2014 Regal-Beloit Proxy

Committee periodically meets with that consultant throughout the year at such times as the Committee deems appropriate, and receives reports and advice from the consultant on matters of executive compensation. Our CEO has access to the independent compensation consultant only at the direction of the Committee. Towers Watson & Co. (“Towers Watson”) served as the Committee’s independent compensation consultant for 2014. In July 2014, the Committee reviewed the independence of Towers Watson and the individual representatives of Towers Watson who served as the Committee’ consultants, including considering factors contained in applicable SEC rules and NYSE listing standards. The Committee concluded, based on the evaluation described in the preceding paragraph, that Towers Watson was independent and that no conflict of interest was raised by the services performed by Towers Watson. Towers Watson did not perform any services for our company other than the services provided at the direction of the Committee. How did the compensation consultant help the Committee in setting NEOs’ compensation for 2014? In setting compensation for 2014, the Committee directed Towers Watson to assemble compensation data for our NEOs and compare the data against aggregated proxy data and general industry survey data for persons holding similarly‐situated positions in our peer group. The Committee approved an updated peer group for use in setting compensation for 2014, consistent with its policy of reviewing the composition of the peer group every three years for potential changes in light of acquisitions, changes in our size, or other factors it deems appropriate. Prior to the updates for 2014, the Committee had last updated our peer group in late 2011. For the 2014 peer group, the Committee selected companies that it believed to be comparable to our company by generally using the following criteria: ! Comparable revenue (target companies with annual revenues ranging from approximately 0.5 to 2.0 times our annual revenues and with an overall median revenue that approximates ours ); ! Compete in an industry similar to ours and/or have the level of complexity and business model similar to ours; and

! Contains companies that we compete with for executive talent.

The Committee expects to revise the peer group next in 2015 to reflect the significantly increased size of the company following the acquisition of Emerson Electric Co.’s Power Transmission Solutions business.

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