847 | $3,173,646 | | | 2014 | $562,838 | - | $317,842 | $325,597 | $1,094,226 | $972,477 | $27,173 | $3,300,153 | | A. Cutler Retired Chairman of the Company, Retired Chief Executive Officer of Eaton Corporation | 2016 | $541,666 | - | $8,590,614 | $2,470,252 | $1,991,927 | $3,698,012 | $142,996 | $17,435,467 | | | 2015 | $1,222,056 | - | $6,706,502 | $2,217,968 | $5,388,549 | $12,496 | $102,021 | $15,649,592 | | | 2014 | $1,200,000 | - | $2,076,331 | $2,125,427 | $6,656,495 | $4,538,766 | $150,733 | $16,747,752 |

  104. 2016 SUMMARY COMPENSATION TABLE

    | In 2016 and 2015, $155,625 and $36,250, respectively, of Mr. Arnold’s salary was attributable to his service as a member of Eaton’s Board of Directors. In 2016 and 2015, $135,625 and $36,250, respectively, of Mr. Fearon’s salary was attributable to his service as a member of Eaton’s Board of Directors. In 2016, 2015 and 2014, $130,000, $165,625, and $162,500, respectively, of Mr. Cutler’s salary was attributed to his role as Chairman of the Board of the Company.(1) |

  105. 2016 SUMMARY COMPENSATION TABLE

    | These two columns show the grant date fair value of equity awards, computed in accordance with ASC 718, granted to the named executive officers. The value of stock options is based on the Black-Scholes option pricing model. The assumptions used in connection with these valuations are further described in Note 11 to the Consolidated Financial Statements of our 2016 annual report. The actual amounts realized by individual named executive officers likely will vary based on a number of factors, including the market performance of our shares and timing of option exercises. In 2016, we adopted a market-based TSR metric for our ESIP. In accordance with regulations, ESIP performance share units granted in 2016 were valued using a Monte Carlo simulation which yielded a premium over the closing price of our shares on the date of the grant. In 2015, ESIP objectives were tied to EPS and CFR goals. Accordingly, ESIP performance shares granted in 2015 were valued based on our New York Stock Exchange Closing Price on the date of the grant. No ESIP performance shares are reported in the stock awards column for 2014 because ESIP opportunities established in that year do not have an imbedded right to stock settlement.(2) |

  106. 2016 SUMMARY COMPENSATION TABLE

    | EATON 2017 Proxy Statement and Notice of Meeting | 52 |

  107. 2016 SUMMARY COMPENSATION TABLE

    | Non-Equity Incentive Plan Compensation reported in this column includes payments earned under the 2016 Senior EIC Plan and the 2013-2016 ESIP. The amount earned under each plan is shown below. The material features of these incentive plans are described in the Compensation Discussion and Analysis.(3) |

  108. 2016 SUMMARY COMPENSATION TABLE

    | | 2016 Short-Term Incentive Award | 2013-2016 Long-Term Incentive Award | Total | | C. Arnold | $1,346,011 | $357,077 | $1,703,088 | | R. Fearon | $810,645 | $357,077 | $1,167,722 | | R. Advaithi | $637,245 | $272,142 | $909,387 | | U. Yadav | $521,443 | $115,563 | $637,006 | | M. McGuire | $398,717 | $221,502 | $620,219 | | A. Cutler | $759,688 | $1,232,239 | $1,991,927 |

  109. 2016 SUMMARY COMPENSATION TABLE

    | In 2016, Mr. Cutler was the only named executive officer to receive above-market earnings on his nonqualified deferred compensation (in the amount of $14,220). The aggregate change in the actuarial present value of the accumulated benefit under all defined benefit pension plans for each named executive officer is noted below.(4) |

  110. 2016 SUMMARY COMPENSATION TABLE

    | | Qualified | Non-qualified | Total | | C. Arnold | $113,216 | $1,263,656 | $1,376,872 | | R. Fearon | $30,042 | $1,237,720 | $1,267,762 | | R. Advaithi | $44,919 | $603,627 | $648,546 | | U. Yadav | $25,496 | $685,326 | $710,822 | | M. McGuire | $23,558 | $641,231 | $664,789 | | A. Cutler | $252,929 | $3,430,863 | $3,683,792 |

  111. 2016 SUMMARY COMPENSATION TABLE

    | “All Other Compensation” includes the aggregate incremental cost we incurred for certain executive personal benefits, including:(5) |

  112. 2016 SUMMARY COMPENSATION TABLE

    | • | Reimbursement of financial, tax and estate planning fees. |

  113. 2016 SUMMARY COMPENSATION TABLE

    | • | Personal Use of Company Aircraft: The calculation of incremental cost for personal use of our aircraft includes only those variable costs incurred as a result of personal flight activity. It excludes non-variable costs, which would have been incurred regardless of whether there was any personal use of our aircraft. We do not reimburse named executive officers for tax costs related to personal use of our aircraft. |

  114. 2016 SUMMARY COMPENSATION TABLE

    | • | Life Insurance: We provide approximately 600 employees, including the named executive officers, with the opportunity to acquire individual whole-life insurance as described on page 46. The annual premium paid by us during 2016 for each of the named executive officers is shown in the chart below. Each participant is responsible for paying individual income taxes due with respect to our insurance program. |

  115. 2016 SUMMARY COMPENSATION TABLE

    | • | 401(k) Company Matching Contributions: The amount of our contributions to the named executive officers’ accounts under the 401(k) Eaton Savings Plan (the “ESP”) is reported below. The ESP permits an employee to contribute a portion of his or her salary to the ESP, subject to limits imposed under the Internal Revenue Code. |

  116. 2016 SUMMARY COMPENSATION TABLE

    | • | Mr. Cutler received a retirement gift for his service to the company. |

  117. 2016 SUMMARY COMPENSATION TABLE

    | The amounts of these items reported as “All Other Compensation” are: |

  118. 2016 SUMMARY COMPENSATION TABLE

    | | Financial Planning | Personal Use of Aircraft | Company Paid Life | Employer Contributions to 401(k) | Retirement Gift | Total Other | | C. Arnold | $11,800 | $2,205 | $9,159 | $5,700 | - | $28,864 | | R. Fearon | $15,585 | - | $10,791 | $4,700 | - | $31,076 | | R. Advaithi | - | - | $7,624 | $4,667 | - | $12,291 | | U. Yadav | $9,220 | $4,725 | $3,171 | $4,000 | - | $21,116 | | M. McGuire | $11,870 | - | $11,725 | $3,893 | - | $27,488 | | A. Cutler | $38,900 | $59,543 | $32,533 | $7,521 | $4,500 | $142,996 |

  119. 2016 SUMMARY COMPENSATION TABLE

    | EATON 2017 Proxy Statement and Notice of Meeting | 53 |

  120. GRANTS OF PLAN-BASED AWARDS IN 2016

    GRANTS OF PLAN-BASED AWARDS IN 2016 The following table summarizes the potential awards payable to named executive officers with respect to the short-term and long-term incentive award opportunities granted in 2016.

  121. GRANTS OF PLAN-BASED AWARDS IN 2016

    | | Estimated Future Payout under Non-Equity Incentive Plan Award | | | | Estimated Future Payout under Equity Incentive Plan Award | | | Stock Awards | | | | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of Stock & Option Awards | | C. Arnold | 2/23/2016(1) | $370,834 | $1,483,334 | $5,766,000 | | | | | | | | | | 2/23/2016(2) | | | | 12,320 | 49,280 | 98,560 | | | | $3,765,485 | | | 2/23/2016(3) | | | | 20,520 | 25,650 | 25,650 | | | | $1,450,508 | | | 2/23/2016(4) | | | | | | | 24,640 | | | $1,288,179 | | | 2/23/2016(4) | | | | | | | | 132,850 | $56.55 | $1,453,379 | | | 6/1/2016(4) | | | | | | | 16,221 | | | $930,346 | | R. Fearon | 2/23/2016(1) | $216,750 | $867,000 | $4,324,500 | | | | | | | | | | 2/23/2016(2) | | | | 7,393 | 29,570 | 59,140 | | | | $2,259,444 | | | 2/23/2016(3) | | | | 20,520 | 25,650 | 25,650 | | | | $1,450,508 | | | 2/23/2016(4) | | | | | | | 14,785 | | | $772,960 | | | 2/23/2016(4) | | | | | | | | 79,700 | $56.55 | $871,918 | | R. Advaithi | 2/23/2016(1) | $178,500 | $714,000 | $4,324,500 | | | | | | | | | | 2/23/2016(2) | | | | 4,929 | 19,715 | 39,430 | | | | $1,506,423 | | | 2/23/2016(3) | | | | 15,640 | 19,550 | 19,550 | | | | $1,105,553 | | | 2/23/2016(4) | | | | | | | 9,860 | | | $515,481 | | | 2/23/2016(4) | | | | | | | | 53,150 | $56.55 | $581,461 | | U. Yadav | 2/23/2016(1) | $146,063 | $584,250 | $2,883,000 | | | | | | | | | | 2/23/2016(2) | | | | 4,435 | 17,740 | 35,480 | | | | $1,355,513 | | | 2/23/2016(3) | | | | 6,656 | 8,320 | 8,320 | | | | $470,496 | | | 2/23/2016(4) | | | | | | | 8,870 | | | $463,724 | | | 2/23/2016(4) | | | | | | | | 47,850 | $56.55 | $523,479 | | M. McGuire | 2/23/2016(1) | $111,685 | $446,742 | $2,883,000 | | | | | | | | | | 2/23/2016(2) | | | | 3,204 | 12,815 | 25,630 | | | | $979,194 | | | 2/23/2016(3) | | | | 12,716 | 15,895 | 15,895 | | | | $898,862 | | | 2/23/2016(4) | | | | | | | 6,410 | | | $335,115 | | | 2/23/2016(4) | | | | | | | | 34,550 | $56.55 | $377,977 | | A. Cutler | 2/23/2016(1) | $203,125 | $812,500 | $5,766,000 | | | | | | | | | | 2/23/2016(2) | | | | 20,943 | 83,770 | 167,540 | | | | $6,400,866 | | | 2/23/2016(4) | | | | | | | 41,885 | | | $2,189,748 | | | 2/23/2016(4) | | | | | | | | 225,800 | $56.55 | $2,470,252 |

  122. GRANTS OF PLAN-BASED AWARDS IN 2016

    | SENIOR EIC PLAN. The amounts shown represent potential payments that were established for 2016 under our Senior EIC Plan. As described in Short-Term Performance-Based Compensation on page 39, the Committee established a pool under the Senior EIC plan, which was expressed as a percentage of an objective corporate performance goal. A portion of this pool was assigned to each participant, thereby establishing each individual’s maximum award opportunity. The Committee considered the maximum allocation generated by the net income pool as well as achievement of corporate CFR and EPS, business unit and individual goals to determine actual incentive awards.(1) |

  123. GRANTS OF PLAN-BASED AWARDS IN 2016

    | ESIP AWARD. The amounts shown represent the potential payments that were established in February 2016 for the 2016-2018 ESIP Award Period. The ESIP opportunities were denominated in performance share units. The number of performance share units was determined by dividing the target value of the ESIP opportunity by the average closing price of our shares over the first 30 trading days of 2016 and rounding up to the nearest 5 shares. At the end of the award period, the number of ESIP performance share units will be adjusted based on the Company’s TSR rank among a group of peers. The(2) |

  124. GRANTS OF PLAN-BASED AWARDS IN 2016

    | EATON 2017 Proxy Statement and Notice of Meeting | 54 |

  125. GRANTS OF PLAN-BASED AWARDS IN 2016

    | final number of performance share units cannot exceed two times the original number of share units. Dividend equivalents will be paid based on the earned number of performance share units and the aggregate dividend paid to our investors over the three-year award period. Actual awards, if any, will be distributed in the first quarter of 2019 and the value realized will vary based on share price appreciation and relative TSR. Mr. Cutler’s award will be prorated based on his retirement date. |

  126. GRANTS OF PLAN-BASED AWARDS IN 2016

    | PERFORMANCE RSUs. These amounts represent Performance RSUs granted on February 23, 2016. Performance shares will vest in 2019, subject to the achievement of restructuring goals described on page 44. The actual amounts realized by individual named executive officers, if any, will depend on the level of goal achievement and the market performance of our shares.(3) |

  127. GRANTS OF PLAN-BASED AWARDS IN 2016

    | STOCK OPTIONS and RSUs. These amounts represent stock options and RSUs granted on February 23, 2016 and June 1, 2016.(4) |

  128. GRANTS OF PLAN-BASED AWARDS IN 2016

    | The value of performance shares and restricted stock units shown in this table are computed in accordance with ASC 718. The value of stock options is based on a Black-Scholes option pricing model. The assumptions used in connection with the valuations of the grants in this table are further described in Note 11 to Consolidated Financial Statements of our 2016 annual report. The actual amounts realized by individual named executive officers will vary based on a number of factors, including the market performance of our shares and timing of option exercises. |

  129. GRANTS OF PLAN-BASED AWARDS IN 2016

    | EATON 2017 Proxy Statement and Notice of Meeting | 55 |

  130. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016 The following table summarizes the outstanding equity awards held by the named executive officers at December 31, 2016. The closing price of our ordinary shares on the last trading day in 2016 ($67.09) was used to determine the market value of the unvested RSAs and RSUs shown in the “Market Value of Shares or Units of Stock That Have Not Vested ($)” column. All share amounts and per-share prices for awards and objectives established before February 28, 2011 have been adjusted to reflect the Company’s two-for-one stock split that occurred on that date.

  131. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | Name | Grant Date | Number of Securities Underlying Unexercised Options (# Exercisable) | Number of Securities Underlying Unexercised Options (# Unexercisable)(1) | Equity Incentive Plan Awards: No. of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price | Option Expiration Date | Grant Date | Number of Shares or Units of Stock that Have Not Vested (#)(1) | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: No. of Unearned Shares, Units or other Rights that Have Not Vested (#) (2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or other Rights that Have Not Vested ($) | | C. Arnold | 2/23/2016 | - | 132,850 | | $56.55 | 2/23/2026 | 6/1/2016 | 16,221(3) | $1,088,267 | | | | | 2/24/2015 | 11,847 | 24,053 | | $71.72 | 2/24/2025 | 2/23/2016 | 24,640 | $1,653,098 | 74,930 | $5,027,054 | | | 2/25/2014 | 17,259 | 8,891 | | $75.36 | 2/25/2024 | 2/24/2015 | 5,267 | $353,363 | 15,720 | $1,054,655 | | | 7/23/2013 | 42,000 | - | | $68.95 | 7/23/2023 | 2/25/2014 | 2,443 | $163,901 | | | | | 2/21/2012 | 44,100 | - | | $51.94 | 2/21/2022 | 7/23/2013 | 2,978(4) | $199,794 | | | | | 2/22/2011 | 44,000 | - | | $53.71 | 2/22/2021 | | | | | | | R. Fearon | 2/23/2016 | - | 79,700 | | $56.55 | 2/23/2026 | 2/23/2016 | 14,785 | $991,926 | 55,220 | $3,704,710 | | | 2/24/2015 | 11,847 | 24,053 | | $71.72 | 2/24/2025 | 2/24/2015 | 5,267 | $353,363 | 15,720 | $1,054,655 | | | 2/25/2014 | 17,259 | 8,891 | | $75.36 | 2/25/2024 | 2/25/2014 | 2,443 | $163,901 | | | | | 7/23/2013 | 42,000 | - | | $68.95 | 7/23/2023 | | | | | | | | 2/21/2012 | 44,100 | - | | $51.94 | 2/21/2022 | | | | | | | | 2/22/2011 | 44,000 | - | | $53.71 | 2/22/2021 | | | | | | | R. Advaith | 2/23/2016 | - | 53,150 | | $56.55 | 2/23/2026 | 2/23/2016 | 9,860 | $661,507 | 39,265 | $2,634,289 | | | 2/24/2015 | 9,025 | 18,325 | | $71.72 | 2/24/2025 | 2/24/2015 | 8,879(5) | $595,692 | 11,975 | $803,403 | | | 2/25/2014 | 13,167 | 6,783 | | $75.36 | 2/25/2024 | 2/25/2014 | 6,312(6) | $423,472 | | | | | 2/26/2013 | 32,000 | - | | $59.56 | 2/26/2023 | 2/26/2013 | 7,045(7) | $472,649 | | | | | 2/21/2012 | 22,050 | - | | $51.94 | 2/21/2022 | | | | | | | | 2/22/2011 | 13,000 | - | | $53.71 | 2/22/2021 | | | | | | | U. Yadav | 2/23/2016 | - | 47,850 | | $56.55 | 2/23/2026 | 2/23/2016 | 8,870 | $595,088 | 26,060 | $1,748,365 | | | 2/24/2015 | 3,844 | 7,806 | | $71.72 | 2/24/2025 | 2/24/2015 | 1,706 | $114,456 | 5,090 | $341,488 | | | 2/25/2014 | 5,610 | 2,890 | | $75.36 | 2/25/2024 | 2/25/2014 | 7,633 | $512,098 | | | | | 7/23/2013 | 13,600 | - | | $68.95 | 7/23/2023 | 2/26/2013 | 5,035(7) | $337,798 | | | | | 2/21/2012 | 7,950 | - | | $51.94 | 2/21/2022 | 2/21/2012 | 5,965(7) | $400,192 | | | | | 2/22/2011 | 7,000 | - | | $53.71 | 2/22/2021 | | | | | | | | 2/26/2008 | 2,405 | - | | $41.57 | 2/26/2018 | | | | | | | M. McGuire | 2/23/2016 | - | 34,550 | | $56.55 | 2/23/2026 | 2/23/2016 | 6,410 | $430,047 | 28,710 | $1,926,154 | | | 2/24/2015 | 7,342 | 14,908 | | $71.72 | 2/24/2025 | 2/24/2015 | 3,260 | $218,713 | 9,730 | $652,786 | | | 2/25/2014 | 10,692 | 5,508 | | $75.36 | 2/25/2024 | 2/25/2014 | 1,513 | $101,507 | | | | | 7/23/2013 | 26,000 | - | | $68.95 | 7/23/2023 | | | | | | | | 2/21/2012 | 24,250 | - | | $51.94 | 2/21/2022 | | | | | | | | 2/22/2011 | 24,000 | - | | $53.71 | 2/22/2021 | | | | | | | | 2/26/2008 | 45,000 | - | | $41.57 | 2/26/2018 | | | | | | | A. Cutler | 2/23/2016 | - | 225,800 | | $56.55 | 2/23/2026 | 2/23/2016 | 41,885 | $2,810,065 | 11,635 | $780,592 | | | 2/24/2015 | 47,932 | 97,318 | | $71.72 | 2/24/2025 | 2/24/2015 | 21,313 | $1,429,889 | 30,043 | $2,015,585 | | | 2/25/2014 | 69,795 | 35,955 | | $75.36 | 2/25/2024 | 2/25/2014 | 9,884 | $663,118 | | | | | 7/23/2013 | 110,644 | - | | $68.95 | 7/23/2023 | | | | | | | | 2/21/2012 | 151,300 | - | | $51.94 | 2/21/2022 | | | | | | | | 2/22/2011 | 154,700 | - | | $53.71 | 2/22/2021 | | | | | | | | 2/26/2008 | 234,995 | - | | $41.57 | 2/26/2018 | | | | | |

  132. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | Unless otherwise noted, Stock Option awards and restricted stock units granted after 2011 vest in approximately equal installments on the first, second and third anniversary of the date of the grant, subject to the executives continued employment with us, such that:(1) |

  133. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | • Approximately one-third of the unexercisable option awards and one-third of the unvested stock awards granted in 2016 will vest on each February 23, 2017, 2018 and 2019. |

  134. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | • Approximately one-half of the unexercisable option awards and one-half of the unvested stock awards granted in 2015 will vest on each February 24, 2017 and 2018. |

  135. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | • The unexercisable option awards and unvested stock awards granted in 2014 will vest in 2017. |

  136. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | EATON 2017 Proxy Statement and Notice of Meeting | 56 |

  137. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | Represents potential payments that were established in 2016 and 2015 for the 2016-2018 and 2015-2017 ESIP Award Periods and the 2016 Restructuring Performance Unit Grant. The number of earned units will be determined at the end of each three-year award period based on the Company’s achievement relative to the performance criteria that was established for each award period. The earned number of share units can range from 0 to 200% in the case of ESIP grants and 0 to 100% in the case of the restructuring performance RSU grant. The value realized, if any, will be determined based on the share price when the shares vest.(2) |

  138. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | Unvested restricted stock units cliff vest on June 1, 2019.(3) |

  139. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | Unvested restricted stock awards vests on July 23, 2019.(4) |

  140. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | Includes 4,865 unvested restricted stock awards that cliff vest on February 24, 2025.(5) |

  141. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | Includes 4,450 unvested restricted stock awards that cliff vest on February 25, 2024.(6) |

  142. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | Unvested restricted stock awards cliff vest on the tenth anniversary of the date of the grant.(7) |

  143. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2016

    | Includes 6,840 unvested restricted stock awards that cliff vest on February 24, 2025.(8) |

  144. OPTION EXERCISES AND STOCK VESTED IN 2016

    OPTION EXERCISES AND STOCK VESTED IN 2016 The following table provides information about exercises of stock options and vesting of RSAs and RSUs during the year ended December 31, 2016. The values for exercised stock options reflect the difference between the aggregate option exercise price and the market price of the applicable number of our shares on the date of exercise. The values for any RSAs or RSUs that vested during 2016 reflect the per share closing price of our ordinary shares on the vesting date multiplied by the number of shares that vested.

  145. OPTION EXERCISES AND STOCK VESTED IN 2016

    | | Option Awards: | | Stock Awards: | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | C. Arnold | 123,000 | $3,106,089 | 10,791 | $646,794 | | R. Fearon | 67,600 | $1,603,646 | 10,988 | $659,213 | | R. Advaithi | 20,000 | $737,926 | 7,274 | $413,775 | | U. Yadav | 8,846 | $228,845 | 2,773 | $157,538 | | M. McGuire | 40,000 | $933,869 | 7,128 | $428,622 | | A. Cutler | 279,928 | $6,179,528 | 31,087 | $1,824,262 |

  146. OPTION EXERCISES AND STOCK VESTED IN 2016

    | Amounts realized upon the exercise of options or on the vesting of RSAs or RSUs are not eligible for deferral under any of our deferred compensation plans.(1) |

  147. OPTION EXERCISES AND STOCK VESTED IN 2016

    2016 PENSION BENEFITS We maintain three basic types of retirement income plans for our U.S. salaried employees:

  148. OPTION EXERCISES AND STOCK VESTED IN 2016

    | ∎ | a tax-qualified defined benefit pension plan (referred to as the Pension Plan for Eaton Corporation Employees in the Pension Benefits table) that has two separate benefit formulas: a final average pay formula and a cash balance formula; |

  149. OPTION EXERCISES AND STOCK VESTED IN 2016

    | ∎ | two defined benefit restoration plans (collectively referred to as the DB Restoration Plan in the Pension Benefits table); and |

  150. OPTION EXERCISES AND STOCK VESTED IN 2016

    | ∎ | a plan that allows us to supplement the pension benefits earned under our qualified pension plan and nonqualified DB Restoration Plan to certain elected officers and executives who are recruited by us mid-career (referred to as the Limited Service Supplemental Plan in the Pension Benefits table). |

  151. OPTION EXERCISES AND STOCK VESTED IN 2016

    Tax-Qualified Retirement Income Plans — Effective January 1, 2003, employees who were then earning benefits under the “Average Final Annual Compensation” benefit formula (the “AFAC benefit formula”) under the Pension Plan for Eaton Corporation Employees (the “Pension Plan”) were given the option to either: (a) continue earning benefits under the AFAC benefit formula, or (b) convert the value of their accrued benefit to an “opening balance” and commence earning benefits in an “Eaton Personal Pension Account” under the cash balance formula (the “EPPA benefit formula”). Salaried employees hired on or after January 1, 2002, but before April 1, 2013, automatically earn benefits under the EPPA benefit formula upon becoming eligible for participation in the retirement plan. Under the AFAC benefit formula, annual normal retirement benefits are computed at the rate of 1% of average final annual compensation up to the applicable Social Security integration level plus 1.5% of average final annual compensation in excess of the Social Security integration level, multiplied by the employee’s years of credited service. In addition, the employee receives a supplement equal to 1/2% of average final annual compensation up to the applicable Social Security integration level payable until the Social Security Normal Retirement Age. An employee’s average final annual compensation is the average annual amount of his or her eligible compensation (generally consisting of salary plus

  152. OPTION EXERCISES AND STOCK VESTED IN 2016

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  153. OPTION EXERCISES AND STOCK VESTED IN 2016

    short-term executive incentive compensation for service during the five consecutive years within the last 10 years of employment for which the employee’s total compensation was the greatest). Years of credited service includes the number of years of employment between age 21 and retirement, subject to a maximum of 44 years. Corporate policies require the named executive officers to retire at age 65. Under the EPPA benefit formula, a participant’s single sum retirement benefit is accumulated throughout his or her career with us. This single sum amount is represented as a notional account balance to which credits are regularly added. The credits are equal to a percentage of eligible compensation (generally consisting of salary and short-term incentive compensation) plus interest at a specified rate and, where applicable, cost-of-living including credits on certain opening balances. The percentage of eligible compensation credited to the participant’s notional account balance varies over his or her career based on the sum of the participant’s age and service with us. For any period when that sum is less than 50, 5.0% of eligible compensation is credited. For any period when the sum is between 50 and 59 (inclusive), 6.0% of eligible compensation is credited. When the sum is between 60 and 69 (inclusive), 7.0% of eligible compensation is credited. When the sum is 70 or greater, 8.0% of eligible compensation is credited. Except as noted below, upon termination of employment, the notional account balance is available as a single sum or may be converted to one of several annuity forms. Under the standard post-retirement surviving spouse option for the AFAC and EPPA benefit formulas, the participant receives a reduced pension, and a pension equal to 50% of the reduced pension is payable to his or her surviving spouse. For example, the benefit for an employee electing that option at age 65 whose spouse is five years younger would be approximately 11.5% less than the amount of the participant’s annual benefit. Any employee hired on or after April 1, 2013 and all U.S. employees of Cooper immediately prior to our acquisition of Cooper will receive an additional employer contribution under the Eaton Savings Plan in lieu of a benefit under the Pension Plan. Nonqualified Defined Benefit Retirement Plans — Certain provisions of the Internal Revenue Code limit the annual benefits that may be paid from a tax-qualified retirement plan. This includes a limitation on the amount of annual compensation that may be taken into account in calculating a participant’s benefit under a qualified retirement plan. As permitted under the Internal Revenue Code, the Board of Directors has authorized the payment from our general funds of any benefits calculated under the provisions of the applicable pension plan that may exceed those limits. This applies to all participants, including the named executive officers. Limited Eaton Service Supplemental Retirement Income Plan — The Board of Directors has adopted a plan that provides supplemental annual retirement income to elected officers and certain executives who do not have the opportunity to accumulate significant credited service with us under our tax-qualified retirement income plans, provided that they either retire at age 55 or older and have at least 10 years of service with us or retire at age 65 or older regardless of the years of service. The amount of the annual supplement generally is equal to the amount by which a percentage of the executive’s average final annual compensation exceeds his or her earned retirement income. This includes amounts receivable under the retirement plans described above. The percentage of average final annual compensation used for this purpose depends upon an executive’s age and years of service at retirement. The percentage ranges from 25% (for retirements at age 55 with less than 15 years of service) to 50% (for retirements at age 62 or older with 15 years or more of service). Benefits accrued and vested before January 1, 2005 under either the nonqualified or the limited service plans generally are paid in one of the forms available under the Pension Plans as elected by the participant. Benefits earned after 2004 are paid as a single lump sum. With respect to all benefits, regardless of when accrued, the present value of the benefit will be paid in a single installment upon a change of control of the Company.

  154. OPTION EXERCISES AND STOCK VESTED IN 2016

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  155. OPTION EXERCISES AND STOCK VESTED IN 2016

    This table shows the estimated present value of the benefits payable under each of our retirement income plans to each named executive officer.

  156. 2016 PENSION BENEFITS

    2016 PENSION BENEFITS

  157. 2016 PENSION BENEFITS

    | Name | Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | | C. Arnold | Pension Plan for Eaton Corporation Employees | 16.25 | $743,467 | - | | | DB Restoration Plan | 16.25 | $4,385,400 | - | | | Limited Service Supplemental Plan | 16.25 | $2,520,115 | - | | R. Fearon | Pension Plan for Eaton Corporation Employees | 14.75 | $282,219 | - | | | DB Restoration Plan | 14.75 | $1,144,427 | - | | | Limited Service Supplemental Plan | 14.75 | $7,789,873 | - | | R. Advaithi | Pension Plan for Eaton Corporation Employees | 16.00 | $381,252 | - | | | DB Restoration Plan | 16.00 | $1,126,490 | - | | | Limited Service Supplemental Plan | 16.00 | $1,077,005 | - | | U. Yadav | Pension Plan for Eaton Corporation Employees | 22.75 | $254,014 | - | | | DB Restoration Plan | 22.75 | $291,946 | - | | | Limited Service Supplemental Plan | 22.75 | $2,673,722 | - | | M. McGuire | Pension Plan for Eaton Corporation Employees | 11.08 | $192,613 | - | | | DB Restoration Plan | 11.08 | $445,176 | - | | | Limited Service Supplemental Plan | 11.08 | $3,523,341 | - | | A. Cutler | Pension Plan for Eaton Corporation Employees | 40.75 | - | $1,978,461 | | | DB Restoration Plan | 40.75 | $4,323,706 | $22,963,697 | | | Limited Service Supplemental Plan | 40.75 | - | - |

  158. 2016 PENSION BENEFITS

    2016 NONQUALIFIED DEFERRED COMPENSATION We provide our executives with opportunities to defer the receipt of their earned and otherwise payable awards under our short- and long-term cash incentive plans. We offer these plans to provide:

  159. 2016 PENSION BENEFITS

    | ∎ | our executives with an opportunity to accumulate additional retirement assets, |

  160. 2016 PENSION BENEFITS

    | ∎ | a means for acquiring our shares in order to meet our share ownership guidelines, and |

  161. 2016 PENSION BENEFITS

    | ∎ | an additional form of employment retention. |

  162. 2016 PENSION BENEFITS

    Despite their popularity across our industry, we currently do not provide our executives with a nonqualified defined contribution plan that enables them to defer base salary amounts in excess of Internal Revenue Code limits that restrict such deferrals under our tax-qualified defined contribution plan. However, in 2014 the Company established a nonqualified defined contribution plan for employees who receive the additional employer contribution under the Eaton Savings Plan (as described under 2016 Pension Benefits on page 57) and whose employer contribution is restricted by IRS limits. No named executive officers participate in this plan. The following table includes not only amounts contributed, earned and distributed as deferred compensation in the last fiscal year, but also includes compensation that the named executive officer elected to defer in all prior years. Therefore, the “Aggregate Balance at Last Fiscal Year-End” column contains the total of all contributions and earnings since the named executive officer began deferring compensation. The plans covered by the Nonqualified Deferred Compensation table are as follows:

  163. 2016 PENSION BENEFITS

    | ∎ | the Deferred Incentive Compensation Plan (the “DIC Plan”); |

  164. 2016 PENSION BENEFITS

    | ∎ | the Deferred Incentive Compensation Plan II (the “DIC Plan II”); and |

  165. 2016 PENSION BENEFITS

    | ∎ | the Incentive Compensation Deferral Plan II (the “IC Deferral Plan II”). |

  166. 2016 PENSION BENEFITS

    DIC Plans — On February 10, 2010, the Committee approved the termination of the DIC Plan with respect to all participant accounts, including those of our current named executive officers, except for certain accounts that contain deferrals for the years 1986 through 1989. The accounts that were not terminated earn fixed interest based on market rates and individual mortality assumptions in effect at the time of the deferrals.

  167. 2016 PENSION BENEFITS

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  168. 2016 PENSION BENEFITS

    Short-term incentive compensation earned prior to December 31, 2004 was eligible for deferral under the DIC Plan. Short-term incentive compensation earned after December 31, 2004 is eligible to be deferred under the DIC Plan II. Incentive compensation earned in 2005 through December 31, 2007 that was deferred under the DIC Plan II was credited with earnings that accrued on a phantom share basis, as if the deferred amounts were invested in our ordinary shares, with earned dividends reinvested in shares. Under the DIC Plan II, prior to the beginning of each calendar year, participants must elect the method and timing of payment with respect to the incentive compensation to be earned in the year that is subject to the deferral election. The creation of the DIC Plan II and the exclusion of deferrals under the prior plan were implemented to satisfy the requirements of Internal Revenue Code Section 409A under the American Jobs Creation Act of 2004 (409A). Beginning with deferrals of short-term incentive compensation earned during 2008 and after for payment following retirement, each executive will have a choice of deferring up to 100% of his or her annual incentive compensation into either or both of (a) an account tracked on a phantom share basis and paid out in our actual shares or (b) an account that earns interest equal to that paid on 10-year Treasury Notes plus 300 basis points. Executives also may defer compensation under the DIC Plan II on a short-term basis for payment within 5 years or less. IC Deferral Plan — Similarly, cash settled long-term incentive compensation earned after December 31, 2004 is eligible for deferral under the IC Deferral Plan II. Under the IC Deferral Plan II, prior to the beginning of any award period for which an award may be earned, or later if permitted by us in the case of performance-based compensation (as defined in the final regulations under 409A), participants must elect the method and timing of payment with respect to the incentive compensation to be earned during that award period, and that is subject to the deferral election. When an executive elects to defer a long-term incentive award under the IC Deferral Plan II for payment at or following his or her retirement, earnings on a minimum of 50% of the deferred amount must be tracked on a phantom share basis. The remainder of the amount deferred to retirement earns interest equivalents equal to that paid on 10-year Treasury Notes plus 300 basis points. At retirement, the portion of the executive’s account that is deferred into phantom shares is paid in our shares. Incentive compensation deferred pursuant to our deferral plans is unsecured, subject to the claims of our creditors and is exposed to the risk of our non-payment. A grantor trust that we previously established, the assets of which are subject to the claims of our creditors, will be used to pay those obligations related to deferred incentive compensation earned by our executives prior to 2005. The transaction to acquire Cooper Industries plc required Eaton to fund the vested liabilities in the trust in the amount of $7.8 million. No comparable trust arrangements currently are in place with respect to incentive compensation deferred after 2004.

  169. 2016 PENSION BENEFITS

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  170. 2016 NONQUALIFIED DEFERRED COMPENSATION

    2016 NONQUALIFIED DEFERRED COMPENSATION

  171. 2016 NONQUALIFIED DEFERRED COMPENSATION

    | Name | Plan Name | Executive Contributions in Last Fiscal Year | Registrant Contributions in Last Fiscal Year | Aggregate Earnings in Last Fiscal Year (1) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last Fiscal Year End (2) | | C. Arnold | DIC Plan | - | - | - | - | - | | | DIC Plan II | - | - | - | - | - | | | IC Deferral Plan II | - | - | - | - | - | | | Subtotal | - | - | - | - | - | | R. Fearon | DIC Plan | - | - | - | - | - | | | DIC Plan II | - | - | - | - | - | | | IC Deferral Plan II | - | - | - | - | - | | | Subtotal | - | - | - | - | - | | R. Advaithi | DIC Plan | - | - | - | - | - | | | DIC Plan II | - | - | - | - | - | | | IC Deferral Plan II | - | - | - | - | - | | | Subtotal | - | - | - | - | - | | U. Yadav | DIC Plan | - | - | - | - | - | | | DIC Plan II | - | - | - | - | - | | | IC Deferral Plan II | - | - | - | - | - | | | Subtotal | - | - | - | - | - | | M. McGuire (First year of deferral: 2006) | DIC Plan | - | - | - | - | - | | | DIC Plan II | - | - | $69,127 | - | $444,625 | | | IC Deferral Plan II | - | - | $257,369 | - | $1,776,681 | | | Subtotal | - | - | $326,496 | - | $2,221,306 | | A. Cutler (First year of deferral: 1983) | DIC Plan | - | - | $192,388 | - | $1,586,507 | | | DIC Plan II | - | - | - | - | - | | | IC Deferral Plan II | - | - | - | - | - | | | Subtotal | - | - | $192,388 | - | $1,586,507 |

  172. 2016 NONQUALIFIED DEFERRED COMPENSATION

    | When applicable, the amounts reported in the “Aggregate Earnings in Last Fiscal Year” column are also reported in the ‘Changes in Pension Value and Nonqualified Deferred Compensation Earnings’ column of the Summary Compensation Table, to the extent such earnings exceed 120% of the applicable federal rate as determined under the Internal Revenue Code. In 2016, Mr. Cutler received above-market earnings on his nonqualified deferred compensation in the amount of $14,220.(1) |

  173. 2016 NONQUALIFIED DEFERRED COMPENSATION

    | Mr. Cutler’s aggregate balance includes amounts he earned and elected to defer before he became a named executive officer. Mr. McGuire’s aggregate balance includes $286,104 and $1,202,320 of executive contributions that were reported in the “Non-Equity Incentive Plan Compensation” column of the 2011 and 2013 Summary Compensation Tables, respectively.(2) |

  174. 2016 NONQUALIFIED DEFERRED COMPENSATION

    2016 POTENTIAL PAYMENTS UPON TERMINATION A named executive officer may experience a termination of employment under several possible situations. In each of these circumstances, certain plans, agreements, arrangements or practices would provide compensation to the executive in varying amounts. We do not provide employment contracts to our executives and do not have plans or arrangements (other than the Change of Control Agreements previously discussed and standard severance benefits available to all U.S. salaried, nonunion employees) that would require any payment to a named executive officer in the event of a termination of his or her employment. Instead, the Compensation and Organization Committee of our Board of Directors exercises the sole discretion to decide what, if any, additional severance payments or benefits will be offered to an executive in the case of a termination of employment. In exercising this discretion, the Committee takes a number of factors into consideration, including the reasons for the termination and the individual executive’s personal circumstances. The Committee believes that it is in the best interest of the Company and our shareholders to insure that a departing executive is treated fairly and in a manner that will help us to secure appropriate confidentiality, non-competition, non-solicitation, non-disparagement and general release agreements. Moreover, providing fair and reasonable employment termination compensation is consistent with our overall compensation philosophy.

  175. 2016 NONQUALIFIED DEFERRED COMPENSATION

    | EATON 2017 Proxy Statement and Notice of Meeting | 61 |

  176. 2016 NONQUALIFIED DEFERRED COMPENSATION

    For each of the termination of employment scenarios described below, the estimated potential payments and benefits that might be received by each named executive officer are displayed in the table that immediately follows that description.

  177. Normal and Early Retirement

    Normal and Early Retirement Each named executive officer is subject to mandatory retirement at age 65 and is eligible to elect voluntary retirement after having attained age 55 with ten or more years of service. Consistent with the policy applied to non-executive employees, in the event we involuntarily terminate an officer after the officer attained age 50 with ten or more years of service, he or she also would be treated as a retiree under the programs described below. Messrs. Arnold, Fearon and McGuire would have the age and Company service necessary for retirement. Ms. Advaithi and Mr. Yadav did not meet the age and service requirements to be treated as a retiree under these programs. A projected termination benefit is shown below only for those officers who would have been treated as retirees at year end. Mr. Cutler retired on May 31, 2016 and the amounts shown represent the value at year end of unvested stock and option awards, prorated potential payments under our ESIP Plan and financial planning reimbursement. In this retirement scenario, the Committee also may exercise its discretion to provide the executive with the following:

  178. Normal and Early Retirement

    | ∎ | pro-rated eligibility in the open award periods under our long-term incentive plan (ESIP); |

  179. Normal and Early Retirement

    | ∎ | vesting of the then unvested stock options, RSAs and RSUs according to the vesting schedule set forth in each grant agreement. For illustrative purposes, these awards are valued based on the closing price of our shares on December 31, 2016 ($67.09), regardless of when they vest; and |

  180. Normal and Early Retirement

    | ∎ | reimbursement for the costs of income tax return preparation and estate and financial planning assistance for the year of and year following retirement. |

  181. Normal and Early Retirement

    | | Base and Short-Term Incentive Severance | Pro-Rated Long-Term Incentive | Equity Vesting Into Retirement | Benefit Continuation | Tax Preparation and Financial Counseling | Outplacement | Total | | C. Arnold | - | $2,781,598 | $6,115,496 | - | $23,600 | - | $8,920,694 | | R. Fearon | - | $2,295,878 | $3,606,063 | - | $31,170 | - | $5,933,111 | | M. McGuire | - | $1,286,750 | $2,951,557 | - | $23,740 | - | $4,262,047 | | A. Cutler | - | $7,932,227 | $7,283,003 | - | $39,800 | - | $15,255,030 |

  182. 2016 Director Compensation

    2016 Director Compensation Non-employee directors receive their retainer in an equal mix of cash and equity. In February 2016, the Governance Committee reduced the total retainer from $290,000 to $265,000, to be split equally between cash and equity. The Committee reduced the retainer because the costs associated with Directors’ travel to Board meetings are no longer treated as imputed income subject to Irish tax withholding. Compensation for our non-employee directors was structured as follows:

  183. 2016 Director Compensation

    2016 Director Compensation The table below shows the compensation and benefits applicable to our non-employee directors for 2016.

  184. 2016 Director Compensation

    | Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Option Awards(3) | Non-Equity Incentive Plan Compensation(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(5) | All Other Compensation(6) | Total Compensation | | T. Bluedorn | $146,875 | $147,878 | - | - | - | $15,097 | $309,850 | | C. Connor | $165,625 | $147,878 | - | - | - | $22,852 | $336,355 | | M. Critelli | $146,875 | $147,878 | - | - | - | $24,772 | $319,525 | | C. Golden | $150,625 | $147,878 | - | - | - | $22,060 | $320,563 | | L. Hill | $135,625 | $147,878 | - | - | - | $195 | $283,698 | | A. Johnson | $155,625 | $147,878 | - | - | - | $22,060 | $325,563 | | N. Lautenbach | $180,625 | $147,878 | - | - | - | $24,532 | $353,035 | | D. McCoy | $150,625 | $147,878 | - | - | - | $22,852 | $321,355 | | G. Page | $173,125 | $147,878 | - | - | - | $23,584 | $344,587 | | S. Pianalto | $153,125 | $147,878 | - | - | - | $195 | $301,198 | | G. Smith | $165,625 | $147,878 | - | - | - | $195 | $313,698 | | D. Thompson | $36,875 | - | - | - | - | $195 | $37,070 |

  185. 2016 Director Compensation

    | Fees Earned or Paid in Cash includes the total annual cash retainer and where applicable, retainers for the Committee Chairs, Lead Director and Audit Committee members. D. Thompson was appointed to the Board of Directors on July 29, 2016.(1) |

  186. 2016 Director Compensation

    | Stock Awards column reports the grant date fair value of the 2,615 restricted share units awarded to each director on February 23, 2016. D. Thompson did not receive a grant in 2016. As of December 31, 2016, the following non-employee directors each held 19,170 unvested stock awards: C.Connor, M.Critelli, C.Golden, A.Johnson, D. McCoy and G.Page. L.Hill and G. Smith each held 9,580 unvested stock awards. T. Bluedorn held 16,116 unvested stock awards. S. Pianalto held 5,035 unvested stock awards. N. Lautenbach retired on December 31, 2016 and his stock awards vested in accordance with the terms of each respective grant agreement.(2) |

  187. 2016 Director Compensation

    | Option Awards — Non-employee directors did not receive stock option grants in 2016. As of December 31, 2016, non-employee directors held the following number of outstanding stock options: C. Connor, C. Golden, D. McCoy and G. Page each held 6,450. T. Bluedorn, M. Critelli, L. Hill, A. Johnson, S. Pianalto, G. Smith and D. Thompson had no stock options outstanding as of December 31, 2016.(3) |

  188. 2016 Director Compensation

    | Non-Equity Compensation Plan — Non-employee directors do not participate in any of Eaton’s incentive plans and do not receive incentive awards or bonuses.(4) |

  189. 2016 Director Compensation

    | Change in Pension Value and Nonqualified Deferred Compensation Earnings — There is no pension in place for non-employee directors. Non-employee directors first elected before 1996 may defer payment of their annual fees, up to $30,000 per year, at an interest rate specified in their deferred compensation agreement. The rate of interest is based upon the number of years from the date of the director’s initial election until the first annual meeting to be held following the director’s 68th birthday and is higher than prevailing market rates. Under a separate deferral plan, all nonemployee directors may defer payment of their fees at a rate of return that varies depending on whether the director defers the fees as retirement compensation or as short-term compensation. At least 50% of retirement compensation, or any greater portion that the director elects, is converted to share units and earns share price appreciation and dividend equivalents. The balance of retirement compensation earns 10-year Treasury Note returns plus 300 basis points. Short-term compensation earns 13-week Treasury Bill returns. In 2016, no non-employee directors received above-market earnings on nonqualified deferred compensation.(5) |

  190. 2016 Director Compensation

    | All Other Compensation — All other compensation, as shown in the following table, includes our contributions in 2016 for the group term life insurance and travel accident insurance for the loss of life or limb while traveling on our business, imputed income attributable to participation in medical and or dental benefits, and cash dividends paid to each Director in 2016 on the unvested restricted shares he or she was granted prior to 2013.(6) |

  191. 2016 Director Compensation

    | | Dividends on Stock Awards | Life Insurance Imputed Income | Travel Accident Insurance | Medical and Dental Insurance | Total Other Compensation | | T. Bluedorn | $14,902 | - | $195 | - | $15,097 | | C. Connor | $21,865 | $792 | $195 | - | $22,852 | | M. Critelli | $21,865 | $1,524 | $195 | $1,188 | $24,772 | | C. Golden | $21,865 | - | $195 | - | $22,060 | | L. Hill | - | - | $195 | - | $195 | | A. Johnson | $21,865 | - | $195 | - | $22,060 | | N. Lautenbach | $21,865 | $2,472 | $195 | - | $24,532 | | D. McCoy | $21,865 | $792 | $195 | - | $22,852 | | G. Page | $21,865 | $1,524 | $195 | - | $23,584 | | S. Pianalto | - | - | $195 | - | $195 | | G. Smith | - | - | $195 | - | $195 | | D. Thompson | - | - | $195 | - | $195 |

  192. 2016 Director Compensation

    | EATON 2017 Proxy Statement and Notice of Meeting | 68 |