Edgar Filing: MODINE MANUFACTURING CO

formdef14a.htm

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June 28, 2012

1500 DeKoven Avenue

Racine, Wisconsin 53403-2552

Notice of Annual Meeting of Shareholders

	Date:	Thursday, July 19, 2012
	Time:	9:00 a.m.
	Place:	The Pfister Hotel
		424 East Wisconsin Avenue
		Milwaukee, Wisconsin 53202
	Record Date:	June 1, 2012

Matters to vote on:

1.	Election of the Company-nominated slate of two directors for terms expiring in 2015;

2.	Advisory vote to approve the Company’s executive compensation;

3.	Ratification of the appointment of the Company’s independent registered public accounting firm;

4.	Consideration of any other matters properly brought before the shareholders at the meeting.

	By order of the Board of Directors,



	Margaret C. Kelsey
	Vice President – Corporate Development,
	General Counsel and Secretary

June 28, 2012

Your vote at the annual meeting is important to us. Please vote your shares of common stock by calling a toll-free telephone number, logging onto the Internet or by completing the enclosed proxy card and returning it in the enclosed envelope. This proxy statement is solicited on behalf of the Board of Directors for use at the 2012 Annual Meeting of Shareholders. This proxy statement and accompanying proxy card are first being sent to shareholders on or about June 28, 2012.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on July 19, 2012 – the Notice and Proxy Statement and 2012 Annual Report on Form 10-K are available at www.proxyvote.com and www.modine.com.

TABLE OF CONTENTS

Item 1 – Election of Directors	1

Corporate Governance	7

Security Ownership of Certain Beneficial Owners and Management	12

Compensation of Directors	14

Compensation Discussion and Analysis	15

Compensation Committee Report	27

TABLES

2012 Summary Compensation Table	28

Grants of Plan-Based Awards for Fiscal 2012	30

Outstanding Equity Awards at Fiscal Year End	31

Option Exercises and Stock Vested for Fiscal 2012	32

Pension Benefits Table for Fiscal 2012	33

Nonqualified Deferred Compensation Table for Fiscal 2012	34

Potential Post-Employment Payments	35

Potential Change in Control Payments and Benefits	37

Item 2 – Advisory Vote to Approve the Company’s Executive Compensation	40

Item 3 – Ratification of the Appointment of the Independent Registered Public Accounting Firm	40

Report of the Audit Committee	42

Section 16(a) Beneficial Ownership Reporting Compliance	44

Additional Matters	44

General Information about the Annual Meeting and Voting	45

Appendix A – Rules of Conduct	A-1

Table of Contents

ITEM 1 - ELECTION OF DIRECTORS

The Board of Directors nominated two current members of the board, Dr. Suresh Garimella and Christopher Patterson, to stand for election at the 2012 Annual Meeting of Shareholders. If elected, each director would serve until the 2015 Annual Meeting of Shareholders and the election of his successor. The persons appointed as proxies will vote FOR the election of these nominees, unless instructions to the contrary are given to them. The nominees have indicated that they are able and willing to serve as directors. While it is not anticipated that any of the nominees will be unable to take office, if that happens, the proxies will vote FOR the substitute nominee(s) designated by the Board of Directors.

The Company’s Bylaws provide that each director shall retire at the close of the term in which he or she attains the age of 70 years, except that the provision shall not apply to any director who has been exempted from it by a resolution passed by a two-third’s vote of the Board of Directors. Frank Jones and Dennis Kuester, both of whom are current members of the board, are 72 and 70, respectively, at the end of their current terms and neither will stand for re-election at the 2012 Annual Meeting of Shareholders. Michael (Tim) Yonker, who will turn 70 in October 2012, has declined to stand for re-election at the 2012 Annual Meeting of Shareholders. The Company gratefully acknowledges Messrs. Jones, Kuester and Yonker for their years of service on the Board of Directors.

The Company’s Amended and Restated Articles of Incorporation provide that the Board of Directors shall be divided into three classes, as nearly equal in number as possible, serving staggered three-year terms. The Board of Directors currently consists of 12 members with three classes of five, four and three directors each.

In accordance with the Company’s Bylaws, a director shall hold office until the end of such director’s term and until the director’s successor shall have been elected, there is a decrease in the number of directors or until his or her death, resignation or removal. Vacancies may be filled by the shareholders or the remaining directors. See Selection of Nominees to the Board of Directors below.

Qualifications of Modine’s Board of Directors

Qualifications of Modine’s Board of Directors as a Governing Entity

Modine’s board consists of proven business and technology leaders from various industries, disciplines and end markets, who know Modine, its products and its businesses well. For a majority of the members of the board, that knowledge has been gained or enhanced from years of service as Modine board members. For most individuals who joined the board more recently, that knowledge was gained in employment with industry leaders in markets important to the Company - commercial vehicle original equipment manufacturers (“OEMs”), off-highway OEMs and developers and manufacturers of commercial HVAC products. The board benefits from the interplay among a technologist at an internationally recognized university; former Chief Financial Officers of large, complex public companies; former managers of international public companies; Modine’s Chief Executive Officer; and former executives of OEMs in the Company’s markets, as well as the experience brought by those who serve on other public company boards. Modine’s board consists of dedicated individuals with high integrity and discipline and who have a strong desire to use their skills to govern Modine in a responsible manner.

Individual Qualifications of the Members of Modine’s Board of Directors

The Board of Directors’ Corporate Governance and Nominating Committee (the “Nominating Committee”), a committee consisting of all of the independent directors of the Company, has determined that the board needs certain specialized expertise as well as broad leadership experience to direct the Company to achieve its strategic goals. The Nominating Committee considers the following qualities and experiences to be necessary for the proper functioning of a board of a responsible, global, technology-driven company:

Business operations leadership;

Relevant industry experience;

Global business experience;

Financial expertise;

Technological expertise;

Corporate governance expertise; and

Financial markets experience.

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A description of the qualities provided by each board member is included below with the description of the individual’s experience and public company directorships.

Board Skills Matrix

The chart below summarizes the specific qualifications, attributes, and skills for each director. An “X” in the chart below indicates that the item is a specific reason that the director was nominated to serve on the board. The lack of an “X” does not mean that the director does not possess that qualification or skill. Rather, an “X” indicates a specific area of focus or expertise of a director on which the board currently relies.

Required Expertise

Board of Directors

Business Operations Leadership

Relevant Industry Experience

Global Business Experience

Financial Expertise

Technological Expertise

Corporate Governance Expertise

Financial Markets Experience

Mr. Burke

Mr. Anderson

Mr. Cooley

Dr. Garimella

Mr. Moore

Mr. Neale

Mr. Patterson

Ms. Petrovich

Ms. Williams

2012 Nominees for Director

The Nominating Committee nominated Dr. Suresh V. Garimella and Christopher W. Patterson for election as directors. Both of the nominees are considered independent under the New York Stock Exchange (“NYSE”) corporate governance rules.

The Board of Directors recommends a vote FOR Dr. Suresh V. Garimella and Christopher W. Patterson.

Vote Required for Approval

Directors in an uncontested election are elected by a majority of the votes cast by holders of shares of the Company’s common stock entitled to vote in the election at a shareholder meeting at which a quorum is present. Because abstentions and broker non-votes are not considered votes cast, they will not have an effect on the vote.

Name	Principal Occupation, Directorships and Qualifications

Nominees to be Elected for Terms Expiring in 2015:

Dr. Suresh V. Garimella Age 48 Director since July 2011	Current Position:	Associate Vice President for Engagement, Purdue University and R. Eugene and Susie E. Goodson Distinguished Professor in the School of Mechanical Engineering and Birck Nanotechnology Center, Purdue University; Director of the Cooling Technologies Research Center, Purdue University School of Mechanical Engineering and Birck Nanotechnology Center (since 2002).
	Experience:	Dr. Garimella has served as a professor of Mechanical Engineering at the University of California at Berkeley; University of Wisconsin-Milwaukee; The University of New South Wales, Sydney, Australia; Xi’an JiaoTong University, Xi’an, China; Technical University of Darmstadt, Germany and Purdue University. Dr. Garimella received his Bachelor of Technology in Mechanical Engineering from Indian Institute of Technology, Madras, India, his M.S. in Mechanical Engineering from The Ohio State University and his Ph.D. in Mechanical Engineering from the University of California at Berkley.

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Specific Attributes and Skills for Dr. Garimella:

Expertise	Discussion of Skills and Attributes

Technological Expertise	Dr. Garimella is a renowned expert in thermal management and heat transfer technology, which is central to the success of the Company.

Christopher W. Patterson Age 57 Director since 2010	Current Position:	Retired.
	Experience:	Mr. Patterson retired as President and Chief Executive Officer of Daimler Trucks North America LLC, a leading producer of heavy-duty and medium-duty trucks and specialized commercial vehicles in North America. Mr. Patterson served in this capacity from 2005 until his retirement in 2009. Prior to this he held senior positions, including as Senior Vice President, Service & Parts, with Freightliner LLC (predecessor to Daimler Trucks North America) and other international, commercial truck producers.
	Public Company Directorships:	Finning International Inc., Vancouver, B.C. (Canada)

Specific Attributes and Skills for Mr. Patterson:

Expertise	Discussion of Skills and Attributes

Business Operations Leadership	Mr. Patterson gained his business operations leadership experience as the President and Chief Executive Officer of Daimler Trucks North America LLC and brings extensive strategic sales and marketing experience to the Company’s board.

Relevant Industry Experience	Mr. Patterson has an unparalleled understanding of commercial truck markets and the operations of a global commercial vehicle OEM.

Global Business Experience	Mr. Patterson’s extensive executive and leadership experience, as described above, gives him valuable insight into the complexities, challenges and issues facing global manufacturing businesses.

Corporate Governance Expertise	Mr. Patterson has significant corporate governance experience from his role as the President and Chief Executive Officer of Daimler Trucks North America LLC.

Directors Continuing in Service for Terms Expiring in 2013:

Thomas A. Burke

Age 54

Director since 2008

Current Position:

Experience:

President and Chief Executive Officer of the Company.

Mr. Burke joined Modine in May 2005 as Executive Vice President and subsequently served as Executive Vice President and Chief Operating Officer (July 2006 – March 2008). Prior to joining Modine, Mr. Burke worked for nine years in various management positions with Visteon Corporation, a leading supplier of parts and systems to automotive manufacturers, including as Vice President of North American Operations (2002 – May 2005) and Vice President, European and South American Operations (2001 – 2002). Prior to working at Visteon, Mr. Burke worked in positions of increasing responsibility at Ford Motor Company.

Specific Attributes and Skills for Mr. Burke:

Expertise	Discussion of Skills and Attributes

Business Operations Leadership	Mr. Burke serves as the President and Chief Executive Officer of the Company.

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Relevant Industry Experience	Mr. Burke has unique knowledge of the challenges, risks and opportunities facing a global supplier of thermal management products to global customers gained through his experience with the Company as well as Visteon Corporation and Ford Motor Company. Mr. Burke’s membership on the board and leadership of the Company’s Executive Council help to ensure that the board is linked to the Company’s management and operations.

Global Business Experience	Mr. Burke’s extensive operational managerial experience at Ford, Visteon and the Company provide him with significant insight and experience in the operations, challenges and complex issues facing global manufacturing businesses.

Technological Expertise	Mr. Burke has a strong background in and knowledge of thermal management technology.

Corporate Governance Expertise	Mr. Burke has gained significant corporate governance experience in his role as President and Chief Executive Officer of the Company.

Charles P. Cooley Age 56 Director since 2006	Current Position: Experience:	Retired. Mr. Cooley retired as Senior Vice President and Chief Financial Officer of The Lubrizol Corporation, a specialty chemical company (April 2009 – September 2011). Mr. Cooley joined The Lubrizol Corporation as Vice President and Chief Financial Officer (April 1998 – July 2005) and subsequently served as its Senior Vice President, Treasurer and Chief Financial Officer (July 2005 – April 2009). Prior to joining The Lubrizol Corporation, Mr. Cooley was Assistant Treasurer of Corporate Finance, Atlantic Richfield Company (ARCO) and Vice President, Finance, ARCO Products Company.
Charles P. Cooley Age 56 Director since 2006	Public Company Directorships:	KeyCorp

Specific Attributes and Skills for Mr. Cooley:

Expertise	Discussion of Skills and Attributes

Global Business Experience	Mr. Cooley served as the Chief Financial Officer of Lubrizol, a company with extensive operations throughout the world.

Financial Expertise	Mr. Cooley has substantial experience as the Chief Financial Officer of Lubrizol including extensive knowledge of complex accounting issues, capital management and internal controls.

Corporate Governance Expertise	In his role at Chief Financial Officer of Lubrizol, Mr. Cooley gained significant experience implementing effective corporate governance practices.

Financial Markets Experience	As the Chief Financial Officer of Lubrizol, Mr. Cooley had significant experience in the financial markets in which the Company competes for financing.

Gary L. Neale Age 72 Director since 1977	Current Position: Experience:	Retired; Chairman of the Board of Modine since April 1, 2008. Mr. Neale served as the Chief Executive Officer (1993 – July 2005) and President (1994 – 2004) of NiSource, Inc., a holding company for gas and electric utilities and other energy-related subsidiaries.
Gary L. Neale Age 72 Director since 1977	Public Company Directorships:	Chicago Bridge & Iron Company N.V.; and NiSource, Inc. (Chairman, 1993 - January 2007)

Specific Attributes and Skills for Mr. Neale:

Expertise	Discussion of Skills and Attributes

Business Operations Leadership	Mr. Neale gained his business operations leadership experience as the President and Chief Executive Officer of NiSource, Inc. and brings an extensive knowledge of international business, financial acuity and understanding the operations of a large, complex public corporation.

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Global Business Experience	Mr. Neale has extensive knowledge of the Company’s global business, having served on the board during a significant period of expansion of the Company. Mr. Neale contributes to the board not only his strong knowledge of the Company but also his strong leadership skills and insight into large organizations.

Corporate Governance Expertise	Mr. Neale has significant experience in the oversight of audit, compensation and governance issues gained in his tenure serving on public company boards and an unparalleled knowledge of the Company given his long-standing tenure on the Board of Directors.

Mary L. Petrovich Age 49 Director since July 2011	Current Position: Experience:	Senior Advisor to Industrial and Transportation Group of The Carlyle Group, a global private equity firm, since July 2011. Ms. Petrovich served as the General Manager of AxleTech International, a supplier of off-highway and specialty vehicle drive train systems and components, after its acquisition by General Dynamics Corporation (December 2008 – July 2011). Ms. Petrovich served as Chairman and Chief Executive Officer of AxleTech International from 2001 through the December 2008 sale of the company to General Dynamics. Prior to AxleTech International, Ms. Petrovich held various leadership positions with the Driver Controls Division of Dura Automotive Systems Inc. and AlliedSignal Friction Materials.
Mary L. Petrovich Age 49 Director since July 2011	Public Company Directorships:	GT Solar International, Inc.; WABCO Holdings Inc.; and Woodward, Inc.

Specific Attributes and Skills for Ms. Petrovich:

Expertise	Discussion of Skills and Attributes

Business Operations Leadership	Ms. Petrovich gained her business operations leadership experience as Chairman and Chief Executive Officer of AxleTech International and as General Manager of AxleTech International after its acquisition by General Dynamics. This experience, together with her operational experience with Six Sigma lean manufacturing techniques, supply chain management and evaluation of new business opportunities, provides the board with valuable knowledge in its oversight of the Company’s operational efficiency.

Relevant Industry Experience	Ms. Petrovich has extensive experience in the automotive, off-highway and transportation industries gained in her roles with AxleTech International, Dura Automotive Systems and AlliedSignal.

Global Business Experience	Ms. Petrovich’s extensive managerial experience, as described above, provides her with significant insight and experience in the operations, challenges and complex issues facing global manufacturing businesses.

Corporate Governance Expertise	Ms. Petrovich serves on the Board of Directors of several public companies.

Directors Continuing in Service for Terms Expiring in 2014:

David J. Anderson Age 64 Director since 2010	Current Position: Experience:	Retired. Mr. Anderson retired as President and Chief Executive Officer of Sauer-Danfoss Inc., a worldwide leader in the design, manufacture and sale of engineered hydraulic, electric and electronic systems and components. Mr. Anderson served in this capacity and as a director of Sauer-Danfoss from 2002 until his retirement in 2009. Prior to that time, he served in various senior leadership positions in strategic planning, business development and sales and marketing.
David J. Anderson Age 64 Director since 2010	Public Company Directorships:	MTS Systems Corporation (Chairman, August 2011 - present); Schnitzer Steel Industries Inc.; and Sauer-Danfoss Inc. (July 2002 - June 2009; Executive Director and Co-Vice Chairman (June 2008 – June 2009))

Specific Attributes and Skills for Mr. Anderson:

Expertise	Discussion of Skills and Attributes

Business Operations Leadership	Mr. Anderson gained his business operations leadership experience as President and CEO of Sauer-Danfoss where he gained his significant understanding of successful leadership of a growing, global, high-technology, industrial company.

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Relevant Industry Experience	Sauer-Danfoss, a company at which Mr. Anderson spent 25 years of his career, develops, manufactures and markets advanced systems for the distribution and control of power in mobile equipment. Over the course of his career with Sauer-Danfoss, Mr. Anderson became thoroughly familiar with the market for products to industrial OEMs.

Global Business Experience	Mr. Anderson has significant global experience having led the post-merger integration of Sauer-Sandstrand and Danfoss Fluid Power into its end state of 26 manufacturing sites in 11 countries.

Corporate Governance Expertise	Mr. Anderson currently serves on the Board of Directors of two international public companies, and formerly served on the board of Sauer-Danfoss.

Larry O. Moore

Age 62

Director since 2010

Current Position:

Experience:

Retired.

Mr. Moore retired as Senior Vice President, Module Centers & Operations of Pratt & Whitney, a division of United Technologies and a manufacturer of aircraft engines. Mr. Moore served in this capacity from 2002 until his retirement in 2009. Prior to joining Pratt & Whitney, Mr. Moore served in various management positions with Cummins and Ford Motor Company.

Specific Attributes and Skills for Mr. Moore:

Expertise	Discussion of Skills and Attributes

Business Operations Leadership	Mr. Moore gained his business operations leadership experience, including experience in low cost country sourcing and operational excellence, at United Technologies where he served as Senior Vice President, Module Centers & Operations of Pratt Whitney, and at Cummins where he served in various operations management positions.

Relevant Industry Experience	Mr. Moore has a deep understanding of the diesel engine markets for off-highway and commercial truck markets gained over his 23 year career in various positions with Volkswagen of America, Inc., General Motors Corporation, Ford Motor Company as well as Cummins and Pratt & Whitney.

Global Business Experience	Mr. Moore has extensive experience working with global industrial companies.

Marsha C. Williams Age 61 Director since 1999	Current Position: Experience:	Retired. Ms. Williams retired as Senior Vice President and Chief Financial Officer of Orbitz Worldwide, Inc., an online travel company (July 2007 - December 2010). Prior to joining Orbitz Worldwide, Ms. Williams was Executive Vice President and Chief Financial Officer (2002 – February 2007) of Equity Office Properties Trust, a real estate investment trust. Prior to that time, Ms. Williams was Chief Administrative Officer of Crate and Barrel and served as Vice President and Treasurer of Amoco Corporation; Vice President and Treasurer of Carson Pirie Scott & Company; and Vice President of The First National Bank of Chicago.
Marsha C. Williams Age 61 Director since 1999	Public Company Directorships:	Chicago Bridge & Iron Company N.V.; Fifth Third Bancorp; Davis Funds; and Selected Funds (1995 – 2008)

Specific Attributes and Skills for Ms. Williams:

Expertise	Discussion of Skills and Attributes

Global Business Experience	Ms. Williams was an officer of Orbitz Worldwide and is currently a director of several public companies with global operations. In these roles, Ms. Williams has accumulated extensive knowledge of global finance, capital management, internal controls and human resources.

Financial Expertise	As the Vice President and CFO of Orbitz and Executive Vice President and CFO of Equity Office Properties Trust, Ms. Williams gained significant financial acumen relating to complex, global companies.

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Corporate Governance Expertise	Ms. Williams serves on the Board of Directors of several public companies.

Financial Markets Experience	As the former Vice President and CFO of Orbitz and Executive Vice President and CFO of Equity Office Properties Trust, Ms. Williams has significant experience in the financial markets in which the Company competes for financing.

CORPORATE GOVERNANCE

The Company’s business is managed under the direction of its Board of Directors, pursuant to the laws of the State of Wisconsin, its Amended and Restated Articles of Incorporation and its Bylaws. Members of the Board of Directors are kept informed of the Company’s operations through discussions with the CEO and key members of management, by reviewing materials provided to them and by participating in meetings of the Board of Directors and its committees.

The Company reviews and evaluates its corporate governance policies and practices, particularly in light of the rules of the Securities and Exchange Commission (“SEC”) and the NYSE, and believes that its current policies and practices meet these requirements. The Company’s corporate governance policies, including its Guidelines on Corporate Governance and charters for committees of the board, are available on its website, www.modine.com, and are also available in print to any shareholder or other interested person upon request.

Code of Ethics

The Company’s Code of Ethics and Business Conduct (the “Code of Ethics”) summarizes the compliance and ethical standards and expectations the Company has for all of its employees, officers (including the principal executive officer, principal financial officer and principal accounting officer) and directors with respect to their conduct in furtherance of Company business. It contains procedures for reporting suspected violations of the Code of Ethics, including procedures for the reporting of questionable accounting or auditing matters or other concerns regarding accounting, internal accounting controls or auditing matters. The Company has established a Business Ethics Program that includes an Internet and phone Helpline through which employees and others may report concerns, anonymously and in confidence, regarding such matters. A copy of the Code of Ethics, as well as further information regarding the Business Ethics Program, is available on the Company’s website, www.modine.com. These materials are also available in print to any shareholder or other interested person upon request. If we make any substantive amendment to the Code of Ethics, we will disclose the nature of such amendment on our website or in a current report on Form 8-K. In addition, if a waiver of the Code of Ethics is granted to an executive officer or director, we will disclose the nature of such waiver on our website, in a press release or in a current report on Form 8-K.

Director Independence

The Company’s Guidelines on Corporate Governance require that a majority of the board’s members be independent. The Company also believes it is in its best interest to have the President and CEO of the Company serve as a director. At a minimum, to qualify as “independent,” a director must meet the independence standards of the NYSE. The Nominating Committee assesses independence on a regular basis, and each director is responsible for bringing to the attention of that committee any changes to his or her status that may affect independence. In addition, the directors complete, on an annual basis, a questionnaire prepared by the Company that is designed to elicit information that the board uses to assess director independence. At least annually, the board reviews the relationships that each director has with the Company. Only those directors that the board affirmatively determines have no material relationship with the Company, and who do not have any of the relationships that prevent independence under the standards of the NYSE, are considered to be independent directors.

The board has determined that all of the directors, other than Mr. Burke, are independent within the meaning of the listing standards of the NYSE. The board concluded that none of these directors has any of the relationships with the Company set forth in the NYSE listing standards that prevent independence and had no other business or other relationships with the Company that would preclude a determination of his or her independence. Mr. Burke is not independent given his position as President and CEO of the Company.

Certain Relationships and Related Party Transactions

The Code of Ethics requires that all officers, employees and directors of the Company avoid any situation that conflicts with the proper discharge of his or her responsibility to the Company or that impairs his or her ability to exercise independence of judgment with respect to the transactions in which he or she is involved for the Company. Significant transactions with the Company’s officers, employees or directors or their relatives, or enterprises in which they have material interests, are not permitted unless such transactions are fully disclosed and approved by the Board of Directors or the Audit Committee as being in the best interest of the Company.

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Modine is a large global organization that engages in thousands of purchases, sales and other transactions annually. Modine may enter into purchase and sale transactions with other companies, universities and entities in which members of the Board of Directors are employed or are members of the board. Modine enters into these arrangements in the ordinary course of business and at competitive prices and terms. The Company anticipates that similar transactions may occur in the fiscal year ending March 31, 2013.

At the end of each fiscal year, each director and officer must respond to a questionnaire that requires him or her to identify any transaction or relationship that occurred during the year or any proposed transaction that involves Modine (or any subsidiary or affiliate of Modine) and that individual, his or her immediate family or any entity with which he, she or such immediate family member is associated. All responses to the questionnaires are reviewed by the Company’s Legal Department and shared with the President and CEO, as appropriate. Based upon such review, there were no related party transactions with respect to persons who were officers or directors during fiscal 2012.

Non-Executive Chairman

Gary L. Neale is the Non-Executive Chairman of the Board. As Non-Executive Chairman of the Board, Mr. Neale presides over meetings of the shareholders, the Board of Directors and executive sessions of the Board of Directors and carries out such other duties as directed by the Board of Directors. The Company believes this leadership structure is in the best interest of the Company’s shareholders at present because it allows the Company to benefit from the unique leadership ability and industry experience that Mr. Neale possesses.

Risk Oversight

The Board of Directors has overall responsibility for risk oversight for the Company. Management provides the board with information on a regular basis to keep the members of the Board of Directors apprised of identified risks. These risks, including financial, organizational and strategic risks, are reviewed and discussed with the board as part of the business and operating review conducted at each of the board’s regular meetings. As described below under Committees of the Board of Directors, the Board of Directors has delegated certain responsibilities to its committees. The committees have oversight of risks that fall within their areas of responsibility. The Audit Committee has primary oversight of the Company’s financial reporting, internal control and compliance risks. The Officer Nomination and Compensation Committee evaluates the risks arising from the Company’s compensation policies and programs. Management is responsible for managing risk and the Company’s enterprise risk management program.

Selection of Nominees to the Board of Directors

The Nominating Committee considers prospective candidates for board membership who are recommended by its members, as well as management, shareholders and independent consultants hired by the Nominating Committee. The Nominating Committee may also decide to engage a professional search firm to assist in identifying qualified candidates. When such a search firm is engaged, the Nominating Committee sets its fees and scope of engagement.

Once the Nominating Committee identifies a prospective nominee, it initially determines whether to conduct a full evaluation of the candidate. The Nominating Committee makes its initial determination based on the information provided to it with the recommendation of the prospective candidate, as well as the Nominating Committee’s own knowledge of the prospective candidate, which may be supplemented by inquiries to the person making the recommendation or others.

The Nominating Committee evaluates the prospective nominee, considering factors it deems appropriate, including the current composition of the board and the evaluations of other prospective nominees. In assessing candidates, the board considers the required areas of expertise set forth above in Item 1 (business operations leadership; relevant industry experience; global business expertise; financial expertise; technological expertise; corporate governance expertise and financial markets experience) as well as issues such as the individual’s education, contribution to diversity of the board and others frequently encountered by a global business.

In choosing a candidate for board membership, every effort is made to complement and supplement skills within the existing board and strengthen any identified areas. Further criteria include a candidate’s personal and professional ethics, integrity and values, as well as his or her willingness and ability to devote sufficient time to attend meetings and participate effectively on the board.

In connection with this evaluation, the board determines whether to interview the prospective nominee. If an interview is warranted, one or more members of the Nominating Committee, and others as appropriate, including the Non-Executive Chairman, will interview prospective nominees. After completing the evaluation and interview, the Nominating Committee makes a recommendation to the board regarding the nomination of a candidate and the board acts on that recommendation.

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Shareholder Nominations and Recommendations of Director Candidates

The Bylaws of the Company provide that any shareholder who is entitled to vote for the election of directors at a meeting called for such purpose may nominate persons for election to the Board of Directors. Shareholders who desire to nominate a person or persons for election to the board must comply with the notice requirements in the Bylaws, a copy of which is available from the Company’s Secretary. For consideration at the 2013 Annual Meeting of Shareholders, nominations must be received by the Secretary no earlier than April 19, 2013 and no later than May 14, 2013. Shareholders who want to submit a recommendation for a director candidate for the board may submit the recommendation to the board using the procedure described below under Shareholder and Other Interested Persons’ Communication with the Board. The Nominating Committee intends to evaluate candidates recommended by shareholders in the same manner that it evaluates other candidates. The Nominating Committee requests that it receive any such recommendations by October 1, 2012 for the 2013 Annual Meeting of Shareholders.

Shareholder and Other Interested Persons’ Communication with the Board

Shareholders and other interested persons wishing to communicate with the Board of Directors or with a board member (including the Non-Executive Chairman) should address communications to the board or to the particular board member, c/o Secretary, Modine Manufacturing Company, 1500 DeKoven Avenue, Racine, Wisconsin 53403-2552. In accordance with a process approved by the Board of Directors, the Secretary reviews all such correspondence. The Secretary forwards to the board a summary of all such correspondence and copies of all correspondence that, in the opinion of the Secretary, deal with the functions of the board or committees thereof or that she otherwise determines requires their attention. Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of the Company’s Business Ethics Committee and handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the board may change the process by which shareholders and other interested persons may communicate with the Board of Directors or its members. Please refer to the Company’s website, www.modine.com, for any changes to this process.

Committees of the Board of Directors

Audit Committee

The Audit Committee is a separately designated standing committee of the Board of Directors, established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The functions of the Audit Committee are described below in the Report of the Audit Committee in this proxy statement. The charter of the Audit Committee is available on the Company’s website, www.modine.com.

The Board of Directors has determined that each member of the Audit Committee is independent as defined in the corporate governance listing standards of the NYSE relating to audit committees. The Board of Directors has determined that each Audit Committee member satisfies the financial literacy and experience requirements of the NYSE, and that Mr. Cooley (the Chair of the Committee) and Ms. Williams each qualify as an audit committee financial expert within the meaning of the SEC rules.

Officer Nomination and Compensation Committee

The Officer Nomination and Compensation Committee of the Board of Directors (the “ONC Committee”) is composed exclusively of non-employee, independent directors with no business relationship with the Company, other than in their capacity as directors, and no interlocking relationships with the Company that are subject to disclosure under the rules of the SEC related to proxy statements. The charter of the ONC Committee is available on the Company’s website, www.modine.com.

The ONC Committee oversees and provides strategic direction to management regarding the Company’s executive compensation practices. The ONC Committee reviews the performance of the executive officers, other than the CEO, and works in conjunction with the Nominating Committee to review the performance of the CEO; reviews candidates for positions as officers; makes recommendations to the board on officer candidates; makes recommendations to the board on compensation of the CEO; determines, with the CEO’s recommendations, the compensation of non-CEO executive officers and other officers of the Company; considers recommendations made by its compensation consultant relating to director compensation and presents those recommendations to the board; administers the incentive compensation plans in which executive officers and directors participate; and reviews the Company’s benefit programs made available to some or all salaried employees of the Company.

Mr. Burke, as President and CEO, recommends to the ONC Committee any compensation changes affecting the Company’s officers, including the other NEOs, other than himself. Mr. Burke presents to the ONC Committee the performance and leadership behavior goals and expectations of each such officer and the level of achievement of those goals as well as the Company’s performance during the fiscal year. The ONC Committee reviews Mr. Burke’s recommendations and either approves or does not approve any compensation matters affecting such officers of the Company. Mr. Burke has no role in setting his own compensation.

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In fiscal 2012, the ONC Committee retained Farient Advisors LLC (“Farient”) as its independent executive compensation consultant. Farient reports directly to the ONC Committee and provides no services to the Company. A representative of Farient attends meetings of the ONC Committee upon invitation by the Chair of the ONC Committee, either by phone or in person, and communicates with the Chair between meetings. Farient conducted a comprehensive benchmarking analysis of the Company’s pay levels for the CEO, non-CEO executive officers and other officers of the Company, by pay component, using proxy data of the peer companies and compensation survey data. In addition, Farient benchmarked the Company’s executive pay programs and practices, including severance and change-in-control arrangements, as well as its goals and performance. The ONC Committee considered Farient’s analyses in determining its decisions; however, the ONC Committee made all decisions regarding the compensation of Modine’s officers, including its named executive officers (except for the CEO, whose compensation is set by the full Board). Additionally, Farient regularly updated the ONC Committee on regulatory and market trends and assisted with the benchmarking of Board of Director compensation practices and levels.

Compensation Committee Interlocks and Insider Participation

The Company had no Compensation Committee Interlocks, as defined by the SEC, during fiscal 2012.

Corporate Governance and Nominating Committee

The Nominating Committee develops and implements policies and practices relating to corporate governance matters, including reviewing and monitoring implementation of the Company’s Guidelines on Corporate Governance and the Code of Ethics; develops and reviews background information on prospective nominees to the board and makes recommendations to the board regarding such persons; supervises the board’s annual self-evaluation working with an outside law firm to conduct such evaluation; and works with the ONC Committee, as appropriate, to review and monitor succession plans relating to the CEO and to evaluate the performance of the CEO. The Nominating Committee is composed exclusively of independent directors with no business relationship with the Company, other than in their capacity as directors, and no interlocking relationships with the Company that are subject to disclosure under the rules of the SEC related to proxy statements. The charter of the Nominating Committee is available on the Company’s website, www.modine.com.

Technology Committee

The Technology Committee reviews and makes recommendations, as appropriate, to the entire Board of Directors on major strategies and other subjects related to the Company’s approach, emphasis, and direction with regard to technical innovation and opportunities; the technology acquisition process to assure ongoing business growth; and development and implementation of measurement and tracking systems important to successful innovation.

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Board Meetings and Committees

The Board of Directors held six meetings during the fiscal year ended March 31, 2012 and had the following four standing committees: Audit; Officer Nomination and Compensation; Corporate Governance and Nominating; and Technology.

In July of each year, the board selects the members of each of the committees. The table below shows the membership of each committee, the number of times the board and each committee met and the attendance at those meetings. All directors attended at least 75 percent of the aggregate of the board meetings and meetings of committees on which he or she served, except for Ms. Petrovich, whose aggregate committee meeting attendance was less than 75 percent during the fiscal year due to commitments existing prior to her election to the board.

Name	Board	Committee

David J. Anderson	6 of 6 (100%)	Audit 4 of 5 (80%)
		Corp. Gov. 3 of 3 (100%)

Thomas A. Burke	6 of 6 (100%)	Not applicable

Charles P. Cooley	5 of 6 (83%)	(Chair) Audit 5 of 5 (100%)
		Corp. Gov. 2 of 3 (67%)
		Tech. 2 of 2 (100%)

Suresh V. Garimella	5 of 5 (100%)	Corp. Gov. 3 of 3 (100%)
		ONC 3 of 3 (100%)
		(Chair) Tech. 1 of 1 (100%)

Frank W. Jones	6 of 6 (100%)	Audit 5 of 5 (75%)
		Corp. Gov. 3 of 3 (100%)
		Tech. 2 of 2 (100%)

Dennis J. Kuester	5 of 6 (83%)	ONC 5 of 5 (100%)
		Corp. Gov. 2 of 3 (67%)

Larry O. Moore	6 of 6 (100%)	ONC 3 of 5 (60%)
		Corp. Gov. 3 of 3 (100%)
		Tech. 1 of 1 (100%)

Gary L. Neale	6 of 6 (100%)	Not applicable

Christopher W. Patterson	6 of 6 (100%)	ONC 5 of 5 (100%)
		Corp. Gov. 3 of 3 (100%)
		Tech. 1 of 1 (100%)

Mary L. Petrovich	5 of 5 (100%)	Audit 0 of 2 (0%)
		Corp. Gov. 3 of 3 (100%)

Marsha C. Williams	6 of 6 (100%)	Audit 5 of 5 (100%)
		(Chair) ONC 5 of 5 (100%)
		Corp. Gov.3 of 3 (100%)

Michael T. Yonker	6 of 6 (100%)	ONC 3 of 5 (60%)
		(Chair) Corp. Gov. 3 of 3 (100%)

Audit = Audit Committee

ONC = Officer Nomination and Compensation Committee

Corp. Gov. = Corporate Governance and Nominating Committee

Tech. = Technology Committee

Attendance at the Annual Meeting. Although the Company does not have a formal policy that its directors attend the Annual Meeting of Shareholders, it expects them to do so and the Company’s directors historically have attended these meetings. All of the directors attended the 2011 Annual Meeting of Shareholders. The Board of Directors conducts a meeting directly after the Annual Meeting of Shareholders.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of shares of the Company’s common stock by persons known by the Company to beneficially own more than five percent of the outstanding shares:

	Common Stock
Name and Address of Owner (1)	Number of Shares Owned and Nature of Interest	Percent of Class

Wellington Management Company, LLP (2)	4,689,604	10.04
280 Congress Street
Boston, Massachusetts 02110

Mario J. Gabelli and affiliates (3)	4,266,042	9.2
One Corporate Center
Rye, New York 10580-1435

BMO Financial Group (4)	2,588,849	5.6
111 W. Monroe Street
Chicago, Illinois 60690

(1)

The number of shares is as of the date the shareholder reported the holdings in filings under the Exchange Act, unless more recent information was provided. The above beneficial ownership information is based on information furnished by the specified persons and is determined in accordance with Exchange Act Rule 13d-3, and other facts known to the Company.

(2)	Based on Amendment No. 5 to Schedule 13G filed under the Exchange Act, dated May 10, 2012. Wellington Management Company, LLP has the shared power to vote or direct the vote of 3,979,089 of the reported shares and shared power to dispose or to direct the disposition of the reported shares.

(3)

Based on Amendment No. 34 to Schedule 13D filed under the Exchange Act, dated September 20, 2011. Each reporting person included in the Schedule 13D: Gabelli Funds, LLC; GAMCO Asset Management Inc. (“GAMCO”); Teton Advisors, Inc.; Gabelli Securities, Inc.; GGCP, Inc.; GAMCO Investors, Inc.; and Mario J. Gabelli, has the sole power to vote or direct the vote and the sole power to dispose or direct the disposition of the reported shares, except that (i) GAMCO does not have authority to vote 129,955 of the reported shares, and (ii) in certain circumstances, proxy voting committees may have voting power over the reported shares.

(4)

Based on Schedule 13G filed under the Exchange Act, dated January 16, 2012. BMO Financial Group ("BMO") has the sole power to vote or direct the vote of 78,388 of the reported shares, shared power to vote or direct the vote of 2,507,932 shares, sole power to dispose or direct the disposition of 2,388 shares and shared power to dispose or to direct the disposition of 2,586,561. The shares over which BMO has shared voting or dispositive power include 2,507,032 shares held in Modine's 401(k) retirement plans, as to which BMO disclaims beneficial ownership.

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The following table sets forth information regarding the beneficial ownership of shares of the Company’s common stock as of June 1, 2012 by:

Each director, director-nominee and named executive officer (“NEO,” as described below under the Compensation Discussion and Analysis section); and

all directors and executive officers of the Company as a group.

			Options		Held in		Restricted
			Exercisable		401(k)		Shares
	Direct		within 60 days of		Retirement		(Not				Percent
	Ownership		June 1 2012		Plan		Vested)		Total (1)		of Class
David J. Anderson		2,545		0	NA			0		2,545		*
Charles P. Cooley		17,005		0	NA			0		17,005		*
Suresh V. Garimella		0		0	NA			0		0		*
Frank W. Jones (2)		69,001		18,438	NA			0		87,439		*
Dennis J. Kuester		34,291		18,438	NA			0		52,729		*
Larry O. Moore		2,545		0	NA			0		2,545		*
Gary L. Neale		73,126		18,438	NA			0		91,564		*
Christopher W. Patterson		9,395		0	NA			0		9,395		*
Mary L. Petrovich		0		0	NA			0		0		*
Marsha C. Williams		16,797		18,438	NA			0		35,235		*
Michael T. Yonker		25,946		18,438	NA			0		44,384		*
Thomas A. Burke		129,547		325,312		8,183		57,242		520,284		1.1	%
Michael B. Lucareli		14,007		15,087		972		6,818		36,884		*
Thomas F. Marry		24,471		71,978		938		63,613		161,000		*
Scott L. Bowser		20,424		40,867		3,102		9,530		73,923		*
Margaret C. Kelsey		12,321		50,765		318		9,644		73,048		*
All directors and executive officers as a group (16 persons)		451,421		596,199		13,513		146,847		1,207,980		2.5	%

* Represents less than one percent of the class.

(1)	Includes shares of common stock that are issuable upon the exercise of stock options exercisable within 60 days of the record date. Such information is not necessarily to be construed as an admission of beneficial ownership.

(2)	Mr. Jones shares the power to vote and dispose of 11,295 shares of common stock with his spouse.

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COMPENSATION OF DIRECTORS

Employees of Modine do not receive any compensation for serving on the board. For the 2012 fiscal year, non-employee directors, including the Non-Executive Chairman of the Board, received the following: an annual retainer of $35,000, payable quarterly; $1,750 for each board meeting attended in person; $1,500 for each committee meeting attended in person; an annual retainer of $5,000 for acting as Chair of the ONC Committee, Nominating Committee or Technology Committee and an annual retainer of $10,000 for acting as Chair of the Audit Committee; reimbursement for travel, lodging, and related expenses incurred in attending board and/or committee meetings; and travel-accident and director and officer liability insurance.

The Amended and Restated 2008 Incentive Compensation Plan (the “Incentive Plan”) gives discretion to the board, or a committee of the board, to grant stock options and stock awards to non-employee directors. The board or the ONC Committee, as applicable, has broad discretionary authority to set the terms of awards under the Incentive Plan. It is the current practice of the Board of Directors to grant unrestricted stock awards after the Annual Meeting to each non-employee director who was in service prior to the Annual Meeting and whose service is continuing. The Company granted each such non-employee director of the Company (other than the Non-Executive Chairman) 2,545 unrestricted shares of stock after the 2011 Annual Meeting of Shareholders. The Company granted Mr. Neale, the Non-Executive Chairman, 7,568 shares of stock at the same time. The Company granted Mr. Neale the greater number of shares to compensate him for his work as Non-Executive Chairman. As Non-Executive Chairman, Mr. Neale, among other duties, generally attends all meetings of the board’s committees but does not receive any attendance fee for those meetings. The compensation of Modine’s non-employee directors has remained at its current level for the past seven fiscal years. The ONC Committee is in the process of working with its independent compensation consultant and management to assess director compensation levels with the goal of ensuring fair and competitive compensation for the Company’s directors. The ONC Committee intends to take action on this subject in 2012.

2012 Director Compensation Table

The following table sets forth compensation paid to non-employee members of the Company’s Board of Directors in fiscal 2012:

			Stock		Change in
	Fees Paid in		Awards		Pension Value
Name	Cash ($)		($)(1)(2)		($)(3)		Total ($)

David J. Anderson		55,000		37,997	NA			92,997
Charles P. Cooley		66,250		37,997	NA			104,247
Suresh V. Garimella(4)		53,750		0	NA			53,750
Frank W. Jones		59,500		37,997		25,162		122,659
Dennis J. Kuester		53,250		37,997		4,954		96,201
Larry O. Moore		56,000		37,997	NA			93,997
Gary L. Neale		45,500		112,990		35,553		194,043
Christopher W. Patterson		58,000		37,997	NA			95,997
Mary L. Petrovich		39,500		0	NA			39,500
Marsha C. Williams		68,000		37,997		280		106,277
Michael T. Yonker		59,500		37,997		4,954		102,451

(1)

After the 2011 Annual Meeting of Shareholders, all of the independent directors, other than Mr. Neale, who were in service prior to the Annual Meeting and whose service was continuing, were granted 2,545 shares of unrestricted stock under the Incentive Plan. As explained above, the Company granted 7,568 shares of unrestricted stock to Mr. Neale at that same time.

None of the directors included in the table above held any unvested stock awards as of the end of fiscal 2012. As of March 31, 2012, the directors included in the table above held options to purchase shares of common stock, all of which are exercisable, as follows: Mr. Anderson – none; Mr. Cooley – none; Dr. Garimella - none; Mr. Jones - 18,438 shares; Mr. Kuester - 18,438 shares; Mr. Moore – none; Mr. Neale – 18,438 shares; Mr. Patterson – none; Ms. Petrovich – none; Ms. Williams - 18,438 shares; and Mr. Yonker - 18,438 shares.

(2)

Represents the aggregate grant date fair value of stock grants computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718. The assumptions used to determine the value of the awards are discussed in Note 23 of the Notes to the Consolidated Financial Statements of the Company contained in the Company’s Form 10-K for the fiscal year ended March 31, 2012.

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(3)

Represents the change in pension value between the end of fiscal 2011 and the end of fiscal 2012 under the Modine Manufacturing Company Director Emeritus Retirement Plan. The change in pension value is solely a result of the change in the interest rate used to calculate the present value of the pension benefit under the Director Emeritus Retirement Plan because no benefits otherwise continue to accrue under that plan. The Company used interest rates of 4.86 percent and 5.83 percent, respectively, to calculate the present value of the pension benefit at March 31, 2012 and March 31, 2011.

The Board of Directors adopted the Director Emeritus Retirement Plan pursuant to which any person, other than an employee of the Company, who was or became a director of Modine on or after April 1, 1992 and who retired from the board would be paid a retirement benefit equal to the annualized sum directors were paid for their service to the Company as directors (including board meeting attendance fees but excluding any applicable committee attendance fees) in effect at the time such director ceased his or her service as a director. The retirement benefit continues for the period of time equal in length to the duration of the director’s board service. If a director dies before retirement or after retirement during such period, his or her spouse or other beneficiary would receive the benefit. In the event of a change in control (as defined in the Director Emeritus Retirement Plan) of Modine, each eligible director, or his or her spouse or other beneficiary entitled to receive a retirement benefit through him or her, would be entitled to receive a lump-sum payment equal to the present value of the total of all benefit payments that would otherwise be payable under the Director Emeritus Retirement Plan. The retirement benefit is not payable if the director, directly or indirectly, competes with the Company or if the director is convicted of fraud or a felony and such fraud or felony is determined by disinterested members of the Board of Directors to have damaged Modine. Effective July 1, 2000, the Director Emeritus Retirement Plan was frozen with no further benefits accruing under it. Ms. Williams and Messrs. Jones, Kuester, Neale, and Yonker accrued pension benefits under the Director Emeritus Retirement Plan until it was frozen on July 1, 2000.

(4)	The amount includes fees paid to Dr. Garimella for attending the May 2011 board meeting and Technology Committee meeting in anticipation of joining the Board of Directors in July 2011.

Share Ownership Guidelines - Directors

Effective January 16, 2008, the board adopted share ownership guidelines for incumbent members of the Board of Directors. The board believes that in order to further align the interests of members of the board and shareholders, members of the board should have a meaningful personal investment in the Company. Only shares of stock, either restricted or unrestricted, count toward the guideline figures. The guidelines generally provide that by 2013 those who were incumbent in January 2008 (Ms. Williams and Messrs. Cooley and Neale) are expected to hold shares of Company stock with a value of at least three times the value of the director’s annual cash retainer. All of those directors already comply with the guidelines. Directors who joined the board after 2008 have five years to hold at least three times the annual cash retainer at the time the director joined the board. The share ownership guidelines for officers of the Company are described below in the Compensation Discussion and Analysis – Share Ownership Guidelines - Officers.

Compensation-Related Risk Assessment

In fiscal 2012, the ONC Committee assessed each element of compensation – base salary; annual cash bonus; long-term incentives – as well as other plans covering employees in international locations to determine whether any of such elements or plans promotes excessive or unreasonable risk-taking. The ONC Committee determined that the Company’s compensation policies and practices encourage behaviors that drive the performance of the Company as a whole and balance short-term results with longer-term results in the interests of shareholders. The ONC Committee determined that any risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

This Compensation Discussion and Analysis describes the material components of compensation paid to Modine’s named executive officers (“NEOs”) in the 2012 Summary Compensation Table on page 28. The Company’s NEOs are:

Thomas A. Burke, President and CEO;

Michael B. Lucareli, Vice President, Finance and CFO;

Thomas F. Marry, Executive Vice President and COO;

Scott L. Bowser – Regional Vice President – Americas; and

Margaret C. Kelsey, Vice President – Corporate Development, General Counsel and Secretary.

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Other than the Principal Executive Officer and Principal Financial Officer, Messrs. Marry and Bowser and Ms. Kelsey were the three most highly compensated active executive officers as of March 31, 2012. The compensation for these individuals is listed in the tables on pages 28 through 40 of this Proxy Statement.

In this Compensation Discussion and Analysis, we will also explain the objectives of our compensation programs, why we pay the compensation we do and how that fits with the Company’s commitment to provide value to our shareholders.

Executive Summary

Executive Compensation Philosophy

The ONC Committee seeks to pay our NEOs fairly and to align executive pay with the Company’s performance. The ONC Committee believes this approach will enhance shareholder return over the long term.

Goals of the Executive Compensation Program

The ONC Committee seeks to help the Company achieve its short- and long-term financial goals and encourage its executive officers to act as owners of the Company. The ONC Committee believes these goals can be accomplished through a compensation program that provides a balanced mix of cash and equity-based compensation. Base salary is designed to attract and retain executives by compensating them for their day-to-day activities, level of responsibility and sustained individual performance. The annual cash incentive is intended to reward for the achievement of annual operating goals that are critical to the Company’s short-term business objectives. The equity portion of the compensation package provides incentives that are intended to focus executives on the Company’s long-term success, align the executives’ returns with those of shareholders, encourage long-term retention, and reward the executive for the Company’s superior long-term performance.

Alignment of Objectives/Fiscal 2012 Financial and Strategic Highlights

The ONC Committee believes the structure of its executive compensation program is aligned with the Company’s overall performance in fiscal 2012. In fiscal 2012, the Company, among other things:

Increased sales 8.9 percent to $1.6 billion;

Improved gross margin to 16.3 percent;

Recorded earnings from continuing operations of $38 million or $0.80 per fully diluted share, a substantial improvement from the prior year;

Completed its previously announced manufacturing footprint changes in North America, which have enabled that business segment to make significant improvements in profitability and become positioned for future growth;

Continued the integration of the Modine Operating System into the Company’s manufacturing and administrative operations, enabling faster cycles of process improvement at all levels of the organization; and

Introduced multiple new and highly energy efficient products within our Commercial Products Group, including the 30-ton AtherionTM packaged rooftop HVAC system, and the DeltaChill chiller for data centers, further demonstrating the ability of this business unit to grow organically and positioning it well for inorganic growth.

Fiscal 2012 Compensation Highlights

The ONC Committee took the following actions in fiscal 2012:

Set CEO and CFO salaries at the median of Modine’s peer group companies to meet its objective of offering competitive compensation;

Approved Return on Average Capital Employed (“ROACE”) and Economic Profit as the performance metrics in the Management Incentive Plan (the “MIP”) (the short-term cash bonus plan) and ROACE and change in Economic Profit as the performance metrics in the Long-Term Incentive Plan (the “LTIP”) to incentivize meeting and exceeding the Company’s operating plans. The Committee used similar metrics in both plans because:

ROACE and Economic Profit are drivers of value creation, reinforce the need for the Company to grow profitably, and are consistent with the Company’s strategic plan and how the Company manages its business;

Use of these measures in the MIP and the LTIP focuses management on key metrics and provides a compelling incentive plan with timeless standards that mitigate risk by avoidance of short-term gains at the expense of the long-term health of the Company; and

The long-term pay orientation of the Company’s pay system (pay mix and time horizon of the LTIP) appropriately reflects the capital intensive, investment time horizon and customer planning time horizon (i.e., long-term orders and partnering for end-product production) of the business.

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Approved the Amendment and Restatement of the 2008 Incentive Compensation Plan (a plan that was subsequently approved by the Company’s shareholders at the 2011 Annual Meeting of Shareholders) that, among other matters, generally requires an involuntary termination of employment within one year following a change in control (a double trigger) for the vesting of equity upon the occurrence of a change in control;

Approved a new change in control severance policy that, among other matters, requires a double trigger for the vesting of benefits upon the occurrence of a change in control for those joining the Company’s senior management on or after adoption of the policy and does not allow for any excise tax gross ups;

Approved a severance policy for individuals serving on the Company’s Executive Council to expressly state the amount of severance for such individuals in the event of involuntary termination of employment without cause, which written policy replaced the Committee’s previous practice of addressing severance decisions on a case-by-case basis, but using previous actions as a guide;

Reviewed and revised the composition of the Company’s Peer Group used for CEO and CFO pay and company performance comparisons;

Conducted a risk assessment of the Company’s compensation practices and found no evidence of any unreasonable risk taking in the Company’s compensation plans and arrangements; and

Reviewed regulatory, shareholder and market changes at each meeting of the Committee.

Shareholder Advisory Vote on Executive Compensation

At the 2011 Annual Meeting of Shareholders, the compensation of the Company’s NEOs was approved by a significant majority of the Company’s shareholders in a nonbinding advisory vote. Nonetheless, the Company and ONC Committee are mindful of the results of the shareholder advisory vote and take the vote into consideration when determining and evaluating the Company’s executive compensation philosophy, program and disclosure. For example, in light of the results of the 2011 shareholder advisory vote and the Company’s subsequent communications with its shareholders, the Company has made an effort to be more transparent about the link between pay and performance by enhancing the disclosure in the Pay for Performance discussion immediately below. Similarly, in an effort to ensure consistency with the Company’s severance policy and to better reflect current market practices, the Company has adopted a new written severance policy for individuals serving on the Company’s Executive Council to formalize the Company’s policy for paying severance in the event of an involuntary termination.

Pay for Performance

The ONC Committee believes that the Company’s compensation program should encourage management to create long-term, sustained value for shareholders and to act like owners of the Company. To achieve this objective, the compensation program is designed to balance short- and long-term considerations while rewarding management in a way that reflects the Company’s performance over time. The ONC Committee further supports this objective with a strong pay for performance philosophy.

The key elements of Modine’s executive pay program that support the pay for performance philosophy include:

A median pay positioning strategy that targets total pay as well as each element of compensation at the median of the market, and allows actual pay to vary from the median based on higher or lower performance, i.e., above median for above market performance and below median for below market performance;

A significant portion of compensation tied to performance, including short-term and long-term incentives tied to strong financial/operational performance;

Use of measures of performance for incentives that balance strong growth and returns and provide a direct link to shareholder value over time;

A significant weighting on equity-based long-term incentives, particularly performance stock; and

Share ownership guidelines (described on page 26), requiring that executives be meaningfully invested in the Company’s stock, and therefore be personally invested in the Company’s performance.

In fiscal 2012, the ONC Committee requested that Farient, the ONC Committee’s independent compensation consultant, assess the relationship between our executive pay and performance over time, with particular focus on the CEO. To conduct this analysis, Farient used its alignment methodology to test whether the Company’s Performance-Adjusted CompensationTM (PACTM) is: (1) reasonable for the Company’s revenue size, peer group and total shareholder return (TSR) performance; and (2) sensitive to the Company’s TSR over time, given that TSR is an objective, transparent measure that shareholders generally rely upon when conducting a long-term pay for performance evaluation. PAC measures compensation outcomes after performance has occurred, rather than target compensation, which represents “expected” compensation before performance has occurred. Farient compared the CEO’s PAC (including actual salary, actual short-term incentive awards, and performance-adjusted long-term incentive values) over rolling 3-year periods to TSR for the same rolling 3-year periods, and tested the results against those same variables for companies in the industry groups that are most relevant to Modine, namely Capital Goods and Automobiles and Components. The Company’s PAC was then compared to a range of values, as indicated by the upper and lower boundaries on the chart below. This range reflects reasonable pay outcomes, as determined by the companies in the relevant industries, for the performance achieved. All PAC values on the chart, current and historical, for both the Company as well as for the companies in the relevant industry groups, are adjusted to reflect the Company’s current size of approximately $1.6 billion in revenue.

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Farient’s analysis of the Company’s pay for performance indicates that the CEO’s compensation historically has been and continues to be strongly aligned with the Company’s performance and shareholder interests in that it is both reasonable and closely correlated to Company performance over time. Farient reached this conclusion, with which the ONC Committee agreed, because the data points for the Company’s CEOs have historically been below the upper boundary, which indicates reasonable compensation, and because the PAC generally moves up as performance rises, and generally moves down as performance falls. Specifically, for the 2010-2012 3-year period, the CEO’s PAC was lower than in the prior 3-year period ending in 2011 since: (1) the Company did not meet its objectives for the 2010-2012 performance stock awards cycle, and therefore, no awards were paid out under this plan cycle; and (2) the 2010-2012 TSR was unusually high due to the Company’s exceptionally low stock price caused by a generally weak economy at the beginning of the 2010-2012 period.

Single CEO in 3-year periods ending in 2006, 2007, 2008, 2011, and 2012

Multiple CEOs in 3-year periods ending 2004, 2005, 2009, and 2010

Top / Bottom tercile relative TSR rankings

Note: Each data point reflects Performance-Adjusted Compensation (adjusted for size and inflation) for a 3-year period and TSR for the same 3-year period. Years shown in the chart refer to the Company’s fiscal years.

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Market Benchmarking of Executive Pay

The ONC Committee targets total pay, as well as each element of compensation, at the median of a peer group of companies for the CEO and CFO and at the median of a broad survey of manufacturing companies for the other NEOs. The ONC Committee believes that targeting the median is an objective way of ensuring that the Company’s executive compensation practices are competitive and reasonable relative to the broader market. Actual pay may vary from the median based on differences in individual performance, job responsibilities, tenure and experience for the individuals being compared, as well as based on actual performance of the Company.

Use of Peer Group

In the fall of 2011, the ONC Committee directed Farient to review the composition of the Company’s peer group. As a group, the peers have characteristics and markets similar to those of the Company. These characteristics and markets are as follows:

U.S. headquartered companies traded on major U.S. exchanges involved in industrial machinery; construction and farm machinery and heavy trucks; auto parts and equipment and industrial machinery; electrical components and equipment and building products (HVAC related);

Companies with revenue between $600 million and $4 billion (approximately ½ to 2 ½ times Modine’s budgeted revenue); and

Technology-intensive companies with a strong focus on OEM suppliers, distributed product expertise and global industrial customers in the vehicular and industrial/commercial (e.g., HVAC) arena.

Based upon this review, the ONC Committee added Meritor, Inc., a manufacturer of drivetrain mobility and braking solutions for OEMs in truck, trailer and specialty vehicle markets, and Lennox International, Inc., a manufacturer of commercial and residential HVAC and refrigeration equipment, to the peer group because of their fit with the Company’s industry criteria as described above. Meritor and Lennox replaced Baldor Electric Co. which was acquired and A.O. Smith Corp. because its business does not fit the industry criteria as well as its replacements. The ONC Committee is satisfied with the number of companies in the peer group and did not want to expand the number of companies beyond 18.

The following is the Company’s peer group for fiscal 2012:

American Axle & Manufacturing	Gentex Corp.	Sauer-Danfoss Inc.
AMETEK Inc.	Hubbell Inc.	Stoneridge Inc.
Briggs & Stratton Corp.	Lennox International, Inc.	Thomas & Betts Corp.
Commercial Vehicle Group Inc.	Meritor, Inc.	WABCO Holdings Inc.
Donaldson Company, Inc.	Mueller Industries, Inc.	Wabtec Corp.
EnerSys Inc.	Regal-Beloit Corp.	Woodward Inc.

The ONC Committee uses the publically available peer group data to assist in the evaluation of the:

pay levels of the Company’s CEO and CFO;

Company’s pay practices; and

Company’s relative performance and relative pay for performance for specified periods of time.

Use of Compensation Survey Data

The ONC Committee also uses survey data compiled by Mercer of manufacturing companies with revenues between approximately $500 million and $3 billion to evaluate competitive pay levels of officers and other key employees in addition to those of the CEO and CFO. Mercer did not provide the ONC Committee with, and the ONC Committee was not aware of, the identities of the companies that participated in the survey. The ONC Committee recognizes that the Company attracts employees from a broad range of companies and its comparison data reflects that fact. The ONC Committee does not use the survey data in a formulaic manner. If the compensation of the NEO is greater or less than the median in the survey for the same job, the ONC Committee will take the survey information into account when setting base salary, cash incentive targets and long-term incentive target value but will also exercise its discretion taking into account the individual’s performance, tenure, experience and changes in job responsibilities when it makes decisions regarding compensation.

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Description of Executive Compensation Program

The ONC Committee sets the compensation philosophy at Modine. In determining the philosophy, the ONC Committee seeks to help the Company achieve its short- and long-term financial goals and encourage its executive officers to act as owners of the Company. In addition, the ONC Committee focuses on attracting and retaining employees who are qualified, motivated and committed to excellence. The ONC Committee believes these goals can be accomplished through a compensation program that provides a balanced mix of cash and equity-based compensation. Base salary is designed to attract and retain executives by compensating them for their day-to-day activities, level of responsibility and sustained individual performance. The annual cash incentive is intended to reward the achievement of annual operating goals that are critical to the Company’s short-term business objectives. The equity portion of the compensation package provides incentives that are intended to align the executives’ returns with those of shareholders, encourages long-term retention and rewards the executive for the Company’s superior long-term performance.

The ONC Committee’s actions are guided by the following beliefs:

Compensation is a primary factor in attracting and retaining employees and Modine’s goals can only be achieved if it attracts and retains qualified and highly skilled people;

All elements of executive compensation, including base salary, targeted annual incentives (cash-based), and targeted long-term incentives (stock-based), are set to levels that the ONC Committee believes ensure that executives are fairly, but not excessively, compensated;

Strong financial and operational performance is expected and shareholder value must be preserved and enhanced over time;

Compensation must be linked to the interests of shareholders and the most effective means of ensuring this linkage is by granting equity incentives such as stock awards, stock options and performance stock awards;

Operating units of the Company are interdependent and the Company, as a whole, benefits from cooperation and close collaboration among individual units so it is important in the Company’s incentive plans to reward overall corporate results and focus on priorities that impact the total Company; and

The executive compensation program should reflect the economic condition of the Company, as well as Company performance relative to peers so in a year in which the Company underperforms, the compensation of the executive officers should be lower than in years when the Company is achieving or exceeding its objectives.

As reflected in this Compensation Discussion and Analysis, the ONC Committee believes the compensation program is aligned with these principles.

Treatment of the CEO

The CEO participates in the same programs and receives compensation based generally on the same factors as the other NEOs. However, the level of the CEO’s compensation is even more heavily dependent upon the Company’s performance than the other NEOs. Mr. Burke’s overall compensation reflects a greater degree of policy- and decision-making authority and a higher level of responsibility with respect to the strategic direction and financial and operational results of the Company. Given his key role in policy- and decision-making, the ONC Committee believes that the CEO’s compensation should be weighted more heavily toward equity awards so his compensation more directly correlates with the Company’s performance.

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Elements of Executive Compensation for Fiscal 2012

The following is a summary of the elements of the Company’s executive pay program:

Pay Element	Competitive Positioning	Program Objectives	Time Horizon	Performance Measures for Fiscal 2012
Base Salary	Compares to 50th percentile, but use of judgment to determine actual pay	Key personnel attraction and retention	Annual	Individual performance Length of time in the position and overall experience Consistency of performance Changes in job responsibility
Management Incentive Plan		Motivate and reward for achieving objectives	Annual	Return on Average Capital Employed (50%) Economic Profit (50%)
Long-Term Incentive Plan (% of total Long-Term Incentive Plan Value) · Performance Stock Awards (60%)		Align executive’s returns with those of shareholders Encourage long-term retention Reward for superior long-term performance	3 year performance period with payout upon certification of results	Return on Average Capital Employed (50%) Change in Economic Profit (50%)
· Retention Restricted Stock Awards (20%)		Reward employees for their continued commitment to the Company	4 year ratable vesting	Retention
· Stock Options (20%)		Focus executives on driving long-term performance	3 year ratable vesting (25% vest immediately, 25% vest on each anniversary for the three years following grant); 10-year term	Stock price appreciation

Base Salary

Base salary is designed to attract and retain executives by compensating them for their day-to-day activities, level of responsibility and sustained individual performance. Individual performance, based upon achievement of the employee’s performance management plan, is a key component in determining base salary and any adjustments to base salary, and is a subjective determination made by the ONC Committee and, for the NEOs other than the CEO, the CEO. The determination of base salary affects every other element of executive compensation because all of the other components of executive compensation, including short-term, performance-based awards, long-term incentive compensation payouts, retirement benefits and severance, are determined based on the amount of the individual’s base salary. The ONC Committee annually reviews base salaries of the NEOs to ensure that, on the basis of responsibility, performance and job scope, the compensation levels are in keeping with the ONC Committee’s principles.

Based upon a subjective evaluation of their individual performances, the ONC Committee determined to increase the base salaries of each of the NEOs in fiscal 2012. In light of the fact that his base salary had been well below the peer group median since his appointment to his current position in 2010, and based on the increased skills and experience he accumulated during that time, the ONC Committee determined to more significantly increase Mr. Lucareli's base salary. Mr. Marry's base salary increase related in large part to his promotion to Executive Vice President and Chief Operating Officer in January 2012. Mr. Marry's current base salary is below the peer group median for his position, and in keeping with the Company's compensation policy and practices, the ONC Committee expects to more closely align it with the median over time.

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CEO Base Salary

The Nominating Committee, working with the ONC Committee, subjectively evaluates the individual performance of the Company’s CEO by evaluating Mr. Burke’s achievement of his performance management plan goals. The ONC Committee recommends the CEO’s base salary to the Board of Directors based upon this evaluation.

Retention Plan

In the face of the departure of two key members of the Company’s management in the fourth quarter of fiscal 2009, the ONC Committee instituted an Executive Council Retention Plan to attempt to ensure the stability of the Company’s senior management team through the global recession. Under the retention plan, all members of the Executive Council, other than Mr. Burke who declined to participate in the retention plan, were to be paid a bonus in an amount equal to one year’s salary (as of April 1, 2009) in three equal installments. The first installment was paid in fiscal 2010; the second installment was paid in fiscal 2011 and the third, and final, payment under the retention plan was made in fiscal 2012. The Company paid retention payments to the NEOs in the following amounts in fiscal 2012: Mr. Lucareli - $63,333; Mr. Marry - $96,667; Mr. Bowser - $83,333; and Ms. Kelsey - $83,333.

Short-Term, Performance-Based Cash Award

The Management Incentive Plan (the “MIP”) is Modine’s broadly applicable short-term, performance cash award plan designed to motivate and reward the Company’s leaders. All NEOs participate in the MIP. The ONC Committee’s objectives for the MIP are to encourage continuous (short-term) operational improvements with metrics that also drive total shareholder return. The ONC Committee believes the MIP metrics should be challenging but achievable and well defined so they are understood by the MIP participants and, accordingly, actively drive results.

The ONC Committee approved the use of ROACE and Economic Profit (which is reflected as improvement in Economic Profit) as the metrics for the fiscal 2012 MIP. Each metric is independent of the other metric and the two are weighted equally. For purposes of the MIP, ROACE equals Net Operating Profit After Taxes (“NOPAT”) divided by average capital employed. Similarly, Economic Profit means ROACE minus 10.5 percent (the Company’s weighted average cost of capital (“WACC”)) multiplied by the average capital employed. A description of the NOPAT and average capital employed calculations under the MIP is provided below. The ONC Committee has negative discretion to reduce the amounts otherwise payable under the MIP.

The ONC Committee used ROACE and Economic Profit because of their link to shareholder value and to strike a balance between profitability and growth, recognizing that return is inherent in both measures so it is weighted more heavily than growth. Management has been actively managing the business to these metrics over the last few years, particularly the last year, so the use of these metrics provides a strong line of sight for those in a position to affect the Company’s results. The ONC Committee, in the use of these metrics, was looking ahead to growth through the profitable deployment of additional capital and the creation of shareholder value while avoiding undue risk through the inclusion of the Economic Profit metric.

The specific levels for the MIP metrics for fiscal 2012 are as follows:

	Threshold		Target		Maximum
ROACE		8.8%		9.8%		11.6%
Improvement in Economic Profit		$8,372,000		$13,769,000		$23,058,000

Assuming achievement of the Target level for each metric, the NEOs would have received the following percentages of base salary: Mr. Burke – 100 percent; Mr. Lucareli – 50 percent; Mr. Marry – 60 percent; Mr. Bowser – 50 percent and Ms. Kelsey – 50 percent. If the Threshold level had been achieved for each metric, each of the NEOs would have received one-half of the Target amount. If the Maximum level had been achieved for each metric, each of the NEOs would have received two times the Target amount. The Company pays amounts between the Threshold and Maximum levels on a linear basis for achievement above Threshold and below Maximum.

For purposes of the MIP metrics, the Company’s ROACE for fiscal year 2012 was 9.36 percent. The Company’s improvement in Economic Profit from fiscal 2011 to fiscal 2012 was $12 million. As a result, the Committee approved a payment for MIP participants at the following levels: 77.8 percent of Target for the ROACE metric; and 79.2 percent of Target for the improvement in Economic Profit metric.

As mentioned in the discussion above regarding the calculations of ROACE and Economic Profit under the MIP, NOPAT equals earnings/losses from continuing operations before income taxes plus interest expense, adjusted to exclude (a) exchange gains (losses) on intercompany loans and (b) other specifically identified and approved unusual, non-recurring or extraordinary non-cash charges and cash restructuring and repositioning charges multiplied by .7 (given the assumption of a 30 percent income tax rate) and further adjusted to exclude earnings (losses) attributable to minority shareholders. Average capital employed equals total debt plus shareholders’ equity measured on each of the following quarter ends: March 31, 2011; June 30, 2011; September 30, 2011; December 31, 2011 and March 31, 2012; divided by five.

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Equity Incentives – Long-Term Incentive Compensation

The long-term incentive element of the Company’s executive compensation program is used to attract, retain and motivate key employees who directly impact the performance of the Company over a timeframe greater than a year. Long-term compensation is stock-based so that Modine’s stock price directly affects the amount of compensation the executive receives. The equity portion of the compensation package provides an incentive that rewards superior long-term performance and provides financial consequences for underperformance.

Grants under the Long-Term Incentive Plan for Plan Commencing in Fiscal 2012

As the ONC Committee did in fiscal 2011, it set equity grants as a percentage of base salary and included the use of performance stock awards as part of the Company’s long-term incentive compensation plan. For fiscal 2012, the Company’s long-term incentive plan included:

Performance Stock Awards (60 percent of long-term incentive dollars at Target). Awards of performance stock are earned by achieving corporate financial goals over a three-year period (ending March 31, 2014) and become vested after the end of that three-year period. Payout levels vary based upon the achievement of Threshold, Target or Maximum goals. Once earned, the performance stock awards are not subject to any restriction. Determinations of the achievement of performance goals for the performance stock awards are not made until the Company’s audited financial statements covering the last year in the performance period are completed and the results for the fiscal year are announced publicly.

Stock Options (20 percent of long-term incentive dollars at Target). The ONC Committee believes that stock options focus executives on driving long-term performance. Stock options have an exercise price equal to the fair market value of the common stock on the effective date of the grant so recipients recognize a value only if and to the extent that the value of the common stock increases. The stock options vest in four equal annual installments commencing on the effective date of the grant. The stock options expire ten years from the date of grant.

Retention Restricted Stock Awards (20 percent of long-term incentive dollars at Target). Retention stock awards reward employees for their continued commitment to the Company. The Company grants the employees shares of restricted stock and the restrictions lapse on one-quarter of the shares each year over a period of four years. In addition, the Company granted Mr. Marry a one-time retention restricted stock award in recognition of his promotion to Executive Vice President and Chief Operating Officer effective in January 2012. The restrictions lapse on one-half of these shares in each of the fourth and fifth years after the date of grant.

In fiscal 2012, the ONC Committee established two metrics for the award of performance stock awards – ROACE and Change in Economic Profit over the three-year performance period. Each metric is independent of the other metric and the two are weighted equally. For purposes of the LTIP, ROACE means NOPAT divided by Capital Employed. The calculation of ROACE is based upon a three-year average ROACE for fiscal 2012 – fiscal 2014 with annual ROACE averaged over five points (i.e., each fiscal year quarter and fiscal year end). Similarly, Economic Profit means ROACE minus a fixed 10.5 percent weighted average cost of capital, multiplied by Capital Employed. A description of the NOPAT and Capital Employed calculations under the LTIP is provided below.

The specific performance goals for the LTIP metrics for performance stock awards granted in fiscal 2012 are as follows:

Threshold

Target

Maximum

Three- Year Average ROACE

10.5%

12.5%

≥15,5%

Change in Economic Profit

$24,000,000

$40,000,000

≥$57,000,000

If actual ROACE or Change in Economic Profit for the Performance Period is between Threshold and Target and/or between Target and Maximum, the number of shares of common stock earned will be determined on a linear basis. In the event that the Company’s actual ROACE or Change in Economic Profit does not meet the Threshold for the Performance Period, no common stock will be earned under this Performance Stock Award. In the event that the Company’s actual ROACE or Change in Economic Profit exceeds the Maximum for the Performance Period, only the Maximum percentage of the Target number of shares of common stock will be earned. Notwithstanding the foregoing, the ONC Committee retains the discretion to decrease the number of shares of common stock earned under the LTIP.

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The Company measures its profitability using ROACE (a measure indicative of the efficiency and profitability of its capital investments), so the ONC Committee used the ROACE metric to incentivize management to continue to improve the Company’s profitability. Similarly, because Change in Economic Profit is a key measure of value created for the Company's shareholders (indicative of both profitability and growth), the ONC Committee used the Change in Economic Profit metric to incentivize management to create additional shareholder value through the continued growth and profitability of the Company. The ONC Committee set the Threshold level at what it believed to be an acceptable return and set the Maximum level at what it believed to be exceptional performance. Achievement and payout for each measure are calculated and paid out independently of the other measure. Generally, a new performance period begins each year so multiple performance periods, with separate goals, operate simultaneously.

As mentioned in the discussion above regarding the calculations of ROACE and Change in Economic Profit under the LTIP, NOPAT means the Company’s earnings (or losses) from continuing operations before income taxes plus interest expense, as reported on the Company’s audited financial statements, adjusted to exclude: (a) exchange gains (or losses) on intercompany loans and (b) other specifically identified and approved unusual, non-recurring or extraordinary non-cash charges, as determined in the discretion of the Committee, and cash restructuring and repositioning charges in excess of $4,000,000 multiplied by 0.7 to account for an assumed 30 percent income tax rate, and further adjusted to exclude earnings (or losses) attributable to minority shareholders. Capital Employed means the Company’s total debt plus shareholders’ equity, as reported on the Company’s audited financial statements. The NOPAT and Capital Employed calculations will exclude the cumulative effect of changes in generally accepted accounting principles.

Long-Term Incentive Compensation

As mentioned above, the ONC Committee sets the equity grants for each NEO under the long-term incentive plan as a percentage of base salary. Assuming achievement of the Target level for each metric under the performance stock awards, the NEOs would have received the following percentages of base salary in equity grants under the long-term incentive plan approved in fiscal 2012: Mr. Burke – 100 percent; Mr. Lucareli – 45 percent; Mr. Marry – 60 percent; Mr. Bowser – 45 percent and Ms. Kelsey – 45 percent. The table below sets forth the number of shares subject to stock options and the number of shares of stock issued to each NEO in fiscal 2012 as well as the number of performance stock awards that would be earned upon achievement of the long-term incentive plan metrics on March 31, 2014:

			Shares of		Performance Stock Awards (#)
	Shares Subject to		Restricted
	Stock Options(#)		Stock (#)		Threshold		Target		Maximum

Mr. Burke		27,622		19,344		29,015		58,031		116,062

Mr. Lucareli		4,820		3,376		5,064		10,127		20,255

Mr. Marry		7,805		55,466		8,198		16,397		32,793

Mr. Bowser		4,907		3,436		5,154		10,308		20,616

Ms. Kelsey		4,820		3,376		5,064		10,127		20,255

Changes in Executive Compensation in Fiscal 2013

For the fiscal 2013 MIP, the ONC Committee approved one metric, ROACE, as the performance measure under the plan. The ONC Committee also approved the Company’s long-term incentive plan for fiscal 2013 to include: retention restricted stock awards (40 percent of long-term incentive dollars at Target); stock options (20 percent of long-term incentive dollars at Target); and performance stock awards (40 percent of long-term incentive dollars at Target). The vesting schedule for retention restricted stock awards and stock options is the same as fiscal 2012. Performance stock awards have a three-year performance period, which is the same as fiscal 2012, and the ONC Committee approved three performance metrics - ROACE, cumulative revenue and European ROACE. The addition of European ROACE as a metric was intended to highlight the strategic importance of the Company’s European restructuring efforts in the coming years. Each metric is independent of the others and ROACE is weighted at 50 percent, while cumulative revenue and European ROACE are weighted at 25 percent each.

In May 2012, the ONC Committee approved an incentive compensation recoupment policy (the “Clawback Policy”). The Clawback Policy applies to all Incentive Plan participants, including the NEOs, and requires forfeiture or repayment of awards granted under the Incentive Plan (i.e., the MIP or any long-term equity awards) if the ONC Committee determines that a participant committed an act of misconduct that is adverse, or reasonably expected to be adverse, to the best interests of the Company or its shareholders. The Clawback Policy is applicable beginning for awards granted in fiscal 2013.

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Employment and Post-Employment Benefits

General Benefit

The NEOs receive the same basic employee benefits that are offered by the Company to all salaried employees within the region where the individual resides. These benefits include medical and dental coverage, disability insurance and life insurance. The cost of these benefits is partially borne by the employee, including each NEO.

Perquisites

The Company does not generally provide perquisites to any of the NEOs.

Retirement Benefits for U.S. Employees

The Company offers retirement benefits to its employees through tax-qualified plans, including an employee and employer funded Modine 401(k) Retirement Plan for U.S. Salaried Employees (the “401(k) Retirement Plan”). Under the 401(k) Retirement Plan, the Company contributes 50 percent of the amount contributed to the plan by the employee, subject to a maximum Company contribution of 2.5 percent of the employee’s pay, up to the maximum allowed by law. While the benefit is available to all of the Company’s full-time employees in the U.S., each individual participant’s 401(k) Retirement Plan balance may vary due to a combination of differing annual amounts contributed by the employee, the investment choices of the participant (the same investment choices are available to all participants in the plan) and the number of years the person has participated in the plan.

The Company has historically also made a contribution early in the calendar year to the 401(k) Retirement Plan equal to a certain percentage of base salary and bonus for each full-time U.S. salaried employee, including the NEOs. This contribution was initiated after the Company froze the accumulation of credited service in its defined benefit pension plan. In April 2012, the Company contributed an amount equal to four percent of calendar 2011 salary for each full-time, U.S. salaried employee. The percentage contributed was determined based upon the assessment of business performance balanced against the need to offer competitive benefits.

The Company’s defined benefit pension plan, which is frozen, is more fully described in the Pension Benefits Table for Fiscal 2012 below. Messrs. Lucareli, Marry and Bowser and Ms. Kelsey participate in the Company’s defined benefit pension plan. Mr. Burke joined the Company after the defined benefit pension plan was closed to new participants.

In addition to the employee benefits applicable to U.S. employees in general, certain highly compensated employees of Modine, including the NEOs may participate in the following plans:

Deferred Compensation Plan. The Deferred Compensation Plan is a nonqualified plan that allows a highly compensated employee to defer up to 10 percent of base salary. Salary deferred pursuant to the Deferred Compensation Plan is an asset of the Company. The sums deferred do not earn a preferential rate of return and the investment alternatives are generally the same as the 401(k) Retirement Plan. Payments out of the Deferred Compensation Plan are not made until termination of service or retirement. As part of the Company’s objective of restoring in this plan amounts that exceeded the allowable Company match and Company contributions to the 401(k) Retirement Plan because of statutory limits, the Company contributes an amount equal to the amount of the employer match and employer contribution that was not allowed to be contributed to the 401(k) Retirement Plan for such individuals due to statutory limits.

Executive Supplemental Retirement Plan (“SERP”). The SERP is a nonqualified pension plan. The SERP, like the defined benefit pension plan, is frozen and intended to be an extension of the Company’s qualified pension plan. Under the SERP, salary and bonus that are in excess of statutory limits are taken into account in determining nonqualified benefits payable to an employee.

Severance Policy

During fiscal 2012, the ONC Committee approved a severance policy for members of the Executive Council to ensure consistent treatment of individuals in such position in the event of an involuntary termination of employment without cause. The policy provides that such individuals would be paid their annual base salary at the time of termination in installment payments over the course of the year following termination and would be eligible to elect Company paid COBRA continuation coverage for one year following termination. In order to receive these benefits, participants are required to release the Company from any and all liability. All NEOs other than Mr. Burke are covered under the severance policy. While the policy also provides for separate benefits upon an involuntary termination at the time of a change in control, none of the NEOs are currently covered under the change in control provisions under the severance policy.

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Share Ownership Guidelines - Officers

Effective January 16, 2008, the board adopted share ownership guidelines for directors and officers of the Company, including the NEOs. The ONC Committee amended the guidelines in May 2010 because the relatively low stock price at that time had made compliance with the guidelines significantly more difficult than was intended by the board. The board continues to believe that directors and officers should have a meaningful personal investment in the Company. Only shares of stock, either restricted or unrestricted, count toward compliance with the guidelines.

The guidelines continue to provide that by the fifth anniversary of appointment to the position, or 2013, whichever occurs later, the President and CEO is expected to hold shares of Company stock with a value of at least four times his annual base salary at the commencement of the five-year period. As amended, the guidelines now do not distinguish between NEOs and other officers and provide that all officers, other than the President and CEO, are expected to hold shares of Company stock with a value of at least two times their annual base salary at the commencement of the five-year period by the end of that period. The stock value is determined by using the higher of the stock price at the time of measurement or the average stock price over the previous three years. The chair of the Nominating Committee evaluates whether an exception should be made for any officer, who, due to his or her unique financial circumstances or other extenuating circumstances, would incur a hardship by complying with the applicable guideline and, in such an event, may make an exception to the guidelines for such individual. Additionally, the guidelines may be temporarily waived for an officer who has an unusual personal circumstance or is approaching retirement and has a need to diversify his/her stock holdings.

Employment Agreements

The Company has an employment agreement with Mr. Burke. The Company also has change in control agreements with all of the other NEOs and certain other key employees. The purpose of these agreements is to ensure continuity and, in the case of a change in control, the continued dedication of key employees during any period of uncertainty due to a proposed or pending change in control of the Company. See Potential Post-Employment Payments below for additional information about these agreements.

Tax Implications for NEOs

The ONC Committee generally seeks to structure compensation amounts and arrangements so that they do not result in penalties for the NEOs under the Internal Revenue Code of 1986, as amended (the “Code”). For example, Section 409A of the Code imposes substantial penalties and results in the loss of any tax deferral for nonqualified deferred compensation that does not meet the requirements of that section. The ONC Committee has generally structured the elements of Modine’s compensation program so that they are either not characterized as nonqualified deferred compensation under Section 409A or meet the distribution, timing and other requirements of Section 409A. Without these steps, certain elements of compensation could result in substantial tax liability for the NEOs. Section 280G and related provisions of the Code impose substantial excise taxes on so-called “excess parachute payments” payable to certain executives upon a change in control and results in the loss of the compensation deductions for such payments by the executive’s employer. When the Company entered into the agreements described in the paragraph immediately above (all of which were entered into prior to 2009), the ONC Committee structured the change in control payment under the employment and change in control agreements with the NEOs to include a gross up for excise taxes imposed under Section 280G in order to preserve the after-tax value of those payments for those executives. The severance policy approved by the ONC Committee in fiscal 2012, which is applicable to those joining the Company’s senior management on or after adoption of the policy, does not provide excise tax gross ups in the event of a change in control.

Compliance with IRC Section 162(m)

Section 162(m) of the Code generally disallows a tax deduction to public companies for compensation over $1,000,000 paid to a company’s CEO and the other NEOs who are covered by Section 162(m). Qualifying performance-based compensation will not be subject to the deduction limit if certain requirements are met.

The ONC Committee believes that it is generally in the Company’s best interest to attempt to structure compensation amounts and plans in a manner that satisfies the requirements of Section 162(m). However, the ONC Committee also recognizes the need to retain flexibility to approve compensation amounts and plans that may not meet Section 162(m) standards in order to enable the Company to meet its overall objectives. Accordingly, the board and the ONC Committee have expressly reserved the authority to award non-deductible compensation in appropriate circumstances. Further, because of uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given that compensation intended by the Company to satisfy the requirements for deductibility under Section 162(m) will do so.

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COMPENSATION COMMITTEE REPORT

The ONC Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis with management; and, based on that review and discussion, the ONC Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s proxy statement and the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2012.

THE OFFICER NOMINATION AND COMPENSATION COMMITTEE

Marsha C. Williams, Chair

Suresh V. Garimella

Dennis J. Kuester

Larry O. Moore

Christopher W. Patterson

Michael T. Yonker

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2012 Summary Compensation Table

The following table sets forth compensation awarded to, earned by, or paid to the Company’s Principal Executive Officer, Principal Financial Officer, the three most highly compensated executive officers, other than the Principal Executive Officer and Principal Financial Officer, serving as executive officers as of March 31, 2012 for services rendered to the Company and its subsidiaries during the fiscal years ended March 31, 2012, 2011 and 2010. In accordance with SEC rules, information is provided for Mr. Lucareli for fiscal 2012 and 2011 only.

Name and Principal Position	Fiscal Year	Salary ($)(1)		Bonus ($)(2)		Stock Awards ($)(3)		Option Awards ($)(4)		Non-Equity Incentive Plan Compensation ($)(2)		Change in Pension Value ($)(5)		All Other Compensation ($)(6)		Total ($)
Thomas A.	2012		740,000		-		1,155,200		288,650		577,368	NA			104,715		2,865,933
Burke
President and	2011		697,350		-		1,372,683		832,142		1,396,875	NA			70,404		4,369,454
CEO
	2010		627,750		-		175,941		469,176		627,750	NA			25,893		1,926,510

Michael B.	2012		322,000		63,333		201,600		50,369		122,264		27,894		27,200		814,660
Lucareli
VP, Finance	2011		239,777		63,333		111,816		23,112		194,000		7,901		18,507		658,446
and CFO (7)

Thomas F. Marry	2012		350,000		96,667		874,900		81,562		164,850		50,476		34,670		1,653,125
Executive VP	2011		297,385		96,667		284,444		58,795		297,500		19,038		26,300		1,080,129
and COO (8)	2010		290,000		96,667		34,544		92,117		145,000		54,035		148,522		860,885

Scott L. Bowser -	2012		293,400		83,333		205,200		51,278		114,335		34,416		29,971		811,933
Regional VP-	2011		275,846		83,333		220,689		45,617		276,250		11,151		23,091		935,977
Americas	2010		250,000		83,333		24,524		65,397		125,000		35,832		108,578		692,664

Margaret C.	2012		288,300		83,333		201,600		50,396		112,343		26,415		27,417		789,804
Kelsey
Vice President –	2011		272,154		83,333		220,689		45,617		218,000		8,395		21,966		870,154
Corporate
Development, General Counsel & Secretary	2010		250,000		83,333		26,277		70,067		100,000		27,455		16,047		573,179

(1)	The salary amounts include amounts deferred at the NEO’s option through contributions to the Modine 401(k) Retirement Plan and the Modine Deferred Compensation Plan.

(2)	The amounts in the “Bonus” column consist of payments of the retention bonus described in the Compensation Discussion and Analysis section above. Payments under the MIP are set forth in the “Non-Equity Incentive Plan Compensation” column of this table.

(3)

Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for retention restricted stock awards and performance stock awards (for fiscal 2012 and 2011). For fiscal 2012, the maximum grant date fair value for the performance stock awards is as follows for the NEOs – Mr. Burke $1,732,800; Mr. Lucareli $302,400; Mr. Marry $489,600; Mr. Bowser $307,800; and Ms. Kelsey $302,400. See Grants of Plan-Based Awards for Fiscal 2012, Compensation Discussion and Analysis – Equity Incentives – Long-Term Incentive Compensation and the Outstanding Equity Awards at Fiscal Year End table for further discussion regarding the retention restricted stock awards and the performance stock awards. The assumptions used to determine the value of the awards are discussed in Note 23 of the Notes to the Consolidated Financial Statements of the Company contained in the Company’s Form 10-K for the fiscal year ended March 31, 2012.

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(4)

Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for grants of stock options. The assumptions used to determine the value of the options are discussed in Note 23 of the Notes to the Consolidated Financial Statements of the Company contained in the Company’s Form 10-K for the fiscal year ended March 31, 2012. The actual value, if any, that an optionee will realize upon the exercise of an option will depend on the excess of the market value of the Company’s common stock over the exercise price on the date the option is exercised, which cannot be determined until the option is exercised.

(5)

Represents the change in pension value between the end of fiscal 2011 and the end of fiscal 2012 for the NEOs who participate in The Modine Manufacturing Company Pension Plan and the Executive Supplemental Retirement Plan. For purposes of calculating the change in benefit values from year to year, the discount rates used to determine the present value of the benefit were 4.86 percent as of March 31, 2012 and 5.83 percent as of March 31, 2011.

(6)	The amounts set forth in this column for fiscal 2012 include:

●

Company matching contributions to participant accounts in the 401(k) Retirement Plan (“401(k) Company Match”) equal to 50 percent of the amount contributed to the plan by the employee, subject to a maximum contribution of the lesser of 2.5 percent of pay or $16,500;

●

Company contributions to 401(k) Retirement Plan (“Company Contribution to 401(k) Retirement Plan”) equal to 4 percent of salary up to a maximum salary of $245,000;

●

Company contributions to the Deferred Compensation Plan equal to (a) the amount of the Company match on salary that could not be contributed to the 401(k) Retirement Plan and (b) the amount of the Company contribution that could not be contributed to 401(k) Retirement Plan because of statutory limits (“Company Excess Match/Contribution Overflow to Deferred Compensation Plan”);

●

Company payment of long-term disability insurance premiums (“Long-Term Disability Insurance Premiums”); and

●

Company payment of life insurance premiums (“Life Insurance Premiums”).

Name	401(k) Company Match ($)		Company Contribution to 401(k) Retirement Plan ($)		Company Excess Match / Contribution Overflow to Deferred Compensation Plan ($)		Long-Term Disability Insurance Premiums ($)		Life Insurance Premiums ($)		Total ($)
Thomas A. Burke		6,125		9,800		87,470		750		570		104,715

Michael B. Lucareli		6,125		9,800		10,006		737		532		27,200

Thomas F. Marry		6,125		9,800		17,435		750		560		34,670

Scott L. Bowser		6,125		9,800		12,819		728		499		29,971

Margaret C. Kelsey		6,125		9,800		10,287		715		490		27,417

(7)	Mr. Lucareli was appointed the Principal Financial Officer effective as of July 12, 2010.

(8)	Mr. Marry’s annual base salary was increased to $400,000 in connection with his promotion to Executive Vice President and Chief Operating Officer effective as of January 26, 2012. Prior to this increase, Mr. Marry’s annual base salary during fiscal 2012 was $340,000.

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Grants of Plan-Based Awards for Fiscal 2012

In fiscal 2012, the Company granted stock options, retention restricted stock, performance stock and cash awards as Plan-Based Awards.

Stock options have an exercise price equal to the fair market value of the Company’s common stock on the date of grant. Stock options granted in fiscal 2012 vest in four annual installments commencing on the date of grant. The stock options expire ten years from the date of grant. Retention restricted stock granted in fiscal 2012 vests in four annual installments commencing one year after the date of grant. Further details regarding the performance stock and cash awards (MIP awards) are described in the Compensation Discussion and Analysis section above.

The following table sets forth information about grants of any award made in the fiscal year ended March 31, 2012 to the NEOs.

Name	Grant Date	Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)						Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards; Number of Shares of Stock or Units (#)(2)		All Other Option Awards; Number of Securities Under- lying Options (#)(2)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)
		Threshold ($)		Target ($)		Max ($)		Threshold (#)		Target (#)		Max (#)

Thomas A.	NA		370,000		740,000		1,480,000													NA
Burke	7/21/11								29,015		58,031		116,062								866,400
	7/21/11														19,344						288,800
	7/21/11																27,622		14.93		288,650

Michael B.	NA		80,500		161,000		322,000													NA
Lucareli	7/21/11								5,064		10,127		20,255								151,200
	7/21/11														3,376						50,400
	7/21/11																4,820		14.93		50,369

Thomas F.	NA		105,000		210,000		420,000										7,805		14.93	NA
Marry	7/21/11								8,198		16,397		32,793								244,800
	7/21/11														5,466						81,600
	7/21/11																				81,562
	1/26/12														50,000						548,500

Scott L.	NA		73,350		146,700		293,400													NA
Bowser	7/21/11								5,154		10,308		20,616								153,900
	7/21/11														3,436						51,300
	7/21/11																4,907		14.93		51,278

Margaret C.	NA		72,075		144,150		288,300													NA
Kelsey	7/21/11								5,064		10,127		20,255								151,200
	7/21/11														3,376		4,820				50,400
	7/21/11																		14.93		50,369

(1)	The cash incentive awards were made under the MIP pursuant to the Company’s authority to grant cash bonus awards under the Incentive Plan.

(2)	Stock options, retention restricted stock and performance stock awards are made under the Incentive Plan.

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Outstanding Equity Awards at Fiscal Year End

Option Awards

Stock Awards

Name

Number of Securities Underlying Unexercised Options Exercisable

(#)(1)

Number of Securities Underlying Unexercised Options Unexercisable

(#)(1)

Option

Exercise

Price ($)

Option Expiration Date

Number

or Units

of Stock

that

Have Not

Vested (#)(2)

Market

Value of

or Units

of Stock

that

Have Not

Vested ($)(2)

Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights that Have Not Vested (#)(3)

Equity Incentive

Plan Awards;

Market or

Payout Value of

Unearned

Shares, Units or

other Rights that

Have Not

Vested ($)(3)

Thomas A.

25,609

30.40

5/31/2015

57,242

505,447

32,450

286,534

Burke

9,298

32.61

1/17/2016

12,471

27.22

1/16/2017