2014 Regal-Beloit Proxy

our CEO’s compensation (as shown in the Summary Compensation Table and on a realizable basis as described above) over our fiscal years 2012 through 2014:

CEO Pay vs TSR

10% 15% 20% 25% 30% 35% 40%

$10,000

$7,500

$5,000

$2,500

0% 5%

$0

Total Shareholder Return

Total CEO Pay (Thousands)

2012

2013

2014

Year

Realizable Pay

SCT Pay

Total Shareholder Return

As described in footnote 3 to the Summary Compensation Table, a significant portion of 2014 Realizable Pay and Summary Compensation Table Pay is attributable to an actuarial calculation of the change in the accumulated benefit obligations under the Target Supplemental Retirement Plan, which increased by more than double the 2013 rate. Without the larger actuarial increase in such accumulated benefit obligations in 2014 compared to 2013, 2014 Realizable Pay and Summary Compensation Table Pay would have decreased in 2014 compared to 2013. Since you have a pay‐for‐performance compensation philosophy, what percentage of your NEOs’ target compensation is “at risk”? To focus on both our short and long‐term success, our NEOs’ target compensation includes a significant portion—more than 60%, on average—that is “at risk” because the value of such compensation is determined based on the achievement of specified results or subject to forfeiture. This “at risk” compensation includes compensation elements intended to reward the achievement of both short‐ and long‐term financial goals. If such goals are not achieved, then performance‐related compensation will decrease. If goals are exceeded, then performance‐related compensation will increase. Payments under our SVA Cash Incentive Plan are “at risk” because the payments are dependent on achievement of one‐year performance goals. In addition, compensation paid in the form of equity awards, such as RSUs, SARs and PSUs, instead of cash is at‐risk because its value varies with changes in the stock price. By creating a total compensation package where a considerable percentage is paid in equity awards that are subject to vesting over multiple years or dependent on achieving multi‐year performance goals, our executive officers have a significant stake in the long‐term success of the Company and gain financially along with our shareholders.

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