<SEC-DOCUMENT>0001193125-17-083017.txt : 20170315
<SEC-HEADER>0001193125-17-083017.hdr.sgml : 20170315
<ACCEPTANCE-DATETIME>20170315113005
ACCESSION NUMBER:		0001193125-17-083017
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20170428
FILED AS OF DATE:		20170315
DATE AS OF CHANGE:		20170315
EFFECTIVENESS DATE:		20170315

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GRACO INC
		CENTRAL INDEX KEY:			0000042888
		STANDARD INDUSTRIAL CLASSIFICATION:	PUMPS & PUMPING EQUIPMENT [3561]
		IRS NUMBER:				410285640
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1230

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-09249
		FILM NUMBER:		17690247

	BUSINESS ADDRESS:	
		STREET 1:		88 11TH AVENUE NE
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55413-1894
		BUSINESS PHONE:		6126236000

	MAIL ADDRESS:	
		STREET 1:		CT CORPORATION SYSTEM, INC.
		STREET 2:		100 SOUTH FIFTH STREET, SUITE 1075
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55401
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>d358732ddef14a.htm
<DESCRIPTION>DEF 14A
<TEXT>
<HTML><HEAD>
<TITLE>DEF 14A</TITLE>
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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="line-height:0px;margin-top:0px;margin-bottom:0px;border-bottom:0.5pt solid #000000">&nbsp;</P>
<P STYLE="line-height:3px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000">&nbsp;</P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="5"><B>UNITED STATES </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="5"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="3"><B>Washington, D.C. 20549 </B></FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="5"><B>SCHEDULE 14A INFORMATION </B></FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>Proxy Statement Pursuant to Section 14(a) of the </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="3"><B>Securities Exchange Act of 1934 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>(Amendment No. &nbsp;&nbsp; )
</B></FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Filed by the
Registrant&nbsp;&nbsp;&#9746;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Filed by a Party other than the
Registrant&nbsp;&nbsp;&#9744;</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Check the appropriate box: </FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#9744;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Preliminary Proxy Statement</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="4"></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#9744;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Confidential, for Use of the Commission Only&nbsp;(as permitted by Rule 14a-6(e)(2))</B></FONT></TD></TR>
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<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#9746;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Definitive Proxy Statement</FONT></TD></TR>
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<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#9744;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Definitive Additional Materials</FONT></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR STYLE="page-break-inside:avoid">
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#9744;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Soliciting Material under Rule 14a-12</FONT></TD></TR>
<TR STYLE="page-break-inside:avoid">
<TD VALIGN="bottom" COLSPAN="5" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="6"><B>Graco Inc.</B></FONT></TD></TR>
<TR STYLE="page-break-inside:avoid">
<TD VALIGN="bottom" COLSPAN="5" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>(Name of registrant as specified in its charter)</B></FONT></TD></TR>
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<TD HEIGHT="16" COLSPAN="5"></TD></TR>
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<TD COLSPAN="5" VALIGN="bottom"></TD></TR>
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<TD VALIGN="bottom" COLSPAN="5" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>(Name of person(s) filing proxy statement, if other than the registrant)</B></FONT></TD></TR>
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<TD HEIGHT="32" COLSPAN="5"></TD></TR>
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<TD VALIGN="bottom" COLSPAN="5"><FONT STYLE="font-family:Times New Roman" SIZE="2">Payment of Filing Fee (Check the appropriate box):</FONT></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR STYLE="page-break-inside:avoid">
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#9746;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">No fee required.</FONT></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#9744;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.</FONT></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">(1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Title of each class of securities to which transaction applies:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">(2)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Aggregate number of securities to which transaction applies:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">(3)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">(4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Proposed maximum aggregate value of transaction:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
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<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">(5)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Total fee paid:</FONT></TD></TR>
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<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#9744;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Fee paid previously with preliminary materials.</FONT></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="4"></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#9744;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form or Schedule and the date of its filing.</FONT></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">(1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Amount Previously Paid:</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">(2)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Form, Schedule or Registration Statement No.:</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>

<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">(3)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Filing Party:</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
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<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">(4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Date Filed:</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
</TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="line-height:0px;margin-top:0px;margin-bottom:0px;border-bottom:0.5pt solid #000000">&nbsp;</P>
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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">GRACO INC. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">88 Eleventh Avenue N.E. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Minneapolis, MN 55413 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Shareholder: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The 2017 Annual Meeting of Shareholders of Graco Inc. will be held on April&nbsp;28, 2017, beginning at 1:00&nbsp;p.m. Central Time.<B> </B>We are pleased
that this year&#146;s meeting will again be a completely virtual meeting of shareholders. You may attend the meeting, vote your shares and submit questions electronically during the meeting via live webcast by visiting
<U>www.virtualshareholdermeeting.com/GGG2017</U>. You will need the <FONT STYLE="white-space:nowrap">16-digit</FONT> control number that is printed in the box marked by the arrow on your Notice Regarding the Availability of Proxy Materials to enter
the annual meeting. We recommend that you log in at least fifteen minutes before the meeting to ensure you are logged in when the meeting starts. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">At this
meeting, shareholders will consider the following matters: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top">Election of three directors to serve for three-year terms. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top">Ratification of the appointment of Deloitte&nbsp;&amp; Touche LLP as our independent registered public accounting firm for the fiscal year 2017. </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top">An advisory, <FONT STYLE="white-space:nowrap">non-binding</FONT> resolution to approve our executive compensation. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">4.</TD>
<TD ALIGN="left" VALIGN="top">An advisory, <FONT STYLE="white-space:nowrap">non-binding</FONT> vote on the frequency for which shareholders will have an advisory, <FONT STYLE="white-space:nowrap">non-binding</FONT> vote on our executive
compensation. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">5.</TD>
<TD ALIGN="left" VALIGN="top">Approval of the Incentive Bonus Plan. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">6.</TD>
<TD ALIGN="left" VALIGN="top">Transaction of such other business as may properly come before the meeting. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Shareholders of record at the
close of business on February&nbsp;27, 2017, are entitled to vote at this meeting or any adjournment. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We encourage you to join us via the Internet and
vote at the meeting. Regardless of whether you plan on joining the meeting, we encourage you to vote by Internet, or by requesting a paper copy and voting by telephone or by returning your proxy card by mail, as described in further detail later in
this Proxy Statement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If you do not vote by Internet, telephone, returning a proxy card or voting your shares online during the meeting, you will lose
your right to vote on matters that are important to you as a shareholder. Accordingly, please vote your shares in one of the methods identified above. Instructions on how to vote while participating in the meeting live via the Internet are posted at
<U>www.virtualshareholdermeeting.com/GGG2017.</U> </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="49%"></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Sincerely,</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
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<TD VALIGN="top">


<IMG SRC="g358732g84j31.jpg" ALT="LOGO">
</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">


<IMG SRC="g358732g49n75.jpg" ALT="LOGO">
</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman">Patrick J. McHale</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman">Karen Park Gallivan</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">President and Chief Executive Officer</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Secretary</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">March&nbsp;15, 2017</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Minneapolis, Minnesota</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">1 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="toc"></A>TABLE OF CONTENTS </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="11%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="85%"></TD>
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<TD></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_1">VOTING METHODS</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">5</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_2">BOARD OF DIRECTORS</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">5</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_3">Nominees and Continuing Directors</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">5</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_4">Qualification Standards</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_5">Qualifications of Current Directors</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_6">Board Diversity</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_8">Nominee Selection Process</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_9">DIRECTOR INDEPENDENCE</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_10">BOARD LEADERSHIP STRUCTURE</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_11">BOARD OVERSIGHT OF RISK</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">9</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_12">MEETINGS OF THE BOARD OF DIRECTORS</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">10</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_13">COMMITTEES OF THE BOARD OF DIRECTORS</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">10</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_14">Audit Committee</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">10</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_15">Governance Committee</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">10</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_16">Management Organization and Compensation Committee</A></P></TD>

<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">11</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_17">COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">11</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_18">DIRECTOR COMPENSATION</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">11</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_19">Director Compensation Table for Fiscal Year Ended December&nbsp;
30, 2016</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">13</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_20">COMMUNICATIONS WITH THE BOARD</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_21">CORPORATE GOVERNANCE DOCUMENTS</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_22">AUDIT COMMITTEE REPORT</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_23">Report of the Audit Committee</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">14</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_24">Independent Registered Public Accounting Firm Fees and
Services</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">15</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_25"><FONT STYLE="white-space:nowrap">Pre-Approval</FONT>
Policies</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">15</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_26">EXECUTIVE COMPENSATION</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">16</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_27">Compensation Discussion and Analysis</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">16</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_28">Report of the Management Organization and Compensation Committee
</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">27</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_29">Summary Compensation Table</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">28</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_30">Grants of Plan-Based Awards in 2016</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">29</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_31">Outstanding Equity Awards at 2016 Fiscal Year End</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">30</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_32">Option Exercises and Stock Vested in 2016</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">31</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_33">Change of Control and Post-Termination Payments</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">31</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_34">Potential Payments Upon Termination or Following a Change of Control
 at December&nbsp;30, 2016</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">33</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_35">Retirement Benefits</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">33</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_36">Pension Benefits at 2016 Fiscal Year End</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">35</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_37">Nonqualified Deferred Compensation</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">35</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_38">Nonqualified Deferred Compensation at 2016 Fiscal Year
End</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">36</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_39">CEO Succession Planning</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">36</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_40">EQUITY COMPENSATION PLAN INFORMATION</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">36</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_41">BENEFICIAL OWNERSHIP OF SHARES</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">37</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_42">Director and Executive Officer Beneficial
Ownership</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">37</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_43">Principal Shareholder Beneficial Ownership</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">38</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_44">Section 16(a) Beneficial Ownership Reporting
Compliance</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">38</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_45">RELATED PERSON TRANSACTION APPROVAL POLICY</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">38</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">PROPOSAL&nbsp;1:</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_46">ELECTION OF DIRECTORS</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">39</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">PROPOSAL 2:</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><A HREF="#tx358732_47">RATIFICATION OF THE APPOINTMENT OF INDEPENDENT<BR>REGISTERED PUBLIC ACCOUNTING FIRM </A></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">40</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">PROPOSAL&nbsp;3:</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_48">ADVISORY VOTE ON OUR EXECUTIVE COMPENSATION </A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">40</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">PROPOSAL&nbsp;4:</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_49">ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON OUR EXECUTIVE</A></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_49">COMPENSATION </A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">41</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">PROPOSAL&nbsp;5:</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_50">APPROVAL OF THE INCENTIVE BONUS PLAN </A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">41</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_51">SHAREHOLDER PROPOSALS FOR THE ANNUAL MEETING IN THE YEAR
2018</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">43</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_52">OTHER MATTERS</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">43</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><A HREF="#tx358732_53">APPENDIX A</A></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="white-space:nowrap">A-1</FONT></TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">2 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>


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<TD WIDTH="99%"></TD>
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<TD></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
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<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>GENERAL REQUESTS FOR GRACO INC. 2016 ANNUAL REPORT ON FORM <FONT STYLE="white-space:nowrap">10-K</FONT></B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt" align="left">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">The Graco Inc. 2016 Annual Report on Form <FONT
STYLE="white-space:nowrap">10-K,</FONT> including the Financial Statements and the Financial Statement Schedule, is available to the public at www.graco.com. A copy may also be obtained free of charge by calling (612)
<FONT STYLE="white-space:nowrap">623-6609</FONT> or writing:</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt" align="left">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Investor Relations</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Graco Inc.</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">P.O. Box 1441</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Minneapolis,
Minnesota</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">55440-1441</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">3 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">GRACO INC. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">88 Eleventh Avenue N.E. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Minneapolis, MN 55413 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>PROXY
STATEMENT </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>FOR ANNUAL MEETING OF SHAREHOLDERS </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>TO BE HELD APRIL&nbsp;28, 2017 </B></P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Your proxy
is solicited by the Board of Directors of Graco Inc. in connection with our Annual Meeting of Shareholders to be held on April&nbsp;28, 2017 and any adjournments of that meeting (the &#147;Meeting&#148;). Throughout this Proxy Statement, we may
refer to Graco Inc. as &#147;us,&#148; &#147;we,&#148; &#147;Graco,&#148; &#147;our Company&#148; or &#147;the Company.&#148; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We have provided you with
access to our proxy materials on the Internet. We are providing a Notice Regarding the Availability of Proxy Materials (the &#147;Notice&#148;) to our shareholders of record and our beneficial owners. All shareholders will have the ability to access
the proxy materials free of charge on the website identified in the Notice or request email or paper copies of the proxy materials. The Notice contains instructions on how to access the proxy materials through the Internet or request electronic or
paper copies. If your shares are held by a broker, bank, broker-dealer or similar organization, you are the beneficial owner of shares held in &#147;street name&#148; and the Notice will be forwarded to you by that organization. As the beneficial
owner, you have the right to direct the organization holding your shares how to vote the shares. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The costs of the solicitation, including the cost of
preparing and mailing the Notice, Notice of Annual Meeting of Shareholders, and this Proxy Statement, will be paid by us. Solicitation will be primarily through Internet availability of this Proxy Statement to all shareholders entitled to vote at
the Meeting. Proxies may be solicited by our officers personally, but at no compensation in addition to their regular compensation as officers. We may reimburse brokers, banks and others holding shares in their names for third parties for the cost
of forwarding proxy material to, and obtaining proxies from, third parties. The Notice will be mailed to shareholders on or about March&nbsp;15, 2017, and the proxy materials will be available at that time on www.proxyvote.com. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Proxies may be revoked at any time prior to being voted by giving written notice of revocation to our Secretary. All properly executed proxies received by
management will be voted in the manner set forth in this Proxy Statement or as otherwise specified by the shareholder giving the proxy. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Shares voted as
abstentions on any matter will be counted as shares that are present and entitled to vote for purposes of determining the presence of a quorum at the Meeting, and as unvoted (although present and entitled to vote) for purposes of determining the
approval of each matter as to which the shareholder has abstained. If a broker submits a proxy which indicates that the broker does not have discretionary authority as to certain shares to vote on one or more matters, those shares will be counted as
shares that are present and entitled to vote for purposes of determining the presence of a quorum at the Meeting, but will not be considered as present and entitled to vote with respect to such matters. The election of directors, the advisory vote
on our executive compensation, the advisory vote on the frequency of the advisory vote on our executive compensation and the vote on the Incentive Bonus Plan will be considered proposals on which your broker does not have discretionary authority to
vote. Thus, if your shares are held in street name and you do not provide instructions as to how your shares are to be voted on these matters, your broker or other nominee will not be able to vote your shares in these matters. Accordingly, we urge
you to provide instructions to your broker or nominee so that your votes may be counted on these matters. You should vote your shares by following the instructions provided on the voting instruction card that you receive from your broker. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The vote required for the election of directors in an uncontested election is a majority of votes cast, where the number of votes cast &#147;for&#148; a
nominee exceeds the number of votes cast &#147;against&#148; a nominee. In a contested election, the vote required for the election of directors is a plurality of votes cast. In the event an incumbent director does not receive a sufficient number of
the votes cast for <FONT STYLE="white-space:nowrap">re-election,</FONT> our Corporate Governance Guidelines require that the director promptly offer to tender his or her resignation to the Board. The Governance Committee will make a recommendation
to the Board on whether to accept or reject the offer. The Board, taking into account the recommendation of the Governance Committee, will decide whether to accept or reject the offer, and will publicly disclose its decision and the rationale behind
it within 90 days after the date of the election. The vote required to ratify the appointment of Deloitte&nbsp;&amp; Touche LLP as our independent registered public accounting firm for the fiscal year 2017 and the vote on the Incentive Bonus Plan
require the approval of the greater of a majority of the shares present at the Meeting and entitled to vote, or a majority of the voting power of the minimum number of shares necessary to constitute a quorum. The vote on our executive compensation
and the vote on the frequency of the vote on our executive compensation are advisory and <FONT STYLE="white-space:nowrap">non-binding.</FONT> However, the Board will consider shareholders to have approved our executive compensation if the number of
the votes cast &#147;for&#148; that proposal exceeds the number of votes cast &#147;against&#148; that proposal. Similarly, the Board will consider shareholders to have selected the frequency option for the advisory vote on our executive
compensation that receives the most votes. An abstention will have no effect on the election of directors, the vote on our executive compensation or the vote </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">4 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
on the frequency of the vote on our executive compensation, but will have the effect of a vote against the ratification of the appointment of Deloitte and Touche LLP and against approval of the
Incentive Bonus Plan. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Only shareholders of record as of the close of business on February&nbsp;27, 2017 may vote at the Meeting. As of that date, there
were 55,272,377 issued and outstanding common shares of the Company, the only class of securities entitled to vote at the Meeting. Each share registered to a shareholder of record is entitled to one vote. Cumulative voting is not permitted. </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_1"></A>VOTING METHODS </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Registered
shareholders may vote by using any one of the following methods: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top">Vote by Internet. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:7%; font-size:10pt; font-family:Times New Roman">You may visit www.proxyvote.com to vote your shares on the Internet, 24
hours a day, seven days a week, prior to 11:59 p.m., Eastern Time, on April&nbsp;27, 2017. Have your Notice or proxy card (if you have requested one) in front of you when you access the website, as they include information, including a unique
shareholder control number, that is required to access the system. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top">Vote by Telephone. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:7%; font-size:10pt; font-family:Times New Roman">You may request a paper proxy card by following the instructions on your
Notice for requesting a copy of materials. After you receive your paper proxy card, you may call the toll-free phone number,
<FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">1-800-690-6903,</FONT></FONT></FONT> listed on your proxy card to vote your shares, 24 hours a day, seven days a week, prior to 11:59 p.m., Eastern
Time, on April&nbsp;27, 2017. Have your proxy card or Notice in front of you when calling, as they include information, including a unique shareholder control number, which is required to access the system. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top">Vote by Mail. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:7%; font-size:10pt; font-family:Times New Roman">You may request a paper proxy card by following the instructions on your Notice
for requesting a copy of materials. After you receive your paper proxy card, you may mark, date, and sign the proxy card, and return it to be received no later than April&nbsp;27, 2017. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%" VALIGN="top" ALIGN="left">4.</TD>
<TD ALIGN="left" VALIGN="top">Vote Online During the Meeting. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:7%; font-size:10pt; font-family:Times New Roman">You may vote online during the Meeting through the link
www.virtualshareholdermeeting.com/GGG2017. The <FONT STYLE="white-space:nowrap">16-digit</FONT> control number provided on your Notice or proxy card is necessary to access this site. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If you own your shares through a broker, bank, broker-dealer or similar organization, you may vote by the methods made available to you through your broker.
Follow the instructions describing the available processes for voting your stock that are provided to you by your broker. </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_2"></A>BOARD OF DIRECTORS </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_3">
</A>Nominees and Continuing Directors </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following information is given with respect to the three nominees for election at the Meeting and the other
six directors whose terms of office will continue after the Meeting, and includes a description of the particular experience, qualifications, attributes or skills that led the Board to conclude that each of the nominees and directors should serve as
members of the Board. Except as noted below, each of the nominees and directors has held the same position, or another executive position with the same employer, for the past five years. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Nominees for election at the Meeting to terms expiring in 2020: </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Patrick J. McHale </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:6%; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;McHale, 55,
is President and Chief Executive Officer of Graco Inc., a position he has held since June 2007. He served as Vice President and General Manager, Lubrication Equipment Division of Graco from June 2003 until June 2007. He was Vice President,
Manufacturing and Distribution Operations from April 2001 until June 2003. He served as Vice President, Contractor Equipment Division from February 2000 to March 2001. Prior to becoming Vice President, Lubrication Equipment Division in September
1999, he held various manufacturing management positions in </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">5 </P>
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Minneapolis, Minnesota; Plymouth, Michigan; and Sioux Falls, South Dakota. Mr.&nbsp;McHale joined the Company in December 1989 and has been a director since June 2007. Mr.&nbsp;McHale has over <FONT
STYLE="white-space:nowrap">twenty-six</FONT> years of progressive experience in various manufacturing, sales and marketing roles while at Graco. He has extensive manufacturing experience and <FONT STYLE="white-space:nowrap">in-depth</FONT> knowledge
of financial and managerial accounting practices at Graco. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Lee R. Mitau </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:6%; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Mitau, 68, was Executive Vice President and General Counsel of U.S. Bancorp, the fifth-largest commercial bank in the United States
by assets, from 1995 until his retirement in March 2013. Mr.&nbsp;Mitau has been a director of Graco since May 1990. He served as Chairman of the Board of the Company from May 2002 until April 2006 and has been serving as Chairman of the Board of
the Company since June 2007. He also serves as Chairman of the Board of H.B. Fuller Company, a position he has held since 2006. Among other qualifications, Mr.&nbsp;Mitau brings to our Board extensive public company legal and governance expertise
developed in his roles as an executive, a director and as the former chair of the corporate and securities practice of a global law firm. In addition, he is an expert in corporate finance and mergers and acquisitions. With over <FONT
STYLE="white-space:nowrap">twenty-six</FONT> years on our Board, Mr.&nbsp;Mitau has developed an <FONT STYLE="white-space:nowrap">in-depth</FONT> knowledge of our business. His long history with our Company, combined with his leadership and
corporate governance skills, makes him particularly well-qualified to be our Chairman and Chair of our Governance Committee. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Martha A. Morfitt
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:6%; font-size:10pt; font-family:Times New Roman">Ms.&nbsp;Morfitt, 59, is President and Chief Executive Officer of River Rock Partners, Inc., a business and cultural transformation
consulting firm. She assumed this position in 2008. Ms.&nbsp;Morfitt formerly served as Chief Executive Officer of Airborne, Inc., a manufacturer of dietary supplements, from 2009 through March 2012. Ms.&nbsp;Morfitt left her position at Airborne
effective March&nbsp;30, 2012 as a result of the acquisition of Airborne by Schiff Nutrition Group on March&nbsp;30, 2012. She also served as President and Chief Executive Officer of CNS, Inc., a manufacturer and marketer of consumer products, from
2001 through March 2007. Ms.&nbsp;Morfitt left her position at CNS effective March 2007 as a result of the acquisition of CNS by GlaxoSmithKline plc in December 2006. Ms.&nbsp;Morfitt has been a director of Graco since October 1995 and is also a
director of lululemon athletica inc. From 2008 until June 2015, Ms.&nbsp;Morfitt served as a director of Life Time Fitness, Inc.; from 1998 until 2007, she served as a director of CNS; from 2005 until 2006, she served as a director of Intrawest
Corporation; and from 2007 until 2010, she served as a director of Solta Medical, Inc. f/k/a Thermage, Inc. Among other qualifications, Ms.&nbsp;Morfitt brings a wealth of global marketing and leadership skills to our Board. Her experience as CEO at
River Rock Partners, Airborne and CNS, as well as her experience as a Vice President at Pillsbury Company, allow her to provide our Company with significant strategic and product marketing guidance. With
<FONT STYLE="white-space:nowrap">twenty-one</FONT> years on our Board, Ms.&nbsp;Morfitt&#146;s considerable knowledge of our business makes her well-suited to provide advice with respect to our strategic plans and marketing programs. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Directors whose terms continue until 2018: </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>William
J. Carroll </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:6%; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Carroll, 72, was Chief Executive Officer of Limo-Reid, Inc. d/b/a NRG Dynamix, a power train designer and
manufacturer, from March 2009 until June 2011. Mr.&nbsp;Carroll has been a principal of Highland Jebco LLC, which provides advisory and consulting services to the automotive parts industry, since 2006. He was the Director of Economic and Community
Development for the City of Toledo, Ohio from September 2004 until January 2006. From September 2003 to March 2004, Mr.&nbsp;Carroll was President and Chief Operating Officer of Dana Corporation, a manufacturer and supplier of components and systems
for vehicular and industrial manufacturers worldwide. From 1997 to March 2004, Mr.&nbsp;Carroll was President - Automotive Systems Group of Dana Corporation. Mr.&nbsp;Carroll has been a director of Graco since June 1999. Mr.&nbsp;Carroll brings to
our Board a seasoned perspective and comprehensive breadth of expertise on the automotive industry, a key market served by Graco, as well as considerable skill in financial, accounting and manufacturing oversight. Our Board recognizes this skill
through its designation of Mr.&nbsp;Carroll as one of our audit committee financial experts and by his appointment as Chair of the Audit Committee. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Jack W. Eugster </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:6%; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Eugster, 71,
was President and Chief Executive Officer of Musicland Stores Corporation, a retail music and home video company, from 1980 until his retirement in January 2001. He also served as Chairman of Musicland Stores from 1986 until his retirement.
Mr.&nbsp;Eugster has been a director of Graco since February 2004. From 2004 until April 2016, he served as a director of Black Hills Corporation; from 2009 until June 2015, Mr.&nbsp;Eugster served as a director of Life Time Fitness, Inc.; from 1993
until November 2012, Mr.&nbsp;Eugster served as a director of Donaldson Company, Inc.; and from 2000 until 2007, he was a director of Golf Galaxy, Inc. From 1991 until 2005, Mr.&nbsp;Eugster served as a director of ShopKo Stores, Inc., and was
Chairman of the Board from 2001 until 2005. Among other qualifications, Mr.&nbsp;Eugster brings to our </P>
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Board more than forty years of public company experience, including extensive experience as an executive and as a director. He has extensive knowledge of and expertise in finance and marketing,
and is able to devote considerable attention to Company matters. Our Board recognizes this experience and expertise by his appointment as Chair of the Management Organization and Compensation Committee. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>R. William Van Sant </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:6%; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Van Sant,
78, has been a Senior Operating Partner at Tenex Capital Management, L.P., a private equity firm, since December 2013, and a Special Advisor at Yukon Partners II, LLC, a provider of mezzanine financing for middle-market private equity transactions,
since July 2014. From September 2012 until December 2013, he was a Senior Advisor at Tenex. He serves as the Chairman or as a director of several portfolio companies of Tenex and is also the Executive Chairman of the Board of Directors of Builtrite
Manufacturing, a portfolio company of TJM Capital Partners. In addition to actively advising private equity funds and their portfolio companies, Mr.&nbsp;Van Sant may from time to time take ownership interests in the funds and portfolio companies he
advises. From January 2008 until February 2013, he was an Operating Partner of Stone Arch Capital, LLC, a private equity firm. From August 2006 through December 2007, he was President and Chief Executive Officer of Paladin Brands Holding, Inc.,
which manufactures attachments for construction equipment. From 2003 until August 2006, Mr.&nbsp;Van Sant was Chairman, and from 2003 until November 2005, Mr.&nbsp;Van Sant was Chairman and Chief Executive Officer, of Paladin Brands, LLC. He was an
operating partner with Norwest Equity Partners, a private equity firm, from 2001 through 2006. Mr.&nbsp;Van Sant has been a director of Graco since February 2004 and is also a director of H.B. Fuller Company. Among other qualifications, Mr.&nbsp;Van
Sant is an expert in management, finance and manufacturing operations, experience he has acquired over many years as an executive and/or director of various manufacturing companies, including those listed above as well as Nortrax, Inc., Lukens Inc.,
Blount, Inc., and Cessna Aircraft Company. He also held roles of increasing responsibility over a nearly thirty year career at John Deere Company. Mr.&nbsp;Van Sant&#146;s strong leadership experience and seasoned business valuation skills make him
a key contributor to our Board on strategy and growth topics, particularly with respect to mergers and acquisitions. He has been designated by our Board as an audit committee financial expert. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Directors whose terms continue until 2019: </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Eric P.
Etchart </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:6%; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Etchart, 60, was Senior Vice President, Business Development of The Manitowoc Company, Inc., a manufacturer of
cranes and foodservice equipment, from January 2015 until his retirement in January 2016. Mr.&nbsp;Etchart served as President of Manitowoc Cranes and Senior Vice President of The Manitowoc Company, Inc. from 2007 until January of 2015. From 2001 to
2007, Mr.&nbsp;Etchart was Executive Vice President, Asia Pacific and President, Zhang Jia Gang Company of the Manitowoc Crane Group, in Shanghai, China. Prior to that, Mr.&nbsp;Etchart held various management positions at Potain S.A., until it was
acquired by Manitowoc in 2001, and PPM Cranes S.A. Mr.&nbsp;Etchart has been a director of Graco since December 2010. He also serves as a director of Alamo Group Inc. and of <FONT STYLE="white-space:nowrap">WD-40</FONT> Company. Among other
qualifications, Mr.&nbsp;Etchart brings to our Board over thirty years of global manufacturing experience, as well as extensive knowledge of and expertise in finance and marketing. Mr.&nbsp;Etchart, a French-national with over twenty years of
experience in management positions outside of the U.S., including positions in China, Singapore, Italy, France and the Middle East, is particularly well-suited to provide an international perspective to the Board as we develop our business in global
markets. Mr.&nbsp;Etchart was recognized as a National Association of Corporate Directors (NACD) Board Leadership Fellow in May 2016. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Jody H. Feragen
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:6%; font-size:10pt; font-family:Times New Roman">Ms.&nbsp;Feragen, 61, was the Executive Vice President and Chief Financial Officer of Hormel Foods Corporation, a multinational
marketer and manufacturer of brand name food and meat products, from October 2010 until October 2016. She served as Hormel&#146;s Senior Vice President and Chief Financial Officer from 2007 to 2010, and Vice President of Finance and Treasurer from
2005 to 2007. She also served on Hormel&#146;s board of directors from 2007 until October 2016. Ms.&nbsp;Feragen is a director and Chair of the Audit Committee of Patterson Companies,&nbsp;Inc., and is the Chair of the University of North Dakota
Alumni Association&nbsp;&amp; Foundation. Ms.&nbsp;Feragen has been a director of Graco since September 2015. Ms.&nbsp;Feragen brings to our Board a wealth of financial expertise, business acumen, strong leadership skills and extensive public
company experience. She has been designated by our Board as an audit committee financial expert. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>J. Kevin Gilligan </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:6%; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Gilligan, 62, is Chairman and Chief Executive Officer of Capella Education Company, an online education provider. He has served as
Chief Executive Officer of Capella Education since March 2009, and as Chairman since February 2010. Mr.&nbsp;Gilligan was President and Chief Executive Officer of United Subcontractors, Inc., a national construction services
</P>
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company, from October 2004 until February 2009. United Subcontractors voluntarily filed for Chapter 11 bankruptcy on March&nbsp;31, 2009 and emerged from the bankruptcy proceedings on
June&nbsp;30, 2009. Mr.&nbsp;Gilligan was President and Chief Executive Officer, Automation and Control Solutions, Honeywell International, Inc., a diversified technology and manufacturing company, from 2001 until January 2004. Mr.&nbsp;Gilligan has
been a director of Graco since February 2001 and is also a director of Capella Education Company. From 2004 until 2009, Mr.&nbsp;Gilligan was a director of ADC Telecommunications, Inc., and served as lead director from 2008 until 2009. Among other
qualifications, Mr.&nbsp;Gilligan brings to our Board over twenty-five years of global operational experience as well as comprehensive knowledge of the construction industry, one of the key industries that Graco serves. Mr.&nbsp;Gilligan&#146;s
additional public company experience as both an executive and as a director provides additional depth to our Board&#146;s leadership capabilities. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_4">
</A>Qualification Standards </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Company will only consider as candidates for director individuals who possess a high level of ethics, integrity and
values, and who are committed to representing the long-term interests of our shareholders. Such candidates must be able to make a significant contribution to the governance of our Company by virtue of their business and financial expertise,
educational and professional background, and current or recent experience as a chief executive officer or other senior leader of a public company or other major organization. The business discipline that may be sought at any given time will vary
depending on the needs and strategic direction of our Company, and the disciplines represented by incumbent directors. In evaluating candidates for nomination as a director of Graco, the Governance Committee will also consider other criteria,
including geographical representation, independence, practical wisdom, mature judgment and the ability of the candidate to represent the interests of all shareholders and not those of a special interest group. One or more of our directors is
required to possess the education or experience required to qualify as an audit committee financial expert as defined in the applicable rules of the Securities and Exchange Commission. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Once elected, all directors are subject to the standards set forth in our Corporate Governance Guidelines, which include, among others, the requirement to
tender the director&#146;s resignation if his or her employment status significantly changes, and the requirement to resign from the Board effective as of the date of the Annual Meeting of Shareholders next following the director&#146;s 75<SUP
STYLE="font-size:85%; vertical-align:top">th</SUP> birthday unless the director has current, substantial engagement in business activities that require skills relevant to Graco&#146;s business and useful to the Board. In August 2016, Mr.&nbsp;Van
Sant reached age 78. At its September 2016 meeting, the Board considered whether Mr.&nbsp;Van Sant had current, substantial engagement in business activities that require skills relevant to our Company&#146;s business and useful to the Board. The
Board once again unanimously determined that it would waive the mandated retirement of Mr.&nbsp;Van Sant, which waiver shall be reviewed annually, because Mr.&nbsp;Van Sant&#146;s current and substantial engagement with private equity firms and
their portfolio companies requires skills relevant to Graco&#146;s business and useful to the Board. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Governance Committee is responsible for the
identification and recruitment of suitable prospective director candidates and has the sole authority to hire an outside search firm to identify director candidates. The Governance Committee may retain an outside search firm as a resource for future
candidate sourcing and succession planning as the Governance Committee deems appropriate. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_5"></A>Qualifications of Current Directors
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">All of our directors meet the qualification standards and expectations described above. In addition to possessing a high level of ethics, integrity
and values, excellent judgment and a commitment to representing the long-term interests of our shareholders, each of our directors brings a particular set of skills and experience that enable him or her to make a significant contribution to the
governance of our Company. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_6"></A>Board Diversity </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In considering whether to recommend an individual for election to our Board, the Governance Committee considers diversity of experience, geographical
representation, gender and race, in addition to the other qualifications described in the &#147;Qualification Standards&#148; section above. The Committee views diversity expansively and considers, among other things, functional areas of business
and financial expertise, educational and professional background, and those competencies that it deems appropriate to develop a cohesive Board such as ethics, integrity, values, practical wisdom, mature judgment and the ability of the candidate to
represent the interests of all shareholders and not those of a special interest group. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Board of Directors and each of its committees engage in an
annual self-evaluation process. As part of that process, directors, including our President and Chief Executive Officer, provide feedback on, among other things, whether the Board has the right set of skills, experience and expertise. This
evaluation encompasses a consideration of diversity as described above. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">8 </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_8"></A>Nominee Selection Process </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The selection process for director candidates reflects guidelines established from time to time by the Governance Committee. A shareholder seeking to
recommend a prospective candidate for the Governance Committee&#146;s consideration should submit such recommendation in writing, addressed to the Governance Committee in care of the Secretary of the Company at our Company&#146;s corporate
headquarters. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">To nominate a director, our bylaws provide that timely notice must be received by the Secretary not less than 90 days prior to the
anniversary of the date of our Annual Meeting of Shareholders. The nominations must set forth: (i)&nbsp;the name, age, business and residential addresses and principal occupation or employment of each nominee proposed in such notice; (ii)&nbsp;the
name and address of the shareholder giving the notice and any beneficial owner on whose behalf the nomination is made, as they appear in our Company&#146;s stock register; (iii)&nbsp;the number of shares of capital stock of our Company which are
beneficially owned by, or any other direct or indirect interest in the capital stock of our Company held by, each such nominee and such shareholder; and (iv)&nbsp;such other information concerning each such nominee as would be required under the
rules of the Securities and Exchange Commission in a proxy statement soliciting proxies for the election of such nominee. Such notice must also include a signed consent of each such nominee to serve as a director of our Company, if elected.
Shareholder nominees will be evaluated in the same manner as nominees from other sources. </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_9"></A>DIRECTOR INDEPENDENCE </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Board of Directors has determined that Mr.&nbsp;Carroll, Mr.&nbsp;Etchart, Mr.&nbsp;Eugster, Ms.&nbsp;Feragen, Mr.&nbsp;Gilligan, Mr.&nbsp;Mitau,
Ms.&nbsp;Morfitt and Mr.&nbsp;Van Sant are independent directors. The independent directors constitute a majority of the Board, and the only director who is not independent is Mr.&nbsp;McHale, the Company&#146;s President and Chief Executive
Officer. In making its determination regarding the independence of the directors, our Board noted that each independent director meets the standards for independence set out in the New York Stock Exchange corporate governance rules, and that there
is no material business relationship between our Company and any independent director, including any business entity with which any independent director is affiliated. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In making its determination, our Board reviewed information provided by each of the independent directors and information gathered by our management, and
determined that none of the independent directors have any relationship with our Company other than as a director and shareholder. </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_10">
</A>BOARD LEADERSHIP STRUCTURE </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Corporate Governance Guidelines provide for the position of Chairman of the Board of Directors, who may or may not
be the same person who serves as our President and Chief Executive Officer. Mr.&nbsp;Mitau has served as our independent Chairman of the Board from May 2002 until April 2006 and again since June 2007. Our Board currently believes that separating the
roles of Chairman of the Board and CEO is appropriate for our Company because, in the wake of difficult or volatile economic times such as those experienced during the economic recession of the late 2000&#146;s, it is desirable to have our CEO
focused on the management and operation of our business without the additional responsibilities of Chairman. Moreover, Mr.&nbsp;Mitau has significant public company and governance experience. Our Corporate Governance Guidelines set forth several
responsibilities of the Chairman of the Board, including setting agendas for board meetings and presiding at executive sessions of <FONT STYLE="white-space:nowrap">non-employee</FONT> directors. </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_11"></A>BOARD OVERSIGHT OF RISK </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our
Board of Directors takes an active role in oversight of our Company&#146;s risk by assessing risks inherent in our Company&#146;s decisions and key strategies. The Audit Committee specifically discusses policies with respect to risk assessment and
risk management as part of its responsibility to oversee our Company&#146;s compliance with legal and regulatory requirements. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Company engages in an
Enterprise Risk Management (&#147;ERM&#148;) process. The ERM process consists of periodic risk assessments performed by each division, region and functional group during the year. Executive management periodically reviews the divisional, regional
and functional risk assessments. These assessments are presented to the Audit Committee each September to ensure completeness, appropriate oversight and review. We believe that the active oversight role played by our Audit Committee, which consists
solely of independent directors, provides the appropriate level of independent oversight of risk within our Company. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">9 </P>
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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_12"></A>MEETINGS OF THE BOARD OF DIRECTORS </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">During 2016, our Board of Directors met five times. Attendance of our directors at all Board and committee meetings averaged 98%. During 2016, every director
attended at least 75% of the aggregate number of meetings of the Board and all committees of the Board on which he or she served. Our Corporate Governance Guidelines require that each director make all reasonable efforts to attend the Company&#146;s
Annual Meeting of Shareholders. In 2016, all of the directors attended the Annual Meeting of Shareholders. Each regularly scheduled meeting of the Board includes an executive session of only <FONT STYLE="white-space:nowrap">non-employee</FONT>
directors. Mr.&nbsp;Mitau, Chairman of the Board, presides at the executive sessions. </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_13"></A>COMMITTEES OF THE BOARD OF DIRECTORS
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Board of Directors has an Audit Committee, a Governance Committee, and a Management Organization and Compensation Committee. Membership as of
February&nbsp;27, 2017, the record date, was as follows: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="29%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="40%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom" NOWRAP> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:22.80pt; font-size:10pt; font-family:Times New Roman">Audit</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; border-bottom:1.00pt solid #000000; width:48.35pt; font-size:10pt; font-family:Times New Roman">Governance</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Management Organization</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1.00pt solid #000000; width:74.80pt; font-size:10pt; font-family:Times New Roman">and Compensation</P></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">William J. Carroll, Chair</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Lee R. Mitau, Chair</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Jack W. Eugster, Chair</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Eric P. Etchart</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">William J. Carroll</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Eric P. Etchart</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Jack W. Eugster</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">J. Kevin Gilligan</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Jody H. Feragen</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Jody H. Feragen</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Martha A. Morfitt</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">J. Kevin Gilligan</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">R. William Van Sant</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">R. William Van Sant</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Lee R. Mitau</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Martha A. Morfitt</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_14"></A>Audit Committee </B>(8 meetings in fiscal year 2016)<B> </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Audit Committee is composed entirely of directors who meet the independence requirements of the Securities Exchange Act of 1934. All of the Audit
Committee members are, in the judgment of the Board, financially literate. Our Board has determined that Mr.&nbsp;Carroll, Ms.&nbsp;Feragen and Mr.&nbsp;Van Sant are audit committee financial experts. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Audit Committee assists the Board in its oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements,
the qualification and independence of the independent auditor, and the performance of the internal audit function and the independent auditors. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
responsibilities of the Audit Committee are set forth in a written charter. The Audit Committee has reviewed and reassessed the adequacy of its charter and concluded that the charter satisfactorily states the responsibilities of the Audit Committee.
The Audit Committee Charter was most recently approved by the Board on February&nbsp;18, 2011. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_15"></A>Governance Committee </B>(3
meetings in fiscal year 2016)<B> </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Governance Committee has the following functions: </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Sets criteria for the selection of prospective Board members, identifies and recruits suitable candidates, and presents director nominees to the Board; </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Periodically evaluates our Company&#146;s shareholder value protections, board structure, and business continuity provisions, and recommends any changes to the Board; and </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Recommends to the Board requirements for Board membership, including minimum qualifications and retirement policies; the appropriate number of directors; the compensation, benefits and retirement programs for directors;
the committee structure, charters, chairs and membership; the number and schedule of Board meetings; a set of Corporate Governance Guidelines; and the appropriate person(s) to hold the positions of Chair of the Board and Chief Executive Officer.
</TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The responsibilities of the Governance Committee are fully set forth in its written charter, which was most recently approved by the Board
on February&nbsp;17, 2006. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">10 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_16"></A>Management Organization and Compensation Committee </B>(3 meetings in fiscal year
2016)<B> </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Management Organization and Compensation Committee is composed entirely of directors who meet the independence requirements of the New
York Stock Exchange. The Management Organization and Compensation Committee has the following functions: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Develops our Company&#146;s philosophy and structure for executive compensation; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Determines the compensation of the Chief Executive Officer and approves the compensation of the executive officers; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Reviews and discusses with management, and recommends to the Board the inclusion of, the Compensation Discussion and Analysis in our Company&#146;s annual proxy statement; </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Reviews the performance of the Chief Executive Officer based on individual goals and objectives, and communicates to the CEO its assessment of the CEO&#146;s performance on an annual basis; </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Administers our Company&#146;s stock option and other stock-based compensation plans; and </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Reviews and makes recommendations on executive management organization and succession plans. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
responsibilities of the Management Organization and Compensation Committee are fully set forth in its written charter, which was most recently approved by the Board on April&nbsp;22, 2016. </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_17"></A>COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">None of the members of the Board who served on the Management Organization and Compensation Committee during 2016 has ever been an officer or employee of our
Company or any of its subsidiaries. </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_18"></A>DIRECTOR COMPENSATION </B></P>
<P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="84%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="82%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="10%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; padding-left:8pt"><B>2016 <FONT STYLE="white-space:nowrap">Non-Employee</FONT> Director
Compensation<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP></B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000"><B>Amount</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;&nbsp;</TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Annual Equity
Grant</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" BGCOLOR="#d9d9d9">$125,000<SUP STYLE="font-size:85%; vertical-align:top">(2)</SUP></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Annual Board Retainer</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$65,000</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Annual Chair
Retainer</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">$95,000</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Annual Committee Retainer:</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Audit Committee</P></TD>

<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">$10,000</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Management Organization and Compensation
Committee</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$5,000</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Governance
Committee</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">$5,000</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:2.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Annual Committee Chair Retainer:</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Audit Committee</P></TD>

<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">$15,000</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Management Organization and Compensation
Committee</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">$10,000</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:4.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Governance Committee</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">$7,500</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">Effective May&nbsp;1, 2016, except for annual equity grant, which became effective February&nbsp;12, 2016. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="6%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">Approximate economic value of annual equity grant based on Black-Scholes value per share on the date of grant. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A <FONT STYLE="white-space:nowrap">non-employee</FONT> director may elect to receive shares of our common stock instead of cash for all or part of the
director&#146;s annual retainers. A director may choose to receive the shares currently or defer receipt until the director leaves the Board, at which time the director may receive the shares in a lump sum or installments. Payments, whether in a
lump sum or by installments, will be made in shares of common stock, plus cash in lieu of any fractional share. When our Board declares a dividend, the director&#146;s deferred stock account is credited with additional shares of stock in an account
held by a trustee in the name of the <FONT STYLE="white-space:nowrap">non-employee</FONT> director equivalent to the number of shares that could be purchased with the dividends at the current fair market value of the shares. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">Non-employee</FONT> directors receive an annual option grant. In 2016, <FONT STYLE="white-space:nowrap">non-employee</FONT>
directors received an annual option grant of </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">11 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
6,000 shares on the date of the Company&#146;s Annual Meeting of Shareholders. The number of shares granted was based on a Black-Scholes value of $20.80 per share on April&nbsp;22, 2016, and an
economic value of approximately $125,000. Upon first joining the Board, <FONT STYLE="white-space:nowrap">non-employee</FONT> directors are also eligible to receive an initial option grant with an economic value equal to that of the most recent
option grant for <FONT STYLE="white-space:nowrap">non-employee</FONT> directors. There were no first-time <FONT STYLE="white-space:nowrap">non-employee</FONT> director appointments in 2016. Options granted to
<FONT STYLE="white-space:nowrap">non-employee</FONT> directors are issued under the Graco Inc. 2015 Stock Incentive Plan. The options are <FONT STYLE="white-space:nowrap">non-statutory,</FONT> have a <FONT STYLE="white-space:nowrap">10-year</FONT>
duration and become exercisable in equal installments over four years, beginning with the first anniversary of the date of the grant. The option exercise price is the fair market value of the stock on the date of grant, as defined in the Plan. The
Plan defines &#147;fair market value&#148; as the last sale price of the stock as reported by the New York Stock Exchange on the date immediately prior to the date of grant. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Board&#146;s philosophy is to target retainer compensation at a level approximately comparable to the median of the market, and to target equity
compensation in the form of stock options at a level approximately comparable to the 75<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> percentile of the market, in order to attract and retain capable Board members, to encourage above-market
Company performance, and to strengthen the link between our director compensation program and the interests of our shareholders in Graco stock performance. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Governance Committee retained Willis Towers Watson to conduct a peer group comparison of director compensation and present such data at its February 2016
meeting. The peer companies used for the 2016 benchmarking study matched the peer group identified for executive compensation on page 20 of the Compensation Discussion and Analysis section of the Proxy Statement for the 2016 Annual Meeting of
Shareholders. In reviewing the peer group comparison, the Governance Committee concluded that total director compensation fell below the median of the peer group. As a result, the Board of Directors, upon recommendation of the Governance Committee,
determined that, effective May&nbsp;1, 2016, the annual retainer for <FONT STYLE="white-space:nowrap">non-employee</FONT> directors (excluding the Chairman) would increase from $50,500 to $65,000, and that the annual retainer for the Chairman would
increase from $75,000 to $95,000. The Board of Directors also determined that board and committee meeting fees would be eliminated in favor of annual retainers of $5,000 for the Governance Committee, $5,000 for the Management Organization and
Compensation Committee, and $10,000 for the Audit Committee. In addition, the Board of Directors determined that committee chair annual retainers would remain the same, and that the economic value of the annual option grant for <FONT
STYLE="white-space:nowrap">non-employee</FONT> directors and the initial option grant for <FONT STYLE="white-space:nowrap">non-employee</FONT> directors first joining the Board would increase from $115,000 to $125,000. As a result of the foregoing
determinations, <FONT STYLE="white-space:nowrap">non-employee</FONT> director retainer and equity compensation were approximately at the 50<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> and
75<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> percentiles of the peer group, respectively. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Governance Committee requested that the Graco
Compensation Department conduct a peer group comparison of director compensation and present such data at its February 2017 meeting. The peer companies selected for the comparison matched the peer group identified for executive compensation on page
20 of the Compensation Discussion and Analysis section of this Proxy Statement. In reviewing the peer group comparison, the Governance Committee concluded that annual committee chair retainers fell below the median of the peer group. As a result,
the Board of Directors, upon recommendation of the Governance Committee, determined that, effective May&nbsp;1, 2017, the annual retainer for the Chair of the Governance Committee will increase from $7,500 to $10,000, the annual retainer for the
Chair of the Management Organization and Compensation Committee will increase from $10,000 to $12,500, and the annual retainer for the Chair of the Audit Committee will increase from $15,000 to $20,000. No other adjustments were made to the <FONT
STYLE="white-space:nowrap">non-employee</FONT> directors&#146; compensation. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Share ownership guidelines for our directors require each of our <FONT
STYLE="white-space:nowrap">non-employee</FONT> directors to own a minimum of approximately five times the total value of their annual retainer and meeting fees in Company stock. Shares of common stock directly and beneficially owned, as well as
phantom stock shares, are used to calculate each director&#146;s ownership level; stock options are not used. Directors have five years from their initial date of appointment to reach the minimum ownership level. All of our directors who have served
for at least five years exceed this ownership requirement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In February 2001, our Board terminated the retirement benefit for <FONT
STYLE="white-space:nowrap">non-employee</FONT> directors, which provided that, upon cessation of service, a <FONT STYLE="white-space:nowrap">non-employee</FONT> director who has served for five full years or more will receive payments for five years
at a rate equal to the director&#146;s annual retainer in effect on the director&#146;s last day of service on the Board. The annual retainer calculation is set at the rate then in effect for the <FONT STYLE="white-space:nowrap">non-Chairman</FONT>
annual retainer and does not include Committee Chair retainer fees. Such retirement payments will be prorated and made quarterly. Payments will be made in accordance with this retirement benefit to Mr.&nbsp;Mitau and Ms.&nbsp;Morfitt upon their
respective retirements. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">12 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_19"></A>Director Compensation Table for Fiscal Year Ended December&nbsp;30, 2016 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following table summarizes the total compensation paid to or earned by our <FONT STYLE="white-space:nowrap">non-employee</FONT> directors for their
service during the fiscal year ended December&nbsp;30, 2016: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="90%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="36%"></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">Name</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Fees&nbsp;Earned&nbsp;or</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Paid in Cash<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Stock</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Awards<SUP STYLE="font-size:85%; vertical-align:top">(2)</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Option</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Awards<SUP STYLE="font-size:85%; vertical-align:top">(3)</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Change&nbsp;in&nbsp;Pension&nbsp;Value</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">and Nonqualified</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Deferred
Compensation</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Earnings<SUP STYLE="font-size:85%; vertical-align:top">(4, 5)</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Total&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">William J.
Carroll</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">68,750</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">22,917&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">124,800&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">216,467&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Eric P. Etchart</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center">&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">75,467&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">124,800&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center">&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">200,267&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Jack W. Eugster</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">17,542</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">67,925&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">124,800&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">210,267&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Jody H. Feragen</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;329</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">75,138&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">124,800&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center">&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">200,267&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">J. Kevin
Gilligan</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">71,767&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">124,800&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">196,567&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Lee R. Mitau</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center">&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">107,433&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">124,800&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">66,000</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">298,233&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Martha A.
Morfitt</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">71,167&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">124,800&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">66,000</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">261,967&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">R. William
Van Sant</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" ALIGN="right">76,067&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" ALIGN="right">124,800&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" ALIGN="right">200,867&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">Mr.&nbsp;Carroll elected to receive 75% of his retainers in cash and 25% in deferred stock. Mr.&nbsp;Eugster elected to receive approximately 20% of his retainers in cash and 80% in deferred stock. Ms.&nbsp;Feragen
elected to receive all her retainers in shares of stock plus cash in lieu of any fractional share. All other <FONT STYLE="white-space:nowrap">non-employee</FONT> directors elected to receive all retainers in deferred stock. </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">During all or a portion of their service on the Board, Messrs. Carroll, Etchart, Eugster, Gilligan, Mitau and Van Sant and Ms.&nbsp;Morfitt elected to defer some or all of their compensation. The amounts in the Stock
Awards column reflect the sum of the grant date fair values of the stock, whether deferred or direct stock, for each of the four calendar quarters. Grant date fair value is based on the closing price of the stock on the last trading day of the
calendar quarter. The Deferred Stock Account balances as of 2016 fiscal <FONT STYLE="white-space:nowrap">year-end</FONT> are as follows: </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="51%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">Name</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">Account Balance&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Carroll</P></TD>

<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">16,431 shares&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Etchart</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">712 shares&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Eugster</P></TD>

<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">15,819 shares&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Gilligan</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">24,214 shares&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Mitau</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">53,424 shares&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Ms.&nbsp;Morfitt</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">30,859 shares&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Van Sant</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">19,527 shares&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(3)</TD>
<TD ALIGN="left" VALIGN="top">Each <FONT STYLE="white-space:nowrap">non-employee</FONT> director received an annual option grant of 6,000 shares on April&nbsp;22, 2016, the date of the Annual Meeting of Shareholders. The amounts reported in the
Option Awards column represent the aggregate grant date fair value of stock options granted in 2016, computed in accordance with financial accounting principles, which is based on a per share value of $20.80 for options granted on April&nbsp;22,
2016. Information concerning the assumptions used in accounting for equity awards may be found in Item 8, Financial Statements and Supplementary Data, Note H to the Consolidated Financial Statements in our 2016 Annual Report on Form <FONT
STYLE="white-space:nowrap">10-K.</FONT> The aggregate number of outstanding option grants at fiscal <FONT STYLE="white-space:nowrap">year-end</FONT> 2016 are as follows: </TD></TR></TABLE>
<P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="50%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">Name</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">Unvested&nbsp;Shares</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">Exercisable&nbsp;Shares</TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Carroll</P></TD>

<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">13,903</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">38,083</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Etchart</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">13,903</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">25,183</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Eugster</P></TD>

<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">13,903</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">46,683</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Ms.&nbsp;Feragen</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">10,523</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;&nbsp;1,507</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Gilligan</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">13,903</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">20,883</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Mitau</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">13,903</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">50,283</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Ms.&nbsp;Morfitt</P></TD>

<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">13,903</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">37,383</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Mr.&nbsp;Van Sant</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000">13,903</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">29,483</TD></TR>
</TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(4)</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Prior to February 2001, <FONT STYLE="white-space:nowrap">non-employee</FONT><SUP
STYLE="font-size:85%; vertical-align:top"> </SUP>directors who served five or more full years on the Board were eligible for a retirement benefit when they left the Board. In February 2001, the Board terminated this retirement benefit for those <FONT
STYLE="white-space:nowrap">non-employee</FONT> directors who had not met the five-year service level. Mr.&nbsp;Mitau and Ms.&nbsp;Morfitt, who satisfied the service requirement in 2001, will receive this retirement benefit when they leave the Board.
The underlying plan provides that, upon retirement, an eligible <FONT STYLE="white-space:nowrap">non-employee</FONT> director shall receive quarterly payments for five years equal to <FONT STYLE="white-space:nowrap">one-fourth</FONT> of the annual
base retainer of the <FONT STYLE="white-space:nowrap">non-Chairman</FONT> directors in effect immediately prior to the director&#146;s retirement. The plan further provides that if an eligible
non-</P></TD>
<TD WIDTH="10%">&nbsp;</TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">13 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">
employee director dies before retirement, payment shall be made to the director&#146;s beneficiary (or estate if no beneficiary is designated) in one lump sum in an amount equal to the total
amount of the payments that would have been made had he or she retired on the date of his or her death and survived to the date of the final payment. </P></TD>
<TD WIDTH="10%">&nbsp;</TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(5)</TD>
<TD ALIGN="left" VALIGN="top">The assumptions that were made in calculating the aggregate change in the actuarial present value of the accumulated benefit are as follows: </TD>
<TD WIDTH="10%">&nbsp;</TD></TR></TABLE>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="86%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="99%"></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&#149;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Discount rate: 4.50% at December&nbsp;31, 2016.</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&#149;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Retirement age: The plan does not have a specified normal retirement age. Therefore, the values reflect the increase/decrease in present value of the accrued benefit as of December&nbsp;31, 2016.</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">&#149;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Form of payment: Five-year certain (payable quarterly).</TD></TR>
</TABLE> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_20"></A>COMMUNICATIONS WITH THE BOARD </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Board of Directors welcomes the submission of any comments or concerns from shareholders or other interested parties. These communications will be
delivered directly to the Vice President, General Counsel and Secretary. If a communication does not relate in any way to Board matters, he or she will deal with the communication as appropriate. If the communication does relate to any matter of
relevance to our Board, he or she will relay the message to the Chairman of the Governance Committee, who will determine whether to relay the communication to the entire Board or to the <FONT STYLE="white-space:nowrap">non-employee</FONT> directors.
The Vice President, General Counsel and Secretary will keep a log of all communications addressed to the Board that he or she receives. If you wish to submit any comments or express any concerns to our Board, you may use one of the following
methods: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Write to the Board at the following address: </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:19%; font-size:10pt; font-family:Times New Roman">Board of Directors </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:19%; font-size:10pt; font-family:Times New Roman">Graco Inc. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:19%; font-size:10pt; font-family:Times New Roman">c/o Karen Park
Gallivan, Vice President, General Counsel and Secretary </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:19%; font-size:10pt; font-family:Times New Roman">P.O. Box 1441 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:19%; font-size:10pt; font-family:Times New Roman">Minneapolis, Minnesota 55440-1441 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Email the Board at boardofdirectors@graco.com </TD></TR></TABLE> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_21"></A>CORPORATE GOVERNANCE DOCUMENTS
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The charters of the Audit, Governance, and Management Organization and Compensation Committees, as well as our Company&#146;s Corporate Governance
Guidelines and Code of Ethics and Business Conduct, are available on our website at www.graco.com and may be found by selecting the &#147;Investors&#148; tab and then clicking on &#147;Corporate Governance&#148; and &#147;Ethics&nbsp;&amp; Business
Conduct.&#148; </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_22"></A>AUDIT COMMITTEE REPORT </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_23"></A>Report of the Audit Committee </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Audit Committee has reviewed and discussed the audited financial statements of our Company for the fiscal year ended December&nbsp;30, 2016 (the
&#147;Financial Statements&#148;) with both the Company&#146;s management and its independent registered public accounting firm, Deloitte&nbsp;&amp; Touche LLP. The Audit Committee has discussed with Deloitte&nbsp;&amp; Touche LLP the matters
required by the applicable Public Company Accounting Oversight Board standards. Our management has represented to the Audit Committee that the Financial Statements were prepared in accordance with accounting principles generally accepted in the
United States of America. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Audit Committee has received from Deloitte&nbsp;&amp; Touche LLP the written disclosure and the letter required by
applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant&#146;s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with Deloitte&nbsp;&amp;
Touche LLP its independence. The Audit Committee has also received written material addressing Deloitte&nbsp;&amp; Touche LLP&#146;s internal quality control procedures and other matters, as required by the New York Stock Exchange listing standards.
The Audit Committee has considered the effect of <FONT STYLE="white-space:nowrap">non-audit</FONT> fees on the independence of Deloitte&nbsp;&amp; Touche LLP and has concluded that such <FONT STYLE="white-space:nowrap">non-audit</FONT> services are
compatible with the independence of Deloitte&nbsp;&amp; Touche LLP. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">14 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Based on these reviews and discussions, the Audit Committee recommended to our Board of Directors that the
Financial Statements for the fiscal year ended December&nbsp;30, 2016, be included in the Company&#146;s 2016 Annual Report on Form <FONT STYLE="white-space:nowrap">10-K</FONT> for filing with the Securities and Exchange Commission. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


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<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="49%"></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">The Members of the Audit Committee</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;William&nbsp;J.
Carroll, Chair</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Eric&nbsp;P.
Etchart</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Jack&nbsp;W.
Eugster</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ms.&nbsp;Jody&nbsp;H.
Feragen</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;R.
William Van Sant</P></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_24"></A>Independent Registered Public Accounting Firm Fees and Services </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following table sets forth the aggregate audit fees incurred by Graco Inc. and its subsidiaries from our Company&#146;s independent registered public
accounting firm, Deloitte&nbsp;&amp; Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively, the &#147;Deloitte Firms&#148;), and the fees paid to the Deloitte Firms for services in the other fee
categories during the fiscal years ended December&nbsp;30, 2016 and December&nbsp;25, 2015. The Audit Committee has considered the scope and fee arrangements for all services provided by the Deloitte Firms to our Company, taking into account whether
the provision of <FONT STYLE="white-space:nowrap">non-audit</FONT> services is compatible with maintaining the Deloitte Firms&#146; independence. The Audit Committee <FONT STYLE="white-space:nowrap">pre-approved</FONT> 100% of the services described
below. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="88%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="71%"></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="right" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">Fiscal Year</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">Ended&nbsp;12/30/16</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="right" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">Fiscal Year</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">Ended&nbsp;12/25/15</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Audit Fees<SUP
STYLE="font-size:85%; vertical-align:top">(1)</SUP></P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">$1,137,000</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">$1,051,000</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Audit-Related Fees</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Tax Fees<SUP
STYLE="font-size:85%; vertical-align:top">(2)</SUP></P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">$243,000</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">$590,000</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Total</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" ALIGN="right">$1,380,000</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" ALIGN="right">$1,641,000</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">Audit Fees include fees for the audits of our annual financial statements and the effectiveness of internal controls over financial reporting, reviews of our quarterly financial statements and SEC filings, statutory
audits and consents. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">Tax Fees in 2016 include tax compliance services of $54,000 and tax advice of $189,000. Tax Fees in 2015 include tax compliance services of $26,000 and tax advice of $564,000. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_25"></A><FONT STYLE="white-space:nowrap">Pre-Approval</FONT> Policies </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Audit Committee&#146;s policy on approval of services performed by the independent registered public accounting firm is to
<FONT STYLE="white-space:nowrap">pre-approve</FONT> all audit and permissible <FONT STYLE="white-space:nowrap">non-audit</FONT> services to be provided by the independent registered public accounting firm during the fiscal year. The Audit Committee
reviews each <FONT STYLE="white-space:nowrap">non-audit</FONT> service to be provided and assesses the impact of the service on the firm&#146;s independence. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">15 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_26"></A>EXECUTIVE COMPENSATION </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_27"></A>Compensation Discussion and Analysis </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Overview </I></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In 2016, the Company achieved record
levels of sales and increased its dividend while continuing to invest in its four core strategies for growth and long-term value creation: new product development; new markets; global expansion; and acquisitions. During the year, net sales were
$1.329&nbsp;billion (up 3% from 2015), diluted earnings per share (&#147;EPS&#148;) were $0.71 (down 88% from 2015), and dividends paid per share were $1.32 (up 10% from 2015 - our 17<SUP STYLE="font-size:85%; vertical-align:top">th</SUP>
consecutive annual increase). Net earnings in 2016 included a non-cash impairment charge of $192<U></U>&nbsp;million ($161<U></U>&nbsp;million after tax effects) ($2.84 per diluted share) related to assets of businesses acquired in 2014 and 2015
that have significant exposure to oil and natural gas markets. Net earnings in 2015 included $141<U></U>&nbsp;million ($2.40 per diluted share) related to the sale in 2015 of the Liquid Finishing business assets that had been acquired in 2012 and
held as a cost-method investment. Total shareholder return during the period was 19%. The Company&#146;s short-term cash incentive plan continued to use net sales and EPS as the sole metrics to reward top and bottom-line performance. The EPS metrics
used for 2016 were adjusted to exclude certain unusual items as defined by the Management Organization and Compensation Committee (for purposes of this Executive Compensation section, the &#147;MOCC&#148;), as described in more detail on pages 22
and 23, which we refer to as &#147;Adjusted EPS.&#148; Accordingly, the Adjusted EPS in this Proxy Statement differ from the adjusted EPS reported in our earnings release. For 2016, Adjusted EPS were $3.53. The following charts detail the
Company&#146;s net sales and Adjusted EPS results against targets and prior year performance. </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="font-size:0pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt;margin-bottom:0pt" ALIGN="center"><U>


<IMG SRC="g358732g42u87.jpg" ALT="LOGO">
 </U></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company&#146;s named executive officers (&#147;Named Executive Officers&#148; or &#147;NEOs&#148;) for 2016 were:
</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="78%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="22%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD WIDTH="74%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"><B>Name</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt"><B>Title</B></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">Patrick J. McHale</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">President and Chief Executive Officer</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">Christian E. Rothe</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">Chief Financial Officer and Treasurer</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">Dale D. Johnson</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">President, Worldwide Contractor Equipment Division</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">Jeffrey P. Johnson</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">Vice President and General Manager, EMEA</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">David M. Lowe</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">Executive Vice President, Industrial Products Division</TD></TR>
</TABLE> <P STYLE="margin-top:10pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Consideration of <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">&#147;Say-on-Pay&#148;</FONT></FONT>
Voting Results </I></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The MOCC targets a competitive and equitable executive compensation program that rewards Company (or, in some cases, region or
division) and individual performance. In making executive compensation decisions, the MOCC considers the results of the most recent advisory, <FONT STYLE="white-space:nowrap">non-binding</FONT> vote on the compensation paid to our NEOs. At the
Annual Meeting of Shareholders in April of 2015, our shareholders approved the compensation paid to our NEOs by over 94%. The MOCC believes this favorable outcome reflects our shareholders&#146; strong support of the Company&#146;s executive
compensation philosophy, program and practices. As a result, the MOCC determined it was not necessary to make any material changes to the Company&#146;s executive compensation program for 2016. Our executive compensation received a similar level of
support at the Annual Meeting of Shareholders in April of 2016, of over 94%. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">16 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Compensation Philosophy </I></B></P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="98%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="33%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="33%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD></TR>
<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" ALIGN="center" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"><B><FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">Pay-for-Performance</FONT></FONT>
</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Shareholder Alignment</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>Accountability for Short- and Long-</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>Term Performance</B></P></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">All components of variable compensation are tied to the performance of the Company, division or region.</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Long-term incentives are designed to align the financial interests of the executive officers with the long-term interests of the Company&#146;s shareholders.</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">Annual performance bonuses and long-term incentives are intended to reward a reasonable and competitive balance of short- and long-term financial and strategic business
results, with an emphasis on managing the business over the long-term.</TD></TR></TABLE>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="98%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="23%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="26%"></TD>
<TD VALIGN="bottom"></TD>
<TD WIDTH="21%"></TD></TR>

<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" COLSPAN="3" ALIGN="center" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"><B>Competitiveness</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="3" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt"><B>Attraction and Retention</B></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" COLSPAN="3" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">All components of compensation are designed to be competitive with companies in similar industries with comparable sales volume and financial performance in order
to attract, retain and motivate high performing executives in an environment where companies are increasingly competing for high-caliber talent.</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">Graco&#146;s executive compensation program is designed to achieve the Company&#146;s goal of attracting, developing and retaining global business leaders who can
establish and drive financial and strategic growth objectives that are intended to build long-term shareholder value.</TD></TR></TABLE>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="98%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


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<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="29%"></TD></TR>

<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" COLSPAN="5" STYLE="BORDER:1px solid #000000; padding-left:8pt; padding-right:2pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>Reducing the Possibility for Excessive
Risk-Taking</B></P> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt" align="left">&nbsp;</P> <P STYLE="font-size:2pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" COLSPAN="5" STYLE="BORDER-LEFT:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt; padding-right:2pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">The Company&#146;s executive compensation program is designed to motivate and reward the executive officers for their performance during the fiscal year and
over the long-term, and for taking appropriate risks toward achieving the long-term financial and strategic growth objectives of the Company. Certain characteristics of the Company&#146;s executive compensation program are designed to motivate our
executive officers, individually and as a group, to not take excessive risks that could maximize short-term results at the expense of long-term value. These characteristics include:</P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4.00em; text-indent:-2.00em; font-size:9pt; font-family:Times New Roman">&#149;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Balanced Mix of Pay Components</U>: The target compensation mix represents a balance of base salary, short-term and long-term incentive-based compensation.</P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4.00em; text-indent:-2.00em; font-size:9pt; font-family:Times New Roman">&#149;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Vesting Schedules</U>: Long-term incentives typically vest over four years and have overlapping vesting schedules, thereby reducing an executive officer&#146;s motivation to maximize performance in any one
period.</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4.00em; text-indent:-2.00em; font-size:9pt; font-family:Times New Roman">&#149;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Capped Incentive Awards</U>: Annual short-term incentive payouts are capped.</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4.00em; text-indent:-2.00em; font-size:9pt; font-family:Times New Roman">&#149; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Recoupment Policy</U>: If there is a material restatement of a financial
statement due to an executive officer&#146;s intentional misconduct or fraud, our executive officers must, upon request of the MOCC, pay back the portion of any short-term incentive payment that would not have been earned if the payment had
originally been made based on the restated financials, net of taxes. In addition, any executive officer who engaged in the intentional misconduct or fraud that caused or contributed to the need for the restatement must, upon request of the MOCC, pay
back the <I>entire</I> amount of any short-term incentive payment, net of taxes. If an executive officer is terminated for gross and willful misconduct, including but not limited to misconduct that caused or contributed to the need for a material
restatement of a financial statement, the executive officer&#146;s unexercised options will terminate as of the time of the misconduct. Similarly, if the Company determines that an executive officer who is no longer with the Company engaged in gross
and willful misconduct while employed by the Company, the executive officer&#146;s unexercised options will terminate as of the time of the misconduct. Further, if an executive officer&#146;s options are exercised and the Company later determines
that the executive officer engaged in gross and willful misconduct during employment before the options were exercised, the executive officer&#146;s options will be terminated as of the time of the misconduct and the Company may rescind the exercise
of the options.</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:4.00em; text-indent:-2.00em; font-size:9pt; font-family:Times New Roman">&#149;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Stock Ownership Guidelines</U>: We require the CEO to retain, until twelve months following retirement or other termination of employment, an amount equal to 50% of net shares from awards granted under the
Company&#146;s equity programs, and to own a minimum of five times the CEO&#146;s annual base salary in Company stock. Executive officers below the CEO level are required to retain, until retirement or other termination of employment, an amount
equal to 50% of net shares from awards granted under the Company&#146;s equity programs on or after April&nbsp;23, 2010 up to three times the current base salary for individuals reporting directly to the CEO and two times the current base salary for
individuals reporting to someone other than the CEO.</P></TD></TR>
</TABLE> <P STYLE="margin-top:10pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Compensation Risk Assessment </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company&#146;s Internal Audit Department conducts an annual risk assessment on the Company&#146;s executive compensation program and presents its findings
to the MOCC and the Audit Committee. The risk assessment identifies, among other things, certain potential risks in the Company&#146;s short- and long-term incentive plans and the Company&#146;s severance and change of control arrangements, and
various factors that serve to mitigate those risks. Such mitigating factors include those set forth above, as well as the annual plan design and benchmarking review by the independent compensation consultant and the MOCC, the MOCC&#146;s review and
approval of incentive awards, the Company&#146;s internal controls, and the use of &#147;double-triggers&#148; in severance and change of control arrangements. At its September 2016 meeting, the MOCC reviewed and discussed the risk assessment and
determined that the Company&#146;s executive compensation program is not likely to have a material adverse impact on the Company, and recommended that the Audit Committee make the same determination as well. As a result, the MOCC did not make any
changes to the Company&#146;s executive compensation program. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">17 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Executive Officer Compensation Processes </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The MOCC uses the following resources, processes and procedures to help it effectively perform its responsibilities: </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">Executive sessions without management present to discuss various compensation matters, including the compensation of our CEO; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">An independent executive compensation consultant who advises the MOCC from time to time on compensation matters; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">An annual review of all executive compensation and, when applicable, benefit programs for competitiveness, reasonableness and cost-effectiveness; </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">Program design and competitive market data for each compensation component using a reputable third-party salary survey of similarly sized manufacturing companies and industry peer group data; </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">An annual review of NEO compensation and benefits tally sheets; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">An annual assessment of the executive compensation program to ensure it is consistent with the MOCC&#146;s philosophy of reducing the possibility of excessive risk-taking; and </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">Consideration of the results of the most recent advisory, <FONT STYLE="white-space:nowrap">non-binding</FONT> vote on the compensation of the NEOs. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Executive Compensation Consultant </I></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The MOCC has
the authority under its charter to engage the services of outside consultants, to determine the scope of the consultants&#146; services and to terminate such consultants&#146; engagement. The MOCC retained Willis Towers Watson as its independent
outside executive compensation consultant to advise the MOCC on matters relating to the determination of base salary, short-term incentive and long-term incentive programs for the Company&#146;s executive officers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In its capacity as the executive compensation consultant, Willis Towers Watson advises the MOCC on the following matters: </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">Preparing a competitive compensation review of the CEO and other executive officer positions, including a peer group analysis; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">Providing advice and guidance with respect to trends and regulatory issues related to executive compensation; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">Reviewing the composition of the industry peer group used to benchmark executive compensation; and </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">Reviewing the Company&#146;s executive compensation risk assessment. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Company&#146;s management engaged
Willis Towers Watson to perform certain <FONT STYLE="white-space:nowrap">non-executive</FONT> compensation services in 2016. The total fees for these services were less than $120,000. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The MOCC reviews the independence of the executive compensation consultant on an annual basis. In evaluating Willis Towers Watson&#146;s independence, the
MOCC considers all factors relevant to Willis Towers Watson&#146;s independence from management, including the following: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">The provision of other services to the Company by Willis Towers Watson; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">The amount of fees received by Willis Towers Watson from the Company as a percentage of Willis Towers Watson&#146;s total revenue; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">Willis Towers Watson&#146;s compliance with the policies and procedures it has adopted to prevent conflicts of interest; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">The lack of any business or personal relationships between the individual Willis Towers Watson consultants performing services for the Company and any member of the MOCC; </TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">18 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">The lack of any ownership of Company stock by the individual Willis Towers Watson consultants performing services for the Company; and </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">The lack of any business or personal relationships between any executive officers of the Company and Willis Towers Watson or the individual Willis Towers Watson consultants performing services for the Company.
</TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Based on its review, the MOCC concluded there was no conflict of interest that impaired Willis Towers Watson&#146;s independence. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Role of Management in Executive Compensation Decisions </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our management is involved in the following executive compensation processes: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">The Vice President, Human Resources and Corporate Communications (&#147;Vice President HR&#148;) and the Director of Global Compensation and Benefits develop and oversee the creation of written background and supporting
materials for distribution to the MOCC prior to its meetings; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">The CEO, the Vice President HR, the Vice President, General Counsel and Secretary and the Director of Global Compensation and Benefits attend the MOCC&#146;s meetings, but leave during the executive officer performance
review discussion (except for the CEO who only leaves for the discussion of his performance review) and the <FONT STYLE="white-space:nowrap">non-employee</FONT> director executive sessions; </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">The CEO and the Vice President HR review executive officer compensation competitive analyses and annually present and make recommendations to the MOCC relating to short- and long-term incentive plan designs and changes,
if warranted; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">The CEO annually recommends to the MOCC base salary adjustments and long-term incentive awards for all executive officers, excluding the CEO (management does not make a recommendation on CEO pay or pay components); and
</TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD ALIGN="left" VALIGN="top">Following the MOCC&#146;s executive sessions, the Chair of the MOCC provides the Vice President HR with a summary of the executive session decisions, actions and underlying rationale for implementation, as appropriate.
</TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Benchmarking </I></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The MOCC
annually retains Willis Towers Watson to provide survey market data of companies with similar revenues for all executive officer positions, with a focus on the manufacturing industry. The MOCC meets in the fall of each year to review this market
data. The market data is derived from Willis Towers Watson&#146;s database and is statistically adjusted to reflect variation in revenues among the companies. The MOCC is presented with data showing total direct compensation amounts at the 50<SUP
STYLE="font-size:85%; vertical-align:top">th</SUP> and 75<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> percentiles of the market data. In addition, the MOCC considers data from this survey reflecting the general mix of compensation
elements among base salary, short-term incentives and long-term incentives. At the same time, the MOCC reviews information showing the relative positioning of the compensation of the Company&#146;s executive officers in relation to the market data.
When reviewing the relative positioning of each executive officer&#146;s total direct compensation level, the MOCC compares each executive officer to generally comparable positions identified within the market data. The purpose of this annual review
is to gather a general sense for whether the Company&#146;s compensation levels and mix of compensation elements are generally consistent with this market data, with a general expectation that total direct compensation should be between the 50<SUP
STYLE="font-size:85%; vertical-align:top">th</SUP> and the 75<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> percentiles of the market data depending on Company and individual performance. At the same time, Willis Towers Watson provides
general information to the MOCC about market trends and expected compensation level changes for the upcoming fiscal year (&#147;Market Increase Projection&#148;). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">At the MOCC&#146;s last meeting of each fiscal year, the MOCC sets base salaries for executive officers for the upcoming fiscal year. The decisions about the
specific base salary levels are based on individual performance and budgetary constraints, and are guided by the 50<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> percentile of the market data without a specific market position targeted.
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">At the MOCC&#146;s first meeting of each fiscal year, the MOCC approves short-term incentive targets and long-term incentive awards. The target
short-term cash award is determined as a percentage of base salary for the executive officer annual incentive plan, which percentage has been consistent for several years. The MOCC targets the value of the long-term incentive awards for the NEOs at
the 75<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> percentile for comparable positions within the Willis Towers Watson database, although the number of shares granted may be adjusted downward based on the Company&#146;s stock dilution
guidelines and internal equity. The reason for targeting the 75<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> percentile is to encourage above-market performance. In addition, the MOCC believes that the opportunity for above-market
compensation should be primarily earned in the area of long-term performance. Once the value of the long-term </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">19 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
incentive award is determined, the number of shares subject to the equity awards granted to each executive officer is determined by dividing the long-term incentive award value by a projected
Black-Scholes value based on assumptions used for financial accounting purposes. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Refer to the discussions of each compensation element below, as well as
the &#147;Compensation of Individual Named Executive Officers&#148; section below, for specific information on how this benchmarking process applied to specific compensation decisions for our NEOs for 2016. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Our Company&#146;s Peer Group </I></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company&#146;s
peer group (the &#147;Graco Peer Group&#148;) was selected in 2013 with the assistance of Willis Towers Watson to improve the alignment of the Graco Peer Group with the Company based on similarity to us on a variety of factors, including industry,
size, labor market, growth trajectory and valuation as compared to revenue. The following table lists the companies that were in the Graco Peer Group when the MOCC set 2016 compensation levels for the executive officers, and includes financial and
headcount data for the Company and the Graco Peer Group: </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="bottom" COLSPAN="9" ALIGN="center" STYLE="BORDER:1px solid #000000; padding-left:8pt; padding-right:2pt"><B>&nbsp;&nbsp;Graco Peer Group&nbsp;&nbsp;</B></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"><FONT STYLE="font-size:9pt">Actuant Corporation</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Crane Co.</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt"><FONT STYLE="font-size:9pt">Polaris Industries, Inc.</FONT></TD></TR>
<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"><FONT STYLE="font-size:9pt">Albany International Corp.</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Donaldson Company, Inc.</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt"><FONT STYLE="font-size:9pt">Simpson Manufacturing Co., Inc.</FONT></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"><FONT STYLE="font-size:9pt">AO Smith Corp.</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Franklin Electric Co., Inc.</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt"><FONT STYLE="font-size:9pt"><FONT STYLE="white-space:nowrap">Snap-on</FONT> Inc.</FONT></TD></TR>
<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"><FONT STYLE="font-size:9pt">Apogee Enterprises, Inc.</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IDEX Corporation</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt"><FONT STYLE="font-size:9pt">Tennant Company</FONT></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"><FONT STYLE="font-size:9pt">Barnes Group Inc.</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Kennametal Inc.</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt"><FONT STYLE="font-size:9pt">Toro Company (The)</FONT></TD></TR>
<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"><FONT STYLE="font-size:9pt">Chart Industries Inc.</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Middleby Corp.</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt"><FONT STYLE="font-size:9pt">TransDigm Group Incorporated</FONT></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"><FONT STYLE="font-size:9pt">CLARCOR Inc.</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nordson Corporation</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt"><FONT STYLE="font-size:9pt">Woodward, Inc.</FONT></TD></TR>
<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" COLSPAN="9" ALIGN="center" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-left:8pt; padding-right:2pt"><B>&nbsp;&nbsp;Most Recent Fiscal Year&nbsp;&nbsp;</B></TD></TR>
<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>Revenue</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>($M)</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>Market<BR>Capitalization</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>($M)</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>Market <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap">Cap-to-</FONT></FONT></B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>Revenue Ratio</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt"><B>Employees&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman"><B>Graco</B></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"><B>1,329.3</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"><B>4,639.0</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"><B>3.49</B></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000"><B>3,325&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD></TR>
<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman"><B>Graco
Peer Group - Median<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP></B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><B>1,826.6</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><B>2,777.8</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><B>1.73</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>6,801&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">Represents most recent fiscal year data available from Equilar as of February&nbsp;2, 2017. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">At its February
2016 meeting, the MOCC engaged Willis Towers Watson to assist in reviewing and analyzing the Graco Peer Group. Since the last formal review of the Graco Peer Group in 2013, Pall Corporation was removed from the Graco Peer Group at the time it was
acquired by Danaher Corporation in August 2015. The MOCC believes it is appropriate and necessary to review and analyze the peer group every three years to ensure the group is large enough to maintain reliable market outcomes and to improve the
alignment of the peer group with our Company. Willis Towers Watson reviewed and analyzed the Graco Peer Group for the September 2016 meeting and recommended no changes. Following its review of an executive compensation peer group report prepared by
Willis Towers Watson and its discussions with Willis Towers Watson, the MOCC determined not to make any changes to the Graco Peer Group, believing the Graco Peer Group includes a sample size that is robust enough that individual company actions or
policies will not skew results and is appropriately aligned with the Company in terms of industry, size, life cycle stage, labor market, and revenue and market capitalization characteristics. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Given that compensation data for the CEO and CFO positions of the Graco Peer Group are readily available in securities filings, the MOCC used the Graco Peer
Group as a primary source of data when setting 2016 compensation levels for the Company&#146;s CEO and CFO. Compensation data for all other executive officer positions in the Graco Peer Group are limited to those executive officers identified in
securities filings, which positions may or may not correspond to the positions held by, and responsibilities of, our other executive officers. Therefore, the MOCC used the Willis Towers Watson survey data as a primary source of data, and the Graco
Peer Group as a secondary source of data to the extent applicable, when setting 2016 compensation levels for the Company&#146;s other executive officers. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">20 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Components of the Executive Compensation Program </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our executive compensation program is designed to reward short-term results and motivate long-term performance through the use of three primary total
compensation components: base salary; short-term incentives; and long-term incentives. The following table summarizes each of these components of compensation: </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"><B>Component</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman"><B>&nbsp;&nbsp;Form of</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman"><B>&nbsp;&nbsp;Compensation&nbsp;&nbsp;</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Purpose</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Key Characteristics</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt"><B>At Risk</B></TD></TR>


<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">Base Salary</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;Cash</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">Recognizes individual work experience, performance, skill and level of responsibility</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Fixed compensation</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Guided by the 50<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> percentile market data, but subject to individual performance in prior year and budget
constraints</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">Used to compute other components of compensation</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">No</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Short-Term</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Incentives</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">(STI)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;Cash</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Establishes a strong link between pay and results</P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Motivates attainment of annual key business objectives</P>
<P STYLE="font-size:6pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Variable compensation tied to actual performance</P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">Bonus thresholds, targets and maximums are set as a percentage of base salary</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">Yes, fluctuates based on corporate and division/region performance; may not pay out if
<FONT STYLE="white-space:nowrap">pre-established,</FONT> measureable goals are not met</TD></TR>
<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Long-Term</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Incentives</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">(LTI)</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">&nbsp;&nbsp;Stock options</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Motivates attainment of long-term goals and overall operational growth</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Variable compensation provided to reward Company&#146;s long-term performance</P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ROWSPAN="3" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">Yes, stock options increase in value only if share price rises above grant date fair market value</TD></TR>
<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">Aligns executives&#146; interests with shareholders&#146; interests</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Annual vesting of 25% over a four-year period from grant date</P> <P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>

<TD VALIGN="bottom">&nbsp;&nbsp;</TD></TR>
<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">Retains executive talent through gradual vesting schedule</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">Stock options expire ten years from grant date</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition to reviewing the benchmark data described above, the MOCC reviews compensation and benefits tally sheets for our
projected NEOs showing their current and potential total compensation and benefits components. The tally sheets also display estimated compensation and benefits for hypothetical change of control and involuntary and voluntary terminations.
Specifically, the tally sheets reviewed by the MOCC in September 2016 provided actual compensation for 2014 and 2015 and target annual compensation for 2016. These tally sheets also provided retirement balances as of December&nbsp;31, 2015,
projected to normal retirement age or the age at which the benefit is not subject to reduction, deferred compensation balances and the projected value of stock awards based on assumptions regarding stock price appreciation. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The MOCC strives to maintain a reasonable and competitive balance between fixed and variable elements of compensation. The MOCC believes the compensation mix
and amount paid to each of our executive officers is market-based, reasonable and competitive. The 2016 pay mix at target for our CEO and other NEOs is displayed below. The percentage allocation among each pay element may vary based on an
individual&#146;s experience, responsibilities, performance and corporate/division/region results. The &#147;at risk&#148; pay components comprised between 64% and 86% of the total target annual direct compensation for 2016 to align our NEOs&#146;
compensation with the performance of the Company and the creation of shareholder value. </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt;margin-bottom:0pt" ALIGN="center">


<IMG SRC="g358732g85i50.jpg" ALT="LOGO">
 </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">21 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Base Salary </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Base salary is fixed compensation. Annual salary increases are based on individual performance and budgetary constraints, and are guided by the 50<SUP
STYLE="font-size:85%; vertical-align:top">th</SUP> percentile market data. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">For 2016, the merit increase decisions for the NEOs were based on the criteria
identified above. Additional information on individual salary adjustments for 2016 is provided in the &#147;Compensation of Individual Named Executive Officers&#148; section below. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Short-Term Incentives (STI) </I></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Graco Inc.
Incentive Bonus Plan (the &#147;Incentive Bonus Plan&#148;) is designed to motivate the executive officers of the Company to improve the overall performance of the Company and to reward them when the Company achieves specific measurable results. The
Incentive Bonus Plan provides cash rewards to executive officers to encourage them to produce a strong return for the Company&#146;s shareholders and to encourage them to remain employees of the Company. The Incentive Bonus Plan gives the MOCC
discretion to grant awards that qualify as &#147;performance-based compensation&#148; under Section 162(m) of the Internal Revenue Code, as well as awards that are not intended to so qualify. The MOCC has the discretion to designate executive
officers and other employees of the Company as participants in the Incentive Bonus Plan. The Incentive Bonus Plan also permits the MOCC to establish performance periods based on a performance period of any length. Potential payouts under the
Incentive Bonus Plan are expressed as a percentage of base salary, which percentages have remained constant within each level (CEO and other executive officers) for several years. Specific financial performance thresholds must be attained in order
for the executive officers to earn an incentive payment. If specified performance levels are not achieved or exceeded, there is no payout. The annual incentives, to the extent earned, are typically paid in cash in March following the calendar <FONT
STYLE="white-space:nowrap">year-end</FONT> and are based upon the MOCC&#146;s determination of financial performance against <FONT STYLE="white-space:nowrap">pre-established</FONT> targets. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">At its meeting in February 2016, the MOCC approved participation of the CEO and other executive officers in the Incentive Bonus Plan for 2016. The MOCC
designated Mr.&nbsp;McHale as the only participant whose bonus award is intended to qualify as performance-based compensation under Section 162(m). The threshold, target and maximum payout levels as a percent of target and as a percent of base
salary for 2016 are displayed below. Achievement of performance levels between threshold and target, and target and maximum, result in a payout that is interpolated based on the level of performance, and permit a partial payout as soon as the
threshold level of achievement has been exceeded. </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt;margin-bottom:0pt" ALIGN="center">


<IMG SRC="g358732g82z15.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:10pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The MOCC established two financial measures for the Incentive Bonus Plan: net sales and EPS growth over the prior year. Net
sales and EPS growth were selected as the metrics against which to measure the executive officers&#146; performance for the Incentive Bonus Plan because the MOCC desires to motivate the officers to achieve profitable business growth consistent with
our long-term financial objectives. The MOCC utilized projected global gross domestic product (&#147;GDP&#148;) growth rates as a guide in setting the 2016 target performance levels. At the time the MOCC established the 2016 target performance
levels, the MOCC determined that final bonus payout calculations for corporate, worldwide division and region EPS would exclude certain purchase accounting and <FONT STYLE="white-space:nowrap">one-time</FONT> transaction costs related to
acquisitions. For any participant whose bonus award is intended to qualify as performance-based compensation under Section 162(m), the MOCC further determined that the calculation for EPS would exclude the effect of write-down or <FONT
STYLE="white-space:nowrap">write-off</FONT> of intangible assets (other than regular amortization), although the MOCC reserved the right to exercise negative discretion to include the effect of write-down or
<FONT STYLE="white-space:nowrap">write-off</FONT> of intangible assets, thereby reducing the amount of any payout that may otherwise be payable to any such participant. Accordingly, the EPS calculation for Mr.&nbsp;McHale&#146;s bonus payout
excluded the <FONT STYLE="white-space:nowrap">non-cash</FONT> impairment charge related to the Company&#146;s Oil and Natural Gas reporting </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">22 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
unit. Similarly, in calculating final 2016 bonus payouts, the MOCC elected to exclude the same <FONT STYLE="white-space:nowrap">non-cash</FONT> impairment charge from the EPS calculation for
those executive officers whose bonus awards are not intended to qualify as performance-based compensation. The MOCC also elected to exercise negative discretion and reduce the EPS calculation for Mr.&nbsp;McHale and the other executive officers,
taking into account a <FONT STYLE="white-space:nowrap">one-time</FONT> gain from a legal settlement. The MOCC believes these adjustments provide a better measure of operating performance in 2016. As a result, the Adjusted EPS results of $3.53 are
the same for Mr.&nbsp;McHale and the other executive officers,<B> </B>and are slightly lower than the adjusted EPS reported in our earnings release. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
2016 incentive award payouts were based upon the achievement of specified levels of net sales and Adjusted EPS at the corporate and division/region levels. Financial performance levels and actual results for the 2016 Incentive Bonus Plan were as
follows: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="30%"></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"><B>Financial Metric</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>Metric<BR>Weighting</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>2016&nbsp;Target&nbsp;Performance<BR>Level (As % of 2015<BR>Actual Results)</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>2016
Threshold<BR>Performance&nbsp;Level</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>(As % of 2016<BR>Target&nbsp;Performance)</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>2016
Maximum<BR>Performance&nbsp;Level</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>(As&nbsp;%&nbsp;of&nbsp;2016&nbsp;Target<BR>Performance)</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>2016 Results&nbsp;&nbsp;</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>(As&nbsp;%&nbsp;of&nbsp;2016&nbsp;&nbsp;<BR>Target&nbsp;&nbsp;<BR>Performance)&nbsp;&nbsp;</B></P></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" COLSPAN="11" STYLE="BORDER-LEFT:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-left:8pt; padding-right:2pt" BGCOLOR="#d9d9d9">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman"><B>CEO</B></P></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="5" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">Corporate Net Sales</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">50%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">105%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">90%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">105%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">99%</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Corporate Adjusted EPS</P>
<P STYLE="font-size:4pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">50%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">107%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">90%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">105%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">93%</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" COLSPAN="11" STYLE="BORDER-LEFT:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-left:8pt; padding-right:2pt" BGCOLOR="#d9d9d9">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman"><B>CFO and Function Executives (HR, Legal and Finance)</B></P></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="5" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">Corporate Net Sales</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">50%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">105%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">90%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">105%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">99%</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Corporate Adjusted EPS</P>
<P STYLE="font-size:4pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">50%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">107%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">90%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">105%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">93%</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" COLSPAN="11" STYLE="BORDER-LEFT:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-left:8pt; padding-right:2pt" BGCOLOR="#d9d9d9">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman"><B>Division and Region Executives</B></P></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="5" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2"></TD>
<TD HEIGHT="5" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">Corporate Net Sales</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">25%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">105%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">90%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">105%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">99%</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">Corporate Adjusted EPS</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">25%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">107%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">90%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">105%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">93%</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">Worldwide Division or Region Net Sales</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">25%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center"><FONT STYLE="white-space:nowrap">104-121%</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">90%</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center"><FONT STYLE="white-space:nowrap">104-105%</FONT></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000"><FONT STYLE="white-space:nowrap">65-104%</FONT></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Worldwide Division or Region Adjusted EPS</P>
<P STYLE="font-size:2pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000">25%</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="white-space:nowrap">6-11%</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000">90%</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="white-space:nowrap">105-150%</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT STYLE="white-space:nowrap">-559-107%</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The 2016 financial results produced at or below target payouts for the Incentive Bonus Plan. The Incentive Bonus Plan targets
as a percentage of base salary, awards at target, performance achievements, actual payouts and payouts as a percentage of base salary for each NEO were as follows: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="85%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="44%"></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="5%"></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman"><B>&nbsp;&nbsp;&nbsp;&nbsp;Named Executive</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Officer</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>2016</B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>Base</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>Salary</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>&nbsp;&nbsp;Target&nbsp;as&nbsp;a&nbsp;&nbsp;<BR>&nbsp;&nbsp;% of Base&nbsp;&nbsp;<BR>&nbsp;&nbsp;Salary&nbsp;&nbsp;</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>&nbsp;&nbsp;Award&nbsp;at&nbsp;&nbsp;<BR>&nbsp;&nbsp;Target&nbsp;&nbsp;</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><B>&nbsp;&nbsp;Performance&nbsp;&nbsp;<BR>&nbsp;&nbsp;Achievement&nbsp;&nbsp;</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>&nbsp;&nbsp;Payout&nbsp;Based&nbsp;&nbsp;<BR>&nbsp;&nbsp;on&nbsp;&nbsp;<BR>&nbsp;&nbsp;Performance&nbsp;&nbsp;</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>&nbsp;&nbsp;Achievement&nbsp;&nbsp;</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>&nbsp;&nbsp;Payout&nbsp;&nbsp;<BR>&nbsp;&nbsp;as&nbsp;a&nbsp;%&nbsp;of&nbsp;&nbsp;</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>&nbsp;&nbsp;Base&nbsp;&nbsp;<BR>&nbsp;&nbsp;Salary&nbsp;&nbsp;</B></P></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Patrick J. McHale</P> <P STYLE="font-size:2pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">$772,900</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">100%</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">$772,900</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">60%</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">$466,021</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">60%&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Christian E. Rothe</P> <P STYLE="font-size:2pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">$375,200</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">70%</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">$262,640</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">60%</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">$158,359</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">42%&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Dale D. Johnson</P> <P STYLE="font-size:2pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">$380,700</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">70%</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">$266,490</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">94%</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">$249,967</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">66%&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Jeffrey P. Johnson</P> <P STYLE="font-size:2pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">$329,300</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">70%</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">$230,510</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">101%</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center">$232,798</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">71%&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">David M. Lowe</P> <P STYLE="font-size:2pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">$318,600</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">70%</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">$223,020</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">90%</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">$200,357</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">63%&nbsp;&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The MOCC has the authority to make adjustments to Incentive Bonus Plan awards that are not intended to qualify as
performance-based compensation under Section 162(m) based on unanticipated or special circumstances. As mentioned above, in calculating final 2016 bonus payouts, the MOCC elected to exclude the <FONT STYLE="white-space:nowrap">non-cash</FONT>
impairment charge related to the Company&#146;s </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">23 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
Oil and Natural Gas reporting unit from the EPS calculation for those executive officers whose bonus awards are not intended to qualify as performance-based compensation.<B><I> </I></B>The MOCC
also elected to reduce the EPS calculation to account for a <FONT STYLE="white-space:nowrap">one-time</FONT> gain from a legal settlement. As noted above, the MOCC believes these adjustments provide a better measure of operating performance in 2016.
The MOCC also has the authority to award special bonuses outside of the Incentive Bonus Plan to individual executive officers, but no such special bonuses were awarded. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Long-Term Incentives (LTI) </I></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The MOCC typically
grants long-term incentive awards in the form of stock options to each executive officer at its regularly scheduled February meeting based on a review of the market data. The MOCC is guided by the
75<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> percentile of the market data for comparable groupings of positions to determine the economic value of such awards. The stock option awards are designed to promote the interests of the
Company and its shareholders through the attraction and retention of experienced and capable leaders. The MOCC considers, except in the case of the award to the CEO, the recommendation of the CEO for such awards. The MOCC also considers the dilutive
effect on our shareholders in determining the number of stock options granted to each executive officer. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under the terms of the Graco Inc. 2015 Stock
Incentive Plan (the &#147;2015 Plan&#148;), the MOCC must approve all stock option grants to executive officers. In February 2016, executive officers were awarded <FONT STYLE="white-space:nowrap">non-qualified</FONT> stock options with an exercise
price equal to the fair market value of our common stock on the grant date, defined in the 2015 Plan as the last sale price of the stock on the day immediately preceding the grant date. Each option has a
<FONT STYLE="white-space:nowrap">10-year</FONT> term and becomes exercisable in equal installments over four years, beginning with the first anniversary of the grant date. Additionally, the 2015 Plan prohibits the repricing of stock options. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In 2016, the MOCC granted the following stock option awards to the NEOs under the 2015 Plan: </P>
<P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="60%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="68%"></TD>
<TD VALIGN="bottom" WIDTH="10%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="10%"></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"><B>&nbsp;&nbsp;Named Executive Officer</B></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>Stock&nbsp;Option&nbsp;Award&nbsp;&nbsp;</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>(Number&nbsp;of&nbsp;Shares)&nbsp;&nbsp;</B></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>Grant&nbsp;Date&nbsp;Fair&nbsp;Value&nbsp;&nbsp;</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><B>($)&nbsp;&nbsp;</B></P></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Patrick J.
McHale</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">201,160</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">3,799,912&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Christian E. Rothe</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">26,460</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">499,829&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Dale D. Johnson</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">21,170</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">399,901&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Jeffrey P. Johnson</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">21,170</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">399,901&nbsp;&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">David M. Lowe</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">21,170</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">399,901&nbsp;&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Compensation of Individual Named Executive Officers </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Patrick J. McHale </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>President and Chief Executive Officer
</I></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;McHale&#146;s base salary as of December 2015 was below the median of the 2015 Willis Towers Watson survey data. In December 2015, the MOCC
approved a base salary increase of 3% to $772,900 for 2016 based on Mr.&nbsp;McHale&#146;s relative position in the market and individual performance. The increase was in line with the Market Increase Projection. Based on 2016 corporate net sales
and corporate Adjusted EPS performance, Mr.&nbsp;McHale received a $466,021 bonus payout under the Incentive Bonus Plan. Mr.&nbsp;McHale&#146;s bonus payout represented 60% of his target award. Based on the process described above for setting
long-term incentive awards, Mr.&nbsp;McHale received a stock option award of 201,160 shares in February 2016. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Christian E. Rothe </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Chief Financial Officer and Treasurer </I></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Rothe&#146;s base salary as of December 2015 was below the median of the 2015 Willis Towers Watson survey data. In December 2015, the MOCC approved a
base salary increase of 7.2% to $375,200 for 2016 based on Mr.&nbsp;Rothe&#146;s relative position in the market and individual performance. Based on 2016 corporate net sales and corporate Adjusted EPS performance, Mr.&nbsp;Rothe received a $158,359
bonus payment under the Incentive Bonus Plan. Mr.&nbsp;Rothe&#146;s bonus payout represented 60% of his target award. Based on the process described above for setting long-term incentive awards, Mr.&nbsp;Rothe received a stock option award of 26,460
shares in February 2016. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">24 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dale D. Johnson </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>President, Worldwide Contractor Equipment Division </I></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Johnson&#146;s base salary as of December 2015 was above the median of the 2015 Willis Towers Watson survey data. His highly competitive base
compensation is based on key factors such as long tenure, strong past performance and individual contributions to the Company. In December 2015, the MOCC approved a 4% increase to Mr.&nbsp;Johnson&#146;s base salary to $380,700 for 2016 based on his
relative position in the market and individual performance. Based on 2016 corporate net sales, corporate Adjusted EPS, worldwide Contractor Equipment Division net sales, and worldwide Contractor Equipment Division Adjusted EPS performance,
Mr.&nbsp;Johnson received a $249,967 cash bonus payout under the Incentive Bonus Plan. Mr.&nbsp;Johnson&#146;s bonus payout represented 94% of his target award. Based on the process described above for setting long-term incentive awards,
Mr.&nbsp;Johnson received a stock option award of 21,170 shares in February 2016. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Jeffrey P. Johnson </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Vice President and General Manager, EMEA </I></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Johnson&#146;s base salary as of December 2015 was at approximately the median of the 2015 Willis Towers Watson survey data. In December 2015, the
MOCC approved a 4% increase to Mr.&nbsp;Johnson&#146;s base salary to $329,300 for 2016 based on his relative position in the market and individual performance. Based on 2016 corporate net sales, corporate Adjusted EPS, worldwide EMEA net sales, and
worldwide EMEA Adjusted EPS performance, Mr.&nbsp;Johnson received a $232,798 bonus payout under the Incentive Bonus Plan. Mr.&nbsp;Johnson&#146;s bonus payout represents 101% of his target award. Based on the process described above for setting
long-term incentive awards, Mr.&nbsp;Johnson received a stock option award of 21,170 shares in February 2016. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">David M. Lowe </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Executive Vice President, Industrial Products Division </I></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Lowe&#146;s base salary as of December 2015 was at approximately the median of the 2015 Willis Towers Watson survey data. In December 2015, the MOCC
approved a 2.5% increase to Mr.&nbsp;Lowe&#146;s base salary to $318,600 for 2016 based on his relative position in market and individual performance. Based on 2016 corporate net sales, corporate Adjusted EPS, worldwide Industrial Products Division
net sales, and worldwide Industrial Products Division Adjusted EPS performance, Mr.&nbsp;Lowe received a $200,357 bonus payout under the Incentive Bonus Plan. Mr.&nbsp;Lowe&#146;s bonus payout represents 90% of his target award. Based on the process
described above for setting long-term incentive awards, Mr.&nbsp;Lowe received a stock option award of 21,170 shares in February 2016. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Compensation
Decisions for 2017 </I></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In December of 2016, the MOCC increased the base salaries of each of the NEOs between 2.5% and 6% effective January&nbsp;1,
2017. At its February 2017 meeting, the MOCC kept each NEO&#146;s target annual cash incentive payout as a percent of base salary the same for 2017, and granted under the 2015 Plan stock option awards of 162,698 shares to Mr.&nbsp;McHale, 21,920
shares to Mr.&nbsp;Rothe, 17,540 shares to each of Messrs. D. Johnson and J. Johnson, and 17,120 shares to Mr.&nbsp;Lowe. The MOCC also determined it would use Adjusted EPS of $3.53 as the baseline in establishing threshold, target and maximum
performance levels for the Incentive Bonus Plan for 2017. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Benefits and Perquisites </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In an effort to attract and retain talented employees, we offer retirement, health and welfare programs competitive within our local markets (the
&#147;Benefit Programs&#148;). The only Benefit Programs offered to our U.S. executive officers, either exclusively or with terms different from those offered to other eligible employees, are the following: </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><U>Restoration Plan</U>. Since the Internal Revenue Code limits the pension benefits that can be accrued under a <FONT STYLE="white-space:nowrap">tax-qualified</FONT> defined benefit pension plan, we established the
Graco Inc. Restoration Plan. This plan is a nonqualified excess benefit plan designed to provide retirement benefits to eligible participants in the United States as a replacement for those retirement benefits reduced under the Graco Employee
Retirement Plan by operation of Section&nbsp;415 and Section 401(a)(17) of the Internal Revenue Code. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><U>Supplemental Long-Term Disability Program</U>. Each U.S. executive officer is enrolled in an individual executive long-term disability plan under which Graco pays the premiums. Each plan provides the executive with a
monthly disability benefit of up to $21,800 in the event of long-term disability. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt"><U>Other Perquisites</U>. We provide few other perquisites to our executive officers. We reimburse our CEO and
the U.S.-based executive officers reporting directly to him for certain financial planning expenses to encourage them to maximize the value of their compensation and benefit programs. In 2016, the maximum amount
</P></TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">25 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>


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<TR style = "page-break-inside:avoid">
<TD WIDTH="13%">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">
reimbursable for financial planning was $10,000 for the CEO and $7,000 for the other U.S.-based NEOs. In order to motivate the executives to receive appropriate preventative medical care to
support their continued health and productivity, we offer executive officers in the U.S. an executive physical examination program through the Mayo Clinic. This program provides a physical examination every three years for executives under age 40,
every other year for executives from age 40 through 49, and every year for executives age 50 and older. Executives may also be reimbursed and/or receive a tax <FONT STYLE="white-space:nowrap">gross-up</FONT> for certain limited spousal travel and
entertainment events. </P></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Severance and Change of Control Arrangements </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We have entered into Key Employee Agreements with the CEO and each of the other NEOs, the terms of which are described below under &#147;Change of Control and
Post-Termination Payments.&#148; The MOCC believes it is in the best interests of our Company and its shareholders to design compensation programs that: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Assist our Company in attracting and retaining qualified executive officers; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Assure our Company will have the continued dedication of our Company&#146;s executive officers in the event of a pending, threatened or actual change of control; </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Provide certainty about the consequences of terminating certain executive officers&#146; employment; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Protect our Company by obtaining <FONT STYLE="white-space:nowrap">non-compete</FONT> covenants from certain executive officers that continue after their termination of employment not involving a change of control; and
</TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Obtain a release of any claims from those former executive officers. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Accordingly, the agreements generally
provide for certain benefits if the executive officer&#146;s employment or service is involuntarily terminated by our Company without cause prior to a change of control or if, within two years after a change of control, the executive officer&#146;s
employment or service is terminated involuntarily by the Company without cause or the executive officer resigns for good reason. The current form of Key Employee Agreement was approved by the MOCC in December 2007 after reviewing the Key Employee
Agreements previously in effect and current market practices related to severance arrangements and benefit levels related thereto. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The MOCC believes it
is imperative to diminish any potential distraction of the executive officers by the personal uncertainties and risks created by a pending or threatened change of control. By offering an agreement that will financially protect the executive officer
in the event his or her employment or service is involuntarily terminated or terminated by the executive officer for good reason following a change of control, the MOCC believes each executive officer&#146;s full attention and dedication to our
Company will be enhanced. The MOCC also believes the officers&#146; dedication will help the Company appropriately evaluate and complete a change of control transaction, and facilitate an orderly transition. In the event of a change of control of
our Company, the agreements provide benefits only if the executive officer&#146;s employment or service is terminated involuntarily without cause or if the executive officer resigns for good reason, including by reason of material demotion, decrease
in compensation, relocation or increased travel, within two years after the change of control. The MOCC believes this &#147;double-trigger&#148; approach is most consistent with the objectives described above. The MOCC believes a termination by an
executive officer for good reason may be conceptually the same as termination by our Company without cause, and that a potential acquirer would otherwise have an incentive to constructively terminate the executive&#146;s employment to avoid paying
severance benefits. Thus, the Key Employee Agreements provide severance benefits in the case of resignation for good reason following a change of control. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The MOCC believes it is important to attract and retain our executive officers by agreeing to provide certain benefits if the executive officer&#146;s
employment or service is terminated without cause prior to a change of control. In addition, the MOCC believes these benefits are appropriate to compensate these executive officers for agreeing not to work with competitors for a specified period of
time following termination of employment, and that compensation enhances the enforceability of these <FONT STYLE="white-space:nowrap">non-compete</FONT> covenants. The MOCC also believes the Company benefits from obtaining a release of any claims
from these former executive officers and the severance payments provide consideration for obtaining the release. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our equity awards for executive officers
and certain key managers provide for accelerated vesting or lapse of restrictions upon a change of control. The MOCC believes that acceleration upon a change of control is appropriate to minimize the risk that executive officers might favor a
transaction based on the likely impact on the executive officers&#146; equity awards, to increase the likelihood that the employees will remain with us after becoming aware of a pending or threatened change of control, and due to the increased
likelihood that employees may be terminated by a successor through no fault of their own. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">26 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Hedging and Pledging </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company&#146;s directors and executive officers are prohibited from hedging Company stock. The Company&#146;s directors and executive officers are also
prohibited from pledging Company stock without first obtaining the proper level of approval. Any pledges of Company stock by a director or an executive officer (other than the CEO or the General Counsel) must be approved in advance by the CEO and
the General Counsel. Any pledges of Company stock by the CEO or the General Counsel must be approved in advance by the Governance Committee. All approvals of pledges of Company stock, if granted, will be on a discretionary basis, considering the
following criteria: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">To ensure continued alignment between the interests of individual directors and executive officers with the long-term interests of shareholders, pledged shares will not be counted toward the Company&#146;s stock
ownership guidelines. As a result, an individual director or executive officer may only pledge those shares he or she owns that are in excess of his or her individual holding requirement. </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">To reduce the potential adverse impact pledged shares may have on the Company&#146;s stock price, approvals will not be granted unless the sum of (i)&nbsp;the aggregate number of shares pledged by all directors and
executive officers at the time of the requested pledge plus (ii)&nbsp;the number of shares requested to be pledged is equal to or less than an amount equal to two times (2X) the average daily trading volume in the Company&#146;s stock during the
preceding thirty (30)&nbsp;days. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Such other factors as the CEO and the General Counsel (or the Governance Committee, as the case may be) deem relevant in determining whether or not to approve the requested pledge. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">During 2016, there were no Company shares pledged or hedged by directors or executive officers. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Tax Implications of Executive Compensation </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Section 162(m) of the Internal Revenue Code places a limit of $1&nbsp;million in compensation per year on the amount we may deduct with respect to each of our
NEOs (other than the CFO). This limitation does not apply to compensation that qualifies as &#147;performance-based compensation.&#148; Annual cash incentives meeting certain conditions and stock option awards constitute performance-based
compensation and will generally be fully deductible. The MOCC believes all compensation paid to the NEOs for fiscal year 2016 will be deductible for federal income tax purposes. However, the MOCC reserves the flexibility to approve elements of
compensation for specific officers in the future which may not be fully deductible should the MOCC deem the compensation appropriate in light of its philosophies. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_28"></A>Report of the Management Organization and Compensation Committee </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Management Organization and Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item
402(b) of Regulation <FONT STYLE="white-space:nowrap">S-K</FONT> with management, and based on such review and discussions, the Management Organization and Compensation Committee recommended to the Board that the Compensation Discussion and Analysis
be included in this Proxy Statement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">The Members of the Management Organization and Compensation Committee </P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="53%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="46%"></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Mr.&nbsp;Jack W. Eugster, Chair</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Mr.&nbsp;Eric&nbsp;P. Etchart</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Ms.&nbsp;Jody&nbsp;H. Feragen</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Mr.&nbsp;J. Kevin Gilligan</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Mr.&nbsp;Lee R. Mitau</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Ms.&nbsp;Martha A. Morfitt</TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">27 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_29"></A>Summary Compensation Table </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The table below summarizes the total compensation paid to or earned by our Chief Executive Officer, our Chief Financial Officer and the other three most
highly compensated Named Executive Officers during the fiscal years ended December&nbsp;30, 2016, December&nbsp;25, 2015 and December&nbsp;26, 2014. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


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<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name and Principal</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Position</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">Year</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Salary</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Bonus<SUP
STYLE="font-size:85%; vertical-align:top">(1)</SUP></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Stock</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Awards</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Option</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Awards<SUP STYLE="font-size:85%; vertical-align:top">(2)</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><FONT
STYLE="white-space:nowrap">Non-Equity</FONT></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Incentive Plan<BR>Compensation<SUP STYLE="font-size:85%; vertical-align:top">(3)</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Change in</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Pension&nbsp;Value</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">and</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Nonqualified</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Deferred</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Compensation</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Earnings<SUP
STYLE="font-size:85%; vertical-align:top">(4)</SUP></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">All&nbsp;Other</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Compensation<SUP STYLE="font-size:85%; vertical-align:top">(5)</SUP></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Total</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" ROWSPAN="3" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman"><B>Patrick J.
McHale</B><B></B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman"><B></B>President and Chief Executive Officer</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="center">2016</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">772,900</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">3,799,912&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">466,021&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">741,000&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">13,961&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">5,793,794</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="center">2015</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">750,400</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">3,397,563&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">910,538&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">815,000&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">18,864&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">5,892,365</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="center">2014</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">728,500</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">3,064,400&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">1,030,297&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">1,790,000&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">14,760&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">6,627,957</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" ROWSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman"><B>Christian E. Rothe</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">Chief Financial Officer and </P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center">2016</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">375,200</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">499,829&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">158,359&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">17,674&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">1,051,062</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center">2015</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">295,467</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">150,000</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">251,999&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">158,882&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">17,618&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">873,966</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Treasurer</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" ROWSPAN="3" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman"><B>Dale D.
Johnson</B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">President, Worldwide Contractor Equipment Division</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="center">2016</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">380,700</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">2,259</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">399,901&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">249,967&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">533,000&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">14,357&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">1,580,184</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="center">2015</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">366,100</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">150,000</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">367,928&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">268,492&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">625,000&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">24,196&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">1,801,716</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="center">2014</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">352,000</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">357,617&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">348,043&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">1,039,000&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">23,685&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" BGCOLOR="#d9d9d9" ALIGN="right">2,120,345</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" ROWSPAN="3" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman"><B>Jeffrey P. Johnson</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman"><B></B>Vice President and General Manager, EMEA</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center">2016</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">329,300</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">399,901&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">232,798&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">257,555&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">1,219,554</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center">2015</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">316,600</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">150,000</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">367,928&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">176,919&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">245,637&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">1,257,084</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center">2014</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">304,400</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">357,617&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">272,723&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD NOWRAP VALIGN="top" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">328,131&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">1,262,871</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman"><B>David M. Lowe</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">Executive Vice President, Industrial Products Division</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="center">2016</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">318,600</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">399,901&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">200,357&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">224,000&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">18,926&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">1,161,784</TD>
<TD NOWRAP VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">Bonus includes any anniversary service awards or discretionary bonuses. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">The amounts reported in the Option Awards column represent the aggregate grant date fair market value of stock options granted in the fiscal year, as estimated for financial accounting purposes. Information concerning
the assumptions used in accounting for equity awards may be found in Item 8, Financial Statements and Supplementary Data, Note H to the Consolidated Financial Statements in our 2016 Annual Report on Form <FONT STYLE="white-space:nowrap">10-K.</FONT>
</TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(3)</TD>
<TD ALIGN="left" VALIGN="top">The amounts reported in the <FONT STYLE="white-space:nowrap">Non-Equity</FONT> Incentive Plan Compensation column represent awards earned under the Incentive Bonus Plan. The Incentive Bonus Plan has a 100% of base
salary target payout and a 150% of base salary maximum payout for Mr.&nbsp;McHale, and a 70% of base salary target payout and a 105% of base salary maximum payout for the other NEOs. See &#147;Grants of Plan-Based Awards in 2016&#148; below. At its
February&nbsp;17, 2017 meeting, the MOCC certified that the NEOs who participated in the Incentive Bonus Plan for 2016 were entitled to payouts as follows: </TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="50%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="68%"></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" COLSPAN="8" ALIGN="center" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;&nbsp;&nbsp;2016 Incentive Bonus Plan</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR BGCOLOR="#d9d9d9" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">&nbsp;&nbsp;Named&nbsp;Executive</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Officer</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Payout&nbsp;as&nbsp;a&nbsp;Percent&nbsp;of</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;Target Opportunity</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Payout&nbsp;as&nbsp;a&nbsp;Percent&nbsp;of</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">2016 Base Salary</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Patrick J. McHale</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">60%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">60%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Christian E.
Rothe</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">60%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">42%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Dale D. Johnson</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">94%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">66%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Jeffrey P.
Johnson</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">101%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">71%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">David M.
Lowe</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" ALIGN="right">90%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" ALIGN="right">63%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:20pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(4)</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">The amount shown in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column reflects
the aggregate change in the actuarial present value of the NEOs&#146; accumulated benefit under the qualified Graco Employee Retirement Plan and nonqualified excess benefits plan known as the Graco Inc. Restoration Plan. As of December&nbsp;30,
2016, the changes were as follows: Mr.&nbsp;McHale: $108,000 (qualified pension) and $633,000 (nonqualified restoration); Mr.&nbsp;D. Johnson: $122,000 (qualified pension) and $411,000 (nonqualified restoration); and Mr.&nbsp;Lowe: $87,000
(qualified pension) and $137,000 (nonqualified </P></TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">28 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="10%">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">
restoration). </P></TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(5)</TD>
<TD ALIGN="left" VALIGN="top">The amounts shown in the All Other Compensation column for 2016 reflect the following for Messrs.&nbsp;McHale, Rothe, D. Johnson, J. Johnson and Lowe: </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="80%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="90%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;McHale&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Rothe&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;D.&nbsp;Johnson&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;J.&nbsp;Johnson&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">Mr.&nbsp;Lowe&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">Employee Investment Plan Matching Contribution</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">$7,950</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">$9,107</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">$7,950</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" BGCOLOR="#d9d9d9">$7,950</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">$7,950</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">Employee Investment Plan Basic Contribution</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" NOWRAP ALIGN="center">&#151;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center">$3,975</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" NOWRAP ALIGN="center">&#151;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center">$3,975</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" NOWRAP ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Other
Perquisites</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">$6,011</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">$4,593</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">$6,407</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">$245,630</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">$10,976</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Total</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000">$13,961</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000">$17,674</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000">$14,357</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000">$257,555</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">$18,926</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">&nbsp;&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The Other Perquisites consist of Company-provided incremental cost for long-term disability coverage, financial planning, spousal travel, miscellaneous travel and an executive physical. None of these individual
perquisite categories exceeded the greater of $25,000 or 10% of the total perquisite amount. In Mr.&nbsp;J. Johnson&#146;s case, the Other Perquisites also include the following benefits provided to him in connection with his expatriate assignment
to Belgium: (1)&nbsp;cost of living adjustment ($27,922); (2) housing, utilities, home maintenance and monitoring ($83,485); (3) payment of travel expenses related to home leave ($19,883); (4) education allowances for his children ($79,800); and
(5)&nbsp;Company-provided automobile and related expenses ($24,071). In Mr.&nbsp;Rothe&#146;s case, the Employee Investment Plan Matching Contribution included an employer match <FONT STYLE="white-space:nowrap">true-up</FONT> from the 2015 plan year
in the amount of $1,157. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_30"></A>Grants of Plan-Based Awards in 2016 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">On February&nbsp;12, 2016, the MOCC awarded a <FONT STYLE="white-space:nowrap">non-qualified</FONT> stock option to each executive officer, including the
NEOs, under the Graco Inc. 2015 Stock Incentive Plan. The amounts shown in the column entitled &#147;All Other Option Awards: Number of Securities Underlying Options&#148; reflect the number of common shares covered by the stock option granted to
each NEO. Each option has a <FONT STYLE="white-space:nowrap">10-year</FONT> term and becomes exercisable in equal installments over four years, beginning with the first anniversary of the grant date. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under the Incentive Bonus Plan, the payout upon achievement of applicable financial measures ranges from a minimum of 0% to a maximum of 150% of base salary
for Mr.&nbsp;McHale and a minimum of 0% to a maximum of 105% of base salary for the other NEOs. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Grants of Plan-Based Awards for Fiscal Year Ending
December&nbsp;30, 2016 </B></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="88%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="41%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" ROWSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ROWSPAN="2" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000">Grant&nbsp;Date</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="5" STYLE="BORDER-TOP:1px solid #000000"> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Estimated&nbsp;Future&nbsp;Payouts&nbsp;Under</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center"><U><FONT STYLE="white-space:nowrap">&nbsp;Non-Equity&nbsp;Incentive&nbsp;Plan&nbsp;Awards&nbsp;</FONT></U></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ROWSPAN="2" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">All&nbsp;Other</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Option</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Awards:</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Number of</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Securities</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Underlying</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Options</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">(#)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ROWSPAN="2" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Exercise</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">or Base</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Price of</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Option</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Awards<SUP
STYLE="font-size:85%; vertical-align:top">(1)</SUP></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($/sh)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ROWSPAN="2" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Closing</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Market</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Price of</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Common</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Stock on</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Grant</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Date</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($/sh)<SUP STYLE="font-size:85%; vertical-align:top"> (1)</SUP></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ROWSPAN="2" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-right:2pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Grant</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Date</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Fair</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Value&nbsp;of</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Stock or</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Option</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Award</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)<SUP
STYLE="font-size:85%; vertical-align:top">(2)</SUP></P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Threshold</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Target</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="font-size:4pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Maximum</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Patrick J. McHale</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">2/12/2016</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">201,160</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">71.54</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">72.79</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;3,799,912&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">0</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">772,900</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">1,159,350</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Christian E. Rothe</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/12/2016</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">26,460</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">71.54</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">72.79</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">499,829</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">0</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">262,640</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">393,960</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Dale D. Johnson</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">2/12/2016</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">21,170</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">71.54</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">72.79</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">399,901</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">0</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">266,490</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">399,735</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Jeffrey P. Johnson</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/12/2016</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">21,170</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">71.54</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">72.79</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">399,901</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">0</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">230,510</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">345,765</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">David M. Lowe</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">2/12/2016</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">21,170</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">71.54</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">72.79</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">399,901</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">0</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">223,020</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">334,530</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">The Graco Inc. 2015 Stock Incentive Plan requires the exercise price of an option to be the fair market value of the shares on the date of the grant. The fair market value of the shares is defined as the last sale price
on the day preceding the date of grant, unless otherwise determined by the MOCC. The MOCC has not changed this definition. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">The aggregate grant date fair value of the award was calculated in accordance with U.S. accounting standards
</P></TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">29 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">
using a value per share of $18.89. </P></TD></TR></TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_31"></A>Outstanding
Equity Awards at 2016 Fiscal Year End </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following table summarizes the outstanding equity awards held by each Named Executive Officer on
December&nbsp;30, 2016: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="70%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="90%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;</TD>
<TD COLSPAN="2" VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="12" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">Option Awards</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" ROWSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ROWSPAN="2" ALIGN="right">Grant&nbsp;Date&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ROWSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Number&nbsp;of&nbsp;Securities&nbsp;&nbsp;&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Underlying Unexercised&nbsp;&nbsp;&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Options<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP>&nbsp;&nbsp;&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ROWSPAN="2" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Option</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Exercise</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Price</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ROWSPAN="2" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Option&nbsp;&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Expiration&nbsp;&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Date&nbsp;&nbsp;</P></TD>
<TD VALIGN="bottom" ROWSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">(#)</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Exercisable</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2"> <P STYLE="font-size:8pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">(#)</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Unexercisable</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Patrick J. McHale</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">2/12/2016&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">201,160&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">71.54</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="center">2/12/2026&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/13/2015&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">36,267&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">108,804&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">74.38</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/13/2025&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/14/2014&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">61,525&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">61,525&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">74.80</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/14/2024&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/15/2013&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">101,250&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">33,750&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">58.74</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/15/2023&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/17/2012&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">130,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">49.84</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/17/2022&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/18/2011&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">126,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">42.73</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/18/2021&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/12/2010&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">143,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">27.17</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/12/2020&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/13/2009&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">225,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">20.80</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/13/2019&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Christian E. Rothe</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/12/2016&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">26,460&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">71.54</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/12/2026&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/13/2015&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2,690&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8,070&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">74.38</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/13/2025&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/14/2014&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">4,510&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">4,510&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">74.80</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/14/2024&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/15/2013&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">7,500&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2,500&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">58.74</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/15/2023&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/17/2012&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">8,900&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">49.84</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/17/2022&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">6/6/2011&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">15,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">49.73</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">6/6/2021&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Dale D. Johnson</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/12/2016&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">21,170&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">71.54</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/12/2026&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/13/2015&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">3,927&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">11,783&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">74.38</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/13/2025&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/14/2014&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">7,180&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">7,180&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">74.80</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/14/2024&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/15/2013&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">13,500&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">4,500&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">58.74</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/15/2023&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/17/2012&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">18,600&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">49.84</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/17/2022&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/18/2011&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">18,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">42.73</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/18/2021&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/12/2010&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">30,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">27.17</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/12/2020&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/13/2009&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">47,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">20.80</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/13/2019&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/15/2008&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">30,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">35.90</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/15/2018&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/16/2007&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">22,500&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">41.36</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/16/2017&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Jeffrey P. Johnson</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/12/2016&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">21,170&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">71.54</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/12/2026&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/13/2015&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">3,927&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">11,783&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">74.38</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/13/2025&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/14/2014&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">7,180&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">7,180&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">74.80</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/14/2024&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/15/2013&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">13,500&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">4,500&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">58.74</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/15/2023&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/17/2012&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">18,600&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">49.84</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/17/2022&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/18/2011&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">18,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">42.73</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/18/2021&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/12/2010&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">30,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">27.17</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/12/2020&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2/15/2008&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">28,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">35,90</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">2/15/2008&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">David M. Lowe</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/12/2016&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">21,170&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">71.54</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/12/2026&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/13/2015&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">3,927&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">11,783&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">74.38</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/13/2025&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/14/2014&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">7,180&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">7,180&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">74.80</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/14/2024&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/15/2013&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">13,500&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">4,500&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">58.74</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/15/2023&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/17/2012&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">18,600&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">49.84</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/17/2022&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/18/2011&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">18,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">42.73</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/18/2021&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/12/2010&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">30,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">27.17</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/12/2020&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/13/2009&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">47,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">20.80</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/13/2019&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2/15/2008&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">30,000&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">35.90</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="center">2/15/2018&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">2/16/2007&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">22,500&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">0&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">41.36</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="center">2/16/2017&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">All options have a <FONT STYLE="white-space:nowrap">10-year</FONT> term and become exercisable in equal installments over four years, beginning with the first anniversary of the grant date. </TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">30 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_32"></A>Option Exercises and Stock Vested in 2016 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following table summarizes the options exercised by each Named Executive Officer in 2016: </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="56%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="71%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="14%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="13%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" ROWSPAN="2" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="3" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">Option Awards</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Number&nbsp;of&nbsp;Shares</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Acquired&nbsp;on&nbsp;Exercise<BR>(#)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt"> <P STYLE="font-size:3pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">&nbsp;&nbsp;&nbsp;&nbsp;Value&nbsp;Realized&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">&nbsp;&nbsp;&nbsp;&nbsp;on Exercise</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">&nbsp;&nbsp;&nbsp;&nbsp;($)<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP></P></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Patrick J.
McHale</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">161,500</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">6,724,964</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Christian E. Rothe</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Dale D. Johnson</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">&nbsp;&nbsp;22,500</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;714,915</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Jeffrey P. Johnson</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">David M. Lowe</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;&nbsp;22,500</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;719,208</TD></TR>
</TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="6%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">The value realized on the exercise of stock options is the difference between the market price of Graco common stock at exercise and the exercise price of the stock option. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_33"></A>Change of Control and Post-Termination Payments </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Summary of the Key Employee Agreement </I></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Key
Employee Agreement provides for payment of the following benefits if the Company terminates the employment of an executive officer involuntarily without Cause (as defined below) prior to a Change of Control (as defined below): </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="white-space:nowrap">Pro-rata</FONT> bonus for year of termination based on actual performance; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Severance pay equal to one times (two times for CEO) base salary plus bonus based on the target level of performance for the year of termination, payable over the severance period; </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Continued medical, dental and life insurance for the severance period; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Outplacement services; and </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Reimbursement of reasonable legal fees incurred to enforce the agreement. </TD></TR></TABLE> <P STYLE="margin-top:10pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Key Employee Agreement provides
for payment of the following benefits if, within two years after a Change of Control, the Company without Cause terminates an executive officer&#146;s employment involuntarily or if the executive officer resigns for Good Reason (as defined below):
</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="white-space:nowrap">Pro-rata</FONT> bonus for year of termination based on performance at the target level; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Severance pay equal to two times (three times for CEO) the sum of base salary plus bonus based on the target level of performance for the year of termination, payable in a lump sum six months after the termination date
or over the severance period (if the Change of Control does not conform to the requirements of Internal Revenue Code Section 409A); </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Continued medical, dental and life insurance for the severance period; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Attribution of two years (three years for CEO) service credit for purposes of nonqualified excess benefit pension plan; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Reimbursement of reasonable legal fees incurred to enforce the agreement; and </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="white-space:nowrap">Gross-up</FONT> of income taxes, and excise taxes related to such <FONT STYLE="white-space:nowrap">gross-up</FONT> payment, due under the &#147;excess parachute&#148; provisions of the
Internal Revenue Code (the &#147;Code&#148;), subject to a reduction of benefits of up to $25,000 to avoid such taxes. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The definition of
&#147;Change of Control&#148; in the Key Employee Agreements generally includes: (i)&nbsp;acquisition of beneficial ownership by a person or group which results in aggregate beneficial ownership of 30% or more of voting power or common stock,
subject to certain exceptions; (ii)&nbsp;change of 50% or more of the Board members, without Board approval; and (iii)&nbsp;consummation of a merger or other business combination unless our Company&#146;s shareholders own a majority of the voting
power and common stock of the surviving corporation and other conditions are satisfied. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">31 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As used in the Key Employee Agreement, &#147;Cause&#148; means: (i)&nbsp;conviction of, or guilty or no contest
plea to, any felony or other criminal act involving moral turpitude; (ii)&nbsp;gross misconduct or any act of fraud, disloyalty or dishonesty related to or connected with the executive officer&#146;s employment or otherwise likely to cause material
harm to our Company or its reputation; (iii)&nbsp;a willful and material violation of our Company&#146;s written policies or codes of conduct; (iv)&nbsp;wrongful appropriation of our Company&#146;s funds or property or other material breach of the
executive officer&#146;s fiduciary duties to our Company; or (v)&nbsp;the willful and material breach of the Key Employee Agreement by the executive officer. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As used in the Key Employee Agreement, &#147;Good Reason&#148; means: (i)&nbsp;assignment of duties materially inconsistent with, or other material diminution
of, the executive officer&#146;s position, duties or responsibilities as in effect immediately prior to the Change of Control; (ii)&nbsp;material reduction, in the aggregate, to the compensation and benefit plans, programs and perquisites applicable
to the executive officer in effect immediately prior to the Change of Control; (iii)&nbsp;relocation of the executive officer to a location more than 50 miles from where the executive officer was based immediately prior to the Change of Control, or
requiring the executive to travel to a substantially greater extent; or (iv)&nbsp;failure by our Company to assign the Key Employee Agreement to a successor. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Under the Key Employee Agreement, the executive officers agree to protect our Company&#146;s confidential information, and not to compete with our Company or
solicit employees for two years after termination of employment (or, if the executive officer&#146;s employment is terminated involuntarily other than for Cause prior to a Change of Control, the <FONT STYLE="white-space:nowrap">non-compete</FONT>
covenant may expire after the executive officer is no longer receiving severance payments). The <FONT STYLE="white-space:nowrap">non-compete</FONT> restriction does not apply if the executive officer&#146;s employment is terminated involuntarily
without Cause or voluntarily for Good Reason within two years after a Change of Control. In order to receive severance, the executive officer must sign a release of claims in favor of our Company and be in compliance with the terms of the Key
Employee Agreement. The term of the Key Employee Agreement for each Named Executive Officer is three years, followed by automatic annual renewals, unless either party gives six months&#146; notice of
<FONT STYLE="white-space:nowrap">non-renewal.</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Except as indicated above with respect to the CEO, the same form of agreement has been provided to
each Named Executive Officer. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Other Compensation and Benefits Payable Upon a Change of Control or Certain Terminations </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Each NEO is eligible for the benefits described in this section as part of our Company&#146;s standard practice or policy; however, the benefits are not
triggered by any specific termination reason. Incremental amounts for each of these benefits are disclosed in the Summary Compensation Table, Potential Payments Upon Termination or Following a Change of Control table, or Pension Benefits table. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Pursuant to the Incentive Bonus Plan, each participant is eligible to receive a prorated bonus based on the amount of base salary earned during the fiscal
year and the bonus percentage actually paid for that year for an employment termination due to death, disability or retirement. Unvested stock option awards provided to any executive officer will automatically accelerate and the options will become
fully vested in the event of a Change of Control of our Company or if the employment is terminated due to death, disability or retirement. All unvested restricted stock provided to any executive officer will automatically be accelerated and fully
vested in the event of a Change of Control of our Company or if the employment is terminated due to death or disability. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Participants in the Graco
Employee Retirement Plan and the Graco Inc. Restoration Plan are entitled to receive the accumulated pension benefits over their lifetime, over a specific defined time or at the time of their retirement. These amounts are reflected in the Present
Value of Accumulated Benefit column of the Pension Benefits table. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Upon any termination of employment, all employees are eligible to receive payment for
any credited but unused vacation time. Each Named Executive Officer would receive reimbursement for any miscellaneous travel and spousal travel perquisites and associated tax <FONT STYLE="white-space:nowrap">gross-up</FONT> payments incurred during
the fiscal year. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">32 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following table discloses the potential payments and benefits, other than those available generally on a
nondiscriminatory basis to all U.S. salaried employees, provided upon a Change of Control or termination of employment for each of the Named Executive Officers, calculated as if the Change of Control or termination of employment had occurred on
December&nbsp;30, 2016: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_34"></A>Potential Payments Upon Termination or Following a Change of Control at December&nbsp;30, 2016
</B></P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="97%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt">


<TR>
<TD WIDTH="36%"></TD>
<TD VALIGN="bottom" WIDTH="7%"></TD>
<TD style="width:169pt"></TD>
<TD></TD>
<TD></TD>
<TD style="width:169pt"></TD>
<TD VALIGN="bottom" WIDTH="7%"></TD>
<TD style="width:55pt"></TD>
<TD></TD>
<TD></TD>
<TD style="width:55pt"></TD>
<TD VALIGN="bottom" WIDTH="7%"></TD>
<TD style="width:20pt"></TD>
<TD></TD>
<TD></TD>
<TD style="width:20pt"></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD style="width:23pt"></TD>
<TD></TD>
<TD></TD>
<TD style="width:23pt"></TD>
<TD VALIGN="bottom" WIDTH="8%"></TD>
<TD style="width:34pt"></TD>
<TD></TD>
<TD></TD>
<TD style="width:34pt"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="4" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">Involuntary&nbsp;(Not&nbsp;for<BR>Cause)&nbsp;or&nbsp;Good&nbsp;Reason<BR>Termination
Following<BR>Change&nbsp;of&nbsp;Control<SUP STYLE="font-size:85%; vertical-align:top">(1)</SUP><SUP STYLE="font-size:85%; vertical-align:top"><BR></SUP>($)</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="4" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Involuntary</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">(Not&nbsp;for&nbsp;
Cause)<BR>Termination<SUP STYLE="font-size:85%; vertical-align:top">(2)</SUP><SUP STYLE="font-size:85%; vertical-align:top"><BR></SUP>($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="4" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">Retirement</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="4" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">&nbsp;&nbsp;&nbsp;&nbsp;Death<SUP STYLE="font-size:85%; vertical-align:top">(3)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="4" NOWRAP ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Disability<SUP STYLE="font-size:85%; vertical-align:top">(3)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman" ALIGN="center">($)</P></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Patrick J.
McHale</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">9,829,911</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">3,600,850</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">468,600</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">468,600</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">730,200</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Christian E. Rothe</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" >&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">2,047,420</TD>
<TD NOWRAP VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" >&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">656,555</TD>
<TD NOWRAP VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" >&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0</TD>
<TD NOWRAP VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" >&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0</TD>
<TD NOWRAP VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" >&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">250,907</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Dale D. Johnson</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">2,119,663</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">921,761</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">261,200</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">261,200</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">517,337</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Jeffrey P. Johnson</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" >&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">1,682,990</TD>
<TD NOWRAP VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" >&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">583,375</TD>
<TD NOWRAP VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" >&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0</TD>
<TD NOWRAP VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" >&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">0</TD>
<TD NOWRAP VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" >&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">220,154</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">
<P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">David M. Lowe</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000;" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">1,720,680</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000;" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">636,970</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000;" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">82,400</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000;" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">82,400</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9"></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000;" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9" ALIGN="right">298,982</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9"></TD></TR>
</TABLE></DIV> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">The amounts represent aggregated payments if a Change of Control and qualifying termination of employment occurred on December&nbsp;30, 2016, which include: </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="2%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Severance payment under the Key Employee Agreement. Upon certain terminations of employment within two years following a Change of Control, Mr.&nbsp;McHale is entitled to a severance payment equal to three times his
base salary and target annual bonus and the other NEOs are entitled to two times their base salary and target annual bonus. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="2%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The intrinsic value (or spread between the exercise and market price) of the stock options whose exercisability would be accelerated. The value of accelerated stock options is determined by multiplying the number of
unvested options by the difference between the closing share price on December&nbsp;30, 2016 and the option exercise price. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="2%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Annual incremental qualified pension and restoration benefit amount. Actuarial annual retirement benefit amount of the accumulated benefit and the accompanying valuation method and assumptions applied for the qualified
Graco Employee Retirement Plan and the nonqualified Graco Inc. Restoration Plan may be found in the Pension Benefits table and the accompanying narrative on page 35. The incremental benefit amount was determined using additional pay and earnings
based on December&nbsp;30, 2016 base pay and target bonus amounts. The Change of Control annual retirement benefit amount providing for additional years of service credit is calculated as of the earliest possible benefit commencement date. Assuming
a December&nbsp;30, 2016 termination date, current year bonus would be paid in accordance with the Incentive Bonus Plan. See the <FONT STYLE="white-space:nowrap">Non-Equity</FONT> Incentive Plan Compensation column and accompanying footnotes in the
Summary Compensation Table on page 28. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="8%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#9679;</TD>
<TD WIDTH="2%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="white-space:nowrap">Gross-up</FONT> of income taxes and related excise taxes. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">The value of other benefits (post-employment health care premiums and life insurance premiums). </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">Reflects two years of base salary and target annual bonus for Mr.&nbsp;McHale and one year of base salary and target annual bonus for the other NEOs. Should our Company elect to extend the
<FONT STYLE="white-space:nowrap">non-compete</FONT> duration beyond one year, the payment amount for the NEOs, except for Mr.&nbsp;McHale, would increase. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(3)</TD>
<TD ALIGN="left" VALIGN="top">Assumes NEO is not age 65 or above and disabled for a full calendar year. Benefit reflects an annualized amount that would be paid on a monthly basis and would cease if NEO reaches his or her Social Security normal
retirement age or is no longer disabled. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_35"></A>Retirement Benefits </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Graco Employee Retirement Plan (1991 Restatement) </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Graco Employee Retirement Plan (the &#147;Retirement Plan&#148;) is a funded defined benefit plan designed to coordinate with Social Security benefits to
provide a basic level of retirement benefits for all eligible employees. Eligible executive officers participate in our <FONT STYLE="white-space:nowrap">tax-qualified</FONT> defined benefit pension plan on the same terms as the rest of our eligible
employees. The Retirement Plan was frozen to employees newly hired on or after January&nbsp;1, 2006. Each of the Named Executive Officers is eligible for benefits under the Retirement Plan except for Messrs. Rothe and J. Johnson as they were hired
by the Company after </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">33 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
January&nbsp;1, 2006. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Benefits for those eligible under the Retirement Plan consist of a fixed
benefit, which is designed to provide a retirement income at age 65 of 43.5% of a participant&#146;s average monthly compensation, less 18% of Social Security-covered compensation (calculated in a life annuity option) for an employee with 30 years
of service. Average monthly compensation is defined as the average of the five consecutive highest years&#146; cash compensation during the last ten years of service, divided by sixty. The Retirement Plan defines eligible cash compensation as base
salary, holiday pay, income earned outside of the United States but paid in the United States, annual bonus, CEO award, sales incentive, area differential, short-term disability payments, vacation pay, paid out accrued vacation, deferrals made under
a cash or deferred agreement under Code Section 401(k), contributions to a plan established under Code Section&nbsp;125, and transit and parking reimbursements made under Code Section&nbsp;132. Benefits under the Retirement Plan vest upon five years
of benefit service. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Normal retirement age is defined as age 65 or age 62 with at least 30 years of service. Early retirement is available to participants
age 55 or older with 5 years of vesting service. The monthly amount of a participant&#146;s benefit when retiring prior to age 65, or age 62 with less than 30 years of benefit service, will be reduced by
<FONT STYLE="white-space:nowrap">one-half</FONT> of one percent (0.5%) for each month by which a participant&#146;s pension benefit is to begin prior to the participant turning age 65. If a participant continues in employment with the Company after
his normal retirement date, payment of the benefit shall be suspended for each calendar month during which the participant continues employment. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
default form of pension benefit is a single life annuity that provides a monthly benefit for the life of the participant. A participant may elect an optional form of payment. The optional forms available are survivor annuity form or a term certain
form. A survivor annuity form is an annuity that is payable monthly to and for the lifetime of the participant with a survivor annuity that is payable monthly after the participant dies to and for the lifetime of a participant&#146;s designated
joint annuitant in an amount equal to 50%, 66 2/3%, 75% or 100% (as elected by the participant) of the amount payable during the joint lives of the participant and the designated joint annuitant. The value of the amounts payable in the survivor
annuity form shall be actuarially equivalent to the value of the amounts payable in the single life annuity form. Term certain form is a form of annuity that is payable monthly to and for the lifetime of the participant or, if longer, for 120 or 180
months, as elected by the participant before the participant&#146;s pension is to begin. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Graco Inc. Restoration Plan (2005 Statement) </I></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Because the Internal Revenue Code limits the pension benefits that can be accrued under a <FONT STYLE="white-space:nowrap">tax-qualified</FONT> defined
benefit pension plan, we have established the Graco Inc. Restoration Plan (the &#147;Restoration Plan&#148;). This plan is a nonqualified excess benefit plan, designed to provide retirement benefits to eligible executives and other highly
compensated employees as a replacement for the retirement benefits limited under the Retirement Plan by operation of Section&nbsp;415 and Section 401(a)(17) of the Code or who have experienced a reduction in benefits due to participant contributions
to the Graco Deferred Compensation Plan. The Restoration Plan provides comparable level retirement benefits as a percentage of compensation as those provided to other employees. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">An employee who is a participant in the Retirement Plan and who has experienced a legislative reduction in benefits under the Retirement Plan due to
limitations imposed by Section&nbsp;415 of the Code, Section 401(a)(17) of the Code, or who has experienced a reduction in benefits due to participant contributions to the Graco Deferred Compensation Plan (2005 Restatement), and is selected for
participation, is eligible to participate in the Restoration Plan. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Benefits under the Restoration Plan supplement the benefits under the Retirement Plan.
The Restoration Plan will pay to a participant as a benefit the amount by which the benefit under the Retirement Plan is exceeded by the benefit to which the participant would have been entitled under the Retirement Plan if the benefit limitations
under Section&nbsp;415 of the Code and the compensation limitations of Section 401(a)(17) of the Code did not apply. The Restoration Plan provides for several default forms of distribution. If the participant is single at the time distribution of a
participant&#146;s benefit is to commence, the participant&#146;s benefit is to be paid in a single life annuity. If the participant is married at the time distribution of a participant&#146;s benefit is to commence, a participant&#146;s benefit is
to be paid in the form of a joint and survivor annuity. The joint and survivor annuity will be paid over the life of the participant and the participant&#146;s spouse, with a reduced annuity paid to the survivor after the death of the participant or
the participant&#146;s spouse. Alternatively, a participant may elect any of the distribution options available under the Retirement Plan or a lump sum option. A participant may elect to change the form of distribution to one of the optional forms
of distribution. If the participant&#146;s form of payment prior to electing one of the alternate forms is an annuity and the alternate form elected is an actuarially equivalent annuity, the benefit will commence on the same date that the benefit
would have been paid but for the election to change the form. If a participant wishes to elect the lump sum option or any option which does not meet the conditions listed above, the election will not take effect until the date that is twelve months
after the date on which the participant made the election, and the distribution will be delayed for at least five years after the distribution would have otherwise been made absent the election unless the participant elected a lump sum for the
prospective benefits earned after December&nbsp;31, 2010. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">34 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A participant&#146;s benefit will commence on the first day of the month after the later of: (i)&nbsp;the date
the participant attains age 62; or (ii)&nbsp;the participant separates from service. In the case of a distribution to a specified employee (as defined in Section 409A of the Code), where commencement is based on the specified employee&#146;s
separation from service, the date that the distribution will commence will be the first day of the month following the date that is six months after the specified employee&#146;s separation from service. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If the value of a participant&#146;s benefit under the Restoration Plan is $10,000 or less as of the date the benefit of a participant is to commence, the
benefit will be paid in a single lump sum. There is no cap on the maximum benefits under the Restoration Plan. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The actuarial present values of
accumulated benefits as of December&nbsp;30, 2016 for both the Retirement Plan and Restoration Plan are reflected in the Present Value of Accumulated Benefit column of the Pension Benefits table below. The actuarial present values are based on the
valuation method and the assumptions applied in the calculations referenced in footnote 1 to the Pension Benefits table. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_36"></A>Pension Benefits at 2016 Fiscal Year End </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:9pt" ALIGN="center">


<TR>
<TD WIDTH="31%"></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD WIDTH="22%"></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="9%"></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;&nbsp;&nbsp;Name</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">Plan Name</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">Years&nbsp;Credited<BR>Service (#)</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">Present&nbsp;Value&nbsp;of<BR>Accumulated<BR>Benefit<SUP STYLE="font-size:85%; vertical-align:top">(1,2)</SUP> ($)</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">Payments&nbsp;During&nbsp;Last&nbsp;&nbsp;<BR>Fiscal Year ($)&nbsp;&nbsp;</TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Patrick J.
McHale</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Graco Employee</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Retirement
Plan</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">(1991 Restatement)</P> <P STYLE="font-size:6pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center" BGCOLOR="#d9d9d9">27.1</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center" BGCOLOR="#d9d9d9">957,000</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="top" NOWRAP ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Graco Inc.</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Restoration
Plan</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">(2005 Statement)</P> <P STYLE="font-size:4pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center" BGCOLOR="#d9d9d9">27.1</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center" BGCOLOR="#d9d9d9">5,962,000</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="top" NOWRAP ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">Dale D. Johnson<SUP
STYLE="font-size:85%; vertical-align:top">(3)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Graco Employee</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Retirement Plan</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:Times New Roman">(1991 Restatement)</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center">40.9</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center">1,862,000</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" NOWRAP ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">&#151;</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Graco Inc.</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Restoration Plan</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">(2005 Statement)</P> <P STYLE="font-size:4pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center">40.9</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center">3,520,000</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" NOWRAP ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000">&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:9pt; font-family:Times New Roman">David M. Lowe</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Graco Employee</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Retirement
Plan</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">(1991 Restatement)</P> <P STYLE="font-size:6pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center" BGCOLOR="#d9d9d9">21.9</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center" BGCOLOR="#d9d9d9">768,000</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="top" NOWRAP ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:9pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Graco Inc.</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">Restoration Plan</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:Times New Roman">(2005 Statement)</P>
<P STYLE="font-size:4pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">21.9</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">1,065,000</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="top" NOWRAP ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9">&#151;</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">Information concerning the assumptions used in accounting for retirement benefits may be found in Item 8, Financial Statements and Supplementary Data, Note J to the Consolidated Financial Statements in our 2015 Annual
Report on <FONT STYLE="white-space:nowrap">Form&nbsp;10-K</FONT> </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">Benefits for both the Retirement Plan and the Restoration Plan are based on either age 65 or the earliest date the NEO would receive unreduced benefits. Based on age and credited years of service, Mr.&nbsp;D. Johnson
was eligible for unreduced benefits upon reaching age 62. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(3)</TD>
<TD ALIGN="left" VALIGN="top">Based on age and credited years of service, Messrs. McHale, D. Johnson and Lowe are eligible for early retirement benefits under the Retirement Plan and the Restoration Plan. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_37"></A>Nonqualified Deferred Compensation </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">The Graco Inc. Deferred Compensation Plan (2005 Statement) (the &#147;Deferred Compensation Plan&#148;) is a nonqualified, unfunded deferred
compensation plan intended to meet the requirements of Section 409A of the Code. Our Company has purchased insurance contracts on the lives of certain employees who are eligible to participate in the Restoration Plan and the Deferred Compensation
Plan to fund the Company&#146;s liability under these plans. These insurance contracts are held in trust and are available to general creditors in the event of the Company&#146;s insolvency. This plan was adopted following the freezing of the Graco
Inc. Deferred Compensation Plan (1992 Restatement) (the &#147;1992 Deferred Compensation Plan&#148;) effective December&nbsp;31, 2004. Only a select group of management and highly compensated employees are eligible to participate in the Deferred
Compensation Plan. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">35 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A participant in the Deferred Compensation Plan may elect to defer 1% to 50% of his or her base salary or advance
sales incentive and/or 1% to 100% of his or her annual bonus and <FONT STYLE="white-space:nowrap">year-end</FONT> sales incentive award. The Deferred Compensation Plan uses measurement funds to value the performance of the participants&#146;
accounts. Participants can select one or more measurement funds and allocate their accounts in whole percentages. Participants have the ability to change their measurement funds on a daily basis. Participants are fully vested in the funds credited
to their account at all times. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Upon enrollment in the Deferred Compensation Plan, the participant elects the year distributions are to begin and the form
of distribution. The participant may elect a <FONT STYLE="white-space:nowrap">one-time</FONT> change to the year in which the distribution is to begin. A change will delay the first distribution date for at least five years after the date the
distributions would have begun under the original election. Participants have the ability to select between the following distribution forms: lump sum or annual installments for five, ten or fifteen years. In the event of a separation from service,
the account will be distributed as soon as administratively possible in the January next following the date of separation from service. For a specified employee (as defined by Code Section 409A) distributions where the timing of the distribution is
based on a separation from service, the date of distribution will be the first of the month following the date that is six months after the date the specified employee separated from service. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Effective December&nbsp;31, 2004, Graco froze the 1992 Deferred Compensation Plan. A participant in the 1992 Deferred Compensation Plan could have deferred 1%
to 25% of his or her base salary or advance sales incentive and/or 1% to 50% of his or her annual bonus and <FONT STYLE="white-space:nowrap">year-end</FONT> sales incentive award. The 1992 Deferred Compensation Plan was amended August&nbsp;1, 2007
to use the same measurement funds as provided for in the Deferred Compensation Plan. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A participant in the 1992 Deferred Compensation Plan is eligible for
distribution upon his or her retirement on or after the date the participant attains age 55 and completes at least five years of service. The monthly amount of a participant&#146;s benefit will be determined by dividing his or her account balance by
the number of months of the payout period that was irrevocably selected by the participant upon enrollment or the number of months necessary to provide a minimum monthly payment of $1,000. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_38"></A>Nonqualified Deferred Compensation at 2016 Fiscal Year End </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As of December&nbsp;30, 2016, no NEOs were contributing to the Deferred Compensation Plan. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_39"></A>CEO Succession Planning </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our
Board is responsible for reviewing and approving, upon recommendation of the Management Organization and Compensation Committee, management&#146;s succession plan for key executive positions and for establishing a succession plan for our CEO
position. Our Management Organization and Compensation Committee is responsible for reviewing and making recommendations to the Board on the executive management organization. Annually, our CEO, together with our Vice President HR, present to our
Board an overview of our talent management program and processes, including the identification of key individuals, their readiness for certain executive positions, and development actions to be taken to prepare them for these positions over a period
of time. In addition, our Board annually reviews and discusses succession planning for our CEO position. In doing so, the Board considers our Company&#146;s current and future business and leadership needs, the identification of candidates who may
be able to serve as our principal executive officer in an emergency, the development of potential candidates who may be able to serve as our principal executive officer in the longer-term, and progress made by those potential candidates in their
development over the past year. Our Board has access to senior executives and key managers from time to time through presentations to the full Board and <FONT STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">one-on-one</FONT></FONT>
meetings with individual directors. </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_40"></A>EQUITY COMPENSATION PLAN INFORMATION </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following table provides information about shares that may be issued under our Company&#146;s various stock option and purchase plans as of
December&nbsp;30, 2016: </P> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:8pt" ALIGN="center">


<TR>
<TD WIDTH="85%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000">(a)</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000">(b)</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-right:2pt">(c)</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">Plan Category</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">Number&nbsp;of&nbsp;securities&nbsp;to&nbsp;be<BR>issued upon
exercise of<BR>outstanding options,<BR>warrants and rights</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">Weighted&nbsp;average&nbsp;exercise<BR>price of
outstanding<BR>options, warrants and<BR>rights</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">Number&nbsp;of&nbsp;securities&nbsp;&nbsp;<BR>remaining&nbsp;available&nbsp;for&nbsp;&nbsp;<BR>future&nbsp;issuance&nbsp;under&nbsp;equity&nbsp;
&nbsp;<BR>compensation plans&nbsp;&nbsp;<BR>(excluding securities&nbsp;&nbsp;<BR>reflected in column (a))&nbsp;&nbsp;</P></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:8pt; font-family:Times New Roman">Equity compensation plans approved by security holders</P>
<P STYLE="font-size:1pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9"> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-bottom:0pt; margin-top:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">5,535,128</P> <P STYLE="font-size:1pt; margin-top:0pt; margin-bottom:1pt" align="left">&nbsp;</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9"> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-bottom:0pt; margin-top:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">$55.26</P> <P STYLE="font-size:1pt; margin-top:0pt; margin-bottom:1pt" align="left">&nbsp;</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000" BGCOLOR="#d9d9d9"> <P STYLE="font-size:2pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-bottom:0pt; margin-top:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">7,041,730</P> <P STYLE="font-size:1pt; margin-top:0pt; margin-bottom:1pt" align="left">&nbsp;</P></TD></TR>
</TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">36 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_41"></A>BENEFICIAL OWNERSHIP OF SHARES </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_42"></A>Director and Executive Officer Beneficial Ownership </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following information, furnished as of February&nbsp;27, 2017, indicates beneficial ownership of the common shares of our Company by each director, each
nominee for election as director, the Named Executive Officers and by all current directors and executive officers as a group. Except as otherwise indicated, the persons listed have sole voting and investment power. </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="37%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD WIDTH="19%"></TD>
<TD VALIGN="bottom" WIDTH="4%"></TD>
<TD WIDTH="19%"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name of Beneficial Owner</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Amount&nbsp;and&nbsp;Nature&nbsp;of</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Beneficial<BR>Ownership<SUP STYLE="font-size:85%; vertical-align:top">(1,2)</SUP></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Percent of</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Common&nbsp;Stock</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Outstanding<SUP
STYLE="font-size:85%; vertical-align:top">(3)</SUP></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Phantom</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Stock</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Units<SUP STYLE="font-size:85%; vertical-align:top">(2)</SUP></P></TD></TR>


<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">William J. Carroll<SUP
STYLE="font-size:85%; vertical-align:top">(4)</SUP></P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">67,927&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">&#151;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">16,569</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Eric P. Etchart</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">36,290&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;956</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Jack W. Eugster</P></TD>

<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">72,999&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">&#151;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">16,097</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Jody H. Feragen</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">4,453&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">J. Kevin
Gilligan</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">41,771&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">&#151;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">24,538</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Dale D. Johnson<SUP
STYLE="font-size:85%; vertical-align:top">(5)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">240,233&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Jeffrey P.
Johnson</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">150,416&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">&#151;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">David M. Lowe<SUP
STYLE="font-size:85%; vertical-align:top">(5)</SUP></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">320,451&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Patrick J. McHale<SUP
STYLE="font-size:85%; vertical-align:top">(5)</SUP></P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">1,095,237&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">2.0%</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Lee R. Mitau</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">111,008&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">53,978</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Martha A.
Morfitt</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">106,927&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">&#151;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">31,209</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Christian E. Rothe</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="right">54,242&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">&#151;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">R. William Van
Sant</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9" ALIGN="right">31,404&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">&#151;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">19,847</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">All current
directors and executive</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">officers as a group (22 persons)<SUP STYLE="font-size:85%; vertical-align:top">(4, 5,
6)</SUP></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000" ALIGN="right">3,297,116&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000">5.7%</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">&nbsp;</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">Includes shares which the <FONT STYLE="white-space:nowrap">non-employee</FONT> directors and executive officers have a right, as of April&nbsp;28, 2017, to acquire beneficial ownership of upon the exercise of vested
stock options, in the following amounts: Mr.&nbsp;Carroll (43,604 shares), Mr.&nbsp;Etchart (29,704 shares), Mr.&nbsp;Eugster (52,204 shares), Ms.&nbsp;Feragen (3,007 shares), Mr.&nbsp;Gilligan (26,404 shares), Mr.&nbsp;D.&nbsp;Johnson (185,517
shares), Mr.&nbsp;J. Johnson (136,517 shares), Mr.&nbsp;Lowe (185,517 shares), Mr.&nbsp;McHale (962,612 shares), Mr.&nbsp;Mitau (52,204 shares), Ms.&nbsp;Morfitt (42,904 shares), Mr.&nbsp;Rothe (52,660 shares) and Mr.&nbsp;Van Sant (26,404 shares).
The aggregate number of shares which all current <FONT STYLE="white-space:nowrap">non-employee</FONT> directors and executive officers have the right to acquire by this method is 276,435 and 2,350,398, respectively. </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">Beneficial ownership excludes phantom stock units held by each individual <FONT STYLE="white-space:nowrap">non-employee</FONT> director as of February&nbsp;27, 2017. Upon termination of the director&#146;s service on
the Board, the <FONT STYLE="white-space:nowrap">non-employee</FONT> director will be paid the balance in his or her deferred stock account through the issuance of Graco shares, either in a lump sum or installments, starting January&nbsp;10 of the
year following the separation of the <FONT STYLE="white-space:nowrap">non-employee</FONT> director from service. The information in the column &#147;Phantom Stock Units&#148; is not required by the rules of the Securities and Exchange Commission
because the phantom stock units carry no voting rights and the <FONT STYLE="white-space:nowrap">non-employee</FONT> director has no right or ability to convert the phantom stock to common stock within 60&nbsp;days of February&nbsp;27, 2017.
Nevertheless, we believe this information provides a more complete picture of the financial stake our directors have in our Company. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(3)</TD>
<TD ALIGN="left" VALIGN="top">Less than 1% if no percentage is given. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(4)</TD>
<TD ALIGN="left" VALIGN="top">Includes 2,220 shares held in trusts for the benefit of three of Mr.&nbsp;Carroll&#146;s grandchildren. Mr.&nbsp;Carroll&#146;s spouse is the trustee of the trusts. </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(5)</TD>
<TD ALIGN="left" VALIGN="top">Includes 7,983 shares which are held indirectly through the Graco Employee Stock Ownership Plan. Shares are held by the Named Executive Officers in the following amounts: Mr.&nbsp;D. Johnson (2,833 shares),
Mr.&nbsp;Lowe (440 shares) and Mr.&nbsp;McHale (1,895shares). The balance of the 7,983 shares is held by other executive officers. The NEOs have voting and investment power over their respective shares. </TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">(6)</TD>
<TD ALIGN="left" VALIGN="top">Includes 964 shares held by an executive officer&#146;s spouse. </TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">37 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_43"></A>Principal Shareholder Beneficial Ownership </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The following table identifies each person or group known to our Company to beneficially own, as of December&nbsp;31, 2016, more than 5% of the outstanding
common stock of the Company, the only class of security entitled to vote at the Meeting: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="98%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


<TR>
<TD WIDTH="59%"></TD>
<TD VALIGN="bottom" WIDTH="7%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="7%"></TD>
<TD WIDTH="18%"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-TOP:1px solid #000000">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Name and Address
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Shareholder&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Amount&nbsp;and&nbsp;Nature&nbsp;of</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Beneficial Ownership</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Percent&nbsp;&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">of&nbsp;Class&nbsp;&nbsp;</P></TD></TR>


<TR STYLE="font-size:1pt">
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2" BGCOLOR="#d9d9d9"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">The Vanguard Group <SUP
STYLE="font-size:85%; vertical-align:top">(1)</SUP></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">100 Vanguard Blvd.</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Malvern, PA 19355</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">4,577,175&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;&nbsp;8.2%</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">BlackRock, Inc.<SUP
STYLE="font-size:85%; vertical-align:top">(2)</SUP></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">55 East
52<SUP STYLE="font-size:85%; vertical-align:top">nd</SUP> Street</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">New York, NY 10022</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center">4,133,433&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt">&nbsp;&nbsp;7.4%</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2" BGCOLOR="#d9d9d9"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000" BGCOLOR="#d9d9d9">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt" BGCOLOR="#d9d9d9"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Mairs and Power, Inc.<SUP
STYLE="font-size:85%; vertical-align:top">(3)</SUP></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">332 Minnesota Street</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">W-1520</FONT> First National Bank Building</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">St. Paul, MN 55101</P></TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" BGCOLOR="#d9d9d9">3,306,331&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" BGCOLOR="#d9d9d9">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; padding-right:2pt" BGCOLOR="#d9d9d9">&nbsp;&nbsp;5.9%</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8pt">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8pt"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">T. Rowe
Price Associates, Inc.<SUP STYLE="font-size:85%; vertical-align:top">(4)</SUP></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">100 E. Pratt Street</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Baltimore, MD 21202</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000">2,792,801&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:2pt">&nbsp;&nbsp;5.0%</TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">In a Schedule&nbsp;13G/A filed with the Securities and Exchange Commission on February&nbsp;13, 2017, The Vanguard Group reported that, as of December&nbsp;31, 2016, it has sole voting power over 32,799 shares, shared
voting power over 6,616 shares, sole dispositive power over 4,540,823 shares and shared dispositive power over 36,352 shares. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">In a Schedule&nbsp;13G/A filed with the Securities and Exchange Commission on January&nbsp;24, 2017, BlackRock,&nbsp;Inc. reported that, as of December&nbsp;31, 2016, it has sole voting power over 3,934,958 shares,
shared voting power over 0 shares, sole dispositive power over all 4,133,433 shares and shared dispositive power over 0 shares. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(3)</TD>
<TD ALIGN="left" VALIGN="top">In a Schedule&nbsp;13G/A filed with the Securities and Exchange Commission on February&nbsp;14, 2017, Mairs and Power,&nbsp;Inc. reported that, as of December&nbsp;31, 2016, it has sole voting power over 2,455,640
shares, shared voting power over 0 shares, sole dispositive power over all 3,306,331 shares and shared dispositive power over 0 shares. </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left">(4)</TD>
<TD ALIGN="left" VALIGN="top">In a Schedule&nbsp;13G/A filed with the Securities and Exchange Commission on February&nbsp;7, 2017, T. Rowe Price Associates, Inc.<SUP STYLE="font-size:85%; vertical-align:top"> </SUP>reported that, as of
December&nbsp;31, 2016, it has sole voting power over 643,784 shares, shared voting power over 0 shares, sole dispositive power over all 2,792,801 shares and shared dispositive power over 0 shares. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_44"></A>Section 16(a) Beneficial Ownership Reporting Compliance </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Company&#146;s executive officers, directors, and 10% shareholders are required under the Securities Exchange Act of 1934 and regulations promulgated
thereunder to file initial reports of ownership of the Company&#146;s securities and reports of changes in that ownership with the Securities and Exchange Commission. Copies of these reports must also be provided to the Company. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Based upon its review of the reports and any amendments made thereto furnished to our Company, or written representations that no reports were required,
management believes that all reports were filed on a timely basis by reporting persons during and with respect to 2016. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><A NAME="tx358732_45"></A>RELATED PERSON TRANSACTION APPROVAL POLICY</B><B><I> </I></B><B> </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In February 2007, our Board of Directors adopted a written related person transaction approval policy which sets forth our Company&#146;s policies and
procedures for the review, approval or ratification of any transaction required to be reported in our filings with the Securities and Exchange Commission. Our policy, as amended from time to time, applies to any transaction, arrangement or
relationship or any series of similar transactions, arrangements or relationships in which our Company is a participant and in which a related person has a direct or indirect interest, other than the following: </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Payment of compensation by our Company to a related person for the related person&#146;s service to our Company in the capacity or capacities that give rise to the person&#146;s status as a &#147;related person&#148;;
and </TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">38 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


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<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Transactions generally available to all employees or all shareholders of our Company on the same terms. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The
Audit Committee of our Board of Directors must approve any related person transaction subject to this policy before commencement of the related person transaction or, if it is not practicable to approve the transaction before commencement, the
transaction will be submitted to the Audit Committee or Chair of the Audit Committee for ratification as soon as possible. The Audit Committee or its Chair will analyze the following factors, in addition to any other factors the Audit Committee
deems appropriate, in determining whether to approve a related person transaction: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The benefits to our Company; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The impact on a director&#146;s independence; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The availability of other sources for comparable products or services; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The terms of the transaction and whether they are fair to our Company; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Whether the terms are available to unrelated third parties or to employees generally; </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Whether the transaction is material to the Company; and </TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The role that the related person played, if any, in arranging the transaction. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Audit Committee or its
Chair may, in its, his or her sole discretion, approve or deny any related person transaction. Approval of a related person transaction may be conditioned upon our Company and the related person following certain procedures designated by the Audit
Committee or its Chair. </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="tx358732_46"></A>PROPOSAL 1 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>ELECTION OF DIRECTORS </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The number of
directors of our Company is set at nine. There are currently nine directors. The directors are divided into three classes, each class being as equal in number as reasonably possible. Vacancies may be filled by a majority vote of the directors then
in office, though less than a quorum, and directors so chosen are subject to election by the shareholders at the next Annual Meeting of Shareholders. Directors elected at an Annual Meeting of Shareholders to succeed directors whose terms expire are
elected for three-year terms. Once elected, all directors are subject to the standards set forth in our Corporate Governance Guidelines, which include, among others, the requirement to tender the director&#146;s resignation if his or her employment
status significantly changes, and the requirement to resign from the Board effective as of the date of the Annual Meeting of Shareholders next following the director&#146;s 75<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> birthday unless
the director has current, substantial engagement in business activities that require skills relevant to Graco&#146;s business and useful to the Board. At the Meeting, three persons will be nominated for election to our Board of Directors. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Upon recommendation of the Governance Committee, which acts as the nominating committee of the Board, the Board has nominated Patrick J. McHale, Lee R. Mitau
and Martha A. Morfitt for three-year terms expiring in the year 2020. Mr.&nbsp;McHale, Mr.&nbsp;Mitau and Ms.&nbsp;Morfitt, whose current terms expire at the Meeting, have previously been elected as directors by the shareholders of our Company. For
additional information about the nominees, please see the &#147;Nominees and Continuing Directors&#148; section of this Proxy Statement beginning on page 5. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Unless otherwise instructed not to vote for the election of directors, proxies will be voted to elect the nominees. A director nominee must receive the vote
of a majority of the votes cast at the Meeting in order to be elected. In the event that an incumbent director does not receive a majority of the votes cast, our Corporate Governance Guidelines require that the director promptly offer to tender his
or her resignation to the Board. The Governance Committee will make a recommendation to the Board on whether to accept or reject the offer. The Board, taking into account the recommendation of the Governance Committee, will decide whether to accept
or reject the offer, and will publicly disclose its decision and the rationale behind it within 90 days after the date of the election. Unless the Board reduces the number of directors, your proxy will be voted to elect any replacement nominee
designated by the Board in the event that a nominee is unable or unwilling to serve. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>The Board of Directors, upon recommendation of the Governance
Committee, recommends that shareholders vote FOR the election of Messrs. McHale and Mitau and Ms.&nbsp;Morfitt to terms expiring in 2020. </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">39 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="tx358732_47"></A>PROPOSAL 2 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Deloitte&nbsp;&amp; Touche LLP has acted as the independent registered public accounting firm for our Company since 1962. The Audit Committee of the Board,
which has selected Deloitte&nbsp;&amp; Touche LLP as the independent registered public accounting firm for fiscal year 2017, recommends ratification of the selection by the shareholders. If the shareholders do not ratify the selection of
Deloitte&nbsp;&amp; Touche LLP, the selection of the independent auditors will be reconsidered by the Audit Committee. It is expected that a representative of Deloitte&nbsp;&amp; Touche LLP will be present at the Meeting and will have the
opportunity to make a statement if so desired and will be available to respond to any appropriate shareholder questions. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>The Audit Committee of the
Board of Directors recommends a vote FOR ratification of the appointment of Deloitte&nbsp;&amp; Touche LLP as the independent registered public accounting firm for fiscal year 2017. </B></P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="tx358732_48"></A>PROPOSAL 3 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>ADVISORY VOTE ON OUR EXECUTIVE COMPENSATION </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company is providing shareholders with an annual advisory, <FONT STYLE="white-space:nowrap">non-binding</FONT> vote on the executive compensation of the
Named Executive Officers (commonly referred to as a &#147;say on pay&#148;). Accordingly, shareholders will vote on approval of the following resolution: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the Company&#146;s Named Executive Officers as disclosed in
the Compensation Discussion and Analysis section, the compensation tables and the related narrative disclosure in this Proxy Statement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">This vote is <FONT
STYLE="white-space:nowrap">non-binding.</FONT> The Board of Directors and the Management Organization and Compensation Committee expect to take the outcome of the vote into account when considering future executive compensation decisions to the
extent they can determine the cause or causes of any significant negative voting results. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">As described in detail under the Compensation Discussion and
Analysis section of this Proxy Statement, our compensation programs are designed to achieve the Company&#146;s goal of attracting, developing and retaining global business leaders who can drive financial and strategic growth objectives that are
intended to build long-term shareholder value. Our executive compensation framework includes the following elements: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Competitive compensation as compared against manufacturing companies of comparable sales volume and financial performance; </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">All elements of compensation are tied to the performance of the Company, a division, a region and/or the performance of the individual executive officer; </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Appropriate balance of short- and long-term financial and strategic business results, with an emphasis on managing the business for the long-term; </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Long-term incentives that align the interests of executive officers with the long-term interests of shareholders; and </TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Compensation designed to reduce the possibility of excessive risk-taking, such as through our stock holding policy and recoupment policy. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Shareholders are encouraged to read the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure to
better understand the compensation of our Named Executive Officers. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>The Board of Directors, upon recommendation of the Management Organization and
Compensation Committee, recommends that shareholders vote FOR approval, on an advisory basis, of the compensation paid to our Named Executive Officers as disclosed in this Proxy Statement. </B></P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">40 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="tx358732_49"></A>PROPOSAL 4 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON OUR EXECUTIVE COMPENSATION </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company is required to seek an advisory, <FONT STYLE="white-space:nowrap">non-binding</FONT> shareholder vote on the frequency of submission to
shareholders of the advisory vote on executive compensation at least once every six years. Shareholders have the opportunity to vote on whether the <FONT STYLE="white-space:nowrap">so-called</FONT> &#147;say on pay&#148; vote will occur once every
year, every two years or every three years. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">This vote is <FONT STYLE="white-space:nowrap">non-binding.</FONT> The Board and the Governance Committee will
review the voting results and expect to take the outcome of the vote into account when selecting the frequency of advisory votes on executive compensation. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Board of Directors recognizes the importance of receiving regular input from our shareholders on important issues such as executive compensation.
Accordingly, the Board is recommending that shareholders vote for the option of once every year as the frequency with which shareholders will have a &#147;say on pay&#148;. The Board believes that an annual advisory vote on executive compensation is
consistent with the Company&#146;s policy of seeking input from, and engaging in discussions with, our shareholders on corporate governance matters. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Although the Board is recommending shareholders vote for the option of once every year, for purposes of this proposal, shareholders are entitled to vote for
any of the frequency alternatives and you are not voting on the Board&#146;s recommendation. The Company will report its determination about the frequency of the advisory vote on executive compensation in a Form
<FONT STYLE="white-space:nowrap">8-K</FONT> or amendment to a Form <FONT STYLE="white-space:nowrap">8-K</FONT> filed within 150 days following the Meeting. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>The Board of Directors, upon recommendation of the Governance Committee, recommends that shareholders vote for the option of once every year as the
frequency with which shareholders will have an advisory, <FONT STYLE="white-space:nowrap">non-binding</FONT> vote on executive compensation. </B></P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="tx358732_50"></A>PROPOSAL 5 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>PROPOSAL TO APPROVE THE INCENTIVE BONUS PLAN </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">On February&nbsp;17, 2017, the Management Organization and Compensation Committee (the &#147;MOCC&#148;) of the Board of Directors approved, subject to Board
and shareholder approval, the Graco Inc. Incentive Bonus Plan (the &#147;Plan&#148;). On February&nbsp;17, 2017, the Board of Directors approved the Plan and directed that the Plan be submitted to the shareholders for approval. The purpose of the
Plan is to motivate the executive officers and certain other employees of the Company to improve the overall performance of the Company and to reward them when the Company achieves specific results. The Plan provides cash rewards to executive
officers and certain other employees to encourage them to produce a strong return for the Company&#146;s shareholders and to encourage them to remain in the employ of the Company. The full text of the Plan is set forth in Appendix A to this Proxy
Statement, and the summary description below is qualified in its entirety by reference to the full text of the Plan. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Plan is substantially similar to
the Incentive Bonus Plan (the &#147;Current Plan&#148;) adopted by our shareholders at the Annual Meeting of Shareholders on April&nbsp;20, 2012. The Plan gives the MOCC discretion to grant awards that qualify as &#147;performance-based
compensation&#148; under Section 162(m) of the Internal Revenue Code, as well as awards that are not intended to so qualify. The MOCC will have the discretion to designate executive officers and other employees of the Company as participants in the
Plan. The Plan will also permit the MOCC to establish performance periods based on a performance period of any length. The Plan can be used for awards granted in 2018 and future years. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Administration.</I> The MOCC, all of whose members are <FONT STYLE="white-space:nowrap">non-employee</FONT> directors who are outside directors within the
meaning of Section 162(m) of the Internal Revenue Code, will administer the Plan. The MOCC will have the authority to grant cash incentive awards to the executive officers and other employees upon such terms, consistent with the terms of the Plan,
as it considers appropriate. The MOCC will have the authority to interpret all provisions of the Plan and to make all other determinations necessary or advisable for the administration of the Plan. The MOCC may delegate its authority under the Plan
to the Chief Executive Officer with respect to awards for eligible employees who are not executive officers. Awards granted pursuant to such delegated authority will be made consistent with the criteria established by the MOCC and will be subject to
any other restriction placed on the delegation by the MOCC. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Eligibility.</I> Any executive officer and other employee is eligible to participate in
the Plan. As of December&nbsp;31, 2016, there were approximately 3,325 employees of the Company, including 14 executive officers. The MOCC determines which executive officers and other employees will participate in the Plan for a given year or other
performance period. The MOCC may also delegate to the CEO the authority to determine which <FONT STYLE="white-space:nowrap">non-executive</FONT> officer employees will be granted bonus awards under the Plan. For awards intended to qualify as
&#147;performance-based compensation&#148; under Section 162(m) of the Internal Revenue Code, </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">41 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


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the MOCC must select the executive officer(s) it deems appropriate to participate in the Plan and make such awards no later than the shorter of the first 90 days or the first 25% of the
performance period. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Determination of Performance Targets.</I> Awards may be based on one or more of the following performance targets chosen by the
MOCC: stock price, net sales, net earnings, <FONT STYLE="white-space:nowrap">pre-tax</FONT> earnings, operating earnings, earnings before interest and taxes, earnings before interest, taxes, depreciation, and amortization, operating cash flow, free
cash flow, cash flow from operations, return on equity, return on assets, return on invested capital, expenses, earnings per share and/or total shareholder return. The MOCC may determine that the financial measures upon which the performance targets
are based may include one or more objectively determinable adjustments, such as excluding the impact of specified unusual or nonrecurring events such as acquisitions, divestitures, restructuring activities, asset write-downs, litigation judgments or
settlements or changes in tax laws or accounting principles. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The performance targets may be related to one or any combination of two or more of corporate
(consolidated), group, unit, division, affiliate or individual performance. The required level of attainment can be measured in absolute amounts, on a per share basis, relative to one or more other financial or performance measures, as a growth rate
or change from preceding periods or as a change from a prior performance period or relative to the performance of other companies, indices or other external measures. In addition to selecting the performance targets, the MOCC will also approve the
level of attainment required to earn a payment under an award. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition, for any award to a participant who is not a covered officer under Section
162(m) of the Internal Revenue Code or that is not intended to constitute performance-based compensation under Section 162(m) of the Internal Revenue Code, the performance targets may include one or more
<FONT STYLE="white-space:nowrap">non-financial</FONT> measures in addition to or in lieu of the financial measures set forth above as the MOCC may determine. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Determination of Cash Incentive Amounts.</I> The degree of attainment for each participant to receive an award will be determined by the MOCC. At the end
of the performance period, the MOCC will certify in writing the degree to which performance targets were attained and the awards payable to the participants. The MOCC has discretion to make adjustments based on unusual or unique circumstances or the
impact of acquisitions, divestitures or other major unusual events, provided that no such adjustment shall be made to an award intended to constitute &#147;performance-based compensation&#148; if it would cause the award to fail to so qualify. In
addition, the MOCC has authority to reduce the amount of any payment under an award intended to constitute &#147;performance-based compensation,&#148; referred to as negative discretion. The participants will receive payment in cash as soon as
practicable, but in no event more than two and <FONT STYLE="white-space:nowrap">one-half</FONT> months after the end of the calendar year in which the performance period ended. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A participant must be employed through the last day of the performance period to receive a payout of an award. However, a participant who resigns, is
terminated, retires, dies or becomes disabled may be eligible for a prorated payment for the portion of the performance period during with the participant was employed if so provided by the MOCC. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Maximum Payments.</I> The maximum amount payable under the Plan to any covered officer under Section 162(m) of the Internal Revenue Code for any year
cannot exceed $10&nbsp;million. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Amendments and Termination.</I> The MOCC may amend or terminate the Plan at any time. Amendments are subject to
approval of the shareholders only if such approval is necessary to maintain the Plan in compliance with the requirements of Section 162(m) of the Internal Revenue Code, or any successor provisions. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Tax Matters.</I> As described in the Compensation Discussion and Analysis section of this Proxy Statement, Section 162(m) of the Internal Revenue Code
limits the deductibility of compensation paid to the Company&#146;s covered officers to $1&nbsp;million per year. This limitation does not apply to &#147;performance-based compensation.&#148; One of the conditions for qualification as
&#147;performance-based compensation&#148; is that the shareholders must approve the material terms of Plan, including the performance measures upon which awards can be granted, and <FONT STYLE="white-space:nowrap">re-approve</FONT> those material
terms every five years. Amounts paid under awards designed to comply with the requirements of Section 162(m) of the Internal Revenue Code will, under current tax law, be exempt from the $1&nbsp;million per year deductibility limit if shareholders
approve the Plan. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">42 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>Plan Benefits.</I> The Plan will be effective January&nbsp;1, 2018. As a result, the first awards granted
under the Plan will relate to fiscal 2018. Amounts payable under the Plan for fiscal 2018 are not determinable because the performance targets and target opportunities will not be set by the MOCC until early in fiscal 2018. However, the benefits
paid to our Named Executive Officers under the Current Plan for fiscal 2016 are set forth under the <FONT STYLE="white-space:nowrap">Non-Equity</FONT> Incentive Plan Compensation column of the Summary Compensation Table on page&nbsp;28. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>The Board of Directors recommends that shareholders vote FOR approval of the Incentive Bonus Plan. </B></P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="tx358732_51"></A>SHAREHOLDER PROPOSALS FOR THE ANNUAL MEETING IN THE YEAR 2018 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Any shareholders wishing to have a matter considered for inclusion in the proxy statement for the Annual Meeting in the year 2018 must follow the procedures
provided in Rule <FONT STYLE="white-space:nowrap">14a-8</FONT> under the Securities Exchange Act of 1934 and submit such proposal in writing to the Secretary of the Company at the address shown on page 1 of this Proxy Statement no later than
November&nbsp;15, 2017. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Any shareholder proposal for the Annual Meeting in year 2018 not included in the Proxy Statement must be submitted by written
notice to the Secretary of the Company by January&nbsp;28, 2018 to be considered and must comply with the other provisions in our bylaws. </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>O<A NAME="tx358732_52"></A>THER MATTERS </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our Board is not aware of any matter, other than those stated above, which will or may properly be presented for action at the Meeting. If any other matters
properly come before the Meeting, it is the intention of the persons named in the available form of proxy to vote the shares represented by such proxies in accordance with their best judgment. </P>
<P STYLE="font-size:24pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top">For the Board of Directors,</TD></TR>
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<TD VALIGN="top">Karen Park Gallivan</TD></TR>
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<TD VALIGN="top">Secretary</TD></TR>
</TABLE> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dated March&nbsp;15, 2017 </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">43 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><I>Graco Inc. 2017 Proxy Statement </I></P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B><A NAME="tx358732_53"></A>APPENDIX A </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>GRACO INC. </B></P> <P STYLE="margin-top:14pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>INCENTIVE
BONUS PLAN </B></P> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"><B>Definitions</B>.&nbsp;&nbsp;When the following terms are used herein with initial capital letters, they shall have the following meanings: </TD></TR></TABLE>
<P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.1<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Affiliate - </B>any entity that (i)&nbsp;directly or indirectly through one or more intermediaries, is controlled by the Company or in which the Company has a significant equity interest, in each case as determined
by the Compensation Committee, and (ii)&nbsp;has adopted the Plan. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.2</TD>
<TD ALIGN="left" VALIGN="top"><B>Base Salary</B> &#150; the annual fixed salary paid to a Participant. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.3<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Bonus Award</B> &#150; the incentive structure established for each Participant by the Compensation Committee for each Performance Period pursuant to Section&nbsp;3.1 hereof. </TD></TR></TABLE>
<P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.4<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Bonus Payment</B> &#150; means an amount payable to a Participant pursuant to Section&nbsp;3.2 hereof. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.5<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Compensation Committee</B> &#150; the Management Organization and Compensation Committee of the Board of Directors of Graco Inc. </TD></TR></TABLE>
<P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.6<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Code</B> &#150; the Internal Revenue Code of 1986, as it may be amended from time to time, and any proposed, temporary or final Treasury Regulations promulgated thereunder. </TD></TR></TABLE>
<P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.7<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Company</B> &#150; Graco Inc., a Minnesota corporation. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.8<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Covered Employee</B> &#150; all Participants whose compensation in the Performance Period for which the Bonus Award is calculated is, or in the Compensation Committee&#146;s discretion may be, subject to the
compensation expense deduction limitations set forth in Section 162(m) of the Code. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.9<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Eligible Employee</B> &#150; any employee of the Company or of an Affiliate. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.10<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Participant</B> &#150; an Eligible Employee designated by the Compensation Committee as subject to the Plan. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.11<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Performance-Based Compensation</B> &#150; a Bonus Award to a Covered Employee that is intended to constitute &#147;performance-based compensation&#148; within the meaning of Section 162(m)(4)(C) of the Code and the
regulations promulgated thereunder. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.12<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Performance Period</B> &#150; the Company&#146;s fiscal year or such other period as determined by the Committee from time to time. </TD></TR></TABLE>
<P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.13<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Performance Target(s)</B> &#150; the financial and other target(s) established by the Compensation Committee for a Performance Period and reflected in a document adopted by the Compensation Committee in accordance
with the terms of the Plan. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">1.14<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Plan</B> &#150; this Incentive Bonus Plan. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="7%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top"><B>Administration</B>. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">2.1<B></B></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt"><B>Authority of Compensation Committee</B>.&nbsp;&nbsp;The Compensation Committee shall have the authority,
subject to the terms of the Plan, to (i)&nbsp;make Bonus Awards, (ii)&nbsp;determine when and to whom Bonus Awards will be granted, (iii)&nbsp;determine the form, amount and other terms and conditions of each Bonus Award, (iv)&nbsp;set the
Performance Period and establish the Performance Target(s) and relationship between the Performance Target(s) and Bonus Payments, and (v)&nbsp;otherwise administer the Plan. The Compensation Committee&#146;s interpretation of the Plan and of any
Bonus Payments made or to be made under the Plan shall be final and binding on all persons with an interest therein. The Compensation Committee shall have the power to establish </P></TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">A-1 </P>


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<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">
regulations to administer the Plan and to change such regulations. The Compensation Committee shall be comprised of two or more &#147;outside directors&#148; pursuant to the requirements of
Section&nbsp;162(m) of the Code. </P></TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">2.2<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Delegation</B>.&nbsp;&nbsp;The Compensation Committee may delegate to the Chief Executive Officer the authority, with respect to Participants who are not executive officers of the Company, to (i)&nbsp;determine which
of such Eligible Employees will be granted Bonus Awards under the Plan, (ii)&nbsp;determine the amount and terms of Bonus Awards under the Plan for such Participants and (iii)&nbsp;take all other actions of the Compensation Committee, including
administration and interpretation of such Bonus Awards. Bonus Awards granted pursuant to such delegated authority shall be made consistent with the criteria established by the Compensation Committee and shall be subject to any other restrictions
placed on the delegation by the Compensation Committee. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="7%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top"><B>Bonus Award for a Performance Period</B>. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">3.1<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Bonus Award</B>. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="15%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">(a)</TD>
<TD ALIGN="left" VALIGN="top">Grant of Bonus Award. For each Bonus Award, the Compensation Committee shall designate the Participants in the Plan; determine the applicable Performance Period; determine the amount of the Bonus Award (which may be
based on a percentage of the Participant&#146;s Base Salary); select applicable Performance Target(s); identify the weights thereof; and determine the relationship between Performance Targets and Bonus Payments. Such determinations shall be
memorialized in written documents adopted by the Compensation Committee. For any Bonus Award of Performance-Based Compensation, the Compensation Committee shall designate the Participants and make the Bonus Awards, including establishment of the
Performance Target(s), within the shorter of the first ninety (90)&nbsp;days or the first twenty-five percent (25%) of the Performance Period. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="15%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">(b)</TD>
<TD ALIGN="left" VALIGN="top">Establishment of Performance Targets. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="23%">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="top" ALIGN="left">(1)</TD>
<TD ALIGN="left" VALIGN="top">In the case of Bonus Awards that are intended to qualify as Performance-Based Compensation, the Performance Target(s) shall be based upon one or more of the following financial measures: stock price, net sales, net
earnings, <FONT STYLE="white-space:nowrap">pre-tax</FONT> earnings, operating earnings, earnings before interest and taxes, earnings before interest, taxes, depreciation, and amortization, operating cash flow, free cash flow, cash flow from
operations, return on equity, return on assets, return on invested capital, expenses, earnings per share or total shareholder return (the &#147;Financial Measures&#148;) for the applicable Performance Period. Each such Financial Measure shall be
computed in accordance with generally accepted accounting principles as in effect from time to time and as applied by the Company in the preparation of its financial statements, except as provided in the following sentence. In specifying the
Performance Targets based on any of these Financial Measures for any Performance Period, the Compensation Committee may provide that one or more objectively determinable adjustments shall be made to the Financial Measures on which the Performance
Targets are based, which may include adjustments that would cause such measures to be considered <FONT STYLE="white-space:nowrap">&#147;non-GAAP</FONT> financial measures&#148; within the meaning of Rule 101 under Regulation G promulgated by the
Securities and Exchange Commission, such as excluding the impact of specified unusual or nonrecurring events such as acquisitions, divestitures, restructuring activities, asset write-downs, litigation judgments or settlements or changes in tax laws
or accounting principles. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="23%">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="top" ALIGN="left">(2)</TD>
<TD ALIGN="left" VALIGN="top">In the case of Bonus Awards that are not intended to constitute Performance-Based Compensation, the Compensation Committee may base Performance Targets on one or more performance measures, which may but need not be
financial in nature (the &#147;Performance Measures&#148;), in addition to or in lieu of one or more Financial Measures. All Performance Measures and Financial Measures applicable to such Bonus Awards shall be applied in a manner consistent with
usual Company practice and such rules and conditions as the Compensation Committee may establish. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="23%">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="top" ALIGN="left">(3)</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Any Performance Target based on one or more of the Financial Measures or Performance Measures may be expressed in
absolute amounts, on a per share basis (basic or diluted), relative to one or more of the other Financial Measures or Performance Measures, as a growth rate or change from preceding periods, or as a comparison to the performance of specified
companies, indices or other external measures, and may relate to one or any </P></TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">A-2 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="30%">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">
combination of two or more of corporate (consolidated), group, unit, division, Affiliate or individual performance. </P></TD></TR></TABLE>
<P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">3.2<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Bonus Payment</B>.&nbsp;&nbsp;Following the close of each Performance Period and prior to the making of any payment in settlement of a Bonus Award (a &#147;Bonus Payment&#148;), the Compensation Committee shall
determine whether and to what extent Performance Target(s) and all other factors upon which the Bonus Payment is based have been attained. In determining whether and to what extent a Performance Target has been attained, the Compensation Committee
may make adjustments based on unusual or unique circumstances or the impact of acquisitions, divestitures or other major unusual events, provided that no such adjustment shall be made to a Bonus Award that is intended to constitute Performance-Based
Compensation if the effect of such adjustment would be to cause the Bonus Award to fail to qualify as Performance-Based Compensation. Subject to any deferred compensation election pursuant to any such plans of the Company, payment of the Bonus
Payment shall in all events be made within two and a half months following the calendar year in which the Performance Period ends. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%" VALIGN="top" ALIGN="left">3.3</TD>
<TD ALIGN="left" VALIGN="top"><B>Limitations</B>. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="15%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">(a)<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>If Performance Targets are not Achieved</B>.&nbsp;&nbsp;If Performance Targets are not achieved during the Performance Period, no Bonus Payments shall be made under the Plan. </TD></TR></TABLE>
<P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="15%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">(b)</TD>
<TD ALIGN="left" VALIGN="top"><B><FONT STYLE="white-space:nowrap">Pro-ration</FONT> or Elimination of Bonus Payment</B>.&nbsp;&nbsp;Participation in the Plan ceases with resignation, termination, retirement, death or long-term disability. A
Participant who resigns or is terminated effective during the Performance Period is ineligible for a Bonus Payment unless the Compensation Committee directs otherwise. A Participant who is employed by the Company or any Affiliate through the last
day of the Performance Period shall be eligible for a Bonus Payment. A Participant who retires, dies or becomes eligible for long-term disability benefits under the Company&#146;s long-term disability benefit plan during the Performance Period may
be paid a bonus in accordance with the direction of the Compensation Committee. Any Bonus Payments made pursuant to this Section 3.3(b) shall be based on actual achievement of the Performance Target(s) and prorated based on the actual number of days
in the Performance Period the Participant was employed by the Company or an Affiliate. For purposes of the Plan, a Participant who has attained age 65, or age 55 and 10 years of service with the Company or an Affiliate shall, upon termination for
any reason other than &#147;cause&#148; (as defined below) be deemed to have retired. As used in this Plan, the term &#147;cause&#148; shall mean: (a)&nbsp;Participant&#146;s conviction or guilty or no contest plea to any felony or other criminal
act involving moral turpitude; (b)&nbsp;gross misconduct or any act of fraud, disloyalty or dishonesty by Participant related to or connected with Participant&#146;s employment or otherwise likely to cause material harm to the Company or its
reputation; (c)&nbsp;a willful and material violation by Participant of the Company&#146;s written policies or codes of conduct; (d)&nbsp;wrongful appropriation by Participant of Company funds or property or other material breach of
Participant&#146;s fiduciary duties to the Company; or (e)&nbsp;the willful and material breach by Participant of any employment agreement between Participant and the Company. Notwithstanding anything to the contrary in this Plan, a Participant who
is terminated for &#147;cause&#148; will not be eligible to receive any Bonus Payment, regardless of whether such termination occurs during or after the Performance Period. </TD></TR></TABLE>
<P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="15%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">(c)<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Limitation on Performance-Based Compensation</B>.&nbsp;&nbsp;No Covered Employee shall be entitled to receive Bonus Awards that entitle the Covered Employee to receive more than ten million dollars ($10,000,000) in
any calendar year. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="15%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">(d)</TD>
<TD ALIGN="left" VALIGN="top"><B>Adjustments.</B>&nbsp;&nbsp;The Compensation Committee is authorized at any time prior to the payment of a Bonus Award that is intended to qualify as Performance-Based Compensation, in its sole and absolute
discretion, to reduce the amount otherwise payable to the Participant in connection with such Bonus Award for any reason. No reduction in the amount of a Bonus Award intended to qualify as Performance-Based Compensation and payable to one
Participant shall increase the amount of such a Bonus Award payable to any other Participant. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%" VALIGN="top" ALIGN="left">4.<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Nontransferability</B>.&nbsp;&nbsp;Participants and beneficiaries shall not have the right to assign, encumber or otherwise anticipate the payments to be made under the Plan, and the benefits provided hereunder shall
not be subject to seizure for payment of any debts or judgments against any Participant or any beneficiary. </TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">A-3 </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%" VALIGN="top" ALIGN="left">5.</TD>
<TD ALIGN="left" VALIGN="top"><B>Tax Withholding</B>.&nbsp;&nbsp;In order to comply with all applicable federal, provincial, state or local income tax laws or regulations, the Company or an Affiliate may take such action as it deems appropriate to
ensure that all applicable federal, provincial, state or local payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. </TD></TR></TABLE>
<P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%" VALIGN="top" ALIGN="left">6.</TD>
<TD ALIGN="left" VALIGN="top"><B>Amendment</B>.&nbsp;&nbsp;The Compensation Committee may amend the Plan prospectively at any time and for any reason deemed sufficient by it without prior notice to any person affected by the Plan. Amendments are
subject to approval of the Company&#146;s shareholders only if such approval is necessary to maintain the Plan in compliance with the requirements of Section&nbsp;162(m) of the Code, its successor provisions or any other applicable law or
regulation. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%" VALIGN="top" ALIGN="left">7.</TD>
<TD ALIGN="left" VALIGN="top"><B>Miscellaneous</B>. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">7.1<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Effective Date</B>.&nbsp;&nbsp;January&nbsp;1, 2018 </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">7.2<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Term of the Plan</B>.&nbsp;&nbsp;The Plan shall continue in existence until affirmatively discontinued or terminated by the Compensation Committee, which it may do at any time. No Bonus Award shall be granted after
the termination of the Plan; provided, however, that a Bonus Payment with respect to a Performance Period which begins before such termination may be made thereafter. </TD></TR></TABLE>
<P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">7.3<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Headings</B>.&nbsp;&nbsp;Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">7.4<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Applicability to Successors</B>.&nbsp;&nbsp;The Plan shall be binding upon and inure to the benefit of the Company and each Participant, the successors and assigns of the Company, and the beneficiaries, personal
representatives and heirs of each Participant. If the Company becomes a party to any merger, consolidation or reorganization, the Plan shall remain in full force and effect as an obligation of the Company or its successors in interest.
</TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">7.5<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Employment Rights and Other Benefit Programs</B>. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="15%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">(a)</TD>
<TD ALIGN="left" VALIGN="top">The provisions of the Plan shall not give any Participant any right to be retained in the employment of the Company or any Affiliate. In the absence of any specific agreement to the contrary, the Plan shall not affect
any right of the Company, or of any Affiliate, to terminate, with or without cause, the Participant&#146;s employment at any time. The Plan shall not replace any contract of employment, whether oral or written, between the Company or any Affiliate
and any Participant, but shall be considered a supplement thereto. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="15%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">(b)</TD>
<TD ALIGN="left" VALIGN="top">Bonus Payments received by a Participant pursuant to the Plan shall not be deemed a part of the Participant&#146;s regular, recurring compensation for purposes of the termination, indemnity or severance pay law of any
country and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan, contract or similar arrangement provided by the Company or any Affiliate unless expressly so provided by such plan,
contract or arrangement, or unless the Compensation Committee expressly determines that a Bonus Payment or portion of a Bonus Payment should be included to accurately reflect competitive practices or to recognize that a Bonus Payment has been made
in lieu of a portion of competitive cash compensation. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">7.6<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>No Trust or Fund Created</B>.&nbsp;&nbsp;The Plan shall not create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or
any other person. To the extent that any person acquires a right to receive payments from the Company or any Affiliate pursuant to the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company or of any
Affiliate. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">7.7<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Governing Law</B>.&nbsp;&nbsp;To the extent that federal law does not otherwise control, the validity, construction and effect of the Plan or any bonus payable under the Plan shall be determined in accordance with
the laws of the State of Minnesota. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">7.8<B></B></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt"><B>Severability</B>.&nbsp;&nbsp;If any provision of the Plan is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Compensation Committee,
</P></TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">A-4 </P>


<p Style='page-break-before:always'>
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<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="15%">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">
materially altering the purpose or intent of the Plan, such provision shall be stricken as to such jurisdiction, and the remainder of the Plan shall remain in full force and effect.
</P></TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">7.9<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Qualified Performance-Based Compensation</B>.&nbsp;&nbsp;Certain Bonus Awards are intended to constitute Performance-Based Compensation and, therefore, the terms and conditions of the Plan shall be interpreted in
such a fashion as to qualify all such Bonus Awards as qualified performance-based compensation within the meaning of Section&nbsp;162(m) of the Code. Accordingly, the material terms of the Plan shall be disclosed to the shareholders of the Company
and must be approved by shareholders in accordance with Section 162(m) of the Code in order for any Bonus Payments to constitute Performance-Based Compensation. </TD></TR></TABLE> <P STYLE="font-size:14pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="7%">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="top" ALIGN="left">7.10<B></B></TD>
<TD ALIGN="left" VALIGN="top"><B>Compensation Recovery Policy</B>.&nbsp;&nbsp;Bonus Awards and any compensation associated therewith, including any Bonus Payment, may be made subject to forfeiture, recovery by the Company or other action pursuant to
any compensation recovery policy adopted by the Compensation Committee at any time, including in response to the requirements of Section&nbsp;10D of the Securities Exchange Act of 1934, as amended, and any implementing rules and regulations
thereunder, or as otherwise required by law. The terms of any Bonus Award may be unilaterally amended by the Compensation Committee to comply with any such compensation recovery policy. </TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">A-5 </P>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>


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<IMG SRC="g358732pcpg001n.jpg" ALT="LOGO">
</P> <P STYLE="font-size:3pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:ARIAL"><B><I>GRACO INC.</I></B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:ARIAL"><B><I>88 11TH AVENUE N.E.</I></B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:ARIAL"><B><I>MINNEAPOLIS, MN 55413-1894</I></B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:6.5pt; font-family:ARIAL"><B>VOTE BY INTERNET</B></P></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:6.5pt; font-family:ARIAL" ALIGN="justify"><I>Before The Meeting </I>- Go to <B><U>www.proxyvote.com</U></B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:6.5pt; font-family:ARIAL" ALIGN="justify">Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the <FONT
STYLE="white-space:nowrap">cut-off</FONT> date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:6.5pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:6.5pt; font-family:ARIAL" ALIGN="justify"><I>During The Meeting </I>- Go to
<B><U>www.virtualshareholdermeeting.com/GGG2017</U></B></P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:6.5pt; font-family:ARIAL" ALIGN="justify">You may attend the Meeting via the Internet and vote during the Meeting. Have the
information that is printed in the box marked by the arrow available and follow the instructions.</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:6.5pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:6.5pt; font-family:ARIAL"><B>VOTE BY PHONE - <FONT STYLE="white-space:nowrap"><FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">1-800-690-6903</FONT></FONT></FONT></B></P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:6.5pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:ARIAL; font-size:6.5pt">Use any touch-tone telephone to transmit your voting instructions up until 11:59&nbsp;P.M. Eastern Time the day before the meeting
date. Have your proxy card in hand when you call and follow the instructions.</P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:6.5pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:6.5pt; font-family:ARIAL"><B>VOTE BY MAIL</B></P></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:ARIAL; font-size:6.5pt">Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.</P></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:6.5pt; font-family:ARIAL"><B>ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS</B></P></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:6.5pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:ARIAL; font-size:6.5pt">If you would like to reduce the costs incurred by Graco Inc. in mailing proxy materials, you can consent to receive all future proxy
statements, proxy cards and annual reports electronically via <FONT STYLE="white-space:nowrap">e-mail</FONT> or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted,
indicate that you agree to receive or access proxy materials electronically in future years.</P></TD></TR>
</TABLE> <P STYLE="font-size:120pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top" COLSPAN="3"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:ARIAL; font-size:7pt">TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:</P></TD>
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<TD VALIGN="bottom" ALIGN="right">E17466-P85911</TD>
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<TD VALIGN="bottom" ALIGN="right">KEEP THIS PORTION FOR YOUR RECORDS</TD></TR>
</TABLE>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:ARIAL" ALIGN="center">&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;
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&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp; </P>
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<TD VALIGN="middle" ROWSPAN="2" ALIGN="center"><FONT STYLE="font-size:8pt"><B>THIS&nbsp;PROXY&nbsp;CARD&nbsp;IS&nbsp;VALID&nbsp;ONLY&nbsp;WHEN&nbsp;SIGNED&nbsp;AND&nbsp;DATED.</B></FONT></TD>
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<TD VALIGN="top" ALIGN="right">DETACH&nbsp;AND&nbsp;RETURN&nbsp;THIS&nbsp;PORTION&nbsp;ONLY</TD></TR>
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<TD VALIGN="top" COLSPAN="5"><FONT STYLE="font-size:7pt"><B>&nbsp;&nbsp;&nbsp;GRACO INC.</B></FONT></TD>
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<TD VALIGN="top" COLSPAN="3"> <P STYLE="font-size:4pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:7pt; font-family:ARIAL"><B>&nbsp;The Board of Directors recommends that you vote</B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:7pt; font-family:ARIAL"><B>&nbsp;FOR the following:</B></P> <P STYLE="font-size:4pt; margin-top:0pt; margin-bottom:1pt">&nbsp;</P></TD>
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<TD VALIGN="top">&nbsp;1.</TD>
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<TD VALIGN="top">Election of Directors</TD>
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<TD VALIGN="top"><B>Nominees</B></TD>
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<TD VALIGN="top"><FONT STYLE="font-size:7pt">1a) &nbsp;&nbsp;&nbsp;&nbsp;Patrick J. McHale</FONT></TD>
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<TD VALIGN="top"><FONT STYLE="font-size:7pt">1b) &nbsp;&nbsp;&nbsp;&nbsp;Lee R. Mitau</FONT></TD>
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<TD VALIGN="top"><FONT STYLE="font-size:7pt">1c) &nbsp;&nbsp;&nbsp;&nbsp;Martha A. Morfitt</FONT></TD>
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<TD VALIGN="top" COLSPAN="3"><B>&nbsp;The Board of Directors recommends you vote FOR the following proposals:</B></TD>
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<TD VALIGN="top"><FONT STYLE="font-size:7pt">&nbsp;2.</FONT></TD>
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<TD VALIGN="top"><FONT STYLE="font-size:7pt">Ratification of appointment of Deloitte&nbsp;&amp; Touche LLP as the Company&#146;s independent registered accounting firm.</FONT></TD>
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<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><FONT STYLE="font-size:7pt">&nbsp;3.</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><FONT STYLE="font-size:7pt">Approval, on an advisory basis, of the compensation paid to our named executive officers as disclosed in the Proxy Statement.</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman">&#9744;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman">&#9744;</FONT>&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman">&#9744;</FONT>&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:7pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3"><B>&nbsp;The Board of Directors recommends you vote 1 year on the following proposal:</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>1&nbsp;Year</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>2&nbsp;Years</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>3&nbsp;Years</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Abstain</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><FONT STYLE="font-size:7pt">&nbsp;4.</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><FONT STYLE="font-size:7pt">An advisory, <FONT STYLE="white-space:nowrap">non-binding</FONT> vote on the frequency for which shareholders will have an advisory, <FONT STYLE="white-space:nowrap">non-binding</FONT> vote on our
executive compensation.</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman">&#9744;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman">&#9744;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman">&#9744;</FONT>&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman">&#9744;</FONT>&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:7pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3"><B>&nbsp;The Board of Directors recommends you vote FOR the following proposal:</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>For</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Against&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><B>Abstain&nbsp;</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><FONT STYLE="font-size:7pt">&nbsp;5.</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><FONT STYLE="font-size:7pt">Approval of the Incentive Bonus Plan.</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman">&#9744;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman">&#9744;</FONT>&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman">&#9744;</FONT>&nbsp;&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR></TABLE> <P STYLE="font-size:10pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:ARIAL; font-size:7pt" ALIGN="center">


<TR>
<TD WIDTH="2%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="7%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="6%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="7%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="16%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="1%"></TD></TR>

<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:7pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" COLSPAN="9"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:7pt; font-family:ARIAL" ALIGN="justify"><B>NOTE: </B>In their discretion, the Proxies are authorized to vote upon such other business as may properly come before
the meeting or any adjournment thereof.</P> <P STYLE="font-size:10pt; margin-top:0pt; margin-bottom:1pt" align="left">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:7pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" COLSPAN="9"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:7pt; font-family:ARIAL" ALIGN="justify">Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary,
please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.</P>
<P STYLE="font-size:10pt; margin-top:0pt; margin-bottom:1pt" align="left">&nbsp;</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR></TABLE>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:ARIAL; font-size:7pt" ALIGN="center">


<TR>
<TD WIDTH="3%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="6%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="7%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="6%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="16%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="1%"></TD></TR>

<TR STYLE="font-size:1px; font-family:ARIAL; font-size:9pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:9pt; font-family:ARIAL"> &nbsp;&nbsp;&nbsp;&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:9pt; font-family:ARIAL" ALIGN="justify"> &nbsp;&nbsp;&nbsp;&nbsp;</P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1.50pt solid #000000">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR></TABLE>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:ARIAL; font-size:7pt" ALIGN="center">


<TR>
<TD WIDTH="2%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="6%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="7%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="27%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="6%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="17%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="1%"></TD></TR>

<TR STYLE="page-break-inside:avoid ; font-family:ARIAL; font-size:7pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Signature [PLEASE SIGN WITHIN BOX]</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Date</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Signature (Joint Owners)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Date</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD></TR></TABLE> </div> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:5pt; font-family:ARIAL" ALIGN="right">V.1.2 </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P STYLE="margin-top:120pt; margin-bottom:0pt; font-size:10pt; font-family:ARIAL" ALIGN="center"><B>Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:ARIAL" ALIGN="center">The Notice and Proxy Statement and 2016 Overview and Annual Report on Form <FONT STYLE="white-space:nowrap">10-K</FONT> are available at </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:ARIAL" ALIGN="center"><U>www.proxyvote.com</U>. </P> <P STYLE="font-size:120pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:20pt; margin-bottom:0pt; font-size:9.5pt; font-family:ARIAL" ALIGN="center">&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;
&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;
&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp;&#151;&nbsp; </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:7pt; font-family:ARIAL" ALIGN="right">E17467-P85911&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><div style="width:100%;margin-left:0%; margin-right:0%;border:solid 2.00pt;padding-top:2pt;padding-bottom:3pt"> <P STYLE="font-size:30pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; padding-top:4pt; font-size:12pt; font-family:ARIAL" ALIGN="center"><B>GRACO INC. </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:ARIAL" ALIGN="center"><B>Annual Meeting
of Shareholders </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:ARIAL" ALIGN="center"><B>April&nbsp;28, 2017 1:00 p.m. Central Time </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:ARIAL" ALIGN="center"><B>This proxy is solicited by the Board of Directors </B></P>
<P STYLE="margin-top:14pt; margin-bottom:0pt; margin-left:10%; margin-right:10%; font-size:10pt; font-family:ARIAL" ALIGN="justify">The undersigned hereby appoints Patrick J. McHale and Christian E. Rothe, or either of them, as proxies and <FONT
STYLE="white-space:nowrap"><FONT STYLE="white-space:nowrap">attorneys-in-fact,</FONT></FONT> each with full power of substitution, to represent the undersigned at the Annual Meeting of Shareholders of Graco Inc., to be held via live webcast at
<U>www.virtualshareholdermeeting.com/GGG2017</U> on Friday, April&nbsp;28, 2017, at 1:00 p.m. Central Time, and any adjournment or postponement thereof, and to vote the number of shares the undersigned would be entitled to vote if personally present
at the meeting. </P> <P STYLE="margin-top:14pt; margin-bottom:0pt; margin-left:10%; margin-right:10%; font-size:10pt; font-family:ARIAL" ALIGN="justify"><B>This proxy, when properly executed, will be voted in the manner directed herein. If no such
direction is made, this proxy will be voted in accordance with the Board of Directors&#146; recommendations. </B></P>
<P STYLE="margin-top:14pt; margin-bottom:0pt; margin-left:10%; margin-right:10%; font-size:10pt; font-family:ARIAL" ALIGN="justify">If shares are held under the Graco Employee Investment Plan (&#147;Plan&#148;): This proxy provides confidential
voting instructions regarding these shares to the Plan Trustee who then votes the shares. Instructions must be received by 11:59 p.m. Eastern Time on April&nbsp;26, 2017, to be included in the tabulation to the Plan Trustee. If instructions are not
received by that date, or if the instructions are invalid because this proxy is not properly signed and dated, the shares will be voted in accordance with the terms of the Plan Document. </P>
<P STYLE="margin-top:14pt; margin-bottom:0pt; padding-bottom:4pt; font-size:10pt; font-family:ARIAL" ALIGN="center"><B>Continued and to be signed on reverse side </B></P> <P STYLE="font-size:24pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P></div> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:5pt; font-family:ARIAL" ALIGN="right">V.1.2 </P>
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
