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

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

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þ		Definitive Proxy Statement
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o		Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.

Rockwell Automation, Inc.

(Name of Registrant as Specified In Its Charter)

 

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

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December 14, 2006

 

Dear Shareowner:

 

 

You are cordially invited to attend our 2007 Annual Meeting of Shareowners.

 

 

We will hold the annual meeting in the Imperial Ballroom at The Pfister Hotel, 424 East Wisconsin Avenue, Milwaukee, Wisconsin, on Wednesday, February 7, 2007, at 10 a.m. (Central Standard Time). At the meeting I will report on the Corporation’s activities and performance during the past fiscal year, and we will discuss and act on the matters described in the Proxy Statement. At this year’s meeting, you will have an opportunity to vote on the election of three directors and approve the selection of Deloitte & Touche LLP as our independent registered public accounting firm. Shareowners will then have an opportunity to comment on or to inquire about the affairs of the Corporation that may be of interest to shareowners generally.

 

 

Your vote is important to us. Whether or not you plan to attend the meeting, please return your proxy card as soon as possible. You also have the option of voting via the Internet or by telephone.

 

 

If you plan to attend the meeting, please request an admittance card in one of the ways described on the last page of the Proxy Statement.

 

 

We sincerely hope that as many shareowners as can conveniently attend will do so.

 

 

We have enclosed the Proxy Statement for our 2007 Annual Meeting of Shareowners and our 2006 Annual Report. I hope you find them interesting and useful in understanding your company.

 

Sincerely yours,

 

 

Keith D. Nosbusch

 

Chairman and Chief Executive Officer

 

 

Rockwell Automation, Inc.

1201 South Second Street, Milwaukee, Wisconsin 53204

 

Notice of 2007 Annual Meeting of Shareowners

 

To the Shareowners of

ROCKWELL AUTOMATION, INC.:

 

 

The 2007 Annual Meeting of Shareowners of Rockwell Automation, Inc. will be held in the Imperial Ballroom at The Pfister Hotel, 424 East Wisconsin Avenue, Milwaukee, Wisconsin, on Wednesday, February 7, 2007, at 10 a.m. (Central Standard Time) for the following purposes:

 

 

 

 

Only shareowners of record at the close of business on December 11, 2006 will be entitled to notice of, and to vote at, the meeting.

 

 

By order of the Board of Directors.

 

 

Douglas M. Hagerman

Secretary

 

December 14, 2006

 

Note: The Board of Directors solicits votes by the execution and prompt return of the
accompanying proxy in the enclosed return envelope or by use of the
Corporation’s telephone or Internet voting procedures.

 

Rockwell Automation, Inc.
2007 Proxy Statement

 

INDEX

 

Rockwell Automation, Inc.

Proxy Statement

 

2007 ANNUAL MEETING

 

The 2007 Annual Meeting of Shareowners of Rockwell Automation, Inc. will be held on February 7, 2007, for the purposes set forth in the accompanying Notice of 2007 Annual Meeting of Shareowners. This proxy statement and the accompanying proxy, which are first being sent to shareowners on or about December 21, 2006, are furnished in connection with the solicitation by the Board of Directors of proxies to be used at the meeting and at any adjournment of the meeting. We will refer to your company in this proxy statement as “we”, “us”, the “Corporation” or “Rockwell Automation”.

 

GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

 

What am I Voting On?

 

You will be voting on the following:

 

 

Who is Entitled to Vote at the Annual Meeting?

 

Only holders of record of the Corporation’s Common Stock at the close of business on December 11, 2006, the record date for the meeting, may vote at the Annual Meeting. Each shareowner is entitled to one vote for each share of our Common Stock held on the record date. On December 11, 2006, we had outstanding 167,179,172 shares of our Common Stock.

 

Who may Attend the Annual Meeting?

 

All shareowners as of the record date, or individuals holding their duly appointed proxies, may attend the Annual Meeting. Please note that if you hold your shares through a broker or other nominee (in street name), you will need to provide a copy of a brokerage statement reflecting your stock ownership as of the record date to be admitted to the Annual Meeting.

 

How Do I Vote My Shares?

 

All shareowners may vote in person at the Annual Meeting. If your shares are held in street name, you should contact your broker or other nominee to obtain a broker’s proxy card and bring it, together with proper identification and your brokerage statement reflecting your stock ownership as of the record date, with you to the Annual Meeting, in order to vote your shares. In addition you may vote:

 

 

How Will My Proxy Be Voted?

 

If you duly complete, sign and return a proxy or use our telephone or Internet voting procedures to authorize the named proxies to vote your shares, your shares will be voted as specified. If your proxy card is signed but does not contain specific instructions, your shares will be voted as recommended by our Board of Directors.

 

For shareowners participating in our savings plans or in the Mellon Investor Services Program (dividend reinvestment and stock purchase plan), the trustee or administering bank will vote the shares that it holds for a

participant’s account only in accordance with instructions given in a duly signed, completed and returned proxy and direction card, or in accordance with instructions given pursuant to our Internet or telephone voting procedures. Where no instructions are received, the shares will not be voted.

 

May I Revoke My Proxy?

 

For shareowners of record, whether you vote by mail, by telephone or via the Internet, you may revoke your proxy at any time before it is voted by:

 

 

If your shares are held in street name, you must contact your broker or other nominee to revoke your proxy. Your proxy is not revoked simply because you attend the Annual Meeting.

 

Will My Vote be Confidential?

 

It is our policy to keep confidential all proxy cards, ballots and voting tabulations that identify individual shareowners, except as may be necessary to meet any applicable legal requirements and, in the case of any contested proxy solicitation, as may be necessary to permit proper parties to verify the propriety of proxies presented by any person and the results of the voting. The independent inspector of election and any employees involved in processing proxy cards or ballots and tabulating the vote are required to comply with this policy of confidentiality.

 

How Many Votes are Needed to Elect Directors and Approve the Selection of our Independent Registered Public Accounting Firm?

 

Election of Directors.   Directors are elected by a plurality of votes cast. This means that the three nominees for election as directors who receive the greatest number of votes cast by the holders of our Common Stock entitled to vote at the meeting, a quorum being present, will become directors.

 

Majority Vote Policy.   Our Guidelines on Corporate Governance set forth our policy if a director is elected by a plurality of votes cast but receives a greater number of votes “withheld” from his or her election than votes “for” such election. In an uncontested election, any nominee for director who receives more votes “withheld” than votes “for” his or her election must promptly tender his or her resignation to the Board. The Board Composition and Governance Committee will consider the resignation offer and make a recommendation to the Board of Directors. The Board will act on the tendered resignation within 90 days following certification of the election results. The Board Composition and Governance Committee, in making its recommendation, and the Board of Directors, in making its decision, may consider any factors or other information that it considers appropriate and relevant, including any stated reasons why the shareowners withheld votes from such director, the director’s tenure, the director’s qualifications, the director’s past and expected contributions to the Board, and the overall composition of the Board. Thereafter, we will promptly disclose the Board’s decision regarding whether to accept or reject the director’s resignation offer in a Form 8-K furnished to the Securities and Exchange Commission. If the Board rejects the tendered resignation or pursues any additional action, the disclosure will include the rationale behind the decision. Any director who tenders his or her resignation may not participate in the Board Composition and Governance Committee deliberations and recommendation or in the Board’s decision whether to accept or reject the resignation offer.

 

Selection of our Independent Registered Public Accounting Firm.   An affirmative vote of the holders of a majority of the voting power of our Common Stock present in person or represented by proxy and entitled to vote on the matter, a quorum being present, is necessary to approve the proposal to approve the selection of D&T as our independent registered public accounting firm.

How are Votes Counted?

 

Under Delaware law and our Restated Certificate of Incorporation and By-Laws, all votes entitled to be cast by shareowners present in person or represented by proxy at the meeting and entitled to vote on the subject matter, whether those shareowners vote “for”, “against” or abstain from voting, will be counted for purposes of determining the minimum number of affirmative votes required for approval of the proposal to approve the selection of D&T as our independent registered public accounting firm. The shares of a shareowner who abstains from voting on a matter or whose shares are not voted by reason of a broker non-vote on a particular matter will be counted for purposes of determining whether a quorum is present at the meeting so long as the shareowner is present in person or represented by proxy. An abstention from voting on a matter by a shareowner present in person or represented by proxy at the meeting has no effect in the election of directors but has the same legal effect as a vote “against” the proposal to approve the selection of D&T as our independent registered public accounting firm. A broker non-vote on a matter has no effect in the election of directors or on the approval of the proposal to approve the selection of D&T as our independent registered public accounting firm.

 

Can I Receive Electronic Access to Shareowner Materials?

 

You can save the Corporation printing and mailing costs by electing to access proxy statements, annual reports and related materials electronically instead of receiving these documents in print. To enroll for these services, please go to www.icsdelivery.com/rockwellauto or visit our website at www.rockwellautomation.com, click on the heading: “About Us”, then the heading: “Investor Relations”, then the heading “Shareowner Information, Transfer Agent & Dividends”. If you own your shares through a broker or other nominee, you may contact them directly to request electronic access.

 

You must have an e-mail account and access to a computer and the Internet and expect to have such access in the future to be eligible for electronic access to such materials. Selecting this option means that you will no longer receive a printed copy of our annual report and proxy statement unless you request one.

 

Your consent to electronic access will be effective until you revoke it. You may cancel your consent at no cost to you at any time by going to www.icsdelivery.com/rockwellauto and following the instructions or by contacting your broker or other nominee.

 

ROCKWELL AUTOMATION

 

We are a leading global provider of industrial automation power, control and information products and services. We were incorporated in 1996 in connection with a tax-free reorganization completed December 6, 1996, pursuant to which we divested our former aerospace and defense business to The Boeing Company. In the reorganization, the former Rockwell International Corporation (RIC) contributed all of its businesses, other than the aerospace and defense business, to the Corporation and distributed all capital stock of the Corporation to RIC’s shareowners. Boeing then acquired RIC. RIC was incorporated in 1928. Our principal executive office is located at 1201 South Second Street, Milwaukee, Wisconsin 53204. Our telephone number is (414) 382-2000 and our website is located at www.rockwellautomation.com.  Our Common Stock trades on the New York Stock Exchange (NYSE) under the symbol ROK.

 

STOCK OWNERSHIP BY CERTAIN BENEFICIAL OWNERS

 

The following table shows, as of December 11, 2006, information with respect to the persons known to us, based on statements filed with the Securities and Exchange Commission (SEC) pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934 (Securities Exchange Act) or information otherwise furnished to us, to be the beneficial owners of more than 5% of our Common Stock.

 

 

Our Restated Certificate of Incorporation provides that the Board of Directors will consist of three classes of directors serving staggered three-year terms that are as nearly equal in number as possible. One class of directors is elected each year with terms extending to the third succeeding Annual Meeting after election.

 

The terms of four directors expire at the 2007 Annual Meeting, including Don H. Davis, Jr., who will retire as a director immediately before the 2007 Annual Meeting. The Board has designated the other three directors, upon the recommendation of the Board Composition and Governance Committee, as nominees for election as directors at the 2007 Annual Meeting with terms expiring at the 2010 Annual Meeting. The Board also decreased the number of directors from ten to nine effective immediately before the 2007 Annual Meeting.

 

Proxies properly submitted will be voted at the meeting, unless authority to do so is withheld, for the election of the three nominees specified in Nominees for Election as Directors with Terms Expiring in 2010 below. If for any reason any of those nominees is not a candidate when the election occurs (which is not expected), proxies and shares properly authorized to be voted will be voted at the meeting for the election of a substitute nominee or, instead, the Board of Directors may reduce the number of directors.

 

For each director nominee and each continuing director, we have stated the nominee’s or continuing director’s name, age (as of December 14, 2006) and principal occupation; the position, if any, with the Corporation; the period of service as a director of the Corporation (or a predecessor corporation); and other directorships held.

 

NOMINEES FOR ELECTION AS DIRECTORS WITH TERMS EXPIRING IN 2010

 

 

The Board of Directors recommends that you vote “FOR” the election as directors of the three nominees described above, which is presented as item (a).

 

Our business is managed under the direction of the Board of Directors. The Board has established the Audit Committee, the Board Composition and Governance Committee, the Compensation and Management Development Committee and the Technology, Environmental and Social Responsibility Committee, whose principal functions are briefly described below. The duties and responsibilities of each committee are set forth in committee charters that are available on our website at www.rockwellautomation.com; click on the heading: “About Us”, then the heading: “Investor Relations”, then the heading: “Corporate Governance”. The committee charters are also available in print to any shareowner upon request. In the 2006 fiscal year, the Board held nine meetings and acted on two occasions by written consent in lieu of a meeting. Average attendance by incumbent directors at Board and committee meetings was 96%, and all of the directors attended 86% or more of the meetings of the Board and the committees on which they served. Directors are expected to attend the Annual Meeting of Shareowners. All directors attended the 2006 Annual Meeting.

 

The Board has reviewed the independence of its members considering categorical standards adopted by the Board to assist in determining independence, the independence criteria of the NYSE and any other commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships between the directors and the Corporation. Based on this review, the Board has determined that none of the current directors, other than Mr. Nosbusch and Mr. Davis (who are current and former employees, respectively, of the Corporation), has a material relationship with the Corporation and each of our current directors (other than Mr. Nosbusch and Mr. Davis) meets the independence requirements of the NYSE.

 

The Board’s categorical standards provide that the following relationships are deemed to be immaterial and would not in and of themselves impair a director’s independence:

 

 

The non-management directors meet in executive session without the presence of any corporate officer or member of management in conjunction with regular meetings of the Board. A director designated by the non-management directors chairs the session. The non-management directors’ practice is to designate the Chairman of one of the Board Committees as chair, in part depending upon whether the principal items to be considered at the session are within the scope of the applicable Committee. The independent directors meet in executive session in connection with most regular meetings.

 

Audit Committee.  The members of the Audit Committee are Verne G. Istock (Chairman), Barry C. Johnson, David B. Speer and Kenneth F. Yontz. All members of the Audit Committee are non-employee directors who meet the independence and financial literacy standards and requirements of the NYSE and the SEC. The Audit Committee assists the Board in overseeing and monitoring the integrity of our financial reporting processes, our internal control and disclosure control systems, the integrity and audits of our financial statements, our compliance with legal and regulatory requirements, the qualifications and independence of our independent registered public accounting firm and the performance of our internal audit function and independent registered public accounting firm. The Committee’s duties and responsibilities are set forth in the Audit Committee Charter, and include: appointment of our independent registered public accounting firm, subject to shareowner approval; approval of all audit, audit-related and permitted non-audit fees and services of

our independent registered public accounting firm; review with our independent registered public accounting firm and management the annual audited and quarterly financial statements; discussion periodically with management of quarterly earnings releases; and review with our independent registered public accounting firm and management of the quality and adequacy of internal controls. The Audit Committee met seven times during the 2006 fiscal year. The Board has determined that Messrs. Istock, Speer and Yontz qualify as “audit committee financial experts” as defined by the SEC.

 

Board Composition and Governance Committee.  The members of the Board Composition and Governance Committee are William T. McCormick, Jr. (Chairman), Verne G. Istock, Joseph F. Toot, Jr. and Kenneth F. Yontz. The principal functions of the Board Composition and Governance Committee are to consider and recommend to the Board qualified candidates for election as directors of the Corporation and to consider matters of corporate governance. The Committee annually assesses and reports to the Board on the performance of the Board of Directors as a whole and of the individual directors. The Committee also recommends to the Board the members of the committees of the Board and the terms of our Guidelines on Corporate Governance. All members of the Committee are independent directors as defined by the NYSE. The Committee met twice during the 2006 fiscal year.

 

The Committee will consider candidates for director recommended by shareowners. Shareowners wishing to recommend director candidates can do so by writing to the Secretary of the Corporation at 1201 South Second Street, Milwaukee, Wisconsin 53204. The recommendation must include the candidate’s name, biographical data and qualifications and any other information required by the SEC to be included in a proxy statement with respect to a director nominee. Any such recommendation must be accompanied by a written statement from the candidate indicating his or her willingness to serve if nominated and elected. The recommending shareowner also must provide evidence of being a shareowner of record of our Common Stock at that time.

 

The Committee, the Chairman and Chief Executive Officer or other members of the Board may identify a need to add new members to the Board or fill a vacancy on the Board. In that case, the Committee will initiate a search for qualified director candidates, seeking input from senior management and Board members, and to the extent it deems it appropriate, outside search firms. The Committee will evaluate qualified candidates and then make its recommendation to the Board for its consideration and approval.

 

In making its recommendations to the Board with respect to director candidates, the Committee considers various criteria set forth in our Board Membership Criteria (see Exhibit A to the Committee’s Charter), including experience, professional background, specialized expertise and concern for the best interests of shareowners as a whole. In addition, directors must be of the highest character and integrity, be free of conflicts of interest with the Corporation, and have sufficient time available to devote to the affairs of the Corporation. The Committee from time to time reviews with the Board our Board Membership Criteria in the context of the current composition of the Board and our circumstances.

 

The Committee will evaluate properly submitted shareowner recommendations under substantially the same criteria and in substantially the same manner as other potential candidates.

 

In addition to recommending director candidates to the Committee, shareowners may also nominate candidates for election to the Board at annual shareowner meetings by following the procedures set forth in our By-Laws. See “Shareowner Proposals for Annual Meeting in 2008” set forth later in this proxy statement.

 

Compensation and Management Development Committee.  The members of the Compensation and Management Development Committee are Joseph F. Toot, Jr. (Chairman), Betty C. Alewine, William T. McCormick, Jr. and Bruce M. Rockwell. All members of the Committee are independent directors as defined by the NYSE and are not eligible to participate in any of our plans or programs administered by the Committee, except our 2003 and 1995 Directors Stock Plans. The principal functions of the Compensation and Management Development Committee are to evaluate the performance of our senior executives and plans for management succession and development, review the design and competitiveness of our compensation plans, review and approve salaries of corporate officers and review the salary plan for other executives who are direct reports to the Chief Executive Officer, review and approve corporate goals and objectives and administer our incentive, deferred compensation and long-term incentives plans pursuant to the terms of the respective plans. The Committee determines salaries, incentive compensation and long-term incentive awards for all corporate

officers. The Committee met five times and acted on one occasion by written consent in lieu of a meeting during the 2006 fiscal year.

 

Technology, Environmental and Social Responsibility Committee.  The members of the Technology, Environmental and Social Responsibility Committee are Bruce M. Rockwell (Chairman), Betty C. Alewine, Barry C. Johnson and David B. Speer. All members of the Committee are independent directors as defined by the NYSE. The Committee reviews and assesses our technological activities as well as our policies and practices in the following areas: employee relations, with emphasis on diversity and inclusiveness; the protection and enhancement of the environment and energy resources; product integrity and safety; employee health and safety; and community and civic relations, including programs for and contributions to educational, cultural and other social institutions. The Committee met twice during the 2006 fiscal year.

 

Communications to the Board and Ombudsman.  Shareowners and other interested parties may send communications to the Board, an individual director, the non-management directors as a group, or a specified Board Committee at the following address:

 

Rockwell Automation, Inc.
c/o Corporate Secretary
1201 South Second Street
Milwaukee, WI 53204
Attn: Board of Directors

 

The Secretary will receive and process all communications before forwarding them to the addressee. The Secretary will forward all communications unless the Secretary determines that a communication is a business solicitation or advertisement, or requests general information about us.

 

In accordance with procedures approved by the Audit Committee, concerns about accounting, internal controls or auditing matters should be reported to the Ombudsman as outlined in our Standards of Business Conduct, which are available on our website at www.rockwellautomation.com; please click on the heading: “About Us”, then the heading: “Who We Are”, then the heading: “Ethics”. The Ombudsman is required to report promptly to the Audit Committee all reports of questionable accounting or auditing matters that the Ombudsman receives. You may contact the Ombudsman by addressing a letter to:

 

Ombudsman
Rockwell Automation, Inc.
1201 South Second Street
Milwaukee, WI 53204

 

You may also contact the Ombudsman by telephone at (800) 552-3589, e-mail at ombudsman@rockwell.com or fax at (414) 382-8485.

 

The following table sets forth compensation paid to and deferred by our non-employee directors in connection with their service as directors during fiscal year 2006.

 

 

 

 

Retainer Fees.  Non-employee directors receive an annual retainer of $87,000, of which $60,000 is paid in cash and $27,000 is paid by delivery of restricted shares of our Common Stock pursuant to the 2003 Directors Stock Plan. Non-employee directors who serve on Board Committees receive an additional retainer at the annual rate of $7,500 ($12,500 for the Chairman) for service on the Audit Committee; $6,000 ($9,000 for the Chairman) for service on the Compensation and Management Development Committee; $4,000 ($6,000 for the Chairman) for service on the Board Composition and Governance Committee; and $3,000 ($5,000 for the Chairman) for service on the Technology, Environmental and Social Responsibility Committee. The restricted shares paid as part of the annual retainer vest upon a director’s retirement from the Board under the Board’s retirement policy, a change of control of the Corporation or resignation by reason of the antitrust laws, compliance with our conflict of interest policies, death, disability or other circumstances the Board determines not to be adverse to the best interests of the Corporation. Non-employee directors are entitled to any cash dividends paid on the restricted shares, but are not entitled to any dividends paid in shares until the restricted shares vest. During fiscal year 2006, cash dividends of $7,396; $733; $2,695; $492; $9,180; $9,180; $5,016; $9,022 and $5,908 were paid on the restricted shares held by Ms. Alewine and Messrs. Davis, Istock, Johnson, McCormick, Rockwell, Speer, Toot and Yontz, respectively.

 

Equity Awards.  Each non-employee director also receives an annual grant of 500 shares of Common Stock pursuant to the 2003 Directors Stock Plan immediately after our Annual Meeting of Shareowners (and for directors elected after the Annual Meeting, a pro-rated number of shares). On the same date, each non-employee director receives an annual grant of options to purchase 1,500 shares of Common Stock pursuant to the 2003 Directors Stock Plan (and for directors elected after the Annual Meeting, a pro-rated number of options). In accordance with the 2003 Directors Stock Plan, the options awarded on February 1, 2006 (i) were granted at an exercise price of $65.35 per share, the closing market price on the date of grant, and (ii) become exercisable in three substantially equal installments on the first, second and third anniversaries of the grant date.

 

The average of retainer fees and the annual stock grants (but not the annual option grants) paid to or deferred by non-employee directors for the 2006 fiscal year was $130,405 (determined by valuing the stock grants at the closing price on the date the shares were issued).

Deferral Election.  Under the terms of the directors’ deferred compensation plan, a director may elect to defer all or part of the cash payment of retainer fees until such time as shall be specified, with interest on deferred amounts accruing quarterly at 120% of the federal long-term rate set each month by the Secretary of the Treasury. In addition, under the 2003 Directors Stock Plan, each director has the opportunity each year to defer all of the annual grant of shares and all or any portion of the cash retainers by electing to receive restricted shares valued, in the case of deferrals of cash retainers, at the closing price on the NYSE on the date each retainer payment would otherwise be made in cash.

 

Other Awards and Benefits.  We provide each director with life insurance in the amount of $100,000. During fiscal year 2006, we imputed income for life insurance in the amount of: $516; $762; $1,524; $792; $792; $1,524; $276; $2,472 and $792 to Ms. Alewine and Messrs. Davis, Istock, Johnson, McCormick, Rockwell, Speer, Toot and Yontz, respectively.

 

Under the 2003 Directors Stock Plan, options to purchase 7,000 shares of our Common Stock are awarded to each director upon his or her initial election to the Board.

 

We reimburse directors for transportation and other expenses actually incurred in attending Board and committee meetings. At times, directors use our corporate aircraft for travel for Board meetings. During fiscal 2006, on two occasions Board meetings were held as retreats at which the Corporation provided leisure activities for the directors’ spouses (with the leisure activities provided for all director spouses valued at less than $4,400) .

 

Directors may participate in a matching gift program under which we will match donations made to eligible educational, arts or cultural institutions. Gifts will be matched in any calendar year up to a maximum of $10,000.

 

Related Party Transactions.  In fiscal year 2006 we engaged in business transactions with organizations with which certain of our directors are affiliated, including Illinois Tool Works Inc., of which Mr. Speer is Chairman and Chief Executive Officer. However, none of these transactions was material to either us or any of those organizations.

 

Directors are subject to stock ownership guidelines. Our Guidelines on Corporate Governance provide that non-management directors are required to own shares of our Common Stock (including restricted shares) equal in value to three times the amount of the annual retainer that is paid in cash for Board service within five years after joining the Board to further the direct correlation of directors’ and shareowners’ economic interests. All directors, except Dr. Johnson who has been a director since September 2005, met the guidelines as of September 30, 2006.

 

Our Guidelines on Corporate Governance and codes of business conduct and ethics are available on our website at www.rockwellautomation.com; click on the heading: “About Us”, then the heading: “Investor Relations”, then the heading “Corporate Governance”. They are also available in print to any shareowner upon request.

 

The Audit Committee assists the Board in overseeing and monitoring the integrity of the Corporation’s financial reporting process, its internal control and disclosure control systems, the integrity and audits of its financial statements, the Corporation’s compliance with legal and regulatory requirements, the qualifications and independence of its independent registered public accounting firm and the performance of its internal audit function and independent registered public accounting firm.

 

Our Committee’s roles and responsibilities are set forth in a written Charter adopted by the Board, which is available on the Corporation’s website at www.rockwellautomation.com under the heading “Investor Relations”. We review and reassess the Charter annually, and more frequently as necessary to address any changes in NYSE corporate governance and SEC rules regarding audit committees, and recommend any changes to the Board for approval.

 

Management is responsible for the Corporation’s financial statements and the reporting process, including the system of internal control. Deloitte & Touche LLP (D&T), the Corporation’s independent registered public accounting firm, is responsible for expressing an opinion on the conformity of those audited financial statements

with U.S. generally accepted accounting principles, and attesting to and reporting on management’s assessment of the Corporation’s internal control over financial reporting.

 

We are responsible for overseeing the Corporation’s overall financial reporting process. In fulfilling our responsibilities for the financial statements for fiscal year 2006, we:

 

 

For information on fees paid to D&T for each of the last two years, see “Proposal to Approve the Selection of Independent Registered Public Accounting Firm” on page 23.

 

We considered the non-audit services provided by D&T in fiscal year 2006 and determined that engaging D&T to provide those services is compatible with and does not impair D&T’s independence.

 

In fulfilling our responsibilities, we met with the internal auditors and D&T, with and without management present, to discuss the results of their examinations, the evaluations of the Corporation’s internal control over financial reporting and the overall quality of the Corporation’s financial reporting. We considered the status of pending litigation, taxation matters and other areas of oversight relating to the financial reporting and audit process that we determined appropriate. We also met separately with the Corporation’s Chief Executive Officer, Chief Financial Officer, Controller, General Counsel and Ombudsman.

 

Based on our review of the audited financial statements and discussions with, and the reports of, management and D&T, we recommended to the Board that the audited financial statements be included in the Corporation’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006 for filing with the SEC.

 

The Audit Committee has selected D&T as auditors of the Corporation for the fiscal year ending September 30, 2007, subject to the approval of shareowners.

 

Audit Committee

Verne G. Istock, Chairman

Barry C. Johnson

David B. Speer

Kenneth F. Yontz

 

The following table shows the beneficial ownership, reported to us as of October 31, 2006, of our Common Stock, including shares as to which a right to acquire ownership within 60 days exists (for example, through the exercise of stock options) of each director, each nominee for director, each executive officer listed in the table on page 14 and of such persons and other executive officers as a group.

 

 

 

 

The information below reflects the annual and long-term compensation for service in all capacities to us for the fiscal years ended September 30, 2006, 2005, and 2004, of our Chief Executive Officer and our other four most highly compensated executive officers at September 30, 2006 (the Named Officers):

 

Summary Compensation Table

 

 

 

 

Option Grants

 

Shown below is further information on grants to the Named Officers of stock options pursuant to the Corporation’s 2000 Long-Term Incentives Plan, as amended (2000 Plan), during the fiscal year ended September 30, 2006, which are reflected in the Summary Compensation Table on page 14. No stock appreciation rights were granted during fiscal 2006.

 

 

 

 

 

The interest rate represents the zero coupon Treasury bond rate with a maturity date approximately 5 years from the date the options were granted. The actual value, if any, the executive officers may realize from these options will depend on the gain in stock price over the exercise price when the options are exercised.

 

Long-Term Incentive Awards

 

Shown below is information on grants to the Named Officers of performance share awards pursuant to the 2000 Plan during the fiscal year ended September 30, 2006.

 

 

 

 

Shown below is information with respect to (i) exercises by the Named Officers during fiscal 2006 of options to purchase our Common Stock granted under the 2000 Plan or the 1995 Long-Term Incentives Plan and (ii) the unexercised options to purchase our Common Stock held by the Named Officers at September 30, 2006.

 

 

 

 

Compensation Philosophy

 

Under our supervision, the Corporation has developed and implemented compensation policies, plans and programs intended to attract and retain executive talent, “pay for performance”, and pay for the creation of shareowner value. Our compensation programs include base salary, annual incentive compensation, and long-term incentives. Our executives participate in our health and welfare plans, pension plan, and 401(k) savings plan that apply to all salaried employees. We also maintain non-qualified pension and savings plans that use the same formulas as the qualified plans that restore the benefits limited in the qualified plans by the Internal Revenue Service. The Corporation also offers a Deferred Compensation Plan for all employees who have base salaries greater than $125,000 per year. Our Deferred Compensation Plan offers a selection of mutual fund investments similar to those in our 401(k) savings plan and does not have any guaranteed rates of return. In

addition, executives receive a limited perquisite package that includes an automobile allowance (executives are not eligible for mileage payments for use of their personal vehicle), social club membership, financial planning, personal liability insurance and annual physical. The principal purpose of the perquisite package is to aid in the attraction and retention of high quality executives.

 

The quality of the Corporation’s leadership impacts its performance, and therefore the purpose of our compensation policies and programs, including base salary, is to attract and retain high quality executives. As such, we set base salaries generally at the median of other major U.S. industrial companies. Increases in base salary are a function of the individual executive’s personal performance, the market value for their position and the executive’s expected future contributions and leadership.

 

Our annual incentive compensation plans (ICP Plans) reward executives for achieving company and business unit results. The ICP Plans provide for cash compensation generally at the median of other major U.S. industrial companies if the Corporation achieves its annual goals, and above market cash compensation for superior performance. Each year, we establish minimum thresholds for payments to be made under the ICP Plans. For fiscal years 2006 and 2007, participants generally receive no payments under the ICP Plans until our results are equal to the prior year’s financial performance, at which point 25% of the target incentive is available to be awarded. Target amounts are generally earned if we achieve our financial and operational goals set for the year. Above target amounts are generally earned when performance exceeds the annual goals. Target award amounts are generally set at the median of other major U.S. industrial companies, regressed based on Rockwell Automation sales. We participate in the Towers Perrin and Hewitt executive compensation surveys, and use their databases for this analysis. The ICP Plans also include adjustments for individual performance, in relation to individual objectives and Rockwell Automation’s leadership objectives and competencies.

 

We grant long-term incentives to reward management for creating shareowner value and to align the interests of management with shareowners. Long-term incentive opportunities are generally set between the 50th and 75th percentile of other major U.S. industrial companies using the Towers Perrin executive compensation database, regressed based on Rockwell Automation sales. We generally make long-term incentive grants near the beginning of the fiscal year to align with our performance management process and other compensation actions. Annual equity grants for corporate officers occur on the same dates as our annual equity grants for our other professional and managerial employees, which in fiscal 2006 was the Monday following our November Committee meeting. In fiscal 2007, our grant date occurred on the date of our December Committee meeting. The Chief Executive Officer makes recommendations to the Committee as to equity grants for other corporate officers, and the Committee approves all equity grants for corporate officers. We also award equity grants to new executive hires or recently promoted executives during the year. These grants are approved by the Committee, and the grant date is the date the Committee approves the grant. The exercise price of all stock option grants is the fair market value of our stock at the close of trading on the date of the grant. Our long-term incentive plans are designed to reward the increase in absolute and relative shareowner value. Long-term incentive grants are delivered in a combination of stock options, performance shares and restricted stock. We believe that stock options are an appropriate vehicle to reward management for increases in shareholder value, and they provide no value if share price does not increase. Performance shares are designed to reward management for relative performance compared to the S&P 500 Index over a three-year period, and provide greater rewards than stock options alone when our shareowners experience above market returns and smaller rewards when our shareowners experience below market returns. We grant restricted shares primarily in order to retain high quality executives. Accordingly restricted shares do not vest until three years after the grant.

 

Compensation Review Process

 

We consider the total direct compensation (earned or potentially available) of each of the Named Officers and the other corporate officers in establishing each element of compensation. Total Direct Compensation is defined as base salary, plus annual bonus under ICP Plans, plus the value of long-term incentive grants. We believe that a significant portion of an executive’s compensation should be directly linked to the creation of shareowner value and generally target approximately 60% to 70% of total direct compensation in the form of long-term incentives delivered as grants of stock options, performance shares and restricted stock.

As part of this process we conduct a total compensation or “Tally Sheet” review consisting of all elements of compensation, including base salary, annual incentives, long-term incentive grants, health benefits, perquisites and retirement and termination benefits. This review includes a calculation of amounts to be paid to our corporate officers if their employment is terminated, as well as upon retirement. We review the potential outcomes of annual incentives and long-term incentive grants under a variety of scenarios from low to high performance. We also review the officers’ current balances in various compensation and benefit plans and consider that corporate officers also receive payments for annual executive physical exams, financial planning, automobile allowance, personal liability insurance, and social club membership. We also consider industry, peer group and national surveys of other major U.S. industrial companies and performance judgments as to the past and expected future contributions of the individual corporate officers. We also review the amounts held from prior equity grants, but do not take these values into account in determining future long-term incentive grants for the following reasons: (i) we want to encourage long-term holding of equity grants, rather than encourage early sales in order to receive future grants; (ii) we have share ownership guidelines for our corporate officers that we believe provide the appropriate balance in retaining equity to align the financial interests of our corporate officers with those of our shareowners; (iii) our corporate officers are not allowed to exercise equity if they are not at our ownership guidelines; and (iv) to continue to provide additional rewards for increasing shareowner value.

 

We have engaged Towers Perrin, an independent executive compensation consulting firm that is directly accountable to us, to provide advice and market information that we use in fulfilling our duties. Based on our reviews, we found the total compensation of Mr. Nosbusch and the Named Officers, as well as the potential payouts to Mr. Nosbusch and the Named Officers in termination, change of control and retirement scenarios, in the aggregate, to be reasonable and consistent with our executive compensation philosophy.

 

Executive Stock Ownership

 

We believe the focus on “pay for performance” is sharpened by aligning closely the financial interests of the Corporation’s officers with those of shareowners. Accordingly, we have set minimum ownership guidelines for corporate officers. The minimum ownership guidelines (multiple of base salary) are as follows:

 

 

Shares owned directly (including restricted shares) or through the Corporation’s savings plans (including share equivalents under the Corporation’s supplemental savings plans) and the after-tax value of vested unexercised stock options are considered in determining whether an executive meets the guidelines, except that not more than 50% of the guidelines can be met by the after-tax value of unexercised vested options. At September 30, 2006, the 17 executives subject to the guidelines owned an aggregate of 417,506 shares (including share equivalents under our supplemental savings plans) of the Corporation’s Common Stock, with an aggregate market value of $24.3 million at September 30, 2006. All corporate officers met the guidelines as of September 30, 2006.

 

Components of Compensation

 

• Base Salary—We reviewed and approved the base salaries of all corporate officers, including the Chief Executive Officer, and reviewed an annual salary plan for other executives in senior management positions, near the beginning of the 2006 fiscal year.

 

• Annual Incentives—In the early part of each fiscal year, we review with the Chief Executive Officer the Corporation’s financial and operating goals for the fiscal year. These include measurable financial and operating goals as well as long-term leadership goals that in part require more subjective assessments. After the end of the year, we evaluate the Corporation’s performance and consider the results together with the contributions made by and the levels of responsibility of the individual executives in awarding annual incentive compensation under our ICP Plans. The incentive compensation for executives responsible for the management of business groups is largely determined by the extent to which the respective business group achieves goals established at the beginning of each year tailored to the particular business group. Annual incentives for Messrs. Nosbusch, Gelly

and Hagerman are based upon the performance of the Corporation, and the annual incentives for Messrs. Eisenbrown and Crandall are based upon a combination of the performance of the Corporation and their business groups.

 

The following table shows the Corporation’s performance against its principal 2006 financial goals:

 

 

 

 

• Long-Term Incentives—In fiscal 2006, long-term incentives for senior executives were provided through a combination of stock options, performance shares and restricted stock. Stock options were worth approximately 5/8 of the value of the grant, performance shares approximately 1/4 of the value of the grant, and restricted stock approximately 1/8 of the value of the grant. We determined the allocation of equity vehicles based upon a review of market practices and our belief that long-term incentives should have a greater performance link than the general market practice. The payout in respect of performance shares granted in November 2005 and December 2006 will be made in shares of our Common Stock or cash, and will range from zero to 200% of the target based on the Corporation’s total shareowner return compared to the S&P 500 Index over a three-year period. The payouts will be at zero, the target amount and the maximum amount if our total shareowner return is equal to or less than the 30th percentile, equal to the 60th percentile and equal to or greater than the 75th percentile of the S&P 500 Index, respectively, over the applicable three-year period, with the payout interpolated for results between those percentiles. Long-term incentives for mid-level executives in fiscal 2006 were provided through stock option grants. All equity grants were generally made near the beginning of the fiscal year. During fiscal year 2006, stock options equal to approximately 0.9% of outstanding shares were granted to senior and middle-management executives and other employees. Total options outstanding at the end of the 2006 fiscal year were approximately 5.2% of outstanding shares. The Committee takes these figures into account when determining the annual grant for executives.

 

In addition, certain executives received stock options and/or restricted stock awards in connection with promotions or as new hires.

 

• Compensation Deductibility—Internal Revenue Code Section 162(m) provides that publicly held companies may not deduct in any taxable year compensation in excess of one million dollars paid in that year to its Chief Executive Officer and its other four most highly compensated executive officers unless the compensation is “performance based”. Grants of stock options, performance shares and awards under our Annual Incentive Compensation Plan for Senior Executive Officers are considered “performance based” compensation. Since we retain discretion with respect to base salaries and other annual incentive compensation awards, those elements would not qualify as “performance based” compensation for these purposes. We do not anticipate that any portion of the fiscal year 2006 compensation to the Named Officers will be subject to any deductibility limitations under Section 162(m).

 

Compensation of the Chairman of the Board and Chief Executive Officer

 

Mr. Nosbusch’s base salary was increased to $925,000 from $800,000 in December 2005. His total annual cash compensation continues to depend substantially on annual incentive compensation tied to our assessment of his and the Corporation’s performance.

 

At the beginning of fiscal 2006, we granted Mr. Nosbusch options for 145,500 shares, 11,200 restricted shares and 25,800 performance shares, consistent with our executive compensation philosophy. We considered information on Mr. Nosbusch’s total compensation compared to the compensation of chief executive officers of other major U.S. industrial companies; historical information regarding his long-term compensation opportunities, as well as Mr. Nosbusch’s past and expected future contributions to the Corporation’s long-term performance.

 

In determining Mr. Nosbusch’s annual incentive compensation for 2006, we concluded that under his leadership in 2006 the Corporation had strong financial and operating performance. In addition, we recognized the substantial return to shareowners during the 2006 fiscal year, which resulted in an increase in market capitalization of $615 million (see the Shareowner Return Performance Presentation on Page 21). Based on the foregoing, we awarded Mr. Nosbusch $1,450,000 in annual incentive compensation.

 

The Board in Executive Session (without Mr. Nosbusch present) received and discussed our evaluation of the Corporation’s and Mr. Nosbusch’s performance in the 2006 fiscal year, together with Mr. Nosbusch’s compensation.

 

The Committee and the Board believe that the skill and motivation of all our employees, and especially our executive leaders, are essential to the Corporation’s performance and to creating shareowner value. We believe our compensation program motivates performance that differentiates us from our competitors. We will continue to provide an effective compensation program that we believe serves shareowners’ interests and is worthy of shareowner support.

 

Compensation and Management Development Committee

Joseph F. Toot, Jr., Chairman

Betty C. Alewine

William T. McCormick, Jr.

Bruce M. Rockwell

 

The following line graph compares the cumulative total shareowner return on our Common Stock against the cumulative total return of the S&P Composite-500 Stock Index and the S&P Electrical Components & Equipment Index for the period of five fiscal years from October 1, 2001 to September 30, 2006, assuming in each case a fixed investment of $100 at the respective closing prices on September 30, 2001 and reinvestment of all dividends.

 

Comparison of Five-Year Cumulative Total Return*

 

Rockwell Automation, S&P Composite-500 & S&P Electrical Components & Equipment

 

 

The cumulative total returns on Rockwell Automation Common Stock and each index as of each September 30, 2001-2006 plotted in the above graph are as follows:

 

 

* Includes the reinvestment of all dividends in our Common Stock.

 

The following table shows the estimated annual retirement benefits payable at age 65 on a straight life annuity basis to the Named Officers, in the earnings and years of service classifications indicated, under our retirement plans that cover most officers and other salaried employees on a non-contributory basis. Such benefits reflect a reduction to recognize in part our cost of Social Security benefits related to service for us. Our plans also provide for the payment of benefits to an employee’s surviving spouse or other beneficiary.

 

 

 

 

 

Sections 401(a)(17) and 415 of the Internal Revenue Code of 1986, as amended, limit the annual benefits that may be paid from a tax-qualified retirement plan. As permitted by the Employee Retirement Income Security Act of 1974, we have a nonqualified supplemental pension plan that authorizes the payment out of our general funds of any benefits calculated under provisions of the applicable retirement plan that may be above the limits under these sections.

 

 

In May and June 2004, we entered into “double trigger” change of control agreements with Messrs. Nosbusch, Gelly and Hagerman. These agreements are intended to provide for continuity of management in the event of a change of control. Each agreement becomes effective if there is a “change of control” of the Corporation before September 30, 2007. Each agreement provides for the continuing employment of the executive for three years after the change of control on conditions no less favorable than those in effect before the change of control. If the executive’s employment is terminated by us without “cause” or if the executive terminates his employment for “good reason” within that three year period, the executive is entitled to severance benefits equal to three times his annual compensation, including bonus, and continuation of other benefits for three years. In addition, if the executive terminates his own employment for any

reason during a 30-day window period beginning one year after the change of control, the executive is also entitled to these severance benefits. The executives are entitled to an additional payment, if necessary, to make them whole as a result of any excise tax imposed on these change of control payments, unless the safe harbor amount above which the excise tax is imposed is not exceeded by more than 10%, in which event the payments will be reduced to avoid the excise tax.

 

The Named Officers participate in our non-qualified supplemental pension plan, supplemental savings plan and deferred compensation plan. These non-qualified plans are available on the same terms to certain other salaried employees. We have established a master rabbi trust relating to these non-qualified plans. The master rabbi trust requires that, upon a change of control, we fund the trust in a cash amount equal to the unfunded accrued liabilities of these non-qualified plans as of such time.

 

The Audit Committee has selected the firm of D&T as our independent registered public accounting firm for the fiscal year ending September 30, 2007, subject to the approval of the shareowners. D&T, and its predecessors, have acted as our independent registered public accounting firm since 1934.

 

Before the Audit Committee selected D&T, it carefully considered the independence and qualifications of that firm, including their performance in prior years and their reputation for integrity and for competence in the fields of accounting and auditing. We expect that representatives of D&T will be present at the Annual Meeting to respond to appropriate questions and to make a statement if they desire to do so.

 

Audit Fees

 

The following table sets forth the aggregate fees for services provided by D&T for the fiscal years ended September 30, 2006 and 2005 (in millions), all of which were approved by the Audit Committee:

 

 

The Audit Committee considered and determined that the provision of non-audit services by D&T was compatible with maintaining the firm’s independence.

 

Audit Committee Pre-Approval Policies and Procedures

 

The Audit Committee is responsible for the appointment and compensation of, and oversight of the work performed by, our independent registered public accounting firm. The Audit Committee pre-approves all audit

(including audit-related) services and permitted non-audit services provided by our independent registered public accounting firm in accordance with the pre-approval policies and procedures established by the Audit Committee. During fiscal 2006, there was one instance in which the Audit Committee approved de minimis non-audit services (expatriate tax return services for one employee) of less than $2,000 after the services were provided, which services constituted less than 0.2% of the Audit-Related, Tax and Other services provided by our independent registered public accounting firm. These services were transitioned from D&T to another firm.

 

The Audit Committee annually approves the scope and fee estimates for the year-end audit, statutory audits and employee benefit plan audits to be performed by our independent registered public accounting firm for the next fiscal year. With respect to other permitted services, management defines and presents specific projects for which the advance approval of the Audit Committee is requested. The Audit Committee pre-approves specific engagements and projects on a fiscal year basis, subject to individual project thresholds and annual thresholds. At each Audit Committee meeting, the Controller reports to the Audit Committee regarding the aggregate fees charged by our independent registered public accounting firm compared to the pre-approved amounts.

 

The Board of Directors recommends that you vote “FOR” the proposal to approve the selection of D&T as our independent registered public accounting firm, which is presented as item (b).

 

The Board of Directors does not know of any other matters that may be presented at the meeting. Our By-Laws required notice by November 3, 2006 for any matter to be brought before the meeting by a shareowner. In the event of a vote on any matters other than those referred to in the accompanying Notice of 2007 Annual Meeting of Shareowners, proxies in the accompanying form will be voted in accordance with the judgment of the persons voting such proxies.

 

Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC and the NYSE.

 

Based on our review of the copies of such forms that we have received and written representations from certain reporting persons confirming that they were not required to file Forms 5 for specified fiscal years, we believe that all our executive officers, directors and greater than ten percent beneficial owners complied with applicable SEC filing requirements during fiscal 2006.

 

Our Annual Report to Shareowners, including the Annual Report on Form 10-K and financial statements, for the fiscal year ended September 30, 2006, was mailed to shareowners with this proxy statement.

 

To be eligible for inclusion in our proxy statement, shareowner proposals for the 2008 Annual Meeting of Shareowners must be received on or before August 16, 2007 by the Office of the Secretary at our Global Headquarters, 1201 South Second Street, Milwaukee, Wisconsin 53204. In addition, our By-Laws require a shareowner desiring to propose any matter for consideration of the shareowners at the 2008 Annual Meeting of Shareowners to notify the Corporation’s Secretary in writing at the address listed in the preceding sentence on or after October 10, 2007 and on or before November 9, 2007. If the number of directors to be elected to the Board at the 2008 Annual Meeting of Shareowners is increased and we do not make a public announcement naming all of the nominees for director or specifying the increased size of the Board on or before October 30, 2007, a shareowner proposal with respect to nominees for any new position created by such increase will be considered timely if received by our Secretary not later than the tenth day following our public announcement of the increase.

 

We have adopted a procedure called “householding”, which has been approved by the SEC. Under this procedure, we are delivering only one copy of the annual report and this proxy statement to multiple shareowners who share the same address and have the same last name, unless we have received contrary instructions from an affected shareowner. This procedure reduces our printing and mailing costs. Shareowners who participate in householding will continue to receive separate proxy cards.

 

We will deliver promptly upon written or oral request a separate copy of the annual report and this proxy statement to any shareowner at a shared address to which a single copy of the documents was delivered. To receive a separate copy of the annual report or proxy statement, you may write or call Rockwell Automation Shareowner Relations, 1201 South Second Street, Milwaukee, WI 53204, telephone: 414-382-8410. You may also access our annual report and proxy statement on our website at www.rockwellautomation.com; click on the heading: “About Us”, then the heading “Investor Relations”, then the heading: “SEC Filings”.

 

If you are a holder of record and would like to revoke your householding consent and receive a separate copy of the annual report or proxy statement in the future, please contact Automatic Data Processing, Inc. (ADP), either by calling toll free at (800) 542-1061 or by writing to ADP, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. You will be removed from the householding program within 30 days of receipt of the revocation of your consent.

 

Any shareowners of record who share the same address and currently receive multiple copies of our annual report and proxy statement who wish to receive only one copy of these materials per household in the future should contact Rockwell Automation Shareowner Relations at the address or telephone number listed above to participate in the householding program.

 

Some brokerage firms have instituted householding. If you hold your shares in street name, please contact your bank, broker or other holder of record to request information about householding.

 

 

We will bear the cost of the solicitation of proxies. In addition to mail and e-mail, proxies may be solicited personally, or by telephone or facsimile, by a few of our regular employees without additional compensation. We will reimburse brokers and other persons holding stock in their names, or in the names of nominees, for their expenses for forwarding proxy materials to principals and beneficial owners and obtaining their proxies.

 

 

This proxy statement contains information regarding return on invested capital (ROIC), which is a non-GAAP financial measure. Management believes that ROIC is useful to investors as a measure of performance and of the effectiveness of the use of capital in our operations. Management uses ROIC as one measure to monitor and evaluate our performance. Our measure of ROIC is likely to differ from that used by other companies. We define ROIC as the percentage resulting from the following calculation:

 

(a) Income from continuing operations before accounting change, if any, and before interest expense, income tax provision, and purchase accounting depreciation and amortization, divided by;

 

(b) average invested capital for the year, calculated as a five quarter rolling average using the sum of short-term debt, long-term debt, shareowners’ equity, cumulative impairments of goodwill and intangibles required under SFAS No. 142, and accumulated amortization of goodwill and other intangible assets, minus cash and cash equivalents, multiplied by;

 

(c) one minus the adjusted effective tax rate for the period, the adjusted effective tax rate is calculated by excluding the effect of separately reported tax items in continuing operations.

ROIC is calculated as follows (in millions, except percentages):

 

 

December 14, 2006

 

	•	marking the appropriate box on the proxy card and mailing the card using the enclosed envelope;
	•	indicating your desire to attend the meeting through our Internet voting procedure; or
	•	calling our Shareowner Relations line at 414-382-8410.

	•	your Rockwell Automation shares are registered in your name; or
	•	your Rockwell Automation shares are held in the name of a broker or other nominee and you provide written evidence of your stock ownership as of the December 11, 2006 record date, such as a brokerage statement or letter from your broker.

ROCKWELL AUTOMATION, INC.

ANNUAL MEETING OF SHAREOWNERS
WEDNESDAY, FEBRUARY 7, 2007
10:00 AM CST

THE PFISTER HOTEL
424 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN

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