Total Rewards at Eaton

1 1 JMW2013 This brochure provides an introduction to Eaton s Total Rewards Philosophy and explains the following aspects:Your Total Rewards : Pay, Benefits and MoreCompetitive CompensationSalary Bands Merit Increases & PromotionsPay for Performance & Resources for YouYou give us your best. We ll reward you pay and benefits. Work that challenges and inspires you. Opportunities to grow in your career. At Eaton , we understand how important these are to you. This brochure explains our Total Rewards philosophy for technical, professional and salaried employees, how we reward our people, and how performance can lead to even bigger Rewards and opportunities for s Total Rewards Values and Philosophy We provide competitive, Total Rewards that include pay and benefits consistent with the varied practices in different regions of the world.

2 An array of programs and tools are utilized to recognize individual and group achievements and to enable us to reward performance consistent with our contributions. This brochure is not a promise of employment or compensation from Eaton ; Eaton reserves the right to change its compensation programs and benefit plans and programs at any time for any Rewards at Eaton2 JMW2013 Powering you to live wellEaton supports your well-being with the strategy of global wellness designed to create an overall culture of health and well-being. Eaton wants you to be healthy, not just for Eaton , but for yourself and your family.

3 The focus on wellness not only keeps our employees at their peak, it helps make Eaton an employer of choice, reduces medical costs for both you and Eaton , and will help Eaton to Total Rewards at Eaton : Pay, Benefits, and More What do we mean by Total Rewards ? Basically, it s all the ways you can be rewarded for your work at Eaton . The elements of Total Rewards that apply to you are based on business needs and the competitive market where you PAYBase pay is the foundation of your compensation at Eaton . It s the amount you see in your paycheck or pay advice statement expressed as an hourly, monthly, or annual amount.

4 Your base pay is determined by your job knowledge, experience and performance, as well as what companies similar to Eaton are paying for jobs like yours. VARIABLE PAYV ariable pay includes bonuses, sales incentives, and variable pay plans offered at the plant, group or division level. Not all jobs at Eaton have variable pay. Your manager will be able to tell you whether you are eligible for a variable pay plan. Either way, your Total compensation at Eaton is ALLOWANCESIn certain countries, compensation might include cash allowances for things such as transportation or housing expenses.

5 Regional market practices and/or government policies determine whether cash allowances are part of your Total compensation at S CONTRIBUTION TO YOUR BENEFITSYour Total Rewards typically include the cost that Eaton pays toward certain social, health and unemployment benefits that protect you and your family. The benefits and the amount that Eaton contributes to them vary by market. To learn more about these benefits in your region, talk with your local Human Resources staff. This brochure is not a promise of employment or compensation from Eaton ; Eaton reserves the right to change its compensation programs, and benefit plans and programs at any time for any JMW2013 Key termsMarket data: Survey information used to compare Eaton s pay levels with those offered at similar companies, for similar jobs drawing from the same pool of available range: The range of pay available for a job, based on market data.

6 Competitive pay for a job falls anywhere within the salary Compensation: How We Attract, Retain, and Motivate Our PeopleWe know you have choices of where you work both when you first join a company and throughout your career. To attract talented employees like you, and motivate you to stay and perform at a high level, we must continue to offer you competitive compensation. To ensure that our compensation is competitive, we focus on three areas: The external job market, Job alignment within Eaton , and the Sustained performance of our employees.

7 The External Job MarketEach year we participate in surveys of the external job market to compare Eaton s compensation to that of employers who compete with us for talent. We compare what our competitors pay employees who are doing the same type of work as our own employees in the markets where we do business. We make these comparisons both at the national and local level. Nationally, we look at large, industrial companies that are similar in size to Eaton in terms of revenue and employees. These national job market studies are managed by third party vendors who help Eaton determine the competitiveness of compensation, primarily for professional and executive clerical, administrative, or manufacturing workers, we generally compete for talent with local companies, so we study their compensation practices as well.

8 Eaton compensation practices are typically standard within a country. Variations do occur, however, in keeping with local job market practices, to comply with local regulations or for other business reasons. What we learn from our studies of the external job market provides the market data we need to determine Eaton s salary ranges. You will read more about salary ranges on page brochure is not a promise of employment or compensation from Eaton ; Eaton reserves the right to change its compensation programs and benefit plans and programs at any time for any JMW2013 Key termsSalary band structure: A format for placing each job at Eaton into one of 14 bands based on the results of the Eaton Job Evaluation System.

9 Standard job titles: Terms that provide a consistent way of identifying the roles and responsibilities of jobs across Eaton . Pay for performance: Eaton s philosophy that Total compensation will increase with sustained high Compensation: How We Attract, Retain, and Motivate Our People (continued)Internal Job AlignmentEaton is a global company with hundreds of types of professional jobs. The Eaton Job Evaluation System helps us group these jobs into categories and assess the value of the job to the company. Using this tool, we measure the value and level of each salaried position through three factors:Know-how the knowledge required to do the job (or job input ) Problem-solving thinking, processing and analyzing (or job throughput ) Accountability the results expected (or job output ) We use these measurements to group salaried jobs into salary bands, which reflect the jobs relative value within the company.

10 We also use them to assign standardized job titles, which gives us a consistent way to match our jobs to jobs in the external market and to monitor our pay practices across the company. Sustained Performance of Our PeopleThe third area of emphasis in compensation at Eaton is motivating and measuring individual performance. We don t view performance as a one-time event. If our company is to achieve superior results, year after year, we must have sustained superior performance from our people. We achieve this through pay for performance. Eaton has a strong commitment to pay for performance at all levels.