UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.    )

 

Check the appropriate box:

CLARCOR Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

SEC 1913 (11-01)		Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

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Notice of
Annual Meeting of Shareholders

The Annual Meeting of Shareholders of CLARCOR Inc. (the “Company”) will be held at the Hilton Naples Florida Hotel at 5111 Tamiami Trail North, Naples, FL 34103, on Tuesday, March 22, 2011 at 9:00 A.M., Eastern Time, for the following purposes:

1. To elect as Directors the three nominees named in the attached Proxy Statement for a term of three years each;

2. To have an advisory vote on the Company’s executive compensation programs and practices;

3. To have an advisory vote on how frequently (annually, every other year or every three years) the Company will have future advisory votes on the Company’s executive compensation programs and practices;

4. To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm to audit the Company’s financial statements for the fiscal year ending November 26, 2011; and

5. To transact such other business as may properly come before the meeting or any adjournment thereof.

Only holders of CLARCOR Common Stock of record at the close of business on Friday, February 4, 2011 are entitled to receive notice of and to vote at the meeting or any adjournment thereof.

Whether or not you plan to attend the meeting, you are requested to vote on these proposals. You can do so in one of three ways: (i) sign and date the enclosed proxy and return it promptly in the envelope enclosed for that purpose; (ii) vote by internet pursuant to the instructions on the enclosed proxy card; or (iii) vote by telephone pursuant to the instructions on the enclosed proxy card. Your vote is important and very much appreciated.

/s/ Richard M. Wolfson
Richard M. Wolfson
Secretary

PLEASE SIGN AND DATE THE ACCOMPANYING PROXY
AND MAIL IT PROMPTLY.

Franklin, Tennessee
February 16, 2011

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CLARCOR Inc.
  
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		Page
Annual Meeting of Shareholders			1
Voting Matters			1
PROPOSAL NUMBER 1 — ELECTION OF DIRECTORS			3
Nominees for Election to the Board of Directors			3
Information Concerning Nominees and Directors			3
Vote Required			6
CORPORATE GOVERNANCE			7
Independence			7
Meetings and Fees			8
DIRECTOR COMPENSATION FOR FISCAL YEAR 2010			9
Stock Ownership Guidelines			9
Committees of the Board of Directors			10
Director Qualifications and Diversity			11
Board Leadership			12
Board Role in Risk Oversight			12
Executive Sessions of the Board; Communications with the Board			13
Code of Ethics			13
Compensation Committee Interlocks and Insider Participation			13
Certain Transactions			13
Compensation Consultant Independence			14
BENEFICIAL OWNERSHIP OF THE COMPANY’S COMMON STOCK			15
Certain Beneficial Owners			15
Directors and Executive Officers			16
Section 16(a) Beneficial Ownership Reporting Compliance			16
COMPENSATION OF EXECUTIVE OFFICERS AND OTHER INFORMATION			17
Compensation Discussion and Analysis			17
Executive Summary			17
Compensation Overview and Philosophies			19
Establishing Compensation for Executive Officers			20
Components of Executive Pay			22
POTENTIAL CASH INCENTIVE PAYMENTS TO NAMED EXECUTIVE OFFICERS IN RESPECT OF FISCAL YEAR 2010			28
Executive Insurance Benefits			30
Retirement Plans			31
Employment and Change of Control Agreements			31
Stock Ownership Guidelines			32
Compensation Decisions for 2011			32

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		Page
Fiscal Year 2011 Option and RSU Grants			32
Deductibility of Executive Compensation			33
Compensation Committee Report			33
Compensation Risk Assessment			33
SUMMARY COMPENSATION TABLE			35
“ALL OTHER” COMPENSATION TABLE			37
GRANTS OF PLAN-BASED AWARDS FOR FISCAL YEAR 2010 TABLE			38
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2010 TABLE			40
OPTION EXERCISES AND STOCK VESTED DURING FISCAL YEAR 2010 TABLE			42
Retirement Plans			42
PENSION BENEFITS FOR FISCAL YEAR 2010 TABLE			44
Deferred Compensation Plan			45
NONQUALIFIED DEFERRED COMPENSATION IN FISCAL 2010 TABLE			45
Potential Payments Upon Termination or Change in Control			46
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE			48
Equity Compensation Plan Information			50
REPORT OF THE AUDIT COMMITTEE			51
PROPOSAL NUMBER 2 — ADVISORY VOTE ON EXECUTIVE COMPENSATION			52
Vote Required			53
PROPOSAL NUMBER 3 — FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION			54
Vote Required			55
PROPOSAL NUMBER 4 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED ACCOUNTING FIRM			56
Information About Our Independent Registered Public Accounting Firm			56
Amounts Paid to PricewaterhouseCoopers LLP			56
Audit Committee Pre-Approval Process			56
Vote Required			56
MISCELLANEOUS			58
Internet Website			58
Proposals of Security Holders for 2012 Annual Meeting of Shareholders			58
Expense of Solicitation of Proxies			58

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CLARCOR Inc.
840 Crescent Centre Drive, Suite 600
Franklin, Tennessee 37067

PROXY STATEMENT

Annual Meeting of Shareholders

This Proxy Statement and the accompanying proxy are being mailed to shareholders of CLARCOR Inc. (the “Company”) on February 16, 2011. They are being furnished in connection with the solicitation of proxies by the Company’s Board of Directors for use at the Annual Meeting of Shareholders to be held at the Hilton Naples Florida Hotel at 5111 Tamiami Trail North, Naples, FL 34103, on Tuesday, March 22, 2011 at 9:00 A.M., Eastern Time, for the purposes set forth in the Notice of Annual Meeting of Shareholders. Directions to the Annual Meeting and information on how to vote in person can be obtained on-line at www.clarcorproxy.com or by contacting the Company’s Secretary, Richard M. Wolfson, at 840 Crescent Centre Drive, Suite 600, Franklin, Tennessee 37067, telephone: (615)-771-3100.

A shareholder may vote by executing the proxy card or vote via the internet or by telephone pursuant to the instructions on the proxy card. A shareholder who gives a proxy may revoke it at any time before it is voted by giving written notice of the termination thereof to the Secretary of the Company, by filing with him another proxy or by attending the Annual Meeting and voting his or her shares in person.

All valid proxies delivered pursuant to this solicitation, if received in time and not revoked, will be voted. If no specifications are given by the shareholder executing the proxy card, valid proxies will be voted (a) to elect three individuals nominated for election to the Board of Directors listed on the proxy card enclosed herein, (b) in favor of the approval, on an advisory and non-binding basis, of the compensation of the Company’s named executive officers as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, in this Proxy Statement, (c) in favor of the approval, on an advisory and non-binding basis, of the Company having an advisory vote on the compensation of the Company’s named executive officers as set forth in the Company’s proxy statement every three years, (d) to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm to audit the books and accounts of the Company for the fiscal year ending November 26, 2011, and (e) in the discretion of the appointed proxies, upon such other matters as may properly come before the meeting.

As of January 15, 2011, the Company had outstanding 50,378,779 shares of Common Stock, constituting the only class of voting securities of the Company outstanding, and each outstanding share is entitled to one vote on all matters to be voted upon. Only holders of CLARCOR Common Stock of record at the close of business on February 4, 2011 are entitled to notice of and to vote at the meeting. A majority of the shares of Common Stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, will constitute a quorum for purposes of the Annual Meeting. Proxies received but marked as abstentions and broker non-votes (as defined below under “Vote Required to Approve Proposals”) will be included in the calculation of the number of shares considered to be present at the meeting.

Voting Matters

If a quorum is present at the Annual Meeting:

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If your shares are held by a bank, brokerage firm or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If your shares are held in street name, these proxy materials are being forward to you by your bank, brokerage firm or other nominee (the “record holder”), along with a voting instruction card. As the beneficial owner, you have the right to direct your record holder how to vote your shares, and the record holder is required to vote your shares in accordance with your instructions. In addition, as the beneficial holder of shares, you are entitled to attend the Annual Meeting. If you are a beneficial owner, however, you may not vote your shares in person at the meeting unless you obtain a legal proxy, executed in your favor, from the record holder of your shares.

If your shares are held in street name and you do not give voting instructions, pursuant to New York Stock Exchange (“NYSE”) Rule 452, the record holder will not be permitted to vote your shares with respect to Proposals 1, 2 and 3, and your shares will be considered “broker non-votes” with respect to these proposals. If your shares are held in street name and you do not give voting instructions, the record holder will nevertheless be entitled to vote your shares with respect to Proposal 4 in the discretion of the record holder.

Broker non-votes will be treated as shares present for quorum purposes, but not entitled to vote. Therefore, broker non-votes will not affect the outcome of Proposals 1, 2 or 3.

Abstentions will have no effect on Proposals 1 or 3. With respect to Proposals 2 and 4, abstentions will be treated as shares present for quorum purposes and entitled to vote, so they will therefore be equivalent to a vote against such proposals.

We know of no business to be conducted at the Annual Meeting other than Proposals 1, 2, 3 and 4. The Company’s bylaws require shareholders to give advance notice of any proposal intended to be presented at the meeting. The deadline for this notice has passed and we did not receive any such notice. If any other matter properly comes before the stockholders for a vote at the Annual Meeting, the proxy holders named in the proxy cards will vote your shares in accordance with their best judgment.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on March 22, 2011:

The following Proxy materials are available for you to review online at: www.clarcorproxy.com:

In accordance with Securities and Exchange Commission (“SEC”) rules, the foregoing website does not use “cookies”, track user moves or gather any personal information.

In addition, you may request a copy of any of the above materials by calling 1-800-252-7267, pressing “0” and asking to be connected to the Company’s Secretary, Richard Wolfson, or by sending an e-mail setting forth a valid mailing address to: investor@clarcor.com.

PROPOSAL NO. 1 — 
  
ELECTION OF DIRECTORS

Nominees for Election to the Board of Directors

The Company’s Certificate of Incorporation provides for a Board of Directors consisting of nine directors divided into three classes, each class consisting of three directors. One class of directors is elected at each Annual Meeting of Shareholders. The Board is currently comprised of nine directors, three of whom are up for re-election this year.

Accordingly, at the Annual Meeting three directors are to be elected. The nominees are Messrs. Mark Emkes, Robert Jenkins, and Philip Lochner, Jr. All of the nominees are current directors whose terms in office expire this year. Messrs. Jenkins and Lochner were previously elected by the shareholders of the Company. Mr. Emkes was appointed as a director by the Board of Directors on June 25, 2010, and has served continuously since his appointment. All have been recommended by the Corporate Governance/Directors’ Affairs Committee and by the entire Board of Directors for re-election to our Board of Directors, and all of the nominees have consented to serve if elected. In the event any of these nominees is unable to serve as a director, the shares represented by the proxy will not be voted with respect to such individual. The Board of Directors has no reason to believe that any of the nominees will be unable to serve.

If elected, Messrs. Emkes, Jenkins and Lochner will hold office for a three-year period ending in 2014 or until their respective successors are duly elected and qualified.

Information Concerning Nominees and Directors

The following are the current directors of the Company (including the nominees), their ages, the year in which each first became a director, their principal occupations or employment during at least the past five years, other directorships held within the last five years, and information regarding their respective qualifications to serve as directors of the Company:

Name

Age

Director Since

Year Term as Director Expires

J. Marc Adam

72

March 23, 1991

2012

Mr. Adam is a former senior executive with 3M Company, St. Paul, Minnesota. He served as Vice President of Marketing from 1995 to 1999 and as Group Vice President from 1986 to 1995. Mr. Adam was a director of Schneider National Inc., a privately held trucking and logistics company until 2010.

Mr. Adam’s experience as the former head of marketing and a senior executive of 3M, including establishing and running an operating unit in Belgium, has allowed Mr. Adam to provide innovative leadership and perspective to the Company and the Board for two decades. Mr. Adam’s 20-year tenure as a director, spanning the terms of two different chief executive officers of the Company, has provided stability and continuity during periods of change and growth. In addition, Mr. Adam’s significant international business experience, including establishing and running an operating unit for 3M in Belgium, has been valuable to the Company in its efforts to grow outside of the United States.

Name

Age

Director Since

Year Term as Director Expires

James W. Bradford, Jr.

63

January 20, 2006

2012

Mr. Bradford is the Dean, Owen Graduate School of Management, Vanderbilt University, Nashville, Tennessee, and has held that position since 2004. From November 2002 until 2004 he was the Associate Dean of Corporate Relations of Owen. From 1999 to 2001 he was the President and Chief Executive Officer of United Glass Corporation, a large national fabricator of flat glass. Prior to becoming CEO, Mr. Bradford was the company’s General Counsel. Mr. Bradford is a director of two other publicly traded US corporations: Genesco, Inc. and Granite Construction, Incorporated and sits on numerous other advisory and academic boards and councils.

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As the leader of one of the United States’ preeminent business schools and an active business professor, Mr. Bradford regularly interacts with leading business executives, academicians and practitioners around the globe, which has provided significant benefits to the Company, including in the area of executive recruitment and corporate governance. Additionally, Mr. Bradford’s executive experience in leading a large and acquisitive industrial company provided him with practical and actual experience that is highly relevant to the Company’s business and has made Mr. Bradford a resource for the Company’s management team.

Name

Age

Director Since

Year Term as Director Expires

Robert J. Burgstahler

66

December 18, 2000

2013

Mr. Burgstahler is a former senior executive of 3M Company, St. Paul, Minnesota. He served as 3M’s Senior Vice President, Business Development and Corporate Services from 2002 until 2003, and Vice President, Finance and Administrative Services from 2000 to 2002. Mr. Burgstahler was President and General Manager of 3M Canada from 1998 to 2000 and Staff Vice President Taxes of 3M from 1995 to 1998.

Mr. Burgstahler brings an exceptionally strong finance and management background to the Board. His experience in all aspects of financial reporting and financial management for a large multinational corporation has made him a valuable resource for the Company and its management, and his expertise in these areas makes him an effective Chairman of the Company’s Audit Committee, in which capacity he has served since 2005. In addition, Mr. Burgstahler’s executive experience in leading 3M Canada, a large international business unit of 3M, has been valuable to the Company in its efforts to grow outside of the United States.

Name

Age

Director Since

Year Term as Director Expires

Paul Donovan

63

March 24, 2003

2013

Mr. Donovan served as Senior/Executive Vice President and Chief Financial Officer of Wisconsin Energy Corporation, a holding company with subsidiaries primarily in utility businesses, from August 1999 until June 2003, and retired as a special advisor to the Chairman of that company in February 2004. Mr. Donovan was the Executive Vice President and Chief Financial Officer of Sundstrand Corporation from December 1988 to June 1999. Mr. Donovan is a director of two other publicly traded U.S. corporations: AMCORE Financial, Inc. and Woodward Governor Company.

Mr. Donovan brings an exceptionally strong finance and management background to the Board. His expertise in all aspects of financial reporting and financial management for large industrial corporations has made him a valuable resource for the Company and its management, and qualifies him as a financial expert for the Audit Committee. His experience on other public company boards has provided significant benefits to the Company and the Board, including in the areas of corporate governance and executive compensation.

Name

Age

Director Since

Year Term as Director Expires

*Mark A. Emkes

57

June 25, 2010

2011

For more than five years and until his retirement effective on February 28, 2010, Mr. Emkes was the Chairman and Chief Executive Officer of Bridgestone Americas, Inc. and Bridgestone Americas Holdings, Inc., the world’s largest tire and rubber company. He was also President of Bridgestone Americas, Inc. from January 2009 until his retirement. Mr. Emkes served as a director of Bridgestone Corporation from April 1, 2008 through February 28, 2009. Mr. Emkes currently serves as a director of two other publicly traded US corporations: Greif, Inc. and First Horizon National Corporation. In December 2010, Mr. Emkes was appointed to serve as the State of Tennessee’s Finance Commissioner, a state-level cabinet position, by the Governor of the State of Tennessee, William Haslam.

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Mr. Emkes’ experience as a former chief executive officer of a major multinational industrial firm and the significant time that Mr. Emkes spent living and operating businesses outside of the United States, including the United Arab Emirates, Spain, Mexico and Brazil, make him a valuable director for the Company as it continues its international growth efforts. In addition, Mr. Emkes has significant marketing and distribution experience in aftermarket sales channels that are important to many of the Company’s key operating businesses. Finally, his experience on other public company boards provides significant benefits to the Company and the Board.

Name

Age

Director Since

Year Term as Director Expires

*Robert H. Jenkins

67

March 23, 1999

2011

Mr. Jenkins is the retired Chairman, Hamilton Sundstrand Corporation, Rockford, Illinois, an aerospace and industrial company that resulted from a merger with United Technologies Corporation in 1999. He served as Chairman, President and Chief Executive Officer of predecessor Sundstrand Corporation from 1997 to 1999 and as President and Chief Executive Officer of Sundstrand from 1995 to 1997. Mr. Jenkins is a director of two other publicly traded U.S. corporations: Acco Brands Corporation and AK Steel Holding Corporation, and serves as the independent lead director of each. Mr. Jenkins formerly served as a director of Solutia, Inc. from 1997 to 2008.

Mr. Jenkins’ experience as the chief executive officer of a publicly held major industrial firm and his business and operational experience at a number of companies in other industries brings a wealth of relevant experience to the Board and has made Mr. Jenkins a resource for the Company and its management team. In addition, Mr. Jenkins’ extensive corporate governance experience as lead director for Acco Brands Corporation and AK Steel Holdings Corporation has been and continues to be valuable to the Company and the Board.

Name

Age

Director Since

Year Term as Director Expires

Norman E. Johnson

62

June 26, 1996

2013

Mr. Johnson has served as Chairman, President and Chief Executive Officer of the Company since March 2000. Mr. Johnson is a director of Schneider National Inc., a privately held trucking and logistics company.

Mr. Johnson has more than 30 years in the filtration industry and has a wealth of operational and management experience in leading filtration related businesses, for both the Company as well as one of the Company’s most significant competitors. Mr. Johnson’s broad and deep experience and knowledge with respect to filtration applications, end-markets and technologies has enabled the Company to grow consistently during his 19 year career with the Company, enter new markets and compete globally with companies that are larger and have more human and financial capital than the Company. This experience and knowledge, combined with Mr. Johnson’s tenure with the Company, allow him to lead the Board of Directors and better enable the Board to set the strategic path for the Company and its operating units.

Name

Age

Director Since

Year Term as Director Expires

*Philip R. Lochner, Jr.

67

June 17, 1999

2011

Mr. Lochner was the Senior Vice President and Chief Administrative Officer, Time Warner, Inc., New York, NY from 1991 to 1998, and a Commissioner of the Securities and Exchange Commission from 1990 to 1991. Mr. Lochner is currently a director of three other publicly traded U.S. corporations: Crane Co.; CMS Energy Corporation (where he serves as the Presiding Director); and Gentiva Health Services, Inc. In the past ten years, he has also served as the director of Adelphia Communications (post-Chapter 11 filing); Apria Healthcare; Gtech Holdings Corporation; Monster Worldwide, Inc. and Solutia Inc., and as a director of the National Association of Securities Dealers and the American Stock Exchange.

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At various times during his tenure with Time Warner, Mr. Lochner’s duties included oversight of certain shareholder relations, legal, internal audit, executive compensation, real estate, employee relations and other functions. As a former SEC Commissioner and a current and former director of public companies, Mr. Lochner has significant experience in the area of corporate governance as well as securities and disclosure matters, and is an extremely valuable resource to the Board and to management in these areas. Additionally, the management and administrative expertise with respect to the functional areas described above that Mr. Lochner gained as a senior executive of a public company make him a valuable member of the Board and a resource to the Company and to management.

Name

Age

Director Since

Year Term as Director Expires

James L. Packard

68

June 22, 1998

2012

Mr. Packard is the former Chairman, President and CEO of Regal-Beloit Corporation, a worldwide manufacturer of mechanical power transmission equipment, electric motors and controls, and electric power generators headquartered in Beloit, WI. He served as Executive Chairman of Regal Beloit from April 2005 to December 2006, Chairman from 1986 to April 2005, President from 1980 to 2002 and Chief Executive Officer from 1984 to 2005. Mr. Packard is currently a director of two other publicly traded U.S. corporations: The Manitowoc Company, Inc. and Douglas Dynamics, Inc., and a director of First National Bank and Trust, located in Beloit, WI, United Plastic Group, located in Oak Brook, IL and ABC Supply, located in Beloit, WI. Mr. Packard previously served on the Boards of two other publicly listed companies: Elco Corporation, and Gehl Corporation.

Mr. Packard served on the Board of Governors of the American Stock Exchange (AMEX) and was a member of the Executive Committee, the Board Oversight Committee on Specialist Unit Structure, and the Listed Company Advisory Committee. He was on the Board of Governors at the time AMEX merged with NASD, and after the merger he served as a member of the Listing and Hearing Review Council of the NASD.

Mr. Packard’s experience as a former chief executive officer of a publicly held major industrial firm and his experience on the boards of companies in other industries are highly relevant to his duties on the Board and have made Mr. Packard a resource for the Company and its management team. In addition, Mr. Packard’s extensive experience in the area of corporate governance make him an effective Chairman of the Company’s Director Affairs/Corporate Governance Committee, in which capacity he has served since 2005.

Vote Required

A shareholder may mark the accompanying form of proxy to (i) vote in favor of all nominees, (ii) withhold votes from all nominees, or (iii) vote in favor of one or more nominees while withholding votes from one or more specified nominees. If a quorum is present at the Annual Meeting, the three directors receiving the greatest number of votes will be elected. As there are precisely three nominees, any director receiving any votes will be elected.

Pursuant to NYSE Rule 452, the uncontested election of directors may not be voted upon by banks, brokerage firms and other nominees holding shares in street name without instruction from beneficial owners. Consequently, proxies submitted by banks, brokerage firms and other nominees holding shares in street name may not, in the absence of specific instructions from beneficial owners, vote the shares in favor of a nominee or withhold votes from a nominee at the discretion of the bank, brokerage firm or other nominee.

If no voting specification is made on a properly returned or voted proxy card, the proxies named on the proxy card will vote FOR the election of Messrs. Emkes, Jenkins and Lochner as directors of the Company in accordance with the Board of Directors’ recommendation below. As noted earlier in this proxy statement, broker non-votes and abstentions will not affect the outcome of the election of these candidates.

The Board of Directors recommends a vote FOR the election of Messrs. Emkes, Jenkins and Lochner as directors of the Company.

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CORPORATE GOVERNANCE

Independence

NYSE corporate governance rules require that the Board of Directors of a listed company consist of a majority of independent directors. The Company’s Board of Directors currently has, and previously has had, a majority of independent directors. Eight of the nine current members of the Board of Directors are independent; only Mr. Johnson is not.

Pursuant to the NYSE corporate governance rules, the Board of Directors has adopted categorical independence standards to provide assistance in the determination of director independence. The categorical standards are set forth below and provide that a director will not qualify as an independent director if:

(i) The director is, or has been within the last three years, an employee of the Company, or an immediate family member of the director is, or has been within the last three years, an executive officer of the Company;

(ii) The director has received, or has an immediate family member who has received, during any twelve month period within the last three years, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);

(iii) The director is a current partner or employee of the Company’s external audit firm, or was within the past three years a partner or employee of such firm and personally worked on the Company’s audit within that time;

(iv) The director has an immediate family member who (a) is a current partner of a firm that is the Company’s external auditor, (b) is a current employee of such firm and participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice or (c) was within the past three years a partner or employee of such firm and personally worked on the Company’s audit within that time;

(v) The director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of the Company’s present executive officers at the same time serves or served on that company’s compensation committee;

(vi) The director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeded the greater of $1 million or 2% of such other company’s consolidated gross revenues; or

(vii) The director or an immediate family member is a current officer, director or trustee of a charitable organization where the Company’s annual discretionary charitable contributions to the charitable organization are more than the greater of (i) two percent (2%) of that organization’s total annual charitable receipts, or (ii) $1,000,000.

For purposes of the categorical standards, immediate family member includes a director’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares the director’s home.

The Board of Directors has affirmatively determined, assisted by the categorical independence standards set forth above, that none of the outside Directors has a material relationship with the Company (either directly or as a partner, shareholder, officer, employee or trustee of an organization that has a relationship with the Company). In making its determination, the Board of Directors considered (i) affirmative representations made by each director attesting to the lack of any commercial, banking, consulting, legal, accounting, charitable or familial relationships between such director (or persons or organizations with which a director has an affiliation) and the Company; and (ii) affirmative representations by the Company’s management that no such relationships exist to the knowledge of management.

Applying the categorical independence standards, the Board of Directors has determined that each of Messrs. Adam, Bradford, Burgstahler, Donovan, Emkes, Jenkins, Lochner and Packard is independent as required by the NYSE corporate governance rules.

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Meetings and Fees

All of the Company’s directors attended all of the meetings of each of (i) the Board of Directors and (ii) Committees of the Board of which they were members throughout fiscal 2010. The Board of Directors held eight meetings during fiscal 2010.

In fiscal 2010, directors who were not employees of the Company received (a) an annual retainer of $40,000 payable in cash or shares of the Company’s Common Stock, at the director’s option; (b) a fee of $1,500 payable for each Board and Committee meeting attended in person; (c) a fee of $1,000 for each Board and Committee meeting attended by telephone; and (d) annual fees payable to Chairmen of Committees of the Board as follows: (i) Audit Committee Chairman, $10,000; (ii) Directors Affairs/Corporate Governance Committee Chairman, $6,500; and (iii) Compensation Committee Chairman, $6,500. Board members also receive reimbursement for travel expenses and the stock options referred to below.

As reported in last year’s proxy statement, in light of the Company’s wage freeze during fiscal year 2009 the Board voluntarily suspended an increase in the annual retainer from $35,000 to $40,000 that was approved in 2008 and was to have gone into effect in 2009. Wages were unfrozen during 2010, and the Board similarly unfroze the annual retainer. Consequently, the annual retainer was increased to the previously approved level of $40,000 during fiscal year 2010.

Pursuant to the Company’s Deferred Compensation Plan for Directors, a non-employee director may elect to defer receipt of the director’s fees to which he is entitled and to be paid the amounts so deferred, plus interest thereon at the prime rate announced quarterly by JP Morgan Chase Bank, or its successor, either when the participant ceases being a director of the Company or at the time the participant reaches a specified age. None of the Company’s directors deferred any portion of the fees payable during fiscal 2010.

Under the Company’s shareholder-approved 2009 Incentive Plan (the “2009 Incentive Plan”), on the date a person first becomes a non-employee director, and annually thereafter on the date of each annual meeting of shareholders, such person has the option to receive a grant of shares of the Company’s Common Stock with an aggregate fair market value equal to and in lieu of the amount of the annual retainer for non-employee directors. In fiscal year 2010, seven of the eight non-employee directors elected to take the annual retainer in stock, although for administrative ease, the $5,000 mid-year increase in the annual retainer was paid to each non-employee director, other than Mr. Emkes, in cash. (Mr. Emkes joined the Board after the increase went into effect and elected to take the entirety of his pro-rated retainer in stock.)

The 2009 Incentive Plan provides that the Directors Affairs/Corporate Governance Committee each year will determine the number and form of equity incentive grants payable to directors. Under the Company’s 2004 Incentive Plan (the predecessor to the 2009 Incentive Plan), each non-employee director was automatically granted, on the date of each annual meeting of shareholders, options to purchase 7,500 shares of Common Stock at an option exercise price equal to the fair market value of a share of Common Stock on the date of grant. In fiscal 2010, the Directors Affairs/Corporate Governance Committee determined not to deviate from historical practice and, consequently, on March 23, 2010 each director other than Mr. Emkes received options to purchase 7,500 shares of Common Stock at an option exercise price equal to the fair market value of a share of Common Stock on such date. On September 27, 2010, Mr. Emkes received a grant of 5,550 stock options (representing the 7,500 options pro-rated to his start date as a director) at an option exercise price equal to the fair market value of a share of Common Stock on September 27, 2010. All of the foregoing options were granted pursuant to the 2009 Incentive Plan.

In fiscal 2011, the Directors Affairs/Corporate Governance Committee again determined not to deviate from historical practice and, consequently, on March 22, 2011 (the date of the Annual Meeting) each director will receive options to purchase 7,500 shares of Common Stock at an option exercise price equal to the fair market value of a share of Common Stock on such date. These options will be granted pursuant to the 2009 Incentive Plan.

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All options granted to directors as described above vest immediately on the date of grant and have a ten year term. Shares acquired upon exercise of an option may not be sold or transferred during the six month period following the date of grant of such option. The following table sets forth the compensation paid to the Company’s non-employee directors during fiscal year 2010:

DIRECTOR COMPENSATION FOR FISCAL YEAR 2010

Name		Fees Earned or Paid in Cash(1) ($)				Stock Awards (2) ($)				Option Awards(3) ($)				Change in Pension Value & Non-Qualified Deferred Earnings ($)				All Other Compensation ($)				Total ($)
J. Marc Adam			34,000				35,005				86,325				—				—				155,330
James W. Bradford, Jr.			33,500				35,005				86,325				—				—				154,830
Robert J. Burgstahler			46,000				35,005				86,325				—				—				167,330
Paul Donovan			36,000				35,005				86,325				—				—				157,330
Mark A. Emkes			6,000				29,611				60,884				—				—				96,495
Robert H. Jenkins			40,000				35,005				86,325				—				—				161,330
Philip R. Lochner, Jr			69,000				—				86,325				—				—				155,325
James L. Packard			40,500				35,005				86,325				—				—				161,830

The grant date fair value of the stock options granted in fiscal 2010 to each director (determined using a Black-Scholes methodology employing the assumptions set forth in the table immediately above) was $11.51 per option for each director other than Mr. Emkes, $10.97 per option for Mr. Emkes and $665,159 for all directors in the aggregate. The number of vested stock options held by each non-employee director of the Company as of the end of fiscal 2010 are set forth in the column entitled “Vested Stock Options” in the table entitled “Security Ownership — Management” under the heading “BENEFICIAL OWNERSHIP OF THE COMPANY’S COMMON STOCK”. No non-employee director had any unvested stock options at the end of fiscal 2010.

Stock Ownership Guidelines

The Company has established stock ownership guidelines for non-employee directors. Under these guidelines, all non-employee directors, after a five-year period from their initial election to the Board, are required to own Company common stock with a value of five times the annual retainer (which is currently $40,000). The Directors Affairs/Corporate Governance Committee oversees these guidelines and reviews each director’s standing in respect of the same once per year. In January of 2011, this Committee determined that all of the Company’s directors complied with these guidelines based on their respective years as a director of the Company.

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Committees of the Board of Directors

During fiscal 2010, the standing committees of the Board of Directors were the Directors Affairs/Corporate Governance Committee, the Audit Committee and the Compensation Committee. Each of these Committees is discussed below.

Directors Affairs/Corporate Governance Committee.  The Directors Affairs/Corporate Governance Committee currently consists of six directors: James L. Packard, Chairman, J. Marc Adam, James W. Bradford, Jr., Mark A. Emkes, Robert H. Jenkins, and Philip R. Lochner, Jr., with Mr. Emkes having joined the Committee after the end of fiscal 2010. Each of these directors is independent as such term is defined in the NYSE corporate governance rules.

The Board has adopted a Charter for the Committee. A current copy of that Charter is available on the Company’s website: www.clarcor.com. The Charter provides, among other things, that the Committee will make recommendations to the full Board regarding changes to the size and composition of the Board or any committee thereof; identify individuals that the Committee believes are qualified to become Board members and recommend that the Board select such nominee or nominees to stand for election; and identify individuals for appointment to the Board to fill vacancies on the Board.

Messrs. Emkes, Jenkins and Lochner are the current nominees recommended by the Committee for election to the Board at this Annual Meeting. All of these individuals are standing for election or reelection, as applicable, by the shareholders.

The Directors Affairs/Corporate Governance Committee met five times during fiscal 2010.

Audit Committee.  The Audit Committee was established by the Board in accordance with applicable provisions of the Securities Exchange Act of 1934, as amended, and applicable NYSE requirements. The Audit Committee currently consists of five directors: Messrs. Robert J. Burgstahler, Chairman, J. Marc Adam, Paul Donovan, Philip R. Lochner, Jr., and James L. Packard. Each of these individuals and any other directors who served on the Audit Committee during fiscal 2010 is independent and financially literate, as such terms are defined in the NYSE corporate governance rules, and is independent as defined in under SEC rules and regulations applicable to audit committees. Further, Mr. Burgstahler and Mr. Donovan have previously served as the chief financial officers of publicly-held corporations. Based on these and other factors, the Board has determined that Mr. Burgstahler and Mr. Donovan is each an “audit committee financial expert” as such term is defined in applicable rules of the Securities and Exchange Commission.

The Board has adopted a Charter for the Audit Committee. A current copy of that Charter is available on the Company’s website: www.clarcor.com.

The purposes of the Committee include assisting Board oversight of the integrity of the Company’s financial statements, the Company’s compliance with legal, regulatory and filing requirements, the Company’s selection of an independent auditor, the Company’s determination of the independent auditor’s qualifications and independence and the performance of the Company’s internal audit function and independent auditors. The Committee discusses with management and the Company’s independent auditors the Company’s annual audited financial statements, quarterly financial statements, earnings press releases, and management’s assessment of internal control over financial reporting.

The Audit Committee met eight times during fiscal 2010.

Compensation Committee.  The Compensation Committee currently consists of five directors: Messrs. Robert H. Jenkins, Chairman, James W. Bradford, Jr., Robert J. Burgstahler, Paul Donovan, and Mark A. Emkes, with Mr. Emkes having joined the Committee after the end of fiscal 2010. Each of these individuals and any the directors who served on the Compensation Committee during fiscal 2010 is independent as such term is defined in the listing standards of the NYSE.

The Board has adopted a written Charter for the Committee. A current copy of that Charter is available on the Company’s website: www.clarcor.com.

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The purposes of the Committee include discharging the Board’s responsibilities relating to compensation of the Company’s executive officers and reviewing and making recommendations to the Board with respect to compensation plans, policies and programs. The Committee annually reviews and approves corporate goals and objectives relevant to the compensation of the Company’s Chief Executive Officer and determines and approves the compensation level of the Chief Executive Officer and the Company’s other executive officers and approves grants and awards of restricted stock units and stock options under the Company’s incentive plans. From time to time the Committee consults with outside compensation experts in exercising its responsibilities. All of the foregoing are described in greater detail in the Compensation Discussion and Analysis below. The Committee has the authority to delegate any of its responsibilities to one or more subcommittees within certain parameters, but the Committee rarely exercises this power, and did not do so in fiscal 2010.

The Compensation Committee met eight times during fiscal 2010.

Director Qualifications and Diversity

The Directors Affairs/Corporate Governance Committee is responsible for evaluating all potential nominees to serve as a director, irrespective of whether the candidate was identified by the Committee, the Board, a stockholder or other third party. The Company’s By-laws (available on the Company’s website at www.clarcor.com) were last amended on January 16, 2010 and provide that notice of any proposed nomination by a shareholder for election of a person to the Board shall be delivered to or mailed and received at the principal executive offices of the Company no less than 120 days nor more than 150 days prior to the anniversary of the prior year’s Annual Meeting of Shareholders (provided, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the shareholder to be timely must be so received not later than the tenth day following the day on which such notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever occurs first). Section 2.12 of the By-laws specifies the information to be included by a shareholder in such a notice.

In the past, the Committee has reviewed potential candidates for election to the Board recommended primarily by Board members or third party search firms. The process has included a review of the candidate’s qualifications, background and reference checks and multiple interviews with the candidate. The same process would be applied with respect to nominees recommended by stockholders.

The Company does not currently have a specific or formal policy with regard to the minimum qualifications of director candidates, but the Company desires (and the Committee and the Board look for) individuals who possess significant and long-term experience in more than one of the following areas:

Additionally, the Committee and the Board consider other factors when evaluating potential candidates, including the candidates’ ability to dedicate sufficient time to their Board and Committee responsibilities, their ability to regularly attend Board and Committee meetings, the experiential makeup of the Board and management at the time they are being considered, the anticipated needs of the Company over the next several years (e.g., the potential entrance into new markets or lines of business), and diversity with respect to

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race, gender and national origin. While the Company and the Board view a candidate’s diversity as a positive attribute, there is no formal diversity policy and no specific weight is assigned to diversity in the consideration process. Rather, the Committee and the Board consider a candidate’s diversity as but one positive factor in the evaluation process along with the other factors outlined above.

Board Leadership

The Company currently combines the role of Chairman of the Board and Chief Executive Officer, with this individual setting the agenda for and overseeing Board meetings. The Company does not have a lead director.

The Company has successfully used this model for years, and believes that it remains the best structure for the Company and its shareholders, due principally to the composition of the current Board, as well as the qualities and characteristics of the Company’s current Chairman and Chief Executive Officer, Mr. Johnson, who has more than 30 years in the filtration industry and has a wealth of operational and management experience in leading filtration related businesses.

As indicated above in their respective profiles, the Board is currently comprised of individuals who have significant levels of experience in the executive management and oversight of multinational industrial public companies, in-depth knowledge of specific functional areas such as finance, accounting and sales and marketing, and expertise in the areas of corporate governance and service on US public company boards. Several of the Company’s directors, including Messrs. Jenkins, Packard and Emkes, have served as Chairman and CEO of larger companies than the Company. No director missed a single Board or committee meeting in fiscal 2010, and, as described further below, at each meeting the Board and all of its committees meet in executive session without Mr. Johnson.

Additionally, it is common practice for the Company’s independent directors to attend the meetings and participate in executive sessions even of those committees on which they are not members. Because the Board members are informed in real-time about matters discussed at each committee meeting, the Company believes that the Board is better able to discharge its responsibilities for overseeing risk management, as described further below.

In light of the above, the Board is and has consistently demonstrated itself to be active and fully engaged and able to act independently irrespective of the individual who holds the title of Chairman, and without the need of designating one of its independent directors to serve as a lead director. Consequently, the Company believes that it is well served by Mr. Johnson serving the dual role of Chairman and Chief Executive Officer, and that it is in the best interest of the Company’s shareholders for him to continue to do so. If and when Mr. Johnson retires, the Board will reconsider this position in light of the qualifications of Mr. Johnson’s successor as well as the composition of the Board at that time.

Board Role in Risk Oversight

The Company’s management is responsible for the Company’s day to day risk management activities and processes, and the Board oversees and provides direction with respect to these activities and processes, principally through the Audit Committee. At least once per year, management prepares and delivers a comprehensive report to the Audit Committee that identifies the material strategic, operational, financial, competitive, and legal/regulatory risks facing the Company and the steps that the Company takes to mitigate them. The Audit Committee uses this report as a launching point for discussing the identified risks and the Company’s mitigation efforts, and reports the substance of this discussion and any conclusions or concerns to the full Board. The full Board also annually reviews the risks faced by each significant business operating unit of the Company as part of the Company’s strategic planning process.

In addition, the Audit Committee and the other Committees of the Board are responsible for overseeing risks related to their respective functional areas and reporting to the full Board regarding the same. Thus, the Audit Committee is responsible for overseeing the Company’s accounting and financial reporting processes, the integrity of the Company’s financial statements, the creation and functioning of the Company’s compliance programs, and the risks associated with litigation and the Company’s whistleblower hotline. The Compensation Committee is responsible for the oversight of risks associated with Company’s compensation practices, and the Directors Affairs/Corporate Governance Committee is responsible for overseeing corporate

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governance risks, including those related to director independence. Each of these committees reports regularly to the full Board and any material matter that is identified in such reports typically is considered and discussed, and if necessary resolved upon, at the Board level.

Executive Sessions of the Board; Communications with the Board

The Company’s Corporate Governance Guidelines (available on the Company’s website, www.clarcor.com) provide that at each meeting of the Board of Directors the independent directors shall meet separately from the management of the Company. Mr. Johnson, a director and the Chairman and Chief Executive Officer of the Company, does not attend these executive sessions. Under the Guidelines, these sessions are chaired on a rotating basis by the chairperson of one of the standing committees of the Board (currently the Audit Committee, the Compensation Committee and the Directors Affairs/Corporate Governance Committee).

The Board has adopted a process for holders of the Company’s common stock and other interested parties to send written communications to the Board. Such communications should be sent to the Corporate Secretary at CLARCOR Inc., 840 Crescent Centre Drive, Suite 600, Franklin, Tennessee 37067. The Corporate Secretary will forward all such communications to the Chairman of the Director Affairs/Corporate Governance Committee of the Board. That Committee will determine whether any such communication will be distributed to the full Board or, if requested by the sender, only to the non-management directors.

The Board has adopted a policy which recommends that all directors personally attend each annual and special meeting of the shareholders of the Company. At the last Annual Meeting of Shareholders, held on March 23, 2010, all of the directors were in attendance.

Code of Ethics

The Company has adopted a Code of Ethics for Senior Financial Officers applicable to the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Vice President — Internal Audit, and any other person performing the duties of such officials. The Code of Ethics for Senior Financial Officers is available on the Company’s website at www.clarcor.com.

Compensation Committee Interlocks and Insider Participation

During fiscal 2010, the Compensation Committee of the Board of Directors was composed of Robert H. Jenkins, James W. Bradford, Jr., Robert J. Burgstahler, and Paul Donovan. None of these persons has at any time been an officer or employee of the Company or any of its subsidiaries. In addition, there are no relationships among our executive officers, members of the Compensation Committee or entities whose executives serve on the Board of Directors or the Compensation Committee that require disclosure under applicable regulations of the SEC.

Certain Transactions

We are not aware of any related party transactions between the Company and any of our directors, executive officers, 5% stockholders or their family members since the beginning of the last fiscal year which require disclosure under Item 404 of Regulation S-K under the Securities Exchange Act of 1934 (“Item 404 Transactions”).

Each year, the Company requires its directors and executive officers to complete a questionnaire, one of the purposes of which is to disclose any related-party transactions with the Company, including any potential Item 404 Transactions. No such transactions were disclosed during or in respect of fiscal 2010. The Company does not have a history of engaging in related-party transactions with its directors or executive officers or their respective related persons or affiliates and does not have a formal or other written policy regarding the analysis or approval of such transactions. Even in the absence of a formal policy, any material proposed related-party transaction, including any Item 404 Transaction irrespective of materiality, would be brought before the Board or a specially designated Committee thereof (with any interested director recusing him or herself from the proceedings) to be specifically considered and approved before the Company would knowingly engage in any such transaction.

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In light of Mr. Emkes’ appointment and service as Finance Commissioner of the State of Tennessee, Mr. Emkes will be required to recuse himself from any Board or committee deliberation or decision involving the Company or any affiliate thereof and the State of Tennessee, or any other transaction where a conflict of interest could be perceived. Similarly, Mr. Emkes will recuse himself in accordance with applicable law from any deliberation or decision involving the Company or any affiliate thereof in his capacity as Finance Commissioner. To the Company’s knowledge, there are no such matters currently pending, and none are currently expected or anticipated. Although the Company’s corporate headquarters are based in Tennessee, the Company does not have material business operations in the state.

Compensation Consultant Independence

During fiscal year 2010, the Compensation Committee engaged the services of Frederic W. Cook & Co., Inc. (“FWC”) as its independent advisor on matters of executive compensation. FWC reports directly to the Committee and provides no other remunerated services to the Company or any of its affiliates.

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BENEFICIAL OWNERSHIP OF THE COMPANY’S COMMON STOCK

Certain Beneficial Owners

The following table sets forth the ownership according to the most recent filings of Schedules 13G and 13D and amendments thereto (as described in footnote 5 to the table), as applicable, by the beneficial owners which, as of the record date for this meeting, own beneficially more than 5% of the Company’s common stock.

Name and Address of Beneficial Owner		Shares Beneficially Owned				Percent of Class(1)
Neuberger Berman Group LLC(2) Neuberger Berman LLC Neuberger Berman Management LLC Neuberger Berman Equity Funds     605 Third Avenue     New York, NY 10158			6,436,555				12.8	%
Black Rock, Inc.(3)     40 E. 52nd St.     New York, NY 10022			3,700,857				7.3	%
Columbia Wanger Asset Management, L.P.(4)     227 West Monroe Street, Suite 3000     Chicago, Illinois 60606			2,768,700				5.5	%
Gabelli Funds, LLC(5) GAMCO Asset Management Inc.     One Corporate Center     Rye, NY 10580			2,652,267				5.3	%

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Directors and Executive Officers

The following table provides information concerning the shares of Common Stock of the Company beneficially owned as of January 15, 2011 by all directors, by the executive officers named in the “Summary Compensation Table” and by all directors and executive officers of the Company as a group.

SECURITY OWNERSHIP — MANAGEMENT

Class		Name				Shares Owned Outright(1)				Vested Stock Options(2)				Restricted Stock Units(3)				Total				Percent of Class(4)
Common Stock			J. Marc Adam				9,948				52,500								62,448				*
Common Stock			James W. Bradford				7,643				38,750								46,393				*
Common Stock			Robert J. Burgstahler				15,877				67,500								83,377				*
Common Stock			Christopher L. Conway				1,442				16,000				1,641				19,083				*
Common Stock			Paul Donovan				5,223				47,977								53,200				*
Common Stock			Mark A. Emkes				778				5,550								6,328				*
Common Stock			David J. Fallon				0				684								684				*
Common Stock			Robert H. Jenkins				36,311				67,500								103,811				*
Common Stock			Norman E. Johnson				592,611				850,151				93,482				1,536,244				3.05	%
Common Stock			Bruce A. Klein				173,300				223,625								396,925				*
Common Stock			Philip R. Lochner, Jr				24,234				60,000								84,234				*
Common Stock			James L. Packard				32,630				75,000								107,630				*
Common Stock			Sam Ferrise				17,797				205,180								222,977				*
Common Stock			Richard M. Wolfson				2,268				59,725				1,146				63,139				*
All Directors and Executive Officers as a Group (14 persons total)																			2,786,473				5.15%

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers and directors and persons who beneficially own more than 10% of the outstanding shares of the Company’s common stock to file reports of ownership and changes in ownership with the SEC and the NYSE. Based solely on our review of those forms and certain written representations from reporting persons, we believe that in fiscal 2010 all of our executive officers, directors and greater than 10% beneficial owners were in compliance with all applicable filing requirements under Section 16(a).

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COMPENSATION OF EXECUTIVE OFFICERS AND OTHER INFORMATION

Compensation Discussion and Analysis

Executive Summary

Fiscal 2010 was a historic year for the Company, as the Company achieved its highest levels of earnings per share and other key financial performance measurements in its more than 100-year history, and surpassed its budgeted levels of operating performance by a wide margin. The Company’s stock price rose approximately 28% from approximately $32 per share at the end of fiscal 2009 to approximately $41 per share at the end of fiscal 2010, resulting in the creation of approximately $450 million in shareholder value. The Company’s achievement of these results was facilitated by management’s positioning of the Company during the economic downturn in fiscal 2009 — cutting costs, but maintaining customer fill rates, retaining key personnel and investing in new product development.

The Company’s compensation programs are straightforward and do not materially change from year to year. The following table sets forth an executive summary of the Company’s compensation programs and how they were implemented in fiscal 2010:

Compensation Program/Element		General Description/Commentary		Fiscal 2010 Commentary
Annual Base Salary		Base salaries are maintained at or below median for the executives in comparable positions at comparable companies and represent a minority of an executive’s total compensation.		After a nearly two year wage freeze, the Company increased base salaries by 2% for the Company’s CEO and other executive officers. Certain other executive officers received higher increases, due to the fact that their base salaries were (and remain) significantly below median.
Cash Incentive Compensation		•   The Company determines cash-incentive compensation under its “CVA Model”, which employs an objective formula that measures how well the Company uses its assets.		•   The Company achieved its highest level of CVA performance (and thus payouts) in its history in fiscal 2010.
		•   The Company has used the CVA Model for the last 13 years. The CVA Model applies to approximately 100 managers, and not just executive officers.		•   No incentive payouts were made to any executive officer under the CVA plan or otherwise in fiscal 2009.
		•   The CVA Model is directly tied to the Company’s annual operating profit, and is objectively performance-based.		•   Fiscal 2010 payouts were based on the application of the objective CVA Formula and based on targets that were established at the beginning of the fiscal year.

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Compensation Program/Element		General Description/Commentary		Fiscal 2010 Commentary
Long-Term Incentives		•   The Company awards time vested stock options and restricted stock units to its executive officers.		Awards in fiscal 2010 were consistent with historical practice.
		•   Vesting period for both types of awards is four years.
		•   These awards represent a significant portion of an officer’s total compensation. When combined with target cash incentive payments under the CVA Model, more than 50% of an officer’s compensation is “at risk”.
Perquisites		The Company provides limited perquisites to executive officers:		In keeping with its commitment to shareholders in last year’s proxy statement, the Company no longer provides tax-gross ups on these perquisites.
		•   Executive Physicals
		•   Company cars (also provided to other senior-level employees)
		•   Financial planning services
Employment Agreements		Only the Company’s CEO has an employment agreement, which has been in place since 2000. This agreement generally provides for 3 years of cash and benefits and accelerated equity vesting if not renewed.		No employment agreements were entered into or modified in fiscal 2010.
Change in Control Agreements		The Company provides executive officers with Change in Control Agreements. These are “double trigger” and generally provide for 3 years of cash and benefits and accelerated equity vesting.		No Change in Control agreements were entered into or modified in fiscal 2010.
Retirement Benefits		The Company provides certain retirement programs, several of which are legacy in nature and do not apply to several of the named executive officers.		There were no changes to participation in the retirement plans in fiscal 2010.

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Compensation Program/Element		General Description/Commentary		Fiscal 2010 Commentary
		Only the Company’s CEO currently participates in the Executive Retirement Plan. The only other participant, the Company’s former CFO, retired in fiscal 2010.
Insurance Benefits		The Company provides certain insurance benefits to executive officers, several of which are legacy in nature and do not apply to several of the named executive officers.		In keeping with its commitment to shareholders in last year’s proxy statement, the Company no longer provides tax-gross ups on these benefits.
Stock Ownership Guidelines		After five years of service, the Company requires its CEO to own Company stock worth 4 times his base salary and requires other executive officers to own Company stock worth 2 times their respective base salary.		•   All of the Company’s executive officers complied with the stock ownership guidelines in fiscal 2010, based on their respective years of experience.
				•   The Company’s CEO owns far in excess of this requirement and the Company believes that he is the Company’s largest non-institutional shareholder.

Compensation Overview and Philosophies

Through its compensation policies, the Company seeks to attract and retain high quality leadership and to assure that the executive officers and senior management of the Company are compensated in a manner consistent with their performance, shareholder interests, competitive practice and the applicable requirements of regulatory bodies. The Compensation Committee of the Board of Directors (the “Committee”) reviews and approves the compensation policies and practices of the Company, particularly in respect of executive officers and other members of senior management. All of the members of the Committee are independent directors as determined under the NYSE corporate governance rules, and none of them has at any time been an officer or employee of the Company or any of its subsidiaries.

The key principles listed below are reflected in structuring the compensation packages for the Chief Executive Officer and the other executive officers of the Company. None of these principles is accorded any specific weight or, as a matter of policy, considered as being more important than the others.

Pay for Performance

A high percentage of an executive’s total compensation is linked to the performance of the Company and its stock as well as the executive’s individual performance in attaining the Company’s objectives. This structure is designed to reward both short-term and long-term performance and align the interests of management with the long-term interests of the Company’s shareholders.

Competitiveness

Our executives’ total compensation packages are generally designed to be competitive with the median compensation levels of those of executives occupying comparable positions in comparable companies. Elements of the total compensation package are also designed to allow an opportunity to earn more than

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median compensation levels when the Company delivers exceptional performance. The Company believes that the opportunity to achieve earnings in excess of median provides a significant challenge and incentive to the executive officers of the Company.

Executive Ownership

A major component of each executive’s compensation is equity-based in the form of stock options and restricted stock units. As a result, our executive officers’ interests are directly linked with our shareholders’ interests. The Company believes that equity-based compensation properly balances the rewards for long-term versus short-term results.

Management Development

The compensation packages are also designed to attract and retain quality executives with the skills and other competencies required to meet the Company’s objectives and to enhance shareholder value.

Establishing Compensation for Executive Officers

The Committee is responsible for all matters relating to executive compensation. To assist it in this endeavor, the Committee has historically engaged independent compensation consulting firms to (i) review on a regular basis relevant market and other data regarding executive compensation and review holistically from time to time the compensation programs for the Company’s executive officers, and (ii) otherwise to advise the Committee on matters of executive compensation. Since fiscal year 2008, the Committee has engaged FWC as its independent advisor on matters of executive compensation. Notwithstanding this engagement, the Committee considers the input of outside consultants such as FWC to be but one of several factors in evaluating and establishing the Company’s compensation programs and the compensation paid to senior management. These other factors include but are not limited to the recommendations of the Company’s Chief Executive Officer; the performance of the Company, its operating units and their respective executives; market factors such as the health of the economy and of the industries served by the Company; the availability of executive talent generally; executives’ length of service; internal assessments and recommendations regarding particular executives; and the succession planning initiatives of the Company.

Tally Sheets

Each year, the Company prepares and the Committee receives updated tally sheets on each executive officer and other senior members of management that show each individual’s historic, actual and expected levels of total compensation until a projected retirement age of 65. Among other things, these tally sheets lay out:

These tally sheets are used for two purposes. First, the Company uses the information as part of its retention efforts by communicating the underlying information to each executive officer and demonstrating to him the value in remaining with the Company until retirement. Second, the Committee uses these tally sheets in order to monitor executive compensation for each of the executive officers on a holistic level and to better understand each executive’s compensation standing over the expected life of his career, as well as the impact that current pay decisions have on other aspects of compensation, including pension amounts and severance benefits. The Committee generally does not use, and in fiscal 2010 did not use, the tally sheets to make specific compensation decisions with respect to the named executive officers or with respect to the specific design or modification of the Company’s compensation programs.

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Comparisons/Peer Group

In considering the competitiveness of the Company’s compensation levels, the Committee refers to outside data, including data in respect of a defined “peer group” of companies that the Company believes approximate the Company in one or more meaningful ways, which may include such other companies’ revenues, market capitalization, operational and geographical structure, and industries/markets, as well as third party considerations (e.g., as where members of the financial community treat a particular company as being a Company peer). As explained below, peer group data is not the only external data the Company considers for assessing the competitive nature of its compensation programs, and, as explained above, such competitive assessment itself is but one of the factors the Committee considers in establishing executive compensation.

The Company believes that the selection of a peer group to be used for assessing the competitiveness of its executive compensation levels is something that requires reconsideration every year. As a general rule, the Company expects to change certain members of the peer group from one period to another, as the Company refines its comparison criteria and as the Company and members of the peer group change in ways that make comparisons less or more appropriate.

In June 2009, the Company determined that Tecumseh Products should be removed from its peer group for fiscal 2010 comparison purposes due to its decline in market capitalization, and that Pall Corporation should be added due to its industry overlap with the Company and because it is generally considered as a Company peer by the financial community. No other changes to the peer group used in fiscal 2009 were made in respect of fiscal 2010. As such, the peer group used for purposes of fiscal 2010 compensation benchmarking was comprised of the following companies:

2010 Peer Group

Astec Industries, Inc.		Dresser-Rand Group Inc.		IDEX Corporation		Robbins & Myers, Inc.
Brady Corporation		EnPro Industries, Inc.		Kaydon Corporation		The Toro Company
Chart Industries, Inc.		ESCO Technologies Inc.		MSC Industrial Direct Co., Inc.		Valmont Industries, Inc.
CIRCOR International, Inc.		GATX Corporation		Nordson Corporation		Wabtec Corporation
Donaldson Company, Inc.		Graco Inc.		Pall Corporation

In addition to the peer group data which is drawn directly from publicly available proxy filings, the Company also uses compensation survey data that is provided by FWC and drawn from surveys of thousands of companies in connection with its competitive analysis. This survey data derives from national, general industry surveys and is scoped (i.e., reduced) by FWC to be representative of the revenue responsibility of the Company’s executive officers.

The Company believes that using both peer group and survey data provides a more comprehensive set of data on which to base comparisons of compensation practices and programs among companies. Because the peer group data derives from proxies filed with the SEC, the Company believes that such data is more transparent, but comes from a more limited sample size and may be more difficult to correlate to positions other than the Chief Executive Officer and Chief Financial Officer. Survey data, on the other hand, comes from a much larger sample size and may be more easily correlated to certain executive positions, but necessarily includes companies outside of a defined peer group.

Fiscal Year 2010 Compensation Analysis.

Using the peer group and survey data described above, the Committee asked FWC to prepare a comprehensive competitive assessment of the annual salary, target total cash compensation and target total direct compensation (which consists of the sum of annual salary, target annual cash incentives and the value of annual long-term incentive awards) for each of the Company’s executives, including the named executive officers. The results of this analysis showed that the Company’s total compensation levels were competitive relative to the survey data and slightly conservative relative to the peer group data — i.e., falling below the median compensation levels of the companies within the peer group — with several executives, including Mr. Wolfson, falling significantly below the median, particularly with respect to target cash compensation. Because Messrs. Fallon and Conway were not executive officers of the Company at the time this analysis was performed, they were not included.

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The Committee used this assessment as its starting point in making 2010 compensation decisions in respect of the executive officers and also considered various other factors with respect to these individuals, including their respective importance to the Company, their respective expected future contribution to the Company, their respective skill sets and performance to date, competitive pressures (i.e., “hire-away” risk), tenure, and the difficulty and cost of replacement.

Components of Executive Pay

The following is a discussion of each of the individual components of the Company’s executive compensation program, including how these components were implemented in respect of fiscal 2010.

Annual Salary.  The Company believes it is appropriate to provide its executives with a level of base salary commensurate with their respective experience, responsibilities and accomplishments. The Committee generally approves the salaries for the executive officers on an annual basis at a meeting of the Committee held early in the first quarter of the fiscal year.

Annual Salary Decisions for Fiscal 2010.

Based on the considerations previously discussed, the Committee approved increases to the annual salaries of the Company’s named executive officers at the outset of fiscal 2010. In light of the Company’s wage freeze and the fact that the average 2010 wage increase across the Company’s domestic operating units was limited to approximately 2%, the Committee determined that all of the named executive officers, other than Mr. Wolfson, should similarly receive a 2% base salary increase for 2010. As for Mr. Wolfson, the Committee noted that his cash compensation remained well below median on the basis of both peer group and survey data and determined that his performance justified an increase of 4%. The 2010 salary increases for the named executive officers were not made effective until April 2010, when the wage freeze was lifted.

Neither Mr. Fallon nor Mr. Conway were executive officers of the Company at the outset of fiscal year 2010. When Mr. Fallon was named Chief Financial Officer of the Company in March of 2010, the Committee did not increase any element of his compensation from their then-current levels, but instead decided to review them for fiscal year 2011. When Mr. Conway was named the President and Chief Operating Officer of the Company in June of 2010, the Committee approved a salary increase from $220,000 (his base salary as President of the Company’s PecoFacet operating business at the time of his promotion) to $275,000 per year for the balance of fiscal 2010.

As a result of the foregoing determinations, the fiscal 2010 salaries of the named executive officers compared with their fiscal 2009 salaries (rounded to the nearest thousand dollars in each case) were as follows:

Name		Fiscal 2010 Annual Salary				Fiscal 2009 Annual Salary				Percentage Increase
Norman E. Johnson		$	740,000			$	725,000				2	%
Sam Ferrise		$	353,000			$	346,000				2	%
David J. Fallon		$	255,000			$	250,000				2	%
Bruce A. Klein(1)		$	321,000			$	321,000				0
Richard M. Wolfson		$	260,000			$	250,000				4	%
Christopher L. Conway(2)		$	275,000			$	210,000				31	%

Performance-based cash incentive compensation.  The Company believes that a substantial portion of an executive officer’s cash compensation should be incentive-based. Therefore, the Company has implemented a cash incentive program that provides executive officers with the opportunity to earn cash incentive compensation for the achievement of annual goals. Such incentive-based cash compensation is contemplated under the Company’s 2009 Incentive Plan, which was approved by the shareholders of the Company on

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March 23, 2009. The aggregate maximum amount of performance-based incentive compensation, including cash, payable under the 2009 Incentive Plan in any fiscal year to any individual is $3,000,000.

The 2009 Incentive Plan allows the Company and the Committee to implement a broad variety of performance-based cash incentive plans and programs. In accordance with the 2009 Incentive Plan, the Company traditionally uses the CLARCOR Value Added Incentive model (“CVA Model”) to determine incentive-based cash compensation. The Company uses the CVA Model for purposes of determining cash incentive compensation not only for the named executive officers, but also for approximately 100 senior management employees of the Company and its various subsidiaries.

Pursuant to the CVA Model, annual cash incentive awards are based upon the achievement of specified corporate and operating unit profit goals using an objective formula (the “CVA Formula”), although the Committee retains discretion to make adjustments as discussed further below. The CVA Formula effectively measures the amount by which the Company’s after-tax earnings exceed the Company’s cost of capital in relation to the assets under management’s control. As a result, the CVA Model is designed to reward the effective deployment of the Company’s capital. Moreover, because the CVA Model is an earnings-based program, compensation paid under the program is by definition self-funding and must “pay for itself” each year.

The CVA Model and CVA Formula are conceptually discussed in detail below. Following this discussion, we discuss how the CVA Model and CVA Formula were applied in respect of fiscal year 2010.

The CVA Model and CVA Formula — Conceptual Discussion

The CVA Formula is as follows:

(Budgeted Operating Profit × 61%) - (Budgeted Net Managed Assets × 13.2%) = Target CVA

In the CVA Formula, the 61% factor represents a deemed 39% tax rate, and the 13.2% factor represents the Company’s deemed cost of capital. These numbers are held constant from year to year so as to allow for meaningful comparisons across years, and do not necessarily reflect the Company’s actual tax rate or cost of capital in any given year. For fiscal 2010, the Company’s budgeted operating profit and budgeted net managed assets for compensation purposes were approximately $116 million and $400 million, respectively, and Target CVA was therefore approximately $18 million.

The variable factors in the CVA Formula are the Company’s budgeted operating profit and its budgeted net managed assets. As a general rule, the budgets of each significant operating unit and the Company as a whole contemplate that revenue and profit will grow over prior year levels, although this is not always the case.

The Company’s budgeted operating profit and budgeted net managed assets used for CVA purposes are drawn directly from the Company’s annual budget, which is reviewed and approved by the Board of Directors. On rare occasions the Committee may set the Company’s consolidated budgeted operating profit for CVA purposes at a level different from the consolidated operating profit established under the annual budget, if the Committee believes that the consolidated annual budget is too aggressive or conservative for compensation purposes. This occurred in fiscal 2010, when the Committee established budgeted operating profit at $116 million for CVA purposes while the Company’s fiscal 2010 annual budget called for operating profit of $112 million, thus making the achievement of CVA targeted operating profit more difficult.

Payouts under the CVA Model are divided into “Levels” of CVA performance. “Level 1” represents the entry point — i.e., the Level that must be achieved before payouts can occur. “Level 6” represents the achievement of Target CVA under the CVA Formula and “Level 10” represents the achievement of some point in excess of Target CVA, as discussed in the next paragraph. Only the target percentage of an individual’s salary for a certain level of performance differs among employees whose incentive compensation is determined through the use of the CVA Model (e.g., for some members of senior management, the achievement of target CVA may equate to a payout equal to 25% of their salary, while for the named executive officers it ranged between 30% and 85% in fiscal 2010.)

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The Company establishes, and the Committee approves, the Target CVA “Level 6” each year by applying the CVA Formula to the Company’s budgeted pre-tax operating profit and its budgeted net managed assets for that year. The Company then establishes “Level 1” and “Level 10” by applying a particular percentage approved by the Committee to the Company’s budgeted pre-tax operating profit, and then running the resulting number through the CVA Formula. In fiscal 2010, “Level 1” and “Level 10” were established by multiplying the Company’s budgeted pre-tax operating profit by 85% and 110%, respectively (the same percentages as used in the last several fiscal years), and then applying the CVA Formula, as follows:

Level*		Budgeted 2010 Operating Profit**		Resulting CVA**
1		$116 million × 85% = $99 million		$7 million
6		$116 million		$18 million
10		$116 million × 110% = $128 million		$25 million

In the event that the Company’s actual operating profit is greater than the amount established for Level 10 (110% in fiscal 2010), then the resulting CVA level is determined on a straight-line basis using the same increments as used in calculating differences between Levels 6 and Level 10. For example, in fiscal 2010, where Level 6 was set at 100% of budgeted operating profit and Level 10 was set at 110% of budgeted operating profit, the differential was 2.5% of budgeted operating profit per Level (i.e., from Level 6 to Level 7, from Level 7 to Level 8, etc.) This means that Level 11 was achieved by attaining 112.5% of budgeted operating profit (i.e., the Level 10 operating profit percentage threshold of 110%, plus 2.5%), Level 12 was achieved by attaining 115% of budgeted operating profit (i.e., the Level 11 operating profit percentage threshold of 112.5%, plus 2.5%), etc.

The Committee does not have any formal method for establishing the Level 1 and Level 10 percentages, but may consider a variety of factors, including a desire to maintain these percentages consistent with prior years, management’s recommendations, the economic climate, the Committee’s perception of how likely the Company or a subsidiary is to achieve its overall budget, and the prior years’ performance of the Company and its subsidiaries. For fiscal 2010, the Committee based its decision on all of the foregoing factors.

With respect to determining payouts above Level 10, the CVA Model is designed to strike a balance between incentivizing management (including the named executive officers) to continue to achieve as much as possible, while recognizing that at least some portion of such achievement may be due to reasons beyond management’s control or influence (e.g., an improvement in general economic conditions or a dramatic demand improvement in a key end-market of a particular subsidiary). This is achieved by calculating the difference between Levels beyond Level 10 (e.g., from Level 10 to Level 11 and from Level 11 to Level 12, etc.) on a straight-line basis, but limiting the amount of extra reward that an employee receives above Level 10 to a fixed additional percentage of his or her payout at Level 10. (This fixed additional percentage was 10% in fiscal 2010.) In other words, the relative benefit to an individual for achieving Level 10 is greater than the benefit of achieving beyond Level 10. The table below entitled “Potential Cash Incentive Payments To Named Executive Officers In Respect Of Fiscal 2010” illustrates this concept. Irrespective of achievement, however, no individual may receive a payout that would put him above the $3,000,000 cap on performance-based incentive compensation mandated by the 2009 Incentive Plan. As such, the highest possible payout to any individual is $3,000,000.

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The fixed additional percentage for moving above Level 10 (10% in fiscal 2010 for each level above Level 10) is established each year by the Committee and is applicable to the named executive officers and all of the approximately 100 senior management employees whose incentive cash compensation is ultimately determined under the CVA Model. The Committee does not have any formal method for establishing this fixed percentage, but may consider a variety of factors, including management’s recommendations, the Committee’s sense of how much of any incremental operating profit should be shared with management versus the Company’s shareholders, the economic climate, the Committee’s perception of how likely the Company or a significant subsidiary is to achieve its overall budget, and the prior years’ performance of the Company and significant subsidiaries. For fiscal 2010, the Committee based its decision on all of the foregoing factors.

As indicated above, the two variable elements of the CVA Formula are the Company’s operating profit and the amount of its “net managed assets”, which include current and long-term assets and liabilities deemed largely to be under the control of management. To encourage management to accurately budget capital spending each year, and to discourage any attempt to artificially inflate CVA performance by deferring such budgeted capital spending into a future year, the Company adjusts the Company’s net managed assets upward (which lowers CVA) if management fails to achieve at least 80% of budgeted capital spending. It does this by deeming a portion of such spending to have occurred for purposes of calculating CVA achievement for the year in question.

At the end of the fiscal year the Company calculates the CVA achievement for that year for each of its subsidiaries and for the Company on a consolidated basis, by drawing each of these numbers from the Company’s independently audited financial statements. Under normal circumstances, the Company does not pay incentive cash compensation to any individual, including the named executive officers, until the audit is complete in January. In light of uncertainty regarding U.S. federal personal income tax rates for calendar year 2011, however, the Company altered this timing with respect to fiscal year 2010 payouts, as discussed in detail further below.

The Committee retains discretion to modify or eliminate the CVA Model and the CVA Formula or any of the elements thereof in respect of any given fiscal year. For example, the Committee may include or exclude extraordinary items of revenue, expense, assets or liabilities in determining the final calculations of cash incentive payments and calculations under the CVA Model. The Committee does not exercise this discretion often (historically once every few years) and does not follow any formula or give a pre-determined weight to any individual factor in doing so. The Committee did not make any adjustments to the CVA Model or CVA Formula in respect of either fiscal 2009 or fiscal 2010.

The Company believes that the historical results of the CVA Model support its view that the budgeted performance numbers are realistic targets which are neither overly aggressive nor easy to achieve, although the unusual economic conditions that prevailed in fiscal 2009 and fiscal 2010 made budgeting more difficult than usual and produced larger-than normal swings in CVA results. The following table shows the Company’s CVA achievement over the previous ten fiscal years, as well as the average over that period and over the last five fiscal years:

Fiscal Year		CVA Level
2001			0
2002			8.6
2003			12.1
2004			10.7
2005			9.4
2006			5.7
2007			1.8
2008			5.7
2009			0
2010			16.0
Ten Year Average (last ten fiscal years)			7.0
Five Year Average (last five fiscal years)			5.8

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Performance Based Cash Incentives in Respect of Fiscal 2010

At the outset of fiscal 2010, the Company intended that any incentive cash compensation paid would satisfy any applicable requirements as performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code of 1986 (“Section 162(m)”), as amended. Accordingly, during the first fiscal quarter of 2010 the Company established and the Committee approved maximum target payouts for total cash incentive compensation for the named executive officers that were based on the Company’s budgeted fiscal 2010 net earnings. The maximum target payout for Mr. Johnson was established at 4.04% of net earnings and for each of the other named executive officers at 1.35% of net earnings.

Recognizing that these maximum target payouts would likely result in the named executive officers receiving cash incentive amounts in excess of what the Committee believes are appropriate levels, the Committee indicated to management that it expected to use its discretion to reduce the cash incentive compensation payable to the executives for fiscal 2010 to levels below the foregoing maximum amounts. The Committee further communicated to the executives to expect that it would set final cash incentive compensation in accordance with historical practice by using the CVA Model and CVA Formula.

In December of 2010, the Committee confirmed the foregoing decisions and analyzed the Company’s fiscal 2010 CVA results. The Committee noted that fiscal 2010 was a historic year for the Company, as the Company and various of its operating businesses achieved some of the highest levels of financial performance in various key areas in the Company’s more than 100-year history. Earnings per share were the highest in corporate history, eclipsing the previous record set in 2008 by more than 2 cents per share. The Company’s consolidated gross margin percentage of 33.5% was its highest in nineteen years, and its consolidated operating margin of 14.3% tied with its highest level since 1992. Sales were the second highest in the Company’s history, trailing only the Company’s record year in fiscal 2008. As a result of this performance, the Company attained the highest level of CVA achievement in its history — Level 16. While individual operating businesses have occasionally achieved this level of CVA performance prior to fiscal 2010, the Company on a consolidated basis has not.

As noted above, all of the named executive officers other than Mr. Conway and Mr. Ferrise were paid on the basis of the Company’s consolidated CVA results (Level 16). Mr. Ferrise was paid 80% on the basis of the CVA Results of Baldwin Filters, the subsidiary for which Mr. Ferrise is President, and 20% on the basis of the Company’s consolidated CVA results. Baldwin Filters achieved a CVA Level of 12.5. Mr. Conway’s payout was prorated between the seven months he spent as the President of the Company’s PecoFacet business unit, and the five months he spent as the President and Chief Operating Officer. For the seven months he served as President of PecoFacet, Mr. Conway’s payout was based 80% on the basis of the CVA results of PecoFacet, and 20% on the basis of the Company’s consolidated CVA results. For the five months he served as President and Chief Operating Officer of the Company, Mr. Conway’s payout was based 100% on the basis of the Company’s consolidated CVA results. PecoFacet achieved a CVA Level of 8.0.

As result of the Company achieving a consolidated CVA Level of 16, the cash incentive payments to all employees whose cash incentive compensation is determined by reference to the Company’s consolidated CVA results, including the named executive officers, were the highest in the Company’s history. The Committee reviewed the CVA results and corresponding payout amounts and determined that they were appropriate. In reaching this determination, the Committee noted the following:

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Although it has been the Company’s practice not to pay out incentive-based cash compensation until the audited financial results of the Company have been finalized, the Company and the Committee decided to alter this practice in respect of fiscal 2010 in light of uncertainty regarding U.S. federal personal income tax rates for calendar year 2011. Because of this uncertainty, the Company determined that it would be beneficial from a human resources perspective for fiscal year 2010 incentive compensation to be paid following the end of the Company’s 2010 fiscal year, but prior to the end of the 2010 calendar year; i.e., based on final, but unaudited results. (At the time this decision was made, federal legislation had not yet been adopted maintaining 2011 rates at 2010 levels.) There was no cost to the Company to make the early payment, and because the Company’s fiscal year ends on or about November 30, the payment was only accelerated by 3 – 4 weeks.

Before allowing early payment, however, the Company and the Committee required that any individual receiving incentive cash compensation prior to the completion of the audit, including the executive officers, agree in writing that (i) the amount paid to such individual would be subject to clawback or increase, as the case may be, if CVA determined under Company’s audited financial results were less than or greater than CVA determined under the Company’s unaudited results, and (ii) the Company would be authorized to withhold any clawback amounts from future wages. No early payment was made to any individual who did not agree in writing to these terms. It should be noted that the audited results of the Company confirmed the payout levels, and no individual was in fact subjected to a clawback.

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The range of potential CVA awards payable in respect of fiscal 2010 for each named executive officer is shown in the following table:

POTENTIAL CASH INCENTIVE PAYMENTS TO NAMED EXECUTIVE OFFICERS
IN RESPECT OF FISCAL 2010

Attainment of Budgeted Performance(1)(2)		Percentage of Annual Salary Payable to Mr. Johnson				Percentage of Annual Salary Payable To Mr. Conway(3)				Percentage of Annual Salary Payable to Mr. Ferrise				Percentage of Annual Salary Payable to Mr. Fallon				Percentage of Annual Salary Payable to Mr. Klein(5)				Percentage of Annual Salary Payable to Mr. Wolfson
Less than 85%			0				0				0				0				0				0
85% (Level 1)			10	%			10	%			10	%			10	%			10	%			10	%
100% (Level 6)			85	%			50	%			50	%			30	%			50	%			40	%
110% (Level 10)			212.5	%			125	%			125	%			75	%			125	%			100	%
125% (Level 16)(4)			340	%			200	%			200	%			120	%			200	%			160	%

Long-term equity incentive compensation.  The Company’s equity-based awards program encourages executives to work towards making business decisions that, over the long term, should increase the price of the Company’s stock, thereby aligning the interests of executives and shareholders. All equity-based awards are made pursuant to the provisions of incentive plans approved by the Company’s shareholders. Equity-based awards include a combination of stock options and restricted stock units.

The Committee typically approves equity-based awards to eligible employees (including the named executive officers) only once per year. The annual award is typically made at the first Committee meeting of the fiscal year, which is normally held within the first three weeks of the fiscal year and scheduled a year in advance of the meeting date, and after the Committee has received input from its independent advisors and the recommendations of the Chief Executive Officer (with respect to awards made to executive officers other than himself). The Committee may make an exception to this general policy of only granting equity awards at the first Committee meeting of the fiscal year in the event that a new executive officer is hired or an executive officer receives a promotion. As a practical matter, the Committee considers and individually approves equity awards made to approximately 10 to 15 of the Company’s most senior executives (including the Chief Executive Officer, the Chief Financial Officer and all other executive officers of the Company), and then approves a pool of equity-based incentives to be granted to other individuals throughout the Company at the discretion of the Chief Executive Officer.

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Once granted, options are not repriced or “reloaded”.

Grants of both stock options and restricted stock units normally vest annually in equal installments over four years in order to encourage executive officers’ continued service to the Company. Until the restricted stock units vest, the recipient does not have any rights as a shareholder of the Company other than the right to receive a cash payment equal to the dividends payable on the underlying shares of common stock. The Company values stock option grants by calculating their Black-Scholes values on the date of grant and the value of restricted stock units by calculating their aggregate market value as of the date of grant. While the Company has no formal policy in this regard, over the past several years the Company has awarded executive officers approximately 75% of the value of their equity-based compensation in the form of stock options and 25% in the form of restricted stock units, with the number of stock options remaining generally consistent (within a range of 15%) from year to year. The value of equity-based awards is included in the Company’s analysis of the executive officer’s total direct compensation and is considered as part of the Company’s benchmarking process.

At the outset of fiscal year 2010 (on December 13, 2009 in the case of all executive officers other than Mr. Fallon and on January 12, 2010 in the case of Mr. Fallon), non-qualified options for the purchase of the Company’s common stock and restricted stock units were granted to our named executive officers pursuant to the 2009 Incentive Plan, as follows:

Name		Shares Subject to Time-Based Vesting Option Grant				Exercise Price(1)				Number of Time-Based Vesting Restricted Stock Units
Norman E. Johnson			120,000			$	32.30				14,617
Bruce A. Klein(2)			20,000			$	32.30				1,812
Sam Ferrise			35,000			$	32.30				3,906
David J. Fallon(3)			2,735			$	33.96				0
Richard M. Wolfson			25,000			$	32.30				2,097
Christopher L. Conway			15,000			$	32.30				1,419

Grants of time vested restricted stock units are not deemed “performance based compensation” under Section 162(m), as an executive officer will realize at least some value from the grant of such units even if the market value of the Company’s common stock declines over the vesting period.

Perquisites.  The Company’s officers receive the following limited perquisites, which the Committee annually reviews and which the Company believes are important to attracting and retaining executive talent, including the named executive officers.

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In keeping with the commitment that the Company made to its shareholders in its proxy statement filed in connection with the 2010 Annual Meeting last year, fiscal 2010 was the last year that the Company paid tax gross-ups associated with these perquisites, and the Company no longer pays them.

No executive officer other than the Chief Executive Officer may use Company aircraft for non-business purposes, although on rare occasions the Company may permit an executive officer other than the Chief Executive Officer to bring his or her spouse on a business trip. In such case, IRS regulations may require the Company to treat this as a personal benefit to the executive (depending on the number of Company personnel on the aircraft) and the Company would bear the expense of providing such benefit. This did not occur with any named executive officer in fiscal 2010.

Although the Company does not have a written policy regarding the non-business use of Company aircraft by the Chief Executive Officer, such non-business use occurs infrequently. Indeed, Mr. Johnson, the Company’s Chief Executive Officer, did not use the Company plane at all during fiscal 2010 for non-business purposes. If he had, the cost of any non-business flight would have been borne by the Company, but an amount calculated in accordance with applicable IRS regulations would have been included in his gross income for the year and he would have borne all associated taxes.

The value of the perquisites and other benefits payable to the named executive officers is set forth in the “Summary Compensation Table” under the heading “All Other Compensation.”

Executive Insurance Benefits

The Company pays the premiums for supplemental life insurance policies owned by Mr. Johnson and certain other senior members of management who are not named executive officers, which will pay their respective beneficiaries an amount equal to approximately two times their respective base salaries upon their deaths. Prior to his retirement in fiscal 2010, the Company paid the premiums for a similar policy for Mr. Klein. In keeping with the Company’s commitment to its shareholders in last year’s proxy statement, fiscal 2010 was the last year that the Company paid tax gross-ups associated with these premium payments, and the Company no longer pays them.

In addition, the Company itself owns life insurance policies on Mr. Johnson and certain other senior members of management who are not named executive officers, which will pay their respective named beneficiaries an additional amount equal to approximately two times their respective base salaries upon their deaths, with any remainder going to the Company. Prior to his retirement in fiscal 2010, the company owned a similar policy on Mr. Klein, which Mr. Klein purchased in accordance with the terms of the policy following his retirement.

The foregoing supplemental life insurance benefits are provided to Mr. Johnson and the other individuals referenced above in order to compensate them for the loss of a benefit provided under a legacy supplemental life insurance program that is no longer in effect.

The Company also provides each of the named executive officers (and certain other members of management who are not executive officers) with supplemental disability insurance coverage totaling between approximately 75% and 110% of their respective cash compensation in the event they are disabled. The precise level of coverage depends on the nature and severity of the disability. Under the disability program available to employees generally, this amount would otherwise be capped at 50%.

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The value of the Company-paid insurance premiums and any amounts described above are included in the “Summary Compensation Table” under the heading “All Other Compensation” and further broken down in the table entitled “All Other Compensation”. The Company believes that the provision of the extra insurance coverage described above to the Company’s named executive officers is an important element in attracting and retaining executive officers.

Retirement Plans

The Company’s various retirement plans serve an important role in retaining the Company’s executives. The Company balances the effectiveness of these plans as a compensation and retention tool with the cost of providing them. A full description of these plans and the named executive officers’ participation therein is set forth in this Proxy Statement under the heading “Retirement Plans”, and the estimated total annual retirement benefits payable to the named executive officers is described in the Pension Benefits Table.

As discussed in greater detail under the heading “Retirement Plans” below, the Company maintains a 1994 Executive Retirement Plan, which was amended and restated with an effective date of January 1, 2008 solely to comply with Section 409A of the Internal Revenue Code of 1986 (“409A”). Only Mr. Johnson currently participates in the Executive Retirement Plan, although Mr. Klein participated prior to his retirement. Under the terms of the Executive Retirement Plan, Mr. Johnson will be eligible upon his retirement to receive (and, following his retirement, Mr. Klein received) a lump sum payment of his benefits under the Executive Retirement Plan. The amount of these payouts is calculated with reference to an interest rate published on a monthly basis by the Pension Benefit Guaranty Corporation (“PBGC rate”) in effect on the date of their respective retirements.

To avoid creating incentives for Mr. Johnson or Mr. Klein to retire based upon the PBGC rate in effect at any given time, the Committee recommended to the Board, and the Board resolved at the outset of fiscal 2010, to amend the Executive Retirement Plan to switch to a 3-year average PBGC rate rather than the “spot” rate in effect on the date of an executive’s retirement. Because this change could negatively impact Messrs. Johnson and Klein (i.e., they could receive less than they would have otherwise received had the change not been implemented), their consent was required in order for the change to take effect. Both Messrs. Johnson and Klein granted such consent voluntarily.

Employment and Change of Control Agreements

When Mr. Johnson was named Chairman and Chief Executive Officer of the Company in 2000, the Company entered into an amended employment agreement with Mr. Johnson. Mr. Johnson’s employment agreement was amended again on January 23, 2008 when Mr. Johnson voluntarily agreed to give up a right to receive a special bonus associated with the Company having achieved certain revenue and profitability targets. Mr. Johnson’s employment agreement was amended again on December 29, 2008 principally so as to ensure compliance with 409A.

Mr. Johnson’s employment agreement, as amended, provides that Mr. Johnson will be employed as the Company’s Chairman, President and Chief Executive Officer. Mr. Johnson is entitled to receive an annual salary (currently $765,000), and to have such salary increased annually at the discretion of the Committee. Mr. Johnson is eligible to participate in all executive incentive plans and in all employee benefit and retirement plans available within the Company, as well as all perquisites made available to executive officers of the Company. Mr. Johnson’s agreement, as amended, expires on the date of the 2011 Annual Meeting. His agreement is extended automatically each year thereafter unless the agreement is terminated by the Board.

The termination provisions of Mr. Johnson’s agreement and the economic consequences of termination and change of control of the Company are discussed further below under the heading “Potential Payments Upon Termination or Change of Control”. The Committee reviews Mr. Johnson’s employment agreement on an annual basis as well as the economic and business ramifications to the Company of failing to renew it. Because the employment agreement was entered into in 2000 and constitutes a binding obligation of the Company, the Company does not have the ability to unilaterally modify its terms. As such, the Committee does not consider individual terms of Mr. Johnson’s employment agreement in its assessment or determination of Mr. Johnson’s annual compensation.

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The Company has entered into Change of Control Agreements with each of the named executive officers and with various members of management other than the named executive officers. The change of control provisions of these agreements and the economic consequences of such a change of control for each of the named executive officers are discussed further below under the heading “Potential Payments Upon Termination or Change of Control.” No such agreements were entered into or amended in fiscal 2010. Because the Change of Control Agreements constitute a binding obligation of the Company, the Company does not have the ability to unilaterally modify their terms, and the Committee does not consider individual terms of these agreements in its assessment or determination of an executive officer’s annual compensation.

The Company believes that the protections afforded through the termination and change of control provisions of the Company’s agreements with the Company’s named executive officers are an important element in attracting and retaining executive officers.

Stock Ownership Guidelines

The Company has established stock ownership guidelines for executive officers. These guidelines require that executive officers, after a five-year period from the time they become executive officers, own Company common stock with a value ranging from a minimum of two times annual salary for officers at the level of corporate vice president to a minimum of four times annual salary for the Company’s Chief Executive Officer. In each case, shares subject to in-the-money options granted to an officer as well as grants of restricted stock units count toward the fulfillment of these guidelines. The Committee oversees these guidelines and reviews each covered executive’s standing in respect of the same once per year. In January of 2011, the Committee determined that all of the Company’s executives complied with the guidelines based on their respective years of employment of the Company.

Compensation Decisions for 2011

During fiscal 2010, the Company undertook several decisions in respect of executive compensation for 2011, as follows:

Salaries

In December of 2010, the Committee approved merit increases in salary for all of the named executive officers. In recognition of their fiscal 2010 performance and fact that their base salaries were (and remain) significantly below median, the Committee authorized an increase in the base salaries of Messrs. Conway, Fallon and Wolfson of 18%, 8% and 5%, respectively. The Committee authorized a merit increase of 3% for Mr. Johnson and 4% for Mr. Ferrise based on their fiscal 2010 performance.

Equity Grants

With respect to equity-based incentives, on December 13, 2010 (which is at the outset of fiscal 2011), the Committee approved grants of stock options and restricted stock units to the named executive officers as set forth in the following table. All stock options and restricted stock units reflected below are subject to the Company’s normal 4-year vesting schedule and were granted at the grant date closing price of $42.86.

Fiscal Year 2011 Option and RSU Grants

Name		Stock Options (#)				Restricted Stock Units (#)
Norman E. Johnson			120,000				13,169
Bruce A. Klein			0				0
Sam Ferrise			35,000				3,141
David J. Fallon			25,000				1,683
Christopher L. Conway			40,000				2,774
Richard M. Wolfson			25,000				1,665

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Deductibility of Executive Compensation

In establishing executive compensation, the Company considers its deductibility under Section 162(m) of the Internal Revenue Code, which provides that the Company may not deduct non-performance based compensation of more than $1,000,000 that is paid to certain individuals. The Company believes that compensation paid under its incentive plans is generally fully deductible for federal income tax purposes other than with respect to amounts realized in respect of time based vested restricted stock units. However, in certain situations, the Committee may approve compensation that will not meet these requirements in order to ensure competitive levels of total compensation for its executive officers.

Compensation Committee Report

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Robert H. Jenkins, Chairman
James W. Bradford, Jr.
Robert J. Burgstahler
Paul Donovan

The foregoing report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference the Proxy Statement into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.

Compensation Risk Assessment

As discussed earlier in this proxy statement, the Compensation Committee is responsible for overseeing risks associated with the Company’s compensation programs. The Compensation Committee discharges this responsibility by reviewing participation in and the mechanics of the Company’s various short-and long-term incentive programs as well as other executive compensation related practices and policies. In addition, the Audit Committee’s annual formal assessment of the risks facing the Company specifically includes a review of compensation-related risks, and the results of this assessment are communicated to and considered by the entire Board. Based on this assessment and the other factors discussed below, the Company and the Compensation Committee believe that the Company’s compensation programs and policies for its employees do not incentivize employees to take excessive risks and do not create risks that are reasonably likely to have a material adverse effect on the Company.

The Company further believes that various elements of its compensation programs and policies help mitigate risk to the Company, including the following:

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SUMMARY COMPENSATION TABLE

Name and Principal Position		Year				Salary(1) ($)				Stock Awards(2) ($)				Option Awards(3) ($)				Non-Equity Incentive Plan Compensation(4) ($)				Change in Pension Value and Non Qualified Deferred Compensation Earnings(5) ($)				All Other Compensation(8) ($)				Total ($)
Norman E. Johnson Chairman, President and CEO			2010				734,481				472,129				938,400				2,501,917				960,089				218,239				5,825,255
			2009				725,962				516,285				864,000				—				4,276,625				219,048				6,601,920
			2008				723,077				456,000				1,130,400				551,129				—				213,359				3,073,965
Bruce A. Klein Former Vice President – Chief Financial Officer			2010				161,916				58,528				156,400				324,439				0	(6)			54,342				755,625
			2009				321,731				126,596				288,000				—				1,802,980				81,585				2,620,892
			2008				320,640				115,240				376,800				153,394				—				84,178				1,050,252
David J. Fallon Vice President – Chief Financial Officer(7)			2010				253,269				—				25,490				304,493				—				27,265				610,517
Sam Ferrise President, Baldwin Filters, Inc.			2010				350,638				126,164				304,850				579,868				11,056				38,127				1,410,703
			2009				346,511				136,135				273,700				—				67,667				33,913				857,926
			2008				345,088				124,105				329,700				100,821				—				40,192				939,906
Christopher L. Conway President and Chief Operating Officer(7)			2010				242,500				45,834				130,650				368,670				—				35,417				823,071
Richard M. Wolfson Vice President – General Counsel and Corporate Secretary			2010				259,231				67,733				217,750				415,547				—				33,731				993,992
			2009				250,962				75,132				195,500				—				—				35,094				556,688
			2008				247,969				64,022				204,414				83,442				—				29,772				629,619

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“ALL OTHER” COMPENSATION

																						Perquisites and Personal Benefits (5)																Total “All Other Compensation” ($)
		401(k) Match(1) ($)				Insurance Premiums Paid(2) ($)				Dividends Paid(3) ($)				Tax Gross-Ups(4) ($)				Company Car ($)				Financial Planning ($)				Physical Exam ($)				Non-Business Aircraft Usage ($)				Miscellaneous(6) ($)
Norman E. Johnson			3,675				80,981				51,384				52,435				21,769				4,850				3,145				—				—				218,239
Bruce A. Klein			2,058				2,439				3,204				4,795				7,238				4,608				—				—				30,000				54,342
David J. Fallon			9,800				1,246				—				1,439				10,780				4,000				—				—				—				27,265
Sam Ferrise			9,800				5,105				3,818				2,306				14,588				675				1,835				—				—				38,127
Christopher L. Conway			9,800				2,285				1,440				3,163				9,886								376				—				8,467				35,417
Richard M. Wolfson			9,800				1,046				2,262				4,005				12,618				4,000				—				—				—				33,731

As discussed, the match under these plans is now discretionary and occurs following the end of the fiscal year. The amounts in this column were thus paid after the end of fiscal 2010, but since they correspond to contributions made by the officers during fiscal 2010, they are included in this column.

Because the Company match under the new 401(k) plan is now discretionary, the named executive officers likely will have to forfeit some portion of the Company match in order for the plan to comply with IRS rules regarding “top-heavy” plan participation. The amounts shown in this column thus represent a maximum match figure based on the named executive officers’ respective contributions to the plan. Their actual match amounts will be determined during the course of fiscal 2011 and are likely to be lower.

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GRANTS OF PLAN-BASED AWARDS FOR FISCAL YEAR 2010

						Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)												All Other Stock Awards: Number of Shares of Stock or Units(5) (#)				All Other Option Awards: Number of Securities Underlying Options(6) (#)				Exercise or Base Price of Option Awards(7) ($)				Grant Date Fair Value of Stock and Option Awards(8) ($)
Name		Grant Date				Threshold(2) ($)				Target(3) ($)				Maximum(4) ($)
Norman E. Johnson
Annual Cash Incentive Plan						$	72,500			$	616,250			$	3,000,000
Restricted Stock Units			12/13/2009																14,617											$	472,129
Stock Options			12/13/2009																				120,000			$	32.30			$	938,400
Bruce A. Klein
Annual Cash Incentive Plan						$	32,136			$	160,680			$	648,878
Restricted Stock Units			12/13/2009																1,812											$	58,528
Stock Options			12/13/2009																				20,000			$	32.30			$	156,400
David J. Fallon
Annual Cash Incentive Plan						$	25,000			$	75,000			$	304,493
Restricted Stock Units
Stock Options			1/12/2010																				2,735			$	33.96			$	25,490
Sam Ferrise
Annual Cash Incentive Plan						$	34,611			$	173,056			$	701,539
Restricted Stock Units			12/13/2009																3,906											$	126,164
Stock Options			12/13/2009																				35,000			$	32.30			$	304,850
Christopher L. Conway
Annual Cash Incentive Plan						$	22,000			$	99,000			$	462,282
Restricted Stock Units			12/13/2009																1,419											$	45,834
Stock Options			12/13/2009																				15,000			$	32.30			$	130,650
Richard M. Wolfson
Annual Cash Incentive Plan						$	26,000			$	104,000			$	415,547
Restricted Stock Units			12/13/2009																2,097											$	67,733
Stock Options			12/13/2009																				25,000			$	32.30			$	217,750

As discussed in the description of the CVA Model in the Compensation Discussion and Analysis, Level 16 is a level at which all of the named executive officers were paid out other than (i) Mr. Ferrise (who was paid out based primarily on the results of Baldwin Filters, which achieved a level below Level 16), and (ii) Mr. Conway (who was paid out based in part on the results of the Company’s PecoFacet business unit, which achieved a level below Level 16). The consolidated Level 16 achieved in fiscal 2010 was the highest level achieved in the Company’s history, and the Company believes it is reflective of a realistic maximum payout that a named executive officer could likely receive.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2010

		Option Awards(1)																								Stock Awards(2)
						Number of Securities Underlying Unexercised Options (#)								Option Exercise Price ($)				Option Expiration Date								Number of Shares or Units of Stock Held That Have not Vested (#)				Market Value of Shares or Units of Stock Held That Have not Vested(3) ($)
Name		Grant Date				Exercisable				Unexercisable												Grant Date
Norman E. Johnson			12/16/2001				27,500								13.75				12/15/2011
			12/15/2002				60,000								16.15				12/14/2012
			12/14/2003				90,000								22.80				12/13/2013
			6/30/2004				41,986								22.57				12/15/2011
			6/30/2004				24,832								22.57				12/14/2012
			12/12/2004				120,000								26.08				12/11/2014
			6/21/2005				18,321								28.96				12/15/2011
			6/21/2005				21,567								28.96				12/14/2012
			6/21/2005				25,945								28.96				12/13/2013
			11/18/2005				120,000								28.79				11/17/2015
			12/17/2006				90,000				30,000				33.75				12/16/2016				12/17/2006				3,108				127,428
			12/16/2007				60,000				60,000				36.48				12/15/2017				12/16/2007				6,250				256,250
			12/14/2008				30,000				90,000				32.78				12/13/2018				12/14/2008				11,812				484,292
			12/13/2009								120,000				32.30				12/12/2019				12/13/2009				14,617				599,297
Bruce A. Klein			12/12/2004				44,000								26.08				5/31/2013
			11/18/2005				39,625								28.79				5/31/2013
			12/17/2006				40,000								33.75				5/31/2013
			12/16/2007				40,000								36.48				5/31/2013
			12/14/2008				40,000								32.78				5/31/2015
			12/13/2009				20,000								32.30				5/31/2015
David J. Fallon			1/12/2010								2,735				33.96				1/11/2020
Sam Ferrise			12/14/2003				35,000								22.80				12/13/2013
			12/12/2004				35,000								26.08				12/11/2014
			6/23/2005				6,458								29.09				4/1/2011
			6/23/2005				6,222								29.09				12/15/2011
			11/18/2005				35,000								28.79				11/17/2015
			12/17/2006				26,250				8,750				33.75				12/16/2016				12/17/2006				884				36,244
			12/16/2007				17,500				17,500				36.48				12/15/2017				12/16/2007				1,700				69,700
			12/14/2008				8,750				26,250				32.78				12/13/2018				12/14/2008				3,115				127,715
			12/13/2009								35,000				32.30				12/12/2019				12/13/2009				3,906				160,146
Christopher L. Conway			8/28/2006				2,000								28.13				8/27/2016
			12/17/2006				1,125				375				33.75				12/16/2016
			12/16/2007				2,500				2,500				36.48				12/15/2017				12/16/2007				369				15,129
			12/14/2008				2,500				7,500				32.78				12/13/2018				12/14/2008				1,100				45,100
			12/13/2009								15,000				32.30				12/12/2019				12/13/2009				1,419				58,179
Richard M. Wolfson			1/27/2006				3,000								34.40				1/26/2016
			12/17/2006				16,275				5,425				33.75				12/16/2016				12/17/2006				424				17,384
			12/16/2007				10,850				10,850				36.48				12/15/2017				12/16/2007				877				35,957
			12/14/2008				6,250				18,750				32.78				12/13/2018				12/14/2008				1,719				70,479
			12/13/2009								25,000				32.30				12/12/2019				12/13/2009				2,097				85,977

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OPTION EXERCISES AND STOCK VESTED DURING FISCAL YEAR 2010

		Option Awards								Stock Awards
Name of Executive Officer		Number of Shares Acquired on Exercise (#)				Value Realized Upon Exercise(1) ($)				Number of Shares Acquired on Vesting (#)				Value Realized on Vesting(2) ($)
Norman E. Johnson			85,836				1,262,377				10,172				334,455
Bruce A. Klein			147,043				2,281,572				9,812	(3)			346,857
David J. Fallon			—				—				—				—
Sam Ferrise			—				—				2,774				91,209
Christopher L. Conway			—				—				551	(4)			18,117
Richard M. Wolfson			—				—				1,437	(5)			47,249

Retirement Plans

Certain employees of the Company and its subsidiaries, including several of the named executive officers, are eligible to receive benefits under the CLARCOR Inc. Pension Plan (the “Pension Trust”). The amount of the Company’s contribution to the Pension Trust in respect to a specified person cannot be individually calculated.

The Pension Trust provides benefits calculated under a Social Security step-rate formula based on career compensation. Benefits are payable for life with a guarantee of 120 monthly payments. The formula accrues an annual benefit each plan year equal to the sum of (a) plan year compensation up to age 65 covered compensation in effect each December multiplied by 0.012 plus (b) any excess of such plan year compensation over age 65 covered compensation (subject to Internal Revenue limitations applicable to all qualified retirement plans) multiplied by 0.0175. The aggregate of all annual accruals plus the benefit accrued at November 30, 1989 under prior plans is the amount of annual pension.

Estimated annual retirement benefits payable under the Pension Trust at normal retirement (age 65) for each of the Named Executive Officers are reflected in the tables below. Such annual retirement benefits are not subject to any reduction for Social Security amounts.

Effective January 1, 2004, the Board adopted a program pursuant to which the pension benefits payable under the Pension Trust to most employees of the Company were frozen. As to these employees, no further benefits will accrue under the Pension Trust. As a substitute benefit the Company implemented a new 401(k) plan (the “New 401(k) Plan”) which is available to substantially all United States employees of the Company and its subsidiaries. Until it was amended in fiscal 2009, the New 401(k) Plan provided that the Company will match all contributions by a participant up to 3% of his or her compensation and 50% of the next 2% of such compensation contributed. Following the amendment, such match is no longer mandatory but rather discretionary on the part of the Company.

The Company offered employees who were both at least 40 years old and had 10 years of service the option of continuing to participate in the Pension Trust or adopting the New 401(k) Plan. Those employees electing to continue participation in the Pension Trust also are eligible to continue to participate in the Company’s previously established 401(k) Plan (the “Old 401(k) Plan”). Under the Old 401(k) Plan, the Company will match 50% of contributions by a participant up to 3% of his or her compensation. Mr. Johnson

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elected to continue to participate in the Pension Trust and will therefore continue to accrue benefits under that program. Messrs. Ferrise and Klein were not eligible to continue to participate in the Pension Trust, and Messrs. Conway, Wolfson and Fallon were not with the Company. However, Mr. Klein continued to participate in the Old 401(k) Plan. The amounts currently payable to Mr. Ferrise pursuant to the Pension Trust will not increase or decrease in the future.

Effective December 1, 1994, the Company established two new retirement plans for officers and senior executives of the Company: the 1994 Supplemental Pension Plan and the 1994 Executive Retirement Plan. Both plans were amended effective in January of 2008 to comply with 409A, and the 1994 Executive Retirement Plan was amended on December 14, 2009 to alter the applicable interest rate used to calculate lump sum payments (see discussion under the heading “Retirement Plans” in the Compensation Disclosure and Analysis, above.)

The 1994 Supplemental Pension Plan is intended to preserve benefits lost by reason of the maximum limitations on compensation and benefits imposed on tax qualified retirement plans by the Internal Revenue Code of 1986. The 1994 Executive Retirement Plan provides a monthly benefit to a participant equal to (a) 65% of his average monthly compensation with respect to the three consecutive fiscal years for which he received the highest compensation, reduced by (b) his monthly normal retirement benefit provided by the Pension Trust. A minimum of 15 years of service after attainment of the age of 40 is required to earn a full benefit of 65% of compensation at retirement. The annual benefit is payable as a life annuity commencing at age 65 with payments for 15 years guaranteed. Benefits in both of the 1994 plans are also payable as lump sums. Assumptions for determination of equivalence are defined in the plans, and current assumptions are included in the assumptions table below. Mr. Johnson participates in both of the 1994 plans, as did Mr. Klein prior to his retirement. Mr. Ferrise participates in the 1994 Supplemental Pension Plan, but his participation is currently frozen. Messrs. Conway, Wolfson and Fallon are not participants in either plan. Such annual retirement benefits are not subject to reduction for Social Security amounts.

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The table below sets forth the following pension benefit information with respect to the Company’s named executive officers under the Pension Trust and the 1994 Supplemental Pension Plan and 1994 Executive Retirement Plan:

PENSION BENEFITS FOR FISCAL YEAR 2010

Name

Plan Name

Number of Years Credited Service (#)

Present Value of Accumulated Benefit(1) $

Payouts During Last Fiscal Year $

Norman E. Johnson

Pension Trust

19

639,798

0

Supplemental/Executive Retirement Plans(2)

19

14,206,677

0

Bruce A. Klein(3)

Pension Trust

8

235,365

0

Supplemental/Executive Retirement Plans(2)

15

1,922,841

$

2,841,203

David J. Fallon

Pension Trust

N/A

N/A

N/A

Supplemental Pension Plan

N/A

N/A

N/A

Sam Ferrise

Pension Trust

2

36,430

0

Supplemental Pension Plan

2

108,207

0

Christopher L. Conway

Pension Trust

N/A

N/A

N/A

Supplemental Pension Plan

N/A

N/A

N/A

Richard M. Wolfson

Pension Trust

N/A

N/A

N/A

Supplemental Pension Plan

N/A

N/A

N/A

		Pension Plan				Executive Retirement Plan				Supplemental Pension Plan
Normal Retirement Age			65				65				65
Discount Rate Before Retirement			5.25%				3.01%				2.25%
Discount Rate After Retirement			5.25%				3.01%				2.25%
Mortality Table After Retirement			RP-2000				UP84				UP84

In addition, Mr. Klein is entitled to begin receiving his benefits under the Pension Trust at any time following his retirement, but has elected to defer initiating these benefits (which are not payable in a lump-sum) until a future date of his choosing. The present value of these benefits at the end of fiscal 2010 was $235,365, as reflected in the column entitled “Present Value of Accumulated Benefit” in this table.

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Deferred Compensation Plan

The Company has a Deferred Compensation Plan, pursuant to which the Company’s executive officers may elect to defer receipt of cash compensation and vested restricted stock units for any number of years up to ten or the executive’s separation from the Company. Any deferred cash amounts are invested in essentially the same funds available to all employees participating in the 401(k) plan and the investment choices/allocations are made by the executive. The Company does not pay any above-market or preferential interest to the executive, and any invested amounts are subject to the same market risks as any other investments under the Company’s 401(k) plan.

The table below sets forth the following information with respect to the Company’s named executive officers under the Deferred Compensation Plan with respect to fiscal 2010:

NONQUALIFIED DEFERRED COMPENSATION IN FISCAL 2010

Name		Plan				Executive Contributions in Last FY ($)				Company Contributions in Last FY ($)				Aggregate Earnings in Last FY(4) ($)				Aggregate Withdrawals /Distributions ($)				Aggregate Balance at Last FYE ($)
Norman E. Johnson			Deferred Compensation				0				0				151,928				0				1,030,533 (5)
			Restricted Stock Unit(2)				0				0				841,338				0				3,832,762 (6)
Bruce A. Klein			Deferred Compensation(1)				0				0				0				0				0
			Restricted Stock Unit(2)				260,020	(3)			0				33,991				0				294,011	(6)
David J. Fallon			Deferred Compensation(1)				0				0				0				0				0
			Restricted Stock Unit(2)				0				0				0				0				0
Sam Ferrise			Deferred Compensation(1)				0				0				0				0				0
			Restricted Stock Unit(2)				0				0				0				0				0
Christopher L. Conway			Deferred Compensation(1)				0				0				0				0				0
			Restricted Stock Unit(2)				18,117	(3)			0				6,130				0				30,135	(6)
Richard M. Wolfson			Deferred Compensation(1)				0				0				0				0				0
			Restricted Stock Unit(2)				18,840	(3)			0				4,653				0				23,493	(6)