Edgar Filing: EMERSON ELECTRIC CO

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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

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[ ] Preliminary Proxy Statement

[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Materials Pursuant to Rule 14a-12

EMERSON ELECTRIC CO.
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(Name of Registrant as Specified in Its Charter)

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

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NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS

[Emerson logo]
St. Louis, Missouri
December 14, 2007
TO THE STOCKHOLDERS OF
EMERSON ELECTRIC CO.:

The Annual Meeting of the Stockholders of Emerson Electric Co. will be held at
the office of the Company, 8000 West Florissant Avenue, St. Louis, Missouri
63136 on Tuesday, February 5, 2008, commencing at 10:00 a.m., at which meeting
only holders of the common stock of record at the close of business on
November 27, 2007 will be entitled to vote, for the following purposes:

1. To elect four Directors;

2. To ratify the appointment of KPMG LLP as our independent registered
public accounting firm; and

3. To transact such other and further business, if any, as lawfully
may be brought before the meeting.

EMERSON ELECTRIC CO.

By /s/ David N. Farr
Chairman of the Board,
Chief Executive Officer and
President

/s/ Frank L. Steeves

Secretary

EVEN THOUGH YOU MAY PLAN TO ATTEND THE MEETING IN PERSON, PLEASE VOTE BY
TELEPHONE OR THE INTERNET, OR EXECUTE THE ENCLOSED PROXY CARD AND MAIL IT
PROMPTLY. A RETURN ENVELOPE (WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES) IS ENCLOSED FOR YOUR CONVENIENCE. TELEPHONE AND INTERNET VOTING
INFORMATION IS PROVIDED ON YOUR PROXY CARD. SHOULD YOU ATTEND THE MEETING IN
PERSON, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.

IMPORTANT

PLEASE NOTE THAT A TICKET IS REQUIRED FOR ADMISSION TO THE MEETING. IF YOU
PLAN TO ATTEND IN PERSON AND ARE A STOCKHOLDER OF RECORD, PLEASE CHECK THE BOX
ON YOUR PROXY CARD AND BRING THE TEAR-OFF ADMISSION TICKET WITH YOU TO THE
MEETING. IF YOUR SHARES ARE HELD BY SOMEONE ELSE (SUCH AS A BROKER) PLEASE
BRING WITH YOU A LETTER FROM THAT FIRM OR AN ACCOUNT STATEMENT SHOWING YOU
WERE A BENEFICIAL HOLDER ON NOVEMBER 27, 2007.

EMERSON ELECTRIC CO.

8000 WEST FLORISSANT AVENUE, ST. LOUIS, MISSOURI 63136

PROXY STATEMENT

FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 5, 2008

This proxy statement is furnished to the stockholders of Emerson Electric Co.
in connection with the solicitation of proxies for use at the Annual Meeting
of Stockholders to be held at 10:00 a.m. on February 5, 2008 at the office of
the Company, 8000 West Florissant Avenue, St. Louis, Missouri 63136 and at all
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. This proxy statement and the enclosed form of
proxy are first being mailed to stockholders on or about December 14, 2007.

If you plan to attend and have a disability which requires accommodation at
the meeting, please call 314-553-2197; requests must be received by January
17, 2008.

STOCKHOLDERS CAN SIMPLIFY THEIR VOTING AND SAVE EMERSON EXPENSE BY VOTING BY
TELEPHONE OR BY INTERNET. Telephone and Internet voting information is
provided on your proxy card. A Control Number, located on the proxy card, is
designed to verify your identity and allow you to vote your shares and confirm
that your voting instructions have been properly recorded.

IF YOU VOTE BY TELEPHONE OR INTERNET, YOU NEED NOT MAIL BACK YOUR PROXY CARD.

If your shares are held in the name of a bank or broker, follow the voting
instructions on the form you receive from that firm. The availability of
telephone or Internet voting will depend on that firm's voting processes.

If you choose not to vote by telephone or Internet, please return your proxy
card, properly signed, and the shares represented will be voted in accordance
with your directions. You can specify your choices by marking the appropriate
boxes on the proxy card. If your proxy card is signed and returned without
specifying choices, the shares will be voted FOR the nominees for Director in
Proposal 1, FOR the ratification of the appointment of KPMG LLP as our
independent registered public accounting firm in Proposal 2, and otherwise in
the discretion of the proxies. The Company knows of no reason why any of the
nominees for Director named herein would be unable to serve. In the event,
however, that any nominee named should, prior to the election, become unable
to serve as a Director, your proxy (unless designated to the contrary) will be
voted for such other person or persons as the Board of Directors of the
Company may recommend.

You may revoke your proxy at any time before it is voted (in the case of proxy
cards) by giving notice to the Secretary of the Company or by executing and
mailing a later-dated proxy. To revoke a proxy given, or change your vote
cast, by telephone or Internet, you must do so by telephone or Internet,
respectively (following the directions on your proxy card), by 11:59 p.m.
Eastern time on February 4, 2008.

The close of business on November 27, 2007 was fixed by the Board of Directors
as the record date for the determination of stockholders entitled to vote at
the Annual Meeting of Stockholders. As of the record date, there were
outstanding and entitled to be voted at such meeting 788,882,508 shares of our
common stock, par value $0.50 per share. The holders of the common stock will
be entitled on each matter to one vote for each share of common stock held of
record on the record date. There is no cumulative voting with respect to the
election of Directors.

A copy of the Company's Annual Report to Stockholders for the fiscal year
ended September 30, 2007 accompanies this proxy statement.

This proxy is solicited by the Board of Directors of the Company. The
solicitation will be by mail and the expense thereof will be paid by the
Company. The Company has retained Morrow & Co., Inc. to assist in the
solicitation of proxies at an estimated cost of $8,000 plus expenses. In
addition, solicitation of proxies may be made by telephone or electronic mail
by Directors, officers or regular employees of the Company.

I. ELECTION OF DIRECTORS
------------------------

NOMINEES AND CONTINUING DIRECTORS
---------------------------------
The Board of Directors is divided into three classes, with the terms of office
of each class ending in successive years. Four Directors of the Company are to
be elected for terms ending at the Annual Meeting in 2011, or until their
respective successors have been elected and have qualified. Certain
information with respect to the nominees for election as Directors proposed by
the Company, as well as the other Directors whose terms of office as Directors
will continue after the Annual Meeting, is set forth below.

SHARES OF
EMERSON
SERVED AS COMMON STOCK
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY
OR POSITION, OTHER DIRECTORSHIPS SINCE OWNED(1)(2)(3)(4)
-------------------------------- --------- -----------------

NOMINEES FOR TERMS ENDING IN 2011

D. N. Farr, 52.............................................. 2000 1,677,169(5)
Chairman of the Board, Chief Executive Officer and
President of Emerson

He is also a Director of Delphi Corp.

R. B. Horton, 68............................................ 1987 26,153
Retired Chairman of BP p.l.c. and Railtrack Group PLC and
Former Chairman of Chubb plc and The Sporting Exchange,
Ltd.

C. A. Peters, 52............................................ 2000 634,722
Senior Executive Vice President of Emerson

J. W. Prueher, 65........................................... 2001 14,335
Admiral, U.S. Navy (Retired), and Former U.S. Ambassador
to The People's Republic of China

He is also a Director of Merrill Lynch & Company, Inc.,
The New York Life Insurance Company, Dyncorp
International, Inc. and Fluor Corporation

TO CONTINUE IN OFFICE UNTIL 2010

C. Fernandez G., 41......................................... 2001 33,309
Chairman and Chief Executive Officer of Grupo Modelo,
S.A.B. de C. V., brewery holding company

He is also a Director of Anheuser-Busch Companies, Inc.
and Grupo Televisa, S.A.B.

W. J. Galvin, 61............................................ 2000 802,474(5)
Senior Executive Vice President and Chief Financial
Officer of Emerson

R. L. Ridgway, 72........................................... 1995 23,349
Former Assistant Secretary of State for Europe and Canada

She is also a Director of The Boeing Company, Manpower,
Inc., Sara Lee Corporation and 3M Company and is a
Director of three funds in the American Funds complex
of mutual funds

R. L. Stephenson, 47........................................ 2006 3,727
Chairman and Chief Executive Officer of AT&T Inc.,
telecommunications provider

He is also a Director of AT&T Inc.

TO CONTINUE IN OFFICE UNTIL 2009

A. A. Busch III, 70......................................... 1985 68,329(5)
Director and Former Chairman of the Board of
Anheuser-Busch Companies, Inc., brewery, container
manufacturer and theme park operator

He is also a Director of AT&T Inc.

A. F. Golden, 61............................................ 2000 20,225
Partner of Davis Polk & Wardwell, lawyers

V. R. Loucks, Jr., 73....................................... 1979(6) 28,429(7)
Chairman of the Board of The Aethena Group, LLC, a
health-care merchant banking firm

He is also a Director of Affymetrix, Inc., Edwards
Lifesciences Corporation, Anheuser-Busch Companies,
Inc. and Pain Therapeutics, Inc.

J. B. Menzer, 56............................................ 2002 13,861
Vice Chairman and Chief Administrative Officer of Wal-Mart
Stores, Inc., global retailer

All Directors and Executive Officers as a Group
(18 persons).............................................. 4,158,742(8)(9)

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(1) Balances reflect the effect of a 2-for-1 stock split effected in the form
of a 100 percent stock dividend which was paid on December 11, 2006.

(2) Beneficial ownership of Emerson common stock is stated as of September 15,
2007, except in the cases of Mr. Galvin, for whom ownership is stated as
of September 19, 2007, and one other executive officer of the Company, for
whom shares are stated as of September 27, 2007, both of whom exercised
stock options after September 15 but prior to the end of the Company's
fiscal year. Under rules of the Securities and Exchange Commission
("SEC"), persons who have power to vote or dispose of securities, either
alone or jointly with others, are deemed to be the beneficial owners of
such securities. Each person reflected in the table has both sole voting
power and sole investment power with respect to the shares included in the
table, except as described in the footnotes below and except for the
following shares of restricted stock over which the person named has no
investment power: Mr. Farr-470,000; Mr. Galvin-150,000; Mr. Edward L.
Monser, Chief Operating Officer (who is an executive officer of the
Company named in the Summary Compensation Table)-60,000; Mr.
Peters-100,000; Mr. W. Wayne Withers, Executive Vice President and Special
Legal Advisor and former Secretary and General Counsel (who is also an
executive officer of the Company named in the Summary Compensation
Table)-70,000; Mr. Fernandez-13,229; Mr. Golden-13,617; Mr. Menzer-9,861;
Adm. Prueher-12,429; Mr. Stephenson-3,727; each other non-management
Director (including Mr. D. C. Farrell who was a Director as of September
15, 2007, but is not standing for re-election)-21,129; and all Directors
and executive officers as a group-1,068,508 shares.

(3) Includes the following shares which such persons have or will have within
60 days after September 15, 2007 the right to acquire upon the exercise of
employee stock options: Mr. Farr-870,000; Mr. Galvin-436,244; Mr.
Monser-165,000; Mr. Peters-320,000; and Mr. Withers-180,536. In computing
the number of shares beneficially owned by a person, shares of common
stock subject to options held by that person that are currently
exercisable or that are exercisable within 60 days after September 15,
2007 are deemed to be outstanding. Such shares, however, are not deemed
outstanding for the purposes of counting the percentage ownership of each
other person.

(4) No person reflected in the table owns more than 0.5% of the outstanding
shares of Emerson common stock. To the Company's knowledge, no person or
group beneficially owns more than 5% of the Company's common stock.

(5) Includes 95,194 shares held by the spouse and/or children of Mr. Farr.
Includes 1,860 shares held in the Emerson Directors' and Officers'
Charitable Trust over which Mr. Farr exercises investment power but has no
financial interest. Includes 86,730 shares held by or in trust for the
spouse and/or children of Mr. Galvin, of which Mr. Galvin disclaims
beneficial ownership as to 9,678 shares. Includes 59,988 shares held by
the Galvin Family Partnership, of which Mr. Galvin's spouse is the general
partner. Includes 1,200 shares held by Mr. Busch as co-trustee of a trust,
as to which Mr. Busch shares voting and investment power and disclaims
beneficial ownership.

(6) Mr. Loucks previously served as a Director from April 1974 to December
1975.

(7) Includes 2,400 shares pledged as collateral for a loan.

(8) Includes 2,050,780 shares of common stock which executive officers have,
or will have within 60 days after September 15, 2007, the right to acquire
upon exercise of employee stock options. Shares owned as a group represent
0.53% of the outstanding common stock of the Company. The shares issuable
upon exercise of options were deemed to be outstanding for purposes of
calculating the percentage of outstanding shares. Such shares, however,
are not deemed outstanding for the purposes of counting the ownership of
other persons.

(9) The total includes shares owned by E. L. Monser and W. W. Withers, the
only executive officers of the Company named in the Summary Compensation
Table not otherwise shown individually in this table, and shares owned by
D. C. Farrell, who was a Director on September 15, 2007 but is not
standing for re-election pursuant to the requirement in the Company's
Bylaws that an individual may not stand for election or re-election as a
Director after the age of 72. Mr. Monser beneficially owned 274,626
shares. Mr. Withers beneficially owned 294,481 shares. Mr. Farrell
beneficially owned 48,750 shares. Also includes 194,803 shares
beneficially owned by three other executive officers of the Company, of
which 60,000 shares are shares of common stock over which two of the other
executive officers have no investment power, 79,000 are shares of common
stock which two of the other executive officers have, or will have within
60 days after September 15, 2007, the right to acquire upon exercise of
employee stock options, and 900 shares held by one of the other executive
officers in the Emerson Directors' and Officers' Charitable Trust over
which the executive officer exercises investment power but has no
financial interest.

Each of the nominees and continuing Directors has had the same position or
other executive positions with the same employer during the past five years,
except as follows:

* Sir Robert Horton retired as Chairman of Railtrack Group PLC in July,
1999. He was named Deputy Chairman of Chubb plc in September, 2002 and
Chairman in December, 2002 (both are non-executive positions), and
served as Chairman of Chubb plc, which was acquired by United
Technologies Corp., until November, 2003. He was appointed Chairman of
The Sporting Exchange, Ltd. in March, 2004 and Executive Chairman in
November, 2005. He resigned from The Sporting Exchange in January, 2006.

* Mr. Loucks also served as Chief Executive Officer of Segway LLC from
January, 2003 to November, 2003 and is the retired Chairman and Chief
Executive Officer of Baxter International, Inc.

* Admiral Prueher served as Ambassador to the People's Republic of China
from November, 1999 to May, 2001. Prior to that time he served as a
Consulting Professor and Senior Advisor to the Stanford-Harvard
Preventive Defense Program and a Senior Fellow at the Center for Naval
Analysis. Admiral Prueher completed 35 years of service in the United
States Navy in May, 1999, and was Commander-in-Chief of the U.S. Pacific
Command from 1996 until his retirement.

* Mr. Farr was additionally elected as President of Emerson on November 1,
2005.

* Mr. Menzer served as Executive Vice President of Wal-Mart Stores, Inc.
and President and Chief Executive Officer of Wal-Mart International from
1999 to 2005, as Vice Chairman of Wal-Mart Stores, Inc. since September,
2005, and assumed the responsibilities of Chief Administrative Officer
in March, 2007.

* Prior to becoming Chairman and Chief Executive Officer of AT&T Inc. in
June, 2007, Mr. Stephenson served as Chief Operating Officer of AT&T
Inc. from November, 2005 to June, 2007, as Chief Operating Officer of
SBC Communications Inc. from April, 2004 to November, 2005 and as Senior
Executive Vice President and Chief Financial Officer of SBC from August,
2001 to April, 2004. SBC Communications Inc. acquired AT&T in November,
2005.

CORPORATE GOVERNANCE
--------------------

The Company's Corporate Governance Principles and Practices and the charters
of all Board Committees are available on the Company's Web site at
www.emerson.com, Investor Relations, Corporate Governance. The foregoing
documents are available in print to stockholders upon written request
delivered to Emerson Electric Co., 8000 West Florissant Avenue, St. Louis,
Missouri 63136, Attn: Secretary.

There were eleven meetings of the Board of Directors during fiscal 2007. All
of the Directors attended at least 75% of the meetings of the Board and
committees on which they served. Directors are strongly encouraged to attend
the Annual Meeting of Stockholders unless extenuating circumstances prevent
them from attending, although the Company has no formal, written policy
requiring such attendance. In 2007, all Directors attended the Annual Meeting
of Stockholders.

The Board of Directors has appointed a Discussion Leader who chairs regularly
scheduled meetings of non-management Directors, as provided in the Company's
Corporate Governance Principles and Practices. The Discussion Leader position
rotates annually among the Chairs of each of the independent Board Committees.
Stockholders and other interested persons may contact the Discussion Leader in
writing c/o Emerson Electric Co., 8000 West Florissant Avenue, St. Louis,
Missouri 63136, Attn: Secretary. All such letters will be forwarded promptly
to the Discussion Leader.

Stockholders may communicate with any of our Directors by sending a letter to
the Director, c/o Emerson Electric Co., 8000 West Florissant Avenue, St.
Louis, Missouri 63136, Attn: Secretary. All such letters will be forwarded
promptly to the relevant Director.

DIRECTOR INDEPENDENCE
---------------------

The Board of Directors has determined that the following of its members are
independent, as that term is defined under the general independence standards
in the listing standards of the New York Stock Exchange: A. A. Busch III,
D. C. Farrell, C. Fernandez G., A. F. Golden, R. B. Horton, V. R. Loucks, Jr.,
J. B. Menzer, J. W. Prueher, R. L. Ridgway and R. L. Stephenson. Mr. Farrell
will not be standing for re-election in accordance with the requirement in the
Company's Bylaws that an individual may not stand for election or re-election
as a Director after the age of 72. G. A. Lodge retired from the Board of
Directors at the 2007 Annual Meeting. During his term on the Board, Mr. Lodge
was determined to be an independent Director. Further, the Board has adopted
its own categorical standards to assist it in making determinations of
Director independence. All Directors identified as independent in this proxy
statement meet these standards; a copy of these standards is attached as
Appendix A and is available on the Company's Web site at www.emerson.com,
Investor Relations, Corporate Governance.

In the course of the Board's determination regarding independence of each
non-management Director, it considered any transactions, relationships and
arrangements as required by the Company's independence standards. In
particular, with respect to each of the three most recently completed fiscal
years, the Board considered for:

* Each of Messrs. Fernandez, Menzer and Stephenson, the annual amount of
sales to Emerson by the company which he serves as an executive officer,
and purchases by that company from Emerson, and determined that the
amount of such sales and the amount of such purchases in each fiscal
year were less than two percent of the annual revenues of each of those
companies.

* Mr. Busch, the annual amount of sales to Emerson by the company which
one of his immediate family members serves as an executive officer, and
purchases by that company from Emerson, and determined that the amount
of such sales and the amount of such purchases in each fiscal year were
less than two percent of the annual revenues of such company.

* Mr. Golden, the annual amount paid by Emerson to the law firm of which
he is a partner and determined that the total amount of such payments in
each fiscal year were less than 1% of the annual revenues of that law
firm.

* Messrs. Busch, Farrell, Fernandez, Golden, Menzer, Prueher and
Stephenson and Ms. Ridgway, the annual amount of contributions by
Emerson to charitable organizations with which the Director served as a
director, officer or trustee, and determined that the amount of such
contributions was less than the greater of $1,000,000 or 2% of each such
charitable organization's gross receipts in each fiscal year, or was
approved by the Finance Committee of the Board of Directors and not made
"on behalf of" any Director.

REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS

We review all transactions and relationships in which the Company and any of
our Directors, nominees for Director or executive officers, or any of their
immediate family members, are participants, so as to determine whether any of
these individuals have a direct or indirect material interest in any such
transaction. We have developed and implemented processes and controls to
obtain information from the Directors and executive officers about related
person transactions, and for then determining, based on the facts and
circumstances, whether a related person has a direct or indirect material
interest in any such transaction. As required by SEC rules, transactions that
are determined to be directly or indirectly material to a related person are
disclosed in the Company's proxy statement.

Pursuant to these processes, all Directors and executive officers annually
complete, sign and submit a Directors' and Officers' Questionnaire and a
Conflict of Interest Questionnaire that are designed to identify related
person transactions and both actual and potential conflicts of interest. We
also make appropriate inquiries as to the nature and extent of business that
the Company conducts with other companies for whom any of our Directors or
executive officers also serve as directors or executive officers. Under the
Company's Code of Business Ethics, if an actual or potential conflict of
interest affects an executive officer, he or she is to immediately disclose
all the relevant facts and circumstances to the Company's Ethics and
Environmental Policy Committee. If the Committee determines that there is a
conflict, it will refer the matter to the Board of Directors, which will
review the matter to make a final determination as to whether a conflict
exists, and, if so, how the conflict should be resolved. If an actual or
potential conflict of interest affects a Director, he or she is to immediately
disclose all the relevant facts and circumstances to the Board of Directors,
which likewise will review the matter to make a final determination as to
whether a conflict exists, and, if so, how it should be resolved.

The Company has a written Code of Business Ethics applicable to all Directors
and executive officers of the Company that prohibits Directors and executive
officers from entering into transactions, or having any relationships, that
would result in a conflict of interest with the interests of the Company.
Waivers of the Code of Business Ethics for Directors and executive officers
may only be granted by the Board of Directors. The Code of Business Ethics can
be found on the Company's Web site at www.emerson.com, Investor Relations,
Corporate Governance.

CERTAIN BUSINESS RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Based on the review described above, there were no transactions from October
1, 2006 through the date of this proxy statement, and there are no currently
proposed transactions, in which the Company was or is to be a participant, in
which the amount involved exceeded $120,000 and in which any of the Company's
Directors or executive officers or any of their immediate family members
either had or will have a direct or indirect material interest.

BOARD OF DIRECTORS AND COMMITTEES
---------------------------------

The members of the Board are elected to various committees. The standing
committees of the Board (and the respective Chairmen) are: Executive Committee
(Farr), Audit Committee (Busch), Compensation Committee (Loucks), Corporate
Governance and Nominating Committee (Farrell) and Finance Committee (Horton).

AUDIT COMMITTEE

The Audit Committee met five times in fiscal 2007. The members of the Audit
Committee are A. A. Busch III, Chairman, R. B. Horton, J. B. Menzer and R. L.
Ridgway, all of whom are independent. The functions of the Audit Committee are
described under "Report of the Audit Committee" at page 13 below. The Board
has determined that all of the Audit Committee members are independent, as
that term is defined under the enhanced independence standards for audit
committee members in the Securities Exchange Act of 1934 (the "Exchange Act")
and rules thereunder, as incorporated into the listing standards of the New
York Stock Exchange. The Board has also determined that J. B. Menzer is an
Audit Committee Financial Expert as that term is defined in the rules issued
pursuant to the Sarbanes-Oxley Act of 2002. See the "Report of the Audit
Committee" at page 13 below.

COMPENSATION COMMITTEE

The Compensation Committee met six times in 2007. The Compensation Committee
Charter requires that the Committee be comprised of at least three Directors.
The current Compensation Committee members are V. R. Loucks, Jr., Chairman,
D. C. Farrell, J. W. Prueher and R. L. Stephenson. The Board has determined
that, as required by the Committee Charter, each of the members of the
Compensation Committee meets applicable independence requirements, including
those of the New York Stock Exchange, and qualifies as an "outside director"
under Section 162(m) of the Internal Revenue Code and as a "non-employee
director" under Rule 16b-3 of the Exchange Act.

The Compensation Committee discharges the Board's responsibilities relating to
compensation of the Company's executives and produces the Committee's annual
report on executive compensation to be included in the Company's annual proxy
statement.

Specifically, the Committee:

* Approves corporate goals and objectives relevant to Chief Executive
Officer compensation, evaluates Chief Executive Officer performance, has
sole authority to set Chief Executive Officer compensation, and reviews
the compensation of the Chief Executive Officer with the Board in
executive session annually.

* Reviews and approves all elements of compensation and oversees the
evaluation process for all officers of the Company.

* Makes recommendations to the Board with respect to equity-based
compensation plans and executive officer incentive compensation plans.

* Approves stock option grants and administers each of the Company's stock
option plans as provided in those plans.

* Approves Company contributions to benefit plans (other than qualified
defined benefit plans), and the adoption, amendment or termination of
benefit plans.

* Approves all additional compensation plans designed to attract and
retain key employees, and, for such key employees, approves all
employment agreements and contracts and all plans providing deferred and
continuing compensation or providing additional benefits upon a
termination or change of control.

* Monitors the levels of stock ownership of Company executives.

* Monitors and keeps current the Senior Management Succession Plan.

* Determines whether service by an officer, Director or employee of the
Company as an officer, director or employee of another company is
eligible for indemnification pursuant to the Company's Bylaws.

* Approves the Compensation Discussion and Analysis ("CD&A") to determine
whether to recommend inclusion of the CD&A in the Company's proxy
statement, annual report on Form 10-K or other appropriate document(s)
filed with the SEC.

The Compensation Committee operates under a written charter that details the
scope of authority, composition and procedures of the Committee. The Committee
may, when appropriate in its discretion, delegate authority

with respect to specific matters to one or more members, provided that all
decisions of any such members are presented to the full Committee at its next
scheduled meeting. For a discussion of delegations of authority the Committee
has made to the Chief Executive Officer, see "Compensation Discussion and
Analysis -- Equity Compensation Grant Practices" at page 24 below. The
Committee reports to the Board of Directors regularly, reviews and reassesses
the adequacy of its Charter at least annually and conducts an annual
evaluation of its performance.

Role of Executive Officers and the Compensation Consultant
----------------------------------------------------------

Executive Officers

The Chief Executive Officer makes recommendations to the Committee regarding
total compensation to be paid to the Company's executive officers other than
himself, including salary, annual bonus, stock awards and benefits, as
appropriate. Management makes recommendations to the Committee regarding
salaries, at or above a level established by the Committee, to be paid to
non-officer employees of the Company, its divisions and subsidiaries,
including the officers of divisions and subsidiaries of the Company who are
not officers of the Company, and salaries of all Division Presidents.

Management develops and presents to the Committee recommendations for the
design of compensation programs, including stock or other incentive-based
programs and other programs designed to attract and retain key employees.

The Committee has unrestricted access to management and may also request the
participation of management in any discussion of a particular subject at any
meeting. Committee meetings are regularly attended by the Chief Executive
Officer, who generally attends all meetings except meetings in executive
session and discussions of Chief Executive Officer compensation, and the Vice
President-Executive Compensation, who is responsible for leading some of the
discussions regarding the Company's compensation programs and is responsible
for recording the minutes of the meetings.

The Compensation Committee also meets in executive session without any members
of management. The Committee may request the participation of management or
outside consultants as it deems necessary or appropriate. The Committee
regularly reports to the Board on compensation matters and annually reviews
the Chief Executive Officer's compensation with the Board.

Compensation Consultant

The Committee has sole discretion, at Company expense, to retain and terminate
independent advisors, including sole authority to approve the fees and
retention terms for such advisors, if it shall determine the services of such
advisors to be necessary or appropriate. Any Committee member may request the
participation of independent advisors in any discussion of a particular
subject at any meeting. The Company engages Frederic W. Cook & Co., Inc. to
assist the Company in its executive compensation program design and
competitive pay analysis. The Committee reviews this information in
determining compensation for its named executive officers. In fiscal 2006, the
Committee engaged Towers Perrin and Ernst & Young as outside consultants to
review the philosophies and principles upon which the program is based, and
the process used by the Committee to set pay. In fiscal 2007, the Committee
engaged Towers Perrin and Ernst & Young to review the Committee's charter and
Towers Perrin to review the reasonableness of the compensation paid to our
Chief Executive Officer. For a description of survey data provided by certain
compensation consultants, see "Compensation Discussion and Analysis" beginning
at page 15 below.

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE

The Corporate Governance and Nominating Committee met five times in fiscal
2007. The members of the Committee are D. C. Farrell, Chairman, C. Fernandez
G., A. F. Golden, V. R. Loucks, Jr., R. L. Ridgway and R. L. Stephenson, all
of whom are independent. The Corporate Governance and Nominating Committee
reviews the Company's corporate governance principles and independence
standards; oversees the annual self-evaluation by the Board and its
committees; discharges the Board's responsibilities related to compensation of
Directors; identifies and evaluates individuals for Board and committee
membership and Chairs; makes recommendations to the Board concerning the
selection of Director nominees; makes recommendations as to the size and
composition

of the Board and its committees; and approves and/or reviews the Company's
conflict of interest policies, codes of ethics, political activities and
compliance with laws and regulations, and oversees management's implementation
thereof. For a description of the process used by the Committee in evaluating
and recommending Director nominees, see "Nomination Process" below.

Nomination Process
------------------

The Corporate Governance and Nominating Committee regularly reviews the
appropriate size and composition of the Board and anticipates future vacancies
and needs of the Board. In the event the Committee recommends an increase in
the size of the Board or a vacancy occurs, the Committee may consider nominees
submitted by several sources, including current Board members, management of
the Company, director search firms, stockholders or other persons.

In evaluating possible Director nominees, the Committee considers the
knowledge, experience, integrity and judgment of possible candidates, their
potential contribution to the diversity of backgrounds, experience and skills
of the Board, and their ability to devote sufficient time and effort to their
duties as Directors. The Company's Statement of Corporate Governance
Principles and Practices sets forth the minimum qualifications for Director
nominees which include, among other criteria determined by the Board, senior
management experience in business, government and/or other relevant
organizations. Important experience includes the field of manufacturing,
international exposure and Board membership with major organizations. Pursuant
to the Company's Bylaws, no Director may stand for election or re-election as
a Director after attaining the age of 72.

The Committee evaluates Director nominees at regular or special Committee
meetings pursuant to the criteria described above and reviews qualified
Director nominees with the Board. The Committee evaluates candidates that meet
the Director criteria, and the Committee selects nominees that best suit the
Board's current needs and recommends one or more of such individuals for
election to the Board. From time to time, the Company retains an independent
search firm to assist the Committee in identifying potential candidates for
Board membership and in evaluating their qualifications and availability.

The Committee will consider candidates recommended by stockholders, provided
the names of such persons, accompanied by relevant biographical information,
are properly submitted in writing to the Secretary of the Company in
accordance with the manner described for stockholder nominations in "IV.
Stockholders' Proposals" at page 39 below. The Secretary will send properly
submitted stockholder recommendations to the Committee. Individuals
recommended by stockholders in accordance with these procedures will receive
the same consideration received by individuals identified to the Committee
through other means. The Committee also may, in its discretion, consider
candidates otherwise recommended by stockholders without accompanying
biographical information, if submitted in writing to the Secretary.

In addition, the Company's Bylaws permit stockholders to nominate Directors at
an annual meeting of stockholders or at a special meeting at which Directors
are to be elected in accordance with the notice of meeting. The procedures for
making such nominations are discussed in "IV. Stockholders' Proposals" at
page 39 below.

Processes and Procedures for Determination of Director Compensation
-------------------------------------------------------------------

As specified in its Charter, the Corporate Governance and Nominating Committee
reviews compensation of the Company's Directors, as well as the Company's
compensation practices for Directors, and makes recommendations to the Board
regarding these matters. The Board makes the final determinations as to
Director compensation and compensation practices. The Committee typically
conducts its review and makes its recommendations in February of each year.

To assist the Committee in performing these duties, Company management
periodically engages Towers Perrin, an outside consultant, to prepare a study
of outside director compensation trends and best practices in the competitive
market, and to make recommendations as to whether and to what extent
compensation of the Company's outside Directors should be increased.
Management, including the Chief Executive Officer, presents these
recommendations to the Committee for its consideration.

DIRECTOR COMPENSATION
---------------------

Directors who are employees of the Company do not receive any compensation for
service as Directors. Each non-management Director is currently paid an annual
retainer of $150,000, a portion of which is paid in restricted stock, and fees
of $1,500 plus expenses for attendance at each Board meeting. The percentage
of the annual retainer paid in restricted stock each year is determined by or
upon the recommendation of the Corporate Governance and Nominating Committee.
For fiscal 2007, $100,000 of the annual retainer was paid in restricted stock
on the date of the Company's Annual Meeting of Stockholders to those
non-management Directors who were elected or re-elected at, or who continued
in office after, such Annual Meeting, and the remaining $50,000 of the annual
retainer was paid in cash on a monthly basis.

The restricted stock award does not vest and cannot be sold until the
Director's retirement or earlier death, disability or a change of control of
the Company. Non-management Directors receive dividends with respect to such
restricted stock. If a Director's tenure on the Board ends for any other
reason, the restrictions will lapse unless it is determined that the
participant has acted in a manner detrimental to the Company or has failed to
fulfill his or her responsibilities in a satisfactory manner. If the
restrictions on the shares do not lapse, such shares will be forfeited to, and
acquired at no cost by, the Company. As a result of these restrictions, the
amount of restricted stock held by a Director reflects the length of time that
a Director has served on the Board.

Each committee Chairman is currently paid an annual retainer of $12,000,
except for the Chairman of the Audit Committee who is paid an annual retainer
of $15,000, and each committee member is paid $1,500 plus expenses for
attendance at each committee meeting.

Directors may elect to defer all or a part of their cash compensation under
the Company's Deferred Compensation Plan for Non-Employee Directors. Under the
plan, which has existed since 1982, such deferred amounts are credited with
interest quarterly at the prime rate charged by Bank of America, N.A. Under
the rules of the SEC, interest on deferred compensation is considered
above-market only if the rate of interest exceeds 120% of the applicable
federal long-term rate, which rate is the rate published monthly by the
Internal Revenue Service applying to debt instruments with a term of more than
9 years. During fiscal 2007, the Bank of America prime rate ranged from 7.75%
to 8.25%, while 120% of the applicable federal long-term rate ranged from
5.56% to 6.21%. The amount of the earnings on deferred compensation for each
of these Directors that is considered above-market is set forth in footnote
(4) to the Director Compensation table. In the alternative, Directors may
elect to have deferred fees converted into units equivalent to shares of
Emerson common stock and their accounts credited with additional units
representing dividend equivalents. All deferred fees are payable only in cash.
A. A. Busch, D. C. Farrell, A. F. Golden and R. L. Stephenson currently
participate in this deferral program.

For Directors who assumed office on or after June 4, 2002, the Company has
eliminated its Continuing Compensation Plan for Non-Management Directors.
Non-management Directors in office on that date who are not fully vested
continue to vest in the plan. A non-management Director who assumed office
prior to June 4, 2002, and who served as a Director for at least five years
will, after the later of termination of service as a Director or age 72,
receive for life a percentage of the annual $30,000 cash retainer for
non-management Directors in effect on June 4, 2002. This percentage is 50% for
five years' service and increases by 10% for each additional year of service
to 100% for ten years' or more service. In the event that service as a covered
Director terminates because of death, the benefit will be paid to the
surviving spouse for five years. Amounts relating to the aggregate change in
the actuarial present value of the accumulated benefit for fiscal year 2007
pursuant to the Company's Continuing Compensation Plan for Non-Management
Directors are set forth in footnote (4) to the Director Compensation table and
the eligible Directors are identified in that footnote.

As part of the Company's overall charitable contributions practice, the
Company may, in the sole and absolute discretion of the Board and its
Committees, make a charitable contribution in the names of Emerson and a
Director upon his or her retirement from the Board (as determined by the Board
and its Committees), taking into account such Director's tenure on the Board,
his or her accomplishments and service on the Board, and other relevant
factors.

The table below sets forth amounts for non-management Director compensation
for fiscal 2007.

DIRECTOR COMPENSATION

--------------------------------------------------------------------------------------------------------------------------
CHANGE IN
PENSION VALUE
FEES AND
EARNED NONQUALIFIED
OR PAID STOCK DEFERRED ALL OTHER
IN CASH AWARDS COMPENSATION COMPENSATION
NAME(1) ($) ($)(2)(3) EARNINGS(4) ($)(5) TOTAL ($)
--------------------------------------------------------------------------------------------------------------------------

A. A. Busch III 96,750 99,957 80,419 10,000 287,126
--------------------------------------------------------------------------------------------------------------------------
D. C. Farrell(6) 96,667 99,957 40,674 10,000 247,298
--------------------------------------------------------------------------------------------------------------------------
C. Fernandez G. 70,500 99,957 7,000 -- 177,457
--------------------------------------------------------------------------------------------------------------------------
A. F. Golden 78,750 99,957 33,701 10,000 222,408
--------------------------------------------------------------------------------------------------------------------------
R. B. Horton 93,417 99,957 16,000 1,500 210,874
--------------------------------------------------------------------------------------------------------------------------
G. A. Lodge(7) 37,084 -- 14,000 334,000 385,084
--------------------------------------------------------------------------------------------------------------------------
V. R. Loucks, Jr. 97,667 99,957 20,000 -- 217,624
--------------------------------------------------------------------------------------------------------------------------
J. B. Menzer 78,750 99,957 -- -- 178,707
--------------------------------------------------------------------------------------------------------------------------
J. W. Prueher 80,250 99,957 23,000 10,000 213,207
--------------------------------------------------------------------------------------------------------------------------
R. L. Ridgway 80,000 99,957 20,000 10,000 209,957
--------------------------------------------------------------------------------------------------------------------------
R. L. Stephenson 76,250 99,957 1,375 -- 177,582
--------------------------------------------------------------------------------------------------------------------------

-------
(1) Messrs. D. N. Farr, W. J. Galvin and C. A. Peters are named executive
officers who are also Directors and their compensation is set forth in the
Summary Compensation Table and related tables. They did not receive any
additional compensation for their service as Directors.

(2) In fiscal 2007 the Directors were awarded 2,223 shares of restricted stock
($100,000 divided by the grant date fair market value of Emerson stock,
rounded down to the nearest whole share) with a total restricted stock
value of $99,957. Constitutes the aggregate grant date fair value of
restricted stock awards for fiscal 2007 calculated in accordance with
Statement of Financial Accounting Standards 123R ("FAS 123R") which is
also the dollar amount recognized for financial statement reporting
purposes for fiscal 2007. See Note 14 to the Company's fiscal year 2007
financial statements in the Company's Annual Report on Form 10-K for a
discussion of the valuation under FAS 123R.

(3) The total number of shares of restricted stock held by each of the
non-management Directors at September 30, 2007 (the end of fiscal 2007),
as adjusted to reflect a 2-for-1 stock split effected in the form of a 100
percent stock dividend which was paid on December 11, 2006, is as follows:
A. A. Busch-21,129; D. C. Farrell-21,129; C. Fernandez G.-13,229; A. F.
Golden-13,617; R. B. Horton-21,129; V. R. Loucks, Jr.-21,129; J. B.
Menzer-9,861; J. W. Prueher-12,429; R. L. Ridgway-21,129; and R. L.
Stephenson-3,727.

(4) Includes above-market earnings for fiscal 2007, based on duration of
participation in the deferred compensation plan, on cash fees that a
Director elected to defer as follows: A. A. Busch-$62,419; D. C.
Farrell-$40,674; A. F. Golden-$13,701; and R. L. Stephenson-$1,375. Also
includes the following amounts attributable to the aggregate change in the
actuarial present value of the accumulated pension benefit for fiscal year
2007 pursuant to the Company's Continuing Compensation Plan for
Non-Management Directors who assumed office prior to June 4, 2002, as
follows: A. A. Busch-$18,000; C. Fernandez G.-$7,000; A. F.
Golden-$20,000; R. B. Horton-$16,000; G. A. Lodge-$14,000; V. R. Loucks,
Jr.-$20,000; J. W. Prueher-$23,000; and R. L. Ridgway-$20,000. Pursuant to
applicable regulations, does not include the following negative amount
relating to the change in actuarial present value: D. C. Farrell-$5,000.
The Company has eliminated its Continuing Compensation Plan for
Non-Management Directors who assumed office on or after June 4, 2002.
Non-management Directors in office on that date who are not fully vested
continue to vest in the plan. The actuarial present value changes reflect
in part the continued vesting of these Directors. Please see the narrative
above for more information.

(5) The Company's charitable matching gifts program matches charitable gifts
of up to $10,000 for all employees and Directors of the Company. Includes
the amount of Company matching contributions as follows: A. A.
Busch-$10,000; D. C. Farrell-$10,000; A. F. Golden-$10,000; R. B.
Horton-$1,500; J. W. Prueher-$10,000; and R. L. Ridgway-$10,000.

(6) D. C. Farrell is not standing for re-election pursuant to the requirement
in the Company's Bylaws that an individual may not stand for election or
re-election as a Director after the age of 72. Mr. Farrell's service on
the Board of Directors will end as of February 5, 2008.

(7) G. A. Lodge retired from Emerson's Board of Directors on February 6, 2007
after 32 years of service to the Company. After his retirement, as a
participant in the Company's Continuing Compensation Plan for Non-
Management Directors, Mr. Lodge began receiving his earned payments under
the plan, as described above. These payments were included in the
calculation of change in pension value for Mr. Lodge during the fiscal
year. In recognition of Mr. Lodge's long and distinguished service on the
Board and his numerous contributions to the Company's success, the Board
of Directors, in its discretion, determined to make a charitable
contribution in the amount of $1 million in the names of Emerson and Mr.
Lodge, payable in three annual installments. The amount included for Mr.
Lodge above under "All Other Compensation" is the amount of the first
installment with respect to this charitable contribution, which was made
in February, 2007.

CODE OF ETHICS
--------------

The Company has adopted a Code of Ethics that applies to the Company's chief
executive officer, chief financial officer, chief accounting officer, and
controller; has posted such Code of Ethics on its Web site; and intends to
satisfy the disclosure requirement under Item 5.05 of Form 8-K by posting such
information on its Web site at www.emerson.com, Investor Relations, Corporate
Governance. The Company has adopted a Code of Business Ethics for Directors,
officers and employees, which is available at the same location on the
Company's Web site. Printed copies of the foregoing documents are available to
stockholders upon written request delivered to Emerson Electric Co., 8000 West
Florissant Avenue, St. Louis, Missouri 63136, Attn: Secretary.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
-----------------------------------------------------------

The functions and members of the Compensation Committee are set forth above
under "Board of Directors and Committees - Compensation Committee." All
Committee members are independent and none of the Committee members has served
as an officer or employee of the Company or a subsidiary of the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------

The Company's Directors and executive officers are required, pursuant to
Section 16(a) of the Exchange Act, to file statements of beneficial ownership
and changes in beneficial ownership of common stock of the Company with the
SEC and the New York Stock Exchange, and to furnish copies of such statements
to the Company. Based solely on a review of the copies of such statements
furnished to the Company and written representations that no other such
statements were required, the Company believes that during fiscal year 2007
its Directors and executive officers complied with all such requirements,
except that Mr. Monser, our Chief Operating Officer, reported late one sale of
a total of 12,000 shares of Emerson common stock, and Mr. Fernandez, a
Director, reported late three dispositions of Emerson stock (a total of 1,052
shares) by entities in which his spouse is a shareholder and with respect to
which Mr. Fernandez had disclaimed beneficial ownership.

REPORT OF THE AUDIT COMMITTEE
-----------------------------

The Audit Committee assists the Board in providing oversight of the systems
and procedures relating to the integrity of the Company's financial
statements, the Company's financial reporting process, its systems of internal
accounting and financial controls, the internal audit process, the annual
independent audit process of the Company's annual financial statements, the
Company's compliance with legal and regulatory requirements and the
qualification and independence of the Company's independent registered public
accounting firm. Management has the responsibility for the implementation of
these activities. In fulfilling its oversight responsibilities, the Committee
reviewed and discussed with management the audited financial statements in the
Company's Annual Report

on Form 10-K for the fiscal year ended September 30, 2007, including a
discussion of the quality and the acceptability of the Company's financial
reporting and controls.

The Company's independent registered public accounting firm is responsible for
expressing an opinion on the conformity of those audited financial statements
with U.S. generally accepted accounting principles and on the effectiveness of
the Company's internal control over financial reporting. The Committee
reviewed with the independent registered public accounting firm the firm's
judgments as to the quality and the acceptability of the Company's financial
reporting and such other matters as are required to be discussed with the
Committee under auditing standards of the Public Company Accounting Oversight
Board (United States), including the matters required to be discussed by
Statement on Auditing Standards No. 61, as may be modified or supplemented. In
addition, the Committee has discussed with the independent registered public
accounting firm the firm's independence from management and the Company,
including the impact of non-audit-related services provided to the Company and
the matters in the independent registered public accounting firm's written
disclosures required by Standard No. 1 of the Independence Standards Board, as
may be modified or supplemented.

The Committee also discussed with the Company's internal auditors and the
independent registered public accounting firm in advance the overall scope and
plans for their respective audits. The Committee meets regularly with the
internal auditor and the independent registered public accounting firm, with
and without management present, to discuss the results of their examinations,
their evaluations of the Company's internal controls, and the overall quality
of the Company's financial reporting.

In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2007 for filing with the Securities and Exchange Commission. The
Committee also reappointed KPMG LLP as the Company's independent registered
public accounting firm for fiscal 2008.

Audit Committee

A. A. Busch III, Chairman
R. B. Horton
J. B. Menzer
R. L. Ridgway

FEES PAID TO KPMG LLP
---------------------

The following are the fees of KPMG LLP, the Company's independent registered
public accounting firm, for services rendered in 2006 and 2007 ($ in
millions):

2006 2007
----- -----

Audit Fees.............................................. $19.7 $22.7
Audit-Related Fees...................................... 3.9 2.8
Tax Fees................................................ 3.1 3.4
All Other Fees.......................................... 0 0
----- -----
Total KPMG LLP Fees................................. $26.7 $28.9
===== =====

Audit Fees primarily represent the cost for the audit of the Company's annual
financial statements, reviews of SEC Forms 10-Q and 10-K and statutory audit
requirements at certain non-U.S. locations.

Audit-Related Fees are primarily related to statutory filings, audits of
employee benefit plans and acquisition and divestiture due diligence.

Tax Fees are primarily related to tax compliance services, which represented
$3.3 million and $3.0 million in 2007 and 2006, respectively. The remaining
tax fees related to tax consulting services and represented $0.1 million in
each of 2007 and 2006.

The Audit Committee approved in advance all services provided by KPMG LLP. The
Audit Committee's pre-approval policies and procedures are included within the
Audit Committee Charter, which was filed as an exhibit to the Company's proxy
statement for the 2006 Annual Meeting and can be found on the Company's Web
site at www.emerson.com, Investor Relations, Corporate Governance.

EXECUTIVE COMPENSATION
----------------------

COMPENSATION DISCUSSION AND ANALYSIS
------------------------------------

OVERVIEW

Emerson is a global technology leader with diversified businesses that report
in five segments: Process Management, Industrial Automation, Network Power,
Climate Technologies, and Appliance and Tools. We design and supply advanced
products and deliver engineered solutions to industrial, commercial and
consumer markets worldwide. Managing these diverse global businesses requires
a team of committed, talented and experienced executives. Our executive
compensation philosophy is straightforward and consistent -- we pay for
performance. Our executives are accountable for the performance of the
businesses they manage and are compensated based on that performance. The
Emerson executive compensation program, which is substantially unchanged since
1977, attracts, retains, motivates and rewards our executives for achieving
outstanding operational and financial performance. This performance, in turn,
builds value for our stockholders.

This Compensation Discussion and Analysis describes Emerson executive
compensation policies and programs and how they apply to our named executive
officers (the senior executives included in the Summary Compensation Table at
page 25 below). This section also describes the actions and decisions of the
Compensation Committee of the Board of Directors (the "Committee"), which
oversees the executive compensation program and determines the compensation of
the named executive officers.

COMPENSATION OBJECTIVES AND ELEMENTS

Emerson's executive compensation program is designed to support the interests
of stockholders by rewarding executives for achievement of the Company's
specific business objectives, such as growth in earnings per share and
improvement in trade working capital and cash flow. The fundamental principles
underlying the program are:

* Rewarding for superior performance rather than creating a sense of
entitlement.

* Maximizing stockholder value by allocating a significant percentage of
compensation to at-risk pay that is dependent on achievement of the
Company's performance goals.

* Aligning executives' interests with stockholder interests by providing
significant stock-based compensation and expecting executives to hold
the stock they earn.

* Attracting and retaining talented executives by providing competitive
compensation opportunities.

* Rewarding overall corporate results while recognizing individual
contributions.

Our executive compensation program includes incentive plans that communicate
to participants the Company's critical business values, strategies and
performance objectives, and are clear and simple to understand. This
understanding focuses their efforts on the performance objectives that drive
Emerson's success and encourages them to make career commitments to the
Company. The program offers a balanced approach to compensation and consists
of the primary components illustrated below. Taken together, we refer to these
components as "total compensation." Individual compensation packages and the
mix of base salary, annual cash bonus opportunity and long-term stock
compensation for each named executive officer vary depending upon the
executive's level of responsibilities, potential, performance and tenure with
the Company. The at-risk portion of total compensation generally increases as
an executive's level of responsibilities increases. The chart below is not to
scale for any particular named executive officer.

------- ---------------
| | | /|*Objective: Supports succession planning and retention
| | Restricted | / |*Participation is highly selective
| | Stock | \ |*Generally represents 5-20%* of total compensation for named
| | | \ | executive officers
| |-------------| \|*No set frequency of awards; vest after term of up to 10 years
| | |
| | |
| | | /|*Objective: Supports achievement of the Company's longer-
| | | / | term financial goal of sustained earnings per share growth
Long-Term | | / |*Is the primary long-term compensation element, generally
Stock | Performance | / | representing 45%-55%* of total compensation for named
Compensation | Shares | \ | executive officers
| | | \ |*Generally awarded every three years with a four-year
| | | \| performance period
| | |
| | |
| | | /*Objective: Rewards for the Company's stock price appreciation
| | | /|*Generally represents 5-10%* of total compensation for named
| |-------------| / | executive officers
| | Stock | / |*Exercise price equal to average of high and low market price
| | Options | \ | on grant date
| | | \ |*Awarded generally every three years, with one-third vesting
|------ |-------------| \| each of the first three years of a ten year term
| | |
| | | /|*Objective: Rewards achievement of the Company's annual
| | Annual | / | financial targets and individual performance
| | Bonus | \ |*Generally represents 10-25%* of total compensation for named
Annual Cash | | \| executive officers
Compensation |-------------| /|*Objective: Rewards individual performance and may vary
| | | / | with the Company's performance
| | Base Salary | \ |*Generally represents 5-20%* of total compensation for named
| | | \| executive officers
------- --------------

-------
*These percentage ranges are based on annualized total compensation values and
do not necessarily correspond to, and are not a substitute for, the values
disclosed in the Summary Compensation Table and supplemental tables.
Annualized values for long-term stock compensation are based on the grant date
value of awards annualized over the three-year award cycle for performance
shares and options and over the vesting terms for restricted stock, based on
data provided by our compensation consultants. We use these annualized values
because competitive data is calculated in the same manner.

COMPETITIVE MARKET PAY INFORMATION AND PHILOSOPHY

In determining total compensation levels and mix for the named executive
officers other than the Chief Executive Officer ("CEO"), the Committee reviews
market trends in executive compensation and survey results from Frederic W.
Cook & Co., Inc. and Hewitt Associates, Inc. The Company's compensation
philosophy is to target total compensation in the median range of these data
sources, as adjusted based on revenue, which we refer to as the "median
range", with actual pay delivered dependent on Company and individual
performance. Equity awards are valued at grant and annualized over their award
frequency. This approach is consistent with long-standing Company practice.

For our CEO, the Committee reviews survey data from three groups reflecting
(1) large industrial companies, (2) companies with profiles similar to the
Company's, and (3) companies with comparable sales revenues.

* Large industrial companies: This group consists of the industrial
--------------------------
companies in the Frederic W. Cook total compensation database, which we
believe is the best indicator of CEO pay. These companies reflect
potential opportunities the CEO has at other companies. The group
generally consists of the same companies from year to year, but may vary
based on survey participants.

* Companies with similar profiles: This group consists of companies
-------------------------------
identified independently by our planning department for benchmarking
Company performance. These companies are not selected for compensation
purposes. The companies have some or all of the following
characteristics which the planning department believes to be similar to
the Company's: industry or markets being served, customers being
targeted, investor profiles being pursued, and a global strategy. The
companies in this group may change each year based on their and the
Company's performance.

* Companies with comparable revenues: Because there is a correlation
----------------------------------
between level of pay and company size, we review a group that includes
companies with revenues comparable to the Company's as a secondary
reference. Companies in this group may vary each year based on their and
the Company's revenues.

As with the other named executive officers, the Company's compensation
philosophy for the CEO is to target total compensation in the median range of
these data sources.

The Committee considers these competitive pay analyses as a frame of reference
in making its pay decisions. The pay decisions are not formulaic and the
Committee exercises judgment in making them. These analyses are not used to
establish performance goals in the compensation programs.

SETTING TOTAL COMPENSATION

Each year as part of the Company's continuing, disciplined management
development and succession planning process, management meets with division
and corporate executives to evaluate the individual performance and leadership
potential of our key executives. Our CEO uses these performance and leadership
evaluations to develop individual pay recommendations to the Committee for
senior executives, including the named executive officers (other than
himself). The Committee reviews the performance evaluations and pay
recommendations for the named executive officers and the other senior
executives. The Committee separately meets in executive session to review the
CEO's performance and set his compensation.

In setting the CEO's compensation, the Committee first considers the Company's
financial results. The Committee considered the Company's outstanding
financial performance in fiscal 2007, which exceeded the financial performance
objectives established by the Company for the year:

* Sales reached a record $22.6 billion, an increase of 12.1 percent over
the prior year.

* Earnings per share rose 18.8 percent to $2.66, which also was a record.

* Return on total capital was 20.1 percent, an increase of 170 basis
points over the prior year.

* Operating cash flow exceeded $3.0 billion, an improvement of 20.1
percent from fiscal 2006.

* The Company increased its dividend to stockholders for the 51st
consecutive year.

* The Company returned $1.7 billion to stockholders in the form of
dividends and share repurchases.

* Total stockholder return, based on stock price appreciation and assuming
dividend reinvestment, was 29.9% for fiscal 2007, driven by the
Company's strong financial performance.

Second, the Committee evaluates his performance and leadership, compares his
pay to the median range of market compensation, and reviews his pay in
relation to the pay of the other named executive officers. The Committee
determined that Mr. Farr played a vital role in achieving this financial
performance in fiscal 2007. His leadership was central to numerous
accomplishments underpinning this performance, including:

* Strengthening Emerson's global business platforms and market-leading
technologies.

* Expanding Emerson's global footprint in high-growth regions.

* Strengthening customer relationships worldwide.

* Improving operating and capital efficiencies and cost positions in the
face of significant competitive pressures.

* Completing acquisitions that added to Emerson's technology base and to
its products and customer services and solutions.

* Driving improvements in Emerson's product development process to
increase the pace and profitability of new and innovative technologies.

* Continuing to develop and retain Emerson's management team.

The Committee uses the survey results under "Competitive Market Pay
Information and Philosophy" above as a frame of reference when setting the
CEO's total compensation. The Committee reviews the relative internal
compensation relationships among the named executive officers, based on each
executive's level of responsibilities, and how they compare to pay
relationships in the survey data. While the Committee monitors these pay
relationships, it does not target any specific pay ratios. The Committee notes
that Mr. Farr's responsibilities as CEO are greater than those of the other
named executive officers. The Committee also receives a summary for the CEO
showing all elements of his compensation, including base salary, annual cash
bonus, long-term stock compensation, retirement and other benefits and
perquisites. The summary shows compensation that may be paid upon voluntary or
involuntary termination of employment, retirement, death or disability, or
upon a change of control. Mr. Farr does not have an employment agreement with
the Company.

The Committee reviewed alternatives for delivering the appropriate level of
total compensation for Mr. Farr based on the Company's and his performance, as
described above. These alternatives reflected the fact that fiscal 2007 was an
award year for performance shares and fiscal 2008 is an award year for stock
options. The Committee's consultant, Towers Perrin, reviewed these
compensation alternatives and determined that they were reasonable, but made
no specific compensation recommendations.

The Committee follows a similar process to determine compensation for the
remaining named executive officers. The Committee uses data from Frederic W.
Cook & Co., Inc. and Hewitt Associates, Inc. in exercising its judgment
regarding these compensation decisions. For the other named executive
officers, the Committee first considered the overall outstanding performance
of the Company for fiscal 2007 as it did for Mr. Farr. The Committee then
reviewed the CEO's evaluation of the individual performance of each named
executive officer, which was outstanding for fiscal 2007. The Committee took
into account the responsibilities of Messrs. Galvin, Monser and Peters in
addition to the traditional roles denoted by their job titles. In addition to
his duties as Chief Financial Officer, Mr. Galvin participates in operational
reviews with the Chief Operating Officer and oversees the Company's
governmental affairs function. The Committee also considered his long tenure
with the Company. In addition to his duties as Chief Operating Officer, Mr.
Monser has corporate oversight responsibilities for the Company's Asian and
Latin American operations, took on additional responsibilities in Europe in
fiscal 2007, and oversees corporate procurement functions. In addition to
being responsible for the Company's marketing and information systems
functions, Mr. Peters also participates with the CEO in strategic reviews of
all of the Company's businesses and provides independent assessments of
potential acquisition targets. The Committee considered the CEO's compensation
recommendations for these named executive officers and their total
compensation relative to the median range of market compensation. The
Committee also took into account its own evaluations of the named executive
officers based on frequent interactions with and presentations to the members

of the Board of Directors. None of the named executive officers has an
employment agreement with the Company. Please see "Description of W. W.
Withers Retirement Agreements" at page 36 below for a description of the terms
of our letter agreement and related consulting contract with Mr. Withers
regarding his retirement.

For the named executive officers, the Committee made its annual pay decisions
for each of the compensation components as outlined below.

ANNUAL CASH COMPENSATION

The Committee targets total annual cash compensation in the median range of
market total cash compensation, while placing more emphasis on the at-risk
annual cash bonus than on base salary.

Base salary: For the named executive officers, the Committee awards base
-----------
salary increases (if any) after reviewing the Company's performance,
individual performance, and competitive market conditions. The Committee
determined that the base salary increases for fiscal 2007 and fiscal 2008
indicated in the table below were in recognition of Company performance,
increased responsibilities for Mr. Monser, and the individual
responsibilities, performance and potential of each named executive officer.
Survey data indicated that the average merit increase for individuals in these
positions was 4-6% in fiscal 2007 and fiscal 2008. Mr. Withers did not receive
a base salary increase for fiscal 2008 due to his pending retirement.

-------------------------------------------------------------------------------------------------------------------------
2006-2007 2007-2008
PERCENTAGE PERCENTAGE
NAME FY2006 FY2007 INCREASE FY2008 INCREASE
-------------------------------------------------------------------------------------------------------------------------

D. N. Farr $1,100,000 $1,150,000 4.5% $1,200,000 4.3%
-------------------------------------------------------------------------------------------------------------------------
W. J. Galvin $645,000 $680,000 5.4% $710,000 4.4%
-------------------------------------------------------------------------------------------------------------------------
E. L. Monser $525,000 $575,000 9.5% $600,000 4.3%
-------------------------------------------------------------------------------------------------------------------------
C. A. Peters $485,000 $515,000 6.2% $540,000 4.9%
-------------------------------------------------------------------------------------------------------------------------
W. W. Withers $500,000 $520,000 4.0% $520,000 --
-------------------------------------------------------------------------------------------------------------------------

Annual bonus: The determination of individual bonus amounts for the named
------------
executive officers is discretionary, but is based on consolidated Company
performance. For fiscal 2007, the Committee considered sales growth, earnings
per share growth, return on total capital, operating cash flow, operating
margin improvement and fiscal year total shareholder return. For all of these
measures the Company met or exceeded the original forecasted financial plan
for the Company for fiscal 2007. The Committee compared fiscal 2007
performance to the prior year to determine whether to increase or decrease the
bonus amounts from the prior year amounts. The Committee reviewed each named
executive officer's individual performance, leadership potential and
responsibilities, and exercised its discretion to determine each individual
annual bonus award. The Committee believes that the bonus amounts awarded for
fiscal 2007 in the table below are consistent with the Company's outstanding
performance for fiscal 2007, as described above.

---------------------------------------------------------------------------------
FOR FOR PERCENTAGE
NAME FY2006 FY2007 INCREASE
---------------------------------------------------------------------------------

D. N. Farr $2,200,000 $2,700,000 22.7%
---------------------------------------------------------------------------------
W. J. Galvin $875,000 $1,025,000 17.1%
---------------------------------------------------------------------------------
E. L. Monser $600,000 $725,000 20.8%
---------------------------------------------------------------------------------
C. A. Peters $615,000 $725,000 17.9%
---------------------------------------------------------------------------------
W. W. Withers $600,000 $660,000 10.0%
---------------------------------------------------------------------------------

LONG-TERM STOCK COMPENSATION

The Committee may make long-term stock compensation awards to the Company's
executives, including the named executive officers. Executives participate in
these programs based on their: (1) ability to make a significant contribution
to the Company's financial results, (2) level of responsibility, (3)
performance and (4) leadership potential. No executive participates
automatically based on title, position or salary level. We require
participants to accept confidentiality, non-competition and non-solicitation
obligations. In general, we target long-term stock

compensation in the median range of market long-term compensation, with more
emphasis on at-risk equity compensation.

Our long-term compensation consists of three programs: performance shares,
stock options and restricted stock. We allocate the largest portion to
performance shares, which are the primary incentive for delivery of superior
longer-term financial performance, with a small portion allocated to stock
options and the remainder is through the selective use of restricted stock. We
make awards of stock options and performance shares periodically, generally
every three years, instead of annually, and restricted stock awards have no
set award cycle. For purposes of its analysis, the Committee considers values
of these awards based on the grant date value annualized over the three-year
award cycle for performance shares and options and over the vesting terms for
restricted stock, because competitive data considered by the Committee is
calculated in the same manner. These estimates do not necessarily correspond
to, and are not a substitute for, the values described for the awards in the
Summary Compensation Table or in the tables that follow it.

Performance Shares Program. Our performance shares program is the primary
--------------------------
element of long-term stock compensation for our named executive officers. For
thirty years, the program has reinforced the Company's long-term financial
objectives, enhancing stockholder value. We limit participation in the
programs to individuals who can most directly influence our long-term success.
The long-term stock compensation opportunities for our senior executives are
heavily weighted towards performance shares, which generally represent
approximately 45-55% of total compensation and 70-80% of long-term stock
compensation.

Unlike many companies, Emerson awards performance shares only once every three
years. Awards of performance shares are made in share units. Participants can
earn from 0-100% of the awarded units depending upon the Company's financial
results at the end of the performance period measured against the
pre-established target. Participants cannot earn greater than 100%, regardless
of the extent to which actual Company performance exceeds the target. For
performance in excess of the targets, participants benefit only to the extent
that performance results in increases in the price of the Emerson stock
received upon payout of the performance shares. During fiscal 2007, the
performance periods for both the 2004 performance shares program and the 2007
performance shares program were in effect, as illustrated below:

[FY-graph]

FISCAL YEAR OCTOBER 1 TO SEPTEMBER 30
------------------------------------------------------------
2004 2005 2006 2007 2008 2009 2010 2011
---- ---- ---- ---- ---- ---- ---- ----

PERFORMANCE SHARES:
-------------------

FY 2004 Program 60% 40%

FY 2007 Program 60% 40%

As shown above, fiscal 2007 was an "overlap" year, both the final year of the
2004 program performance period, which ended on September 30, 2007, and the
first year of the 2007 program performance period, which began on October 1,
2006 and ends on September 30, 2010. Due to this overlap, the Summary
Compensation Table includes amounts for both the 2004 and 2007 performance
shares programs.

To earn a 100% payout under each of the fiscal 2004 and fiscal 2007
performance shares programs, the performance target requires the Company's
compounded average growth rate in earnings per share to exceed by three
percentage points the compounded average growth rate in the U.S. Gross
National Product over the four-year performance period. We target earnings per
share growth exceeding the growth in the economy because we believe this focus
on above market growth over the long-term performance period drives
participants in the program to produce superior financial returns for our
stockholders. For the 2004 and 2007 performance shares programs, the Committee
has specified that 60% of any earned performance share units will be paid at
the end of the four-year performance period, and the remaining 40% will be
paid one year later, subject to continued service. Cash dividend equivalents
are paid on 40% of the award during the performance period and on the 40%
of the earned award during the holdback period. The cash dividend equivalents
for these longer-term awards align the participants with stockholders
receiving dividend returns.

At the completion of fiscal 2007, the four-year performance period for the
2004 performance shares program ended. The compounded average growth rate in
U.S. Gross National Product over the four year performance period for the 2004
performance shares program, plus three percentage points, was 8.8%. The
Committee determined that the Company's actual compounded average earnings per
share growth rate over the performance period was 22.0%, resulting in a 100%
payout, with the units earned set forth in the table below.

---------------------------------------------------------------------
40% ONE-YEAR
60% PAYOUT HOLDBACK
NAME (UNITS) (UNITS)
---------------------------------------------------------------------

D. N. Farr 240,000 160,000
---------------------------------------------------------------------
W. J. Galvin 90,000 60,000
---------------------------------------------------------------------
E. L. Monser 60,000 40,000
---------------------------------------------------------------------
C. A. Peters 48,000 32,000
---------------------------------------------------------------------
W. W. Withers 42,000 28,000
---------------------------------------------------------------------

The payout of the 60% portion is shown in the Option Exercises and Stock
Vested table on page 30 and the remaining 40% hold-back is shown in the
Outstanding Equity Awards at Fiscal Year-End table on page 28.

Under the 2007 performance shares program, the Committee awarded the named
executive officers performance share units in early fiscal 2007 as follows:
D. N. Farr-460,000 units; W. J. Galvin-200,000; E. L. Monser-160,000; and
C. A. Peters-120,000. These performance share units are subject to the
achievement of the performance target over the four-year performance period.
No performance share units were awarded to Mr. Withers due to his anticipated
retirement before the end of the performance period. These awards reflected
the Committee's judgment that the named executive officers' leadership
performance and their potential to enhance long-term stockholder value would
continue to be significant factors in the Company's future success. The
Committee determined that these awards were consistent with targeting 45-55%
of total compensation and 70-80% of long-term stock compensation in the form
of performance shares.

Stock Options Program. Our stock option awards provide long-term focus and are
---------------------
the primary form of long-term stock compensation for a broader group of key
employees. Stock options represent a smaller portion of long-term stock
compensation for the named executive officers. We made no grants of stock
options to our named executive officers during fiscal 2007. In early fiscal
2008, as part of the normal three-year award cycle and in recognition of their
individual performance, the Committee awarded Mr. Farr, Mr. Galvin, Mr. Monser
and Mr. Peters 200,000, 130,000, 100,000 and 100,000 stock options,
respectively. The Committee determined that these amounts are consistent with
targeting 5-10% of total compensation in the form of stock options.

Restricted Stock Program. Our restricted stock program is designed to retain
------------------------
key executives and future leaders of the Company. The objective is to lock in
top executives and their potential replacements identified through the
succession planning process. The Committee views this program as an important
management succession planning and retention tool. Restricted stock, along
with stock options, supplement performance shares to achieve the target of
long-term compensation in the median range of market compensation, and in some
cases may provide compensation above the median range. Restricted stock
provides participants with dividends and voting rights beginning on the award
date. We made the following grants of restricted stock to our named executive
officers during fiscal 2007 and 2008:

* At the beginning of fiscal 2008 Mr. Galvin was awarded 30,000 shares of
restricted stock in recognition of his continued outstanding performance
with the Company.

* In fiscal 2007 the Committee awarded Mr. Monser 20,000 shares of
restricted stock in recognition of his increased responsibilities in
fiscal 2007 related to international operations. To help secure his
continued employment with the Company, at the beginning of fiscal 2008
Mr. Monser was awarded 10,000 shares of restricted stock.

* Mr. Withers did not receive a performance share award due to his
anticipated retirement. However, the Committee awarded 50,000 shares of
restricted stock to Mr. Withers, reflecting the Company's desire to
retain his services during the transition to his successor.

TOTAL COMPENSATION

In the Committee's judgment, Mr. Farr's total compensation reflects the
Company's outstanding performance under his leadership as well as his
individual performance, and his total compensation is in the median range of
competitive market pay. The combination of the performance share awards, stock
option awards and annual cash bonus represents at-risk compensation of
approximately 74% of Mr. Farr's total compensation. For the other named
executive officers, the combination of the performance shares, stock option
awards and annual cash bonus awarded by the Committee represents at-risk
compensation for the named executive officers of approximately 54-79% of their
total compensation. These at-risk incentives, and the way we allocate them,
reward the named executive officers for the achievement of outstanding Company
performance, which builds shareholder value.

The table below illustrates how total compensation for our named executive
officers for fiscal 2007 was allocated between performance- and
non-performance-based components, how performance-based compensation is
allocated between annual and long-term components, and how total compensation
is allocated between cash and equity components. These percentages are based
on annualized total compensation values and do not necessarily correspond to,
and are not a substitute for, the values disclosed in the Summary Compensation
Table and supplemental tables.

----------------------------------------------------------------------------------------------------------------------------
FISCAL 2007 TOTAL COMPENSATION MIX*
----------------------------------------------------------------------------------------------------------------------------
PERCENTAGE OF
PERCENTAGE OF TOTAL PERFORMANCE-BASED PERCENT OF TOTAL
COMPENSATION THAT IS: TOTAL THAT IS: COMPENSATION THAT IS:
----------------------------------------------------------------------------------------------------------------------------
PERFORMANCE- NOT PERFORMANCE- LONG-
NAME BASED BASED ANNUAL TERM CASH EQUITY
----------------------------------------------------------------------------------------------------------------------------

D. N. Farr 74% 26% 30% 70% 31% 69%
----------------------------------------------------------------------------------------------------------------------------
W. J. Galvin 75% 25% 26% 74% 32% 68%
----------------------------------------------------------------------------------------------------------------------------
E. L. Monser 79% 21% 24% 76% 34% 66%
----------------------------------------------------------------------------------------------------------------------------
C. A. Peters 74% 26% 29% 71% 37% 63%
----------------------------------------------------------------------------------------------------------------------------
W. W. Withers 54% 46% 42% 58% 40% 60%
----------------------------------------------------------------------------------------------------------------------------

-------
* Only amounts for base salary, annual bonus and long-term compensation
(performance shares, stock options and restricted stock) were included in
calculating the percentages in this table. Other forms of compensation that
are shown in the Summary Compensation Table were not included. Annualized
values for long-term stock compensation are based on the grant date value of
awards annualized over the three-year award cycle for performance shares and
options and over the vesting terms for restricted stock, based on data
provided by our compensation consultants. The competitive data we use is
calculated in the same manner. For purposes of this table, (i) annual bonus,
performance shares and stock options are performance-based compensation,
(ii) performance shares and stock options are long-term, performance-based
compensation, and (iii) base salary and annual bonus are the only forms of
cash compensation.

EXECUTIVE STOCK OWNERSHIP

The Compensation Committee monitors the stock ownership of the Company's
executive officers. While the Company has no formal stock ownership policies,
we expect executives to retain a substantial portion of stock earned under
long-term compensation plans. Based on beneficial ownership of Emerson stock,
as shown on page 3, the named executive officers' holdings of Emerson stock
are valued at multiples of between approximately 25 and 75 times their
respective base salaries. Our stock trading policy requires elected Company
officers to obtain written permission from two other senior executives before
engaging in transactions in Emerson stock.

SECURITY AND PERQUISITES

We provide security services to help ensure the safety of all employees while
they are on Company business. Due to increased security risks that are
inherent in senior executive positions, we provide the named executive
officers with residential security monitoring and personal security as needed.
The Company's security policy and the Committee require that the CEO use the
Company aircraft for all business and personal travel. On a very limited
basis, other named executive officers have access to Company aircraft for
personal use subject to reimbursement at first class rates. The Company also
provides leased cars, club memberships and financial planning for executives.
These are long-standing perquisites which we believe are similar to those
generally provided to executives at

other similarly-sized companies. Executives also have access to tickets for
theater or sporting events. The Committee reviews these perquisites annually.
Total perquisite costs and related information appear in the Summary
Compensation Table at page 25 below.

SEVERANCE, EXECUTIVE TERMINATION AND RETIREMENT

Emerson does not provide employment agreements, severance agreements, or
golden parachute agreements for the named executive officers. The terms of all
executive terminations and retirements are determined individually based on
specific facts and circumstances at the time of such events, and not on
formulaic rules. In general, we follow these principles:

* We do not pay lump sum, non-forfeitable cash severance payments.

* Departing executives sign extended non-competition, non-solicitation and
confidentiality agreements, or reaffirm existing agreements on these
matters.

* As permitted under stockholder-approved plans, departing plan
participants, including named executive officers, may have additional
time to exercise previously granted stock options, with accelerated
vesting for retirees. However, the additional time cannot exceed the
time permitted in the original grants.

* The Committee may also allow continuation (without accelerated vesting)
of previously granted long-term performance shares or restricted stock
awards, which would be paid if and when the Company achieves specified
performance targets or service vesting requirements are met.

* Executives forfeit these awards if they breach their non-competition,
non-solicitation or confidentiality agreements.

In 2006, the Committee adopted an Executive Officer Severance Policy,
reflecting these principles. In addition to the foregoing principles, the
Executive Officer Severance Policy provides that the Company shall not
implement individual severance or change of control agreements providing
certain benefits (as described in the Policy) to any of the named executive
officers in excess of 2.99 times the sum of the officer's then current base
salary and most recently earned cash bonus without stockholder ratification.
The Executive Officer Severance Policy can be found on the Company's Web site
at www.emerson.com, Investor Relations, Corporate Governance.

W. W. Withers, our former Executive Vice President, Secretary and General
Counsel, retired from the Company effective November 30, 2007. To facilitate
the transition of his duties to his successor and provide his continued
expertise to the Company, on April 4, 2007, we entered into a letter agreement
and related consulting contract with Mr. Withers in respect of his retirement.
Consistent with the policy above, Mr. Withers received no lump-sum cash
severance payment, was allowed up to five years (but no longer than the
original option term) to exercise his stock options as provided under the plan
and continued to vest in performance shares and outstanding restricted stock.
All of these benefits are forfeitable if he breaches his non-competition and
non-solicitation agreements, which were extended from two to four years
pursuant to the severance policy. Please see "Description of W. W. Withers
Retirement Agreements" at page 36 below for a description of these agreements.

CHANGE OF CONTROL

Emerson has no employment agreements, severance agreements or golden parachute
agreements with the named executive officers. If a change of control occurs,
we protect all employees who participate in long-term stock plans, the Saving
Investment Restoration Plan and the Pension Restoration Plan as described
under "Potential Payments Upon Termination or Change of Control" at page 33
below. To provide this protection, we accelerate vesting of stock awards and
pay accrued benefits under the Savings Investment Restoration Plan and the
Emerson Pension Restoration Plan. We do not credit additional years of service
under any plans, or continue medical or other benefits. We do not make
additional cash payments related to stock compensation plans, although stock
awards vest upon a change of control. We do not increase payouts to cover
payment of taxes and do not provide tax gross-ups.

OTHER BENEFITS

The named executive officers are eligible for medical, life and disability
insurance, and other Company-provided benefits that are generally available to
all other employees, including the Company's charitable matching gifts
program. Retirement plans for U.S. employees may be qualified defined-benefit
pension plans, 401(k) plans

and/or profit-sharing plans as determined by each business unit's competitive
market. The Company continues to maintain a defined-benefit pension plan for a
majority of U.S. employees. These other benefits are available to the named
executive officers, as follows:

* A qualified 401(k) savings plan and a non-qualified savings plan which
allows participating executives to defer up to 20 percent of their cash
compensation and continue to receive the Company match after they reach
the Internal Revenue Service qualified plan limits.

* A qualified defined-benefit pension plan and a non-qualified
defined-benefit pension plan (the "Pension Restoration Plan") which
provides benefits based on the qualified plan without regard to IRS
limits and does not provide additional credited years of service.
Participation in the Pension Restoration Plan is by award and based on
the executive's individual contributions and long-term service to the
Company. In recognition of their outstanding contributions over their
long careers with the Company, Mr. Monser and Mr. Peters were awarded
participation in the Pension Restoration Plan in fiscal 2007. The other
named executive officers were previously awarded this benefit.

* A group term life insurance policy under the same terms as other
employees and a term life insurance policy which was converted from the
former split dollar program.

* A voluntary annual physical paid for by the Company.

REGULATORY CONSIDERATIONS

Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a $1
million limit on the amount that a public company may deduct for compensation
paid to the Company's CEO or any of the Company's other named executive
officers, other than the Chief Financial Officer, who are employed as of the
end of the fiscal year. This limitation does not apply to compensation that
meets the requirements under Section 162(m) for "qualifying performance-based"
compensation (i.e., compensation paid only if the individual's performance
meets pre-established objective goals based on performance criteria approved
by stockholders). The Company's incentive compensation plans are designed to
qualify under Internal Revenue Code Section 162(m) to ensure tax
deductibility. However, restricted stock awards do not qualify under Section
162(m) and the Committee retains the flexibility to design compensation
programs that are in the best interests of Emerson and its stockholders.

Internal Revenue Code Section 409A, which was enacted in 2004, requires that
nonqualified deferred compensation arrangements must meet specific
requirements. Failure to meet these requirements results in immediate taxation
of certain deferred amounts, as well as an additional tax equal to 20% of such
deferred amounts and an interest penalty. The term "nonqualified deferred
compensation plan" is defined broadly in the regulations issued under Section
409A to potentially include equity-based compensation such as equity-based
bonuses and stock options. We have adopted amendments to our compensation
plans to comply with the requirements of Section 409A.

In accordance with Statement of Financial Accounting Standards 123R, for
financial statement purposes, we expense all equity-based awards over the
period earned based upon their estimated fair value at grant date, or
subsequently, depending on the terms of the award. FAS 123R has not resulted
in any significant changes in our compensation program design.

EQUITY COMPENSATION GRANT PRACTICES

The Committee approves all grants of equity compensation, including
performance shares, stock options and restricted stock, to executive officers
of the Company, as defined in Section 16 of the Exchange Act. All elements of
executive officer compensation are reviewed by the Committee annually at its
October meeting. Generally, the Company's awards of performance shares, stock
options and restricted stock are made at that meeting, but may be made at
other meetings of the Committee. The Committee meeting date, or the next
business day if the meeting falls on a non-business day, is the grant date for
stock option, performance share and restricted stock awards. The Company may
also make awards of stock options in connection with acquisitions or
promotions, or for retention purposes. Under the Company's stock option plans,
the Committee may delegate to the Company's CEO the authority to grant stock
options to any employees of the Company other than "executive officers" of the
Company as that term is defined in Section 16 of the Exchange Act. The
Committee has exercised this authority and delegated to the CEO the ability to
make stock option grants in connection with retention and

acquisitions, which he uses on an infrequent basis. This delegation of
authority does not extend to executive officers or other officers who are
subject to the Company's trading blackout policy.

COMPENSATION COMMITTEE REPORT
-----------------------------

The Compensation Committee of the Board of Directors acts on behalf of the
Board to establish and oversee the Company's executive compensation program in
a manner that serves the interests of the Company and its stockholders. For a
discussion of the Compensation Committee's policies and procedures, see
"Compensation Committee" at page 8 above.

Management of the Company has prepared the Compensation Discussion and
Analysis describing the Company's compensation program for senior executives,
including the named executive officers. See "Compensation Discussion and
Analysis" beginning on page 15 above. The Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis for fiscal year 2007
(included in this proxy statement) with the Company's management. Based on
this review and discussion, the Compensation Committee recommended to the
Board of Directors of the Company that the Compensation Discussion and
Analysis be included in the Company's proxy statement for the fiscal year
ended September 30, 2007, for filing with the Securities and Exchange
Commission.

Compensation Committee

V. R. Loucks, Jr., Chairman
D. C. Farrell
J. W. Prueher
R. L. Stephenson

SUMMARY COMPENSATION TABLE
--------------------------

The following information relates to compensation received or earned by our
Chief Executive Officer, our Chief Financial Officer and each of our other
three most highly compensated executive officers for the last fiscal year (the
"named executive officers"). All share and option numbers and exercise prices
in the following tables reflect the effect of a 2-for-1 stock split effected
in the form of a 100% stock dividend which was paid on December 11, 2006.

-----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN
PENSION VALUE
AND
NONQUALIFIED ALL
DEFERRED OTHER
STOCK OPTION COMPENSATION COMPEN-
FISCAL BONUS AWARDS AWARDS EARNINGS SATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($)(1) ($)(2) ($)(3) ($)(4) ($)(5) TOTAL ($)
-----------------------------------------------------------------------------------------------------------------------------------

D. N. Farr 2007 1,150,000 2,700,000 16,077,732 527,500 1,343,000 383,302 22,181,534
Chairman of the Board,
Chief Executive Officer
and President(6)
-----------------------------------------------------------------------------------------------------------------------------------
W. J. Galvin 2007 680,000 1,025,000 6,251,132 358,700 1,081,000 114,840 9,510,672
Senior Executive Vice
President and Chief
Financial Officer(6)
-----------------------------------------------------------------------------------------------------------------------------------
E. L. Monser 2007 575,000 725,000 4,252,004 211,000 406,000 141,285 6,310,289
Chief Operating Officer
-----------------------------------------------------------------------------------------------------------------------------------
C. A. Peters 2007 515,000 725,000 3,483,368 211,000 1,390,000 79,761 6,404,129
Senior Executive Vice
President(6)
-----------------------------------------------------------------------------------------------------------------------------------
W. W. Withers 2007 520,000 660,000 3,704,349 211,000 332,000 107,546 5,534,895
Executive Vice President,
Special Legal Advisor and
former Secretary and
General Counsel(7)
-----------------------------------------------------------------------------------------------------------------------------------

--------
(1) Represent bonus amounts paid after the end of fiscal 2007 with respect to
fiscal 2007 performance.

(2) The amounts relate to awards of performance shares and restricted stock
and reflect the amounts expensed in the Company's financial statements for
these awards under FAS 123R and do not correspond to the actual value that
will be realized by the named executive officers. See Note 14 to the
Company's fiscal year 2007 financial statements in the Company's Annual
Report on Form 10-K for a discussion of the valuation of these amounts
under FAS 123R. Pursuant to SEC rules, the amounts shown exclude the
impact of estimated forfeitures related to service-based vesting
conditions. Fiscal 2007 was an "overlap" year which, as described in the
Compensation Discussion and Analysis beginning on page 15, was the final
year of the 2004 performance shares program performance period, which
ended on September 30, 2007, and the first year of the 2007 performance
shares program performance period, which began on October 1, 2006 and ends
on September 30, 2010. Due to this overlap, the amounts for performance
share awards include awards made in both fiscal 2004 and fiscal 2007.
Amounts for performance share awards generally reflect the difference
between the financial reporting value at the beginning and the end of the
fiscal year, which varies depending upon stock price and the probability
that targets will be reached. Amounts for restricted stock generally
include the aggregate grant date dollar value amortized over the
applicable vesting period. See the Grants of Plan-Based Awards table at
page 27 below for information on performance shares and restricted stock
granted in fiscal 2007.

(3) There were no stock option awards granted in fiscal 2007 to the named
executive officers. The amounts reflect the financial statement expense
under FAS 123R related to awards made in prior years and do not correspond
to the actual amount that will be realized upon exercise by the named
executive officers. See Note 14 to the Company's fiscal year 2007
financial statements in the Company's Annual Report on Form 10-K for a
discussion of the valuation of these amounts under FAS 123R. Pursuant to
SEC rules, the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting conditions. Amounts for stock options
generally include the aggregate grant date dollar value amortized over the
applicable vesting period.

(4) Includes the fiscal 2007 aggregate change in the actuarial present value
of the named executive officers' accumulated benefits under the Company's
defined benefit pension plans. See the Pension Benefits table at page 31
below for additional information, including the present value assumptions
used in this calculation.

(5) Includes the following amounts:

----------------------------------------------------------------------------------------------------------------------------
SAVINGS LIFE CHARITABLE TAX
NAME PERQUISITES(a) PLAN(b) INSURANCE(c) MATCH(d) GROSS-UP TOTAL
----------------------------------------------------------------------------------------------------------------------------

D. N. Farr $239,286 $83,698 $9,564 $10,000 $40,754(e) $383,202
----------------------------------------------------------------------------------------------------------------------------
W. J. Galvin $46,449 $41,474 $16,917 $10,000 -- $114,840
----------------------------------------------------------------------------------------------------------------------------
E. L. Monser $92,218 $29,323 $14,744 $5,000 -- $141,285
----------------------------------------------------------------------------------------------------------------------------
C. A. Peters $32,132 $28,219 $9,410 $10,000 -- $79,761
----------------------------------------------------------------------------------------------------------------------------
W. W. Withers $44,926 $27,979 $34,036 $605 -- $107,546
----------------------------------------------------------------------------------------------------------------------------

---------
(a) The perquisites provided are: tax and financial planning, leased
Company car, club dues (except for Mr. Peters), annual physical,
tickets for theater or sporting events and costs related to
personal security provided to each of the named executive officers
under the Company's security program. The Company's security
program and the Board of Directors require that the Chairman and
Chief Executive Officer use Company aircraft for all business and
personal air travel. The Company also provides limited personal
use of Company aircraft outside of the security program
requirements to the named executive officers, who reimburse the
Company at first class rates. Amounts for personal use of Company
aircraft represent the incremental cost to the Company, calculated
based on the variable operating costs per hour of operation, which
include fuel costs, maintenance, and associated travel costs for
the crew, less any reimbursements. For Mr. Farr the amount of
personal use of Company aircraft was $172,150, which is included
in the perquisites amount above. The amounts for personal use by
other named executive officers in fiscal 2007 were E. L.
Monser-$50,981 and C. A. Peters-$3,019.

(b) Contributions by the Company for the named executive officers to
the Company's savings plans.

(d) Matching contribution under the Company's charitable matching
gifts program which matches charitable gifts of up to $10,000 for
all employees and Directors of the Company.

(e) Tax gross-up for amounts included in Mr. Farr's compensation
relating to personal use of Company aircraft required by the Board
of Directors and pursuant to the Company's security program.

(6) Messrs. Farr, Galvin and Peters do not receive any separate compensation
for service as Directors.

(7) Mr. Withers retired from the Company on November 30, 2007. On April 4,
2007, we entered into a letter agreement and related consulting contract
with Mr. Withers in respect of his retirement. Please see "Description of
W. W. Withers Retirement Agreements" at page 36 below for a description of
the agreements. Amounts for Mr. Withers' stock awards include the impact
of his retirement on the amounts expensed under FAS 123R.

GRANTS OF PLAN-BASED AWARDS
---------------------------

The following table provides information about equity awards granted to the
named executive officers in fiscal 2007.

--------------------------------------------------------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUTS UNDER EQUITY
INCENTIVE PLAN AWARDS
---------------------------------------
ALL OTHER
STOCK AWARDS:
NUMBER OF
SHARES OF GRANT DATE FAIR
GRANT THRESHOLD TARGET MAXIMUM STOCK OR VALUE OF STOCK AND
NAME DATE (#)(1) (#)(1) (#)(1) UNITS (#)(2) OPTION AWARDS ($)(3)
--------------------------------------------------------------------------------------------------------------------------------

D. N. Farr 10/2/2006 N/A 460,000 460,000 18,186,100
--------------------------------------------------------------------------------------------------------------------------------
W. J. Galvin 10/2/2006 N/A 200,000 200,000 7,907,000
--------------------------------------------------------------------------------------------------------------------------------
E. L. Monser 10/2/2006 N/A 150,000 150,000 5,930,250
11/7/2006 N/A 10,000 10,000 411,640
11/7/2006 20,000 870,200
--------------------------------------------------------------------------------------------------------------------------------
C. A. Peters 10/2/2006 N/A 120,000 120,000 4,744,200
--------------------------------------------------------------------------------------------------------------------------------
W. W. Withers (4) 10/2/2006 50,000 2,096,375
--------------------------------------------------------------------------------------------------------------------------------

-------
(1) Includes performance share awards granted in fiscal 2007 under the 2007
performance shares program. Payout for a performance period is made as
soon as practicable after the achievement of the performance target,
provided that the Committee may establish additional vesting conditions
for retention purposes. Earned performance shares are paid to participants
in stock, with a portion paid in cash to cover tax obligations of
participants. See "Performance Shares Program" at page 20 above for
additional information regarding the program and additional detail on
performance shares.

(2) Includes restricted stock granted in fiscal 2007 which vests over 8 years
from the date of grant for Mr. Monser and 3 years for Mr. Withers. Please
see "Description of W. W. Withers Retirement Agreements" at page 36 below
for a description of Mr. Withers' letter agreement and the terms and
conditions of vesting applicable to him after retirement.

(3) Includes the grant date fair value of awards of performance shares or
restricted stock computed in accordance with FAS 123R applying the same
valuation model and assumptions applied for financial reporting purposes.
These amounts do not correspond to the actual value that will be realized
by the named executive officers. For stock options and restricted stock,
the aggregate amount that the Company would expense in its yearly
financial statements over the vesting period is generally equal to the
full grant date fair value reported above. Yearly amounts expensed in the
Company's financial statements over the performance period for performance
share awards reflect the difference between the financial reporting value
of the award at the beginning and the end of the performance program term
during the fiscal year, which varies depending upon stock price and the
probability that targets will be reached, and therefore will generally not
be equal to the grant date fair value reported above. See Note 14 to the
Company's fiscal year 2007 financial statements in the Company's Annual
Report on Form 10-K for a discussion of the valuation of these amounts
under FAS 123R.

(4) Mr. Withers retired from the Company on November 30, 2007. On April 4,
2007, we entered into a letter agreement and related consulting contract
with Mr. Withers in respect of his retirement. Please see "Description of
W. W. Withers Retirement Agreements" at page 36 below for a description of
those agreements.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
--------------------------------------------

The following table provides information on the holdings of stock options,
performance shares and restricted stock by our named executive officers at the
end of fiscal 2007. This table includes unexercised and unvested stock
options, unvested restricted stock and performance shares with performance
conditions or service requirements that have not been satisfied.

-----------------------------------------------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
-----------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF
SECURITIES SECURITIES
UNDERLYING UNDERLYING NUMBER OF MARKET VALUE
UNEXERCISED UNEXERCISED SHARES OR OF SHARES OR
OPTIONS (#) OPTIONS (#) OPTION OPTION UNITS OF STOCK UNITS OF STOCK
DATE OF EXERCISABLE UNEXERCISABLE EXERCISE EXPIRATION DATE OF THAT HAVE NOT THAT HAVE NOT
NAME AWARD (1) (1) PRICE ($) DATE AWARD VESTED (#) VESTED ($)(5)
-----------------------------------------------------------------------------------------------------------------------

D. N. 10/4/99 70,000 32.0313 10/4/2009 4/6/04 160,000(3) 8,515,200
Farr 3/6/00 100,000 21.2813 3/6/2010 (4) 470,000(4) 25,013,400
10/2/00 200,000 33.4063 10/2/2010 10/2/06
1/16/02 250,000 26.4150 1/16/2012
10/5/04 166,666 83,334(2) 31.6275 10/5/2014
-----------------------------------------------------------------------------------------------------------------------
W. J. 10/4/99 29,574 32.0313 10/4/2009 4/6/04 60,000(3) 3,193,200
Galvin 3/6/00 66,670 21.2813 3/6/2010 (4) 150,000(4) 7,983,000
1/16/02 170,000 26.4150 1/16/2012 10/2/06
10/5/04 113,333 56,667(2) 31.6275 10/5/2014
-----------------------------------------------------------------------------------------------------------------------
E. L. 4/1/99 15,000 26.1719 4/1/2009 4/6/04 40,000(3) 2,128,800
Monser 3/6/00 10,000 21.2813 3/6/2010 (4) 60,000(4) 3,193,200
1/16/02 40,000 26.4150 1/16/2012 10/2/06
10/5/04 66,666 33,334(2) 31.6275 10/5/2014 11/7/06
-----------------------------------------------------------------------------------------------------------------------
C. A. 4/1/99 30,000 26.1719 4/1/2009 4/6/04 32,000(3) 1,703,040
Peters 3/6/00 30,000 21.2813 3/6/2010 (4) 100,000(4) 5,322,000
10/2/00 60,000 33.4063 10/2/2010 10/2/06
1/16/02 100,000 26.4150 1/16/2012
10/5/04 66,666 33,334(2) 31.6275 10/5/2014
-----------------------------------------------------------------------------------------------------------------------
W. W. 10/4/99 30,640 32.0313 10/4/2009 4/6/04 28,000(3) 1,490,160
Withers 1/16/02 56,216 26.4150 1/16/2012 (4) 70,000(4) 3,725,400
(7) 10/5/04 60,346 33,334(2) 31.6275 10/5/2014
-----------------------------------------------------------------------------------------------------------------------

--------------------------------------------
STOCK AWARDS
--------------------------------------------
EQUITY
INCENTIVE PLAN EQUITY
AWARDS: INCENTIVE PLAN
NUMBER OF AWARDS: MARKET
UNEARNED OR PAYOUT VALUE
SHARES, UNITS OF UNEARNED
OR OTHER SHARES, UNITS OR
RIGHTS THAT OTHER RIGHTS
DATE OF HAVE NOT THAT HAVE NOT
NAME AWARD VESTED (#) VESTED($)(5)
--------------------------------------------------------

D. N. 4/6/04
Farr (4)
10/2/06 460,000(6) 24,481,200

--------------------------------------------------------
W. J. 4/6/04
Galvin (4)
10/2/06 200,000(6) 10,644,000

--------------------------------------------------------
E. L. 4/6/04
Monser (4)
10/2/06 150,000(6) 7,983,000
11/7/06 10,000(6) 532,200
--------------------------------------------------------
C. A. 4/6/04
Peters (4)
10/2/06 120,000(6) 6,386,400

--------------------------------------------------------
W. W. 4/6/04
Withers (4)
(7)
--------------------------------------------------------

--------
(1) Consists of stock options granted under the Company's stock option plans.

(2) These options became exercisable on October 5, 2007.

(3) Consists of performance share awards granted in fiscal 2004 under the 2004
performance shares program (under our 1997 Incentive Shares Plan) which
were subject to the achievement of financial targets for the performance
period ending September 30, 2007. Those financial targets have been
satisfied. Amounts shown represent the 40% portions of the earned awards
which will remain subject to forfeiture as participants must remain
employed by the Company for an additional year. The 60% portions of those
awards earned at the end of the performance period were paid out in stock,
with a portion paid in cash to cover tax obligations of participants, and
are set forth in the Option Exercises and Stock Vested table.

(4) Consists of restricted stock for each of the named executive officers
which vests as follows:

----------------------------------------------------------------------------------------------
NUMBER VESTING TERM
NAME OF SHARES (IN YEARS) GRANT DATE VESTING DATE
----------------------------------------------------------------------------------------------

D. N. Farr 40,000 10 10/7/1997 10/7/2007
100,000 5 10/5/2004 10/5/2009
120,000 10 10/2/2000 10/2/2010
110,000 6 10/5/2005 10/5/2011
100,000 10 10/1/2002 10/1/2012
----------------------------------------------------------------------------------------------
W. J. Galvin 40,000 5 10/1/2002 10/1/2007
40,000 10 10/7/1997 10/7/2007
20,000 10 10/2/2000 10/2/2010
50,000 6 10/4/2005 10/4/2011
----------------------------------------------------------------------------------------------
E. L. Monser 20,000 10 10/2/2000 10/2/2010
20,000 10 11/4/2002 11/4/2012
20,000 8 11/7/2006 11/7/2014
----------------------------------------------------------------------------------------------
C. A. Peters 60,000 10 10/2/2000 10/2/2010
40,000 10 10/4/2005 10/4/2015
----------------------------------------------------------------------------------------------
W. W. Withers 20,000 5 11/4/2002 11/4/2007
50,000 3 10/2/2006 10/2/2009
----------------------------------------------------------------------------------------------

(5) Based on the closing market price of the Company's common stock of $53.22
on September 30, 2007.

(6) Consists of performance share awards granted in fiscal 2007 under the 2007
performance shares program (under our 2006 Incentive Shares Plan), subject
to the achievement of financial targets for the performance period ending
September 30, 2010. The target and maximum number of shares that can be
earned under these awards are shown in this column. Participants cannot
earn greater than 100% of the maximum, regardless of the extent to which
actual Company performance exceeds the target. Payout for a performance
period is made as soon as practicable after the achievement of the
performance target, provided that the Committee may establish additional
vesting conditions for retention purposes. Earned performance shares are
paid to participants in stock, with a portion paid in cash to cover tax
obligations of participants. See "Performance Shares Program" at page 20
above for additional information regarding the program and additional
detail on performance shares, including how the shares are earned.

(7) Mr. Withers retired from the Company on November 30, 2007. On April 4,
2007, we entered into a letter agreement and related consulting contract
with respect to his retirement. In accordance with those agreements and as
permitted under the 1997 and 2006 Incentive Shares Plans, Mr. Withers will
be eligible to receive payout of the awards described in footnote (4), and
the restricted stock described in footnote (3) will vest as normally
scheduled. Mr. Withers will also be permitted to exercise his outstanding
stock options for a period of five years following his retirement, in
accordance with the terms of the option plans. See "Description of W. W.
Withers Retirement Agreements" at page 36 below for a description of those
agreements with respect to Mr. Withers.

OPTION EXERCISES AND STOCK VESTED
---------------------------------

The following table provides information for fiscal 2007 for our named
executive officers on (1) stock option exercises during fiscal 2007, including
the number of shares acquired on exercise and the value realized and (2) the
earning of performance shares that are not subject to additional service
requirements, the vesting of restricted stock, and the values realized.

------------------------------------------------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE REALIZED NUMBER OF SHARES VALUE REALIZED
ACQUIRED ON ON EXERCISE ACQUIRED ON ON VESTING
NAME EXERCISE (#) ($)(1) VESTING (#) ($)(4)
------------------------------------------------------------------------------------------------------------------------

D. N. Farr 10,000 212,075 240,000(2) 12,439,200
40,000(3) 1,677,100
------------------------------------------------------------------------------------------------------------------------
W. J. Galvin 73,756 1,756,247 90,000(2) 4,664,700
------------------------------------------------------------------------------------------------------------------------
E. L. Monser -- -- 60,000(2) 3,109,800
------------------------------------------------------------------------------------------------------------------------
C. A. Peters -- -- 48,000(2) 2,487,840
------------------------------------------------------------------------------------------------------------------------
W. W. Withers 16,344 254,387 42,000(2) 2,176,860
------------------------------------------------------------------------------------------------------------------------

---------
(1) Values for stock options represent the difference between the exercise
price of the options and the market price of the Company's common stock at
exercise, based on the average of the high and low market prices on the
day of exercise.

(2) Numbers reflect the earning of performance shares granted under the 2004
performance shares program. The performance shares were subject to the
achievement of financial targets for the four-year period ended September
30, 2007. The performance shares shown are the 60% portions of the awards
earned and paid out in stock, with a portion paid in cash to cover tax
obligations of participants, after the end of fiscal 2007. Amounts shown
exclude the 40% portions of the 2004 performance share awards which remain
subject to forfeiture, as participants must remain employed by or in
service to the Company for an additional year, and which are set forth in
the Outstanding Equity Awards at Fiscal Year End table.

(3) Represents the vesting of 40,000 shares of restricted stock with a five
year vesting term with respect to Mr. Farr.

(4) Values realized for performance shares earned reflect the market value
based on the average of the high and low market prices ($51.83) on
November 5, 2007, the date the Compensation Committee determined that the
performance targets for the performance period ended September 30, 2007
were met. Value realized for restricted stock described in footnote (3)
above reflects the market value based on the average of the high and low
market prices on the date of vesting.

PENSION BENEFITS
----------------

The table below presents information on the pension benefits for the named
executive officers under each of the following pension plans:

EMERSON RETIREMENT PLAN

The Emerson Electric Co. Retirement Plan is a tax-qualified retirement program
that covered approximately 65,000 participants as of September 30, 2007. As
applicable to the named executive officers, the plan provides benefits based
primarily on a formula that considers the highest consecutive five-year
average of the executive's annual cash earnings (final average earnings).
Earnings for this plan include base salary plus bonus payments, but may not
exceed an IRS-prescribed limit applicable to tax-qualified plans ($225,000 for
2007).

The formula provides an annual benefit accrual for each year of service of
1.0% of final average earnings up to "covered compensation" and 1.5% of final
average earnings in excess of "covered compensation," limited to 35 years of
service. Once the employee has attained 35 years of service, the annual
accrual is 1.0% of final average earnings. "Covered compensation" is based on
the average of Social Security taxable wage bases, and varies per individual
based on Social Security retirement age. A small portion of the accrued
benefits payable from the Emerson Retirement Plan for Messrs. Farr, Galvin,
and Peters includes benefits determined under different but lesser pension
formulas for periods of prior service at various Company divisions or
subsidiaries.

The accumulated benefit that an employee earns over his or her career with the
Company is payable upon retirement on the basis of an annuity on a monthly
basis for life with a guaranteed minimum term of five years. The normal
retirement age is defined for this plan as 65. Employees are eligible to
retire early under the plan once they have attained age 55 and 10 years of
service. As of September 30, 2007, Mr. Withers has met the eligibility
requirements for normal retirement, and Mr. Galvin and Mr. Monser have met the
eligibility requirements for early retirement under the Plan. In the event the
employee retires before normal retirement age, the accrued benefit is reduced
for the number of years prior to age 65 that the benefit commences (4% for
each of the first 5 years that retirement precedes age 65, and 5% for each
year thereafter). Employees vest in their accrued benefit after 5 years of
service. The Plan provides for spousal joint and survivor annuity options. No
employee contributions are required.

Benefits under the Emerson Retirement Plan are subject to the limitations
imposed under section 415 of the Internal Revenue Code (which in 2007 is
$180,000 per year for a single life annuity payable at an IRS-prescribed
retirement age). This ceiling may be actuarially adjusted in accordance with
IRS rules for items such as other forms of distribution and different annuity
starting dates.

EMERSON PENSION RESTORATION PLAN

The Emerson Electric Co. Pension Restoration Plan is a non-qualified plan that
is an unfunded obligation of the Company. Benefits are payable from the
Company's general operating funds. Participation in, and benefits payable
from, the plan are by award, subject to the approval of the Compensation
Committee. D. N. Farr, W. J. Galvin, W. W. Withers, E. L. Monser and C. A.
Peters have been selected to participate in the Plan. At age 65 or later
termination of employment, the Plan will provide a benefit based on the same
final average earnings formula as described above for the Emerson Retirement
Plan, for all years of service at Emerson, and without regard to the
IRS-prescribed limitations on benefits and compensation as described in the
Emerson Retirement Plan. The benefit payable from the Pension Restoration Plan
is reduced by the benefit received from the Emerson Retirement Plan. Benefits
payable from the Pension Restoration Plan are generally payable in the same
annuity form as the benefits paid from the Emerson Retirement Plan. In the
event a named executive officer leaves the Company before normal retirement
age, the benefit payable to the executive is determined in the discretion of
the Committee. No pension benefits were paid to any of the named executives
during the 2007 fiscal year.

The amounts reported in the table below equal the present value of the
accumulated benefit at September 30, 2007, for the named executive officers
under each plan based upon the assumptions described in footnote (2).

PENSION BENEFITS

--------------------------------------------------------------------------------------------------------------------------
NUMBER OF PRESENT VALUE PAYMENTS DURING
YEARS CREDITED OF ACCUMULATED LAST FISCAL YEAR
NAME PLAN NAME SERVICE (#)(1) BENEFIT ($)(2) ($)
--------------------------------------------------------------------------------------------------------------------------

D. N. Farr Emerson Electric Co. Retirement Plan 27 375,000 --
Emerson Electric Co. Pension Restoration Plan 27 4,373,000 --
--------------------------------------------------------------------------------------------------------------------------
W. J. Galvin Emerson Electric Co. Retirement Plan 35 859,000 --
Emerson Electric Co. Pension Restoration Plan 35 4,214,000 --
--------------------------------------------------------------------------------------------------------------------------
E. L. Monser Emerson Electric Co. Retirement Plan 6 118,000 --
Emerson Electric Co. Pension Restoration Plan 6 376,000 --
--------------------------------------------------------------------------------------------------------------------------
C. A. Peters Emerson Electric Co. Retirement Plan 31 368,000 --
Emerson Electric Co. Pension Restoration Plan 31 1,332,000 --
--------------------------------------------------------------------------------------------------------------------------
W. W. Withers Emerson Electric Co. Retirement Plan 18 544,000 --
Emerson Electric Co. Pension Restoration Plan 18 1,893,000 --
--------------------------------------------------------------------------------------------------------------------------

---------
(1) The number of years of service credited under the plans is computed as of
the same pension plan measurement date used for financial statement
reporting purposes with respect to the Company's financial statements for
the last completed fiscal year. Mr. Monser has 30 years of service with
the Company, but only 6 years of credited service under our Retirement
Plan as he previously participated in a divisional profit sharing plan.

(2) The accumulated benefit is based on service and earnings (as described
above) considered by the plans for the period through September 30, 2007.
The present value has been calculated assuming that the named executives
will remain in service until age 65 (with the exception of Mr. Withers,
who is currently age 67), the age at which retirement may occur without
any reduction in benefits, and that the benefit is payable under the
stated form of annuity. Except for the assumption that the executives
remain in service and retire at age 65, the present value is based on the
assumptions as described in Note 10 to the Company's fiscal year 2007
financial statements in the Company's Annual Report on Form 10-K.

NONQUALIFIED DEFERRED COMPENSATION
----------------------------------

The Emerson Electric Co. Savings Investment Restoration Plan ("Savings
Investment Restoration Plan") is a nonqualified, unfunded defined contribution
plan. The plan provides participants with benefits that would have been
provided under the Emerson Electric Co. Employee Savings Investment Plan, the
Company's qualified 401(k) plan (the "ESIP"), but could not be provided due to
Internal Revenue Code ("IRC") qualified plan compensation limits.

Participants in the Savings Investment Restoration Plan are individuals who
have been designated by the Compensation Committee. Under the Savings
Investment Restoration Plan, participants may elect to defer up to 20 percent
of compensation and the Company will make matching contributions on up to the
first 5 percent of those deferrals at the rate of 50 percent, not to exceed
2.5 percent of compensation and less any matching amounts contributed to the
ESIP. Compensation includes cash pay (base salary plus annual cash bonus)
received by a participant and excludes any reimbursements, payments under the
incentive shares plans, stock option gains, any other stock based awards and
any severance payments. Amounts deferred under the plan (which are 100%
vested) will be credited with returns based on the same investment
alternatives selected by the participant under the ESIP, which include an
Emerson common stock fund and 21 other mutual fund investment alternatives.
The Company matching contributions vest 20% each year for the first 5 years of
service, after which the participant is 100% vested. The matching
contributions are credited to a book-entry account reflecting units equivalent
to Emerson stock. There are no "above-market earnings" as all earnings are
market-based consistent with the investment funds elected. All deferred
amounts and the Company matching contributions are accounted for on the
Company's financial statements and are unfunded obligations of the Company
which are paid in cash when benefit payments commence.

Generally, distribution of vested account balances occurs no later than one
year following termination of employment in a lump sum. Upon retirement, or in
other certain instances, participants may elect to receive their account
balances in up to ten annual installments. Unvested matching contributions
shall be fully vested in the event of (i) retirement with the approval of the
Compensation Committee on or after the age of 55, (ii) death or disability,
(iii) termination of the plan, or (iv) a change of control of the Company. All
or a portion of any participant's vested account balance may be distributed
earlier in the event of an unforeseeable emergency, if approved by the
Compensation Committee. For amounts deferred or vested as of December 31,
2004, a participant may receive a distribution of after tax deferrals upon 30
days notice.

NON-QUALIFIED DEFERRED COMPENSATION

-------------------------------------------------------------------------------------------------------------------------------
EXECUTIVE AGGREGATE AGGREGATE AGGREGATE
CONTRIBUTIONS REGISTRANT EARNINGS IN WITHDRAWALS/ BALANCE AT
IN LAST FY CONTRIBUTIONS IN LAST FY DISTRIBUTIONS LAST FYE
NAME ($)(1) LAST FY ($)(1) ($)(1) ($) ($)(2)
-------------------------------------------------------------------------------------------------------------------------------

D. N. Farr 323,792 78,198 423,331 -- 3,021,323
-------------------------------------------------------------------------------------------------------------------------------
W. J. Galvin 144,354 33,339 253,058 -- 2,599,647
-------------------------------------------------------------------------------------------------------------------------------
E. L. Monser 78,333 23,823 64,274 -- 512,810
-------------------------------------------------------------------------------------------------------------------------------
C. A. Peters 45,438 22,719 182,813 -- 1,119,630
-------------------------------------------------------------------------------------------------------------------------------
W. W. Withers 107,608 24,188 223,859 -- 1,785,287
-------------------------------------------------------------------------------------------------------------------------------

-------
(1) Includes amounts contributed by each named executive officer and by the
Company, respectively, to the Savings Investment Restoration Plan.
Executive and Company contributions in the last fiscal year have been
included in the Salary and All Other Compensation columns, respectively,
of the Summary Compensation Table. Aggregate earnings under the plan are
not above-market and are not included in the Summary Compensation Table.

(2) Includes amounts reported as compensation for the named executive officers
in the Summary Compensation Table for previous years. For fiscal 2007, the
amounts described in footnote (1) are included in the Summary Compensation
Table as described.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
--------------------------------------------------------

As described in the Compensation Discussion and Analysis beginning on
page 15, the named executive officers do not have any written or oral
employment agreements with the Company and have no other agreements that
contain severance or "golden parachute" provisions. As described below, the
terms and conditions of Mr. Withers' retirement are set forth in a letter
agreement and related consulting contract.

The information below generally describes payments or benefits under the
Company's compensation plans and arrangements that would be available to all
participants in the plans, including the named executive officers, in the
event of the participant's termination of employment or of a Change of Control
of the Company. Benefits or payments under other plans and arrangements that
are generally available to the Company's employees on similar terms are not
described.

CONDITIONS AND OBLIGATIONS APPLICABLE TO RECEIPT OF TERMINATION/CHANGE OF
CONTROL PAYMENTS

In the event of any termination or Change of Control, all executives
participating in stock options, performance shares, restricted stock or the
Pension Restoration Plan have the following obligations to the Company:

Stock Options. Named executive officers awarded stock options are obligated to
-------------
maintain the confidentiality of Company information, to assign to the Company
intellectual property rights, and not to compete with, or solicit the
employees of, the Company. If these obligations are breached, any unexercised
portion of the option will be void and, for options exercised within twelve
months prior to the breach, the named executive officer owes the Company the
difference between (i) the fair market value of the shares acquired and (ii)
the exercise price.

Performance Shares and Restricted Stock. Named executive officers awarded
---------------------------------------
performance shares or restricted stock are obligated not to compete with, or
solicit the employees of, the Company during and for two years after
termination of employment.

Pension Restoration Plan. If any participating named executive officer is
------------------------
discharged for cause, enters into competition with the Company, interferes
with the Company's relations with a customer, or engages in any activity that
would result in a decrease of or loss in sales by the Company, the named
executive officer's rights to benefits under this Plan will be forfeited,
unless the Compensation Committee determines that the activity is not
detrimental to the Company's interests.

Additionally, upon retirement and involuntary termination, named executive
officers generally execute letter agreements reaffirming their applicable
confidentiality, non-competition and non-solicitation obligations and may
enter into extended non-competition agreements with the Company.

PAYMENTS MADE UPON RETIREMENT

Upon retirement, the Company's compensation plans and arrangements provide as
follows:

* The Compensation Committee has the discretion to determine whether any
annual cash bonus award, or any part of it, would be paid, subject to
satisfaction of pre-established performance conditions;

* All unvested stock options would vest immediately, and all unexercised
options could be exercised for a period of up to five years after
retirement, but no longer than the original option term;

* Upon retirement after age 65, the named executive officer would receive
a prorated payout of performance shares, as reasonably determined by the
Compensation Committee, subject to satisfaction of pre-established
performance conditions, and paid after the end of the applicable
performance period. Before age 65, the Compensation Committee has the
discretion to determine whether the named executive officer would
receive a prorated, other or no payout of performance shares, which
payout would be made after the performance period, subject to the
satisfaction of performance conditions;

* The Compensation Committee has the discretion to determine whether to
allow the named executive officer to continue to vest in restricted
stock following retirement, or to reduce the vesting period (to not less
than three years);

* If not previously vested, the named executive officer would be vested in
Company contributions to his or her Savings Investment Restoration Plan
account if retirement occurs with the approval of the Committee on or
after age 55; and

* Under the Company's Pension Restoration Plan, a named executive
officer's pension commences at age 65 (or upon retirement, if later) and
is paid in the form of an annuity on a monthly basis (no lump sum
distributions).

PAYMENTS MADE UPON DEATH OR DISABILITY

Upon death or total disability, the Company's compensation plans and
arrangements provide as follows:

* The Compensation Committee has the discretion to determine whether any
annual cash bonus award, or any part of it, would be paid, subject to
satisfaction of pre-established performance conditions;

* All unvested stock options would vest immediately upon death, and all
unexercised options could be exercised for a period of up to one year
after death, but no longer than the original option term. Upon
termination due to disability, the named executive officer would have up
to one year, but no longer than the original option term, to exercise
any previously vested options (no accelerated vesting);

* The Compensation Committee has the discretion to determine whether the
named executive officer would receive full, partial or no payout of
performance shares, subject to satisfaction of pre-established
performance conditions;

* Awards of restricted stock will be prorated for the period of service
during the restriction period and distributed free of restriction at the
end of the vesting period and the Compensation Committee has the
discretion to determine whether to reduce the vesting period to not less
than three years;

* If not previously vested, the named executive officer would be vested in
Company contributions to his or her Savings Investment Restoration Plan
account;

* Upon the death of a named executive officer participating in the Pension
Restoration Plan, the surviving spouse would receive, in the form of an
annuity payment on a monthly basis, benefits equal to 50% of the benefit
that would have been payable to the named executive officer at the named
executive officer's earliest retirement age. Upon termination due to
disability, benefits would start when the named executive officer
reaches age 65 (or upon termination, if later) and be paid in the form
of an annuity on a monthly basis; and

* Upon a named executive officer's death, the beneficiaries would receive
proceeds from term life insurance provided by the Company.

PAYMENTS MADE UPON OTHER TERMINATION

If the named executive officer's employment terminates for a reason other than
as described above (i.e., voluntary termination, termination for cause or
involuntary termination), he or she would only receive:

* Payment of the vested portion of the named executive officer's Savings
Investment Restoration Plan account, which payment would be made within
60 days after termination, in a single lump sum, unless the named
executive officer previously had chosen to be paid in equal annual
installments for up to ten years.

Under the Company's compensation plans and arrangements, the Committee may
also, in its discretion, determine whether any of the additional payments or
benefits described below would be paid to the named executive officer.
However, this exercise of discretion is unlikely to result in the payment of
any additional benefits in the case of voluntary quit or termination for
cause.

* The Compensation Committee has the discretion to determine whether any
annual cash bonus award, or any part of it, would be paid, subject to
satisfaction of pre-established performance conditions;

* If termination occurs with Company consent, the Compensation Committee
may permit the named executive officer to have up to three months, but
no longer than the original option term, to exercise any previously
vested stock options;

* The Compensation Committee has the discretion to determine whether to
allow the named executive officer to continue to vest in restricted
stock following termination, or to reduce the vesting period (to not
less than three years); and

* Subject to the discretion of the Compensation Committee, a named
executive officer participating in the Pension Restoration Plan would
receive his or her vested benefits starting at age 65 (or upon
termination, if later), paid in the form of an annuity on a monthly
basis.

The estimated amounts of the foregoing benefits, based on certain assumptions
regarding the exercise of the Committee's authority, are identified in the
tables below.

PAYMENTS MADE UPON CHANGE OF CONTROL

Upon a Change of Control, the Company's compensation plans and arrangements
provide as follows:

* Annual cash bonus awards are not paid in the event of a Change of
Control. Previously earned annual cash bonus awards that have been
deferred would be paid as previously elected by the named executive
officer, in a single lump sum or in deferral installments, either upon
the Change of Control or the termination of employment after the Change
of Control;

* All unvested stock options would vest immediately, and all unexercised
options could be exercised for their remaining terms;

* Performance conditions of outstanding performance share awards would be
deemed to be satisfied, with payout to be made immediately;

* All restricted stock awards would vest immediately;

* If not previously vested, the named executive officer would be vested in
Company contributions to his or her Savings Investment Restoration Plan
account; and

* A named executive officer participating in the Pension Restoration Plan
would become fully vested and plan benefits would be paid immediately in
a lump sum.

"CHANGE OF CONTROL" DEFINITION AND PAYMENT APPROACH

"Change of Control" generally means: (i) the acquisition of beneficial
ownership of 20% or more of the Company's common stock, (ii) individuals who
currently make up the Company's Board of Directors (or who subsequently become
Directors after being approved for election by at least a majority of current
Directors) ceasing for any reason to make up at least a majority of the Board,
or (iii) approval by the Company's stockholders of (a) a reorganization,
merger or consolidation which results in the ownership of more than 50% of the
Company's common stock by persons or entities that were not previously
stockholders; (b) a liquidation or dissolution of the Company; or (c) the sale
of substantially all of the Company's assets, provided that, only with respect
to the 2006 Incentive Shares Plan, the Change of Control must also meet the
requirements of Internal Revenue Code Section 409A and any transaction
referenced in (iii) must have actually occurred, rather than merely have been
approved; and, provided further that, with respect to the Company's Pension
Restoration Plan, Savings Investment Restoration Plan and Deferred
Compensation Plan for Non-Employee Directors, a Change of Control refers to a
change in the ownership or effective control of the Company or a change in the
ownership of a substantial portion of the assets of the Company, as such terms
are defined under Section 409A of the Internal Revenue Code and the
regulations promulgated thereunder.

As described above, immediately upon a Change of Control, named executive
officers may exercise all their outstanding stock options, all their
outstanding performance shares will be paid out, and their restricted stock
vests. This is the so-called "single" trigger treatment for outstanding equity
awards, which does not require an additional, or "double", trigger for
receiving the benefit, such as termination or significant change in the named
executive officers' duties as a result of a Change of Control. The Company
believes that "single" trigger treatment is appropriate for equity awards for
the following reasons:

* It provides employees with the same opportunities as stockholders of the
Company, who are free to sell their equity at the time of the Change of
Control and to realize the value created at the time of the transaction.

* It ensures that continuing employees are treated the same as terminated
employees.

* It is an effective retention device during Change of Control
discussions, especially for more senior executives for whom equity
represents a significant portion of their total pay.

* It is particularly appropriate for performance-based equity, given the
potential difficulty of replicating or meeting the performance goals
after the Change of Control.

DESCRIPTION OF W. W. WITHERS RETIREMENT AGREEMENTS

On April 4, 2007, the Company and W. Wayne Withers entered into a letter
agreement and related consulting contract in connection with Mr. Withers'
previously announced voluntary retirement effective November 30, 2007.

Under the letter agreement, Mr. Withers agrees, among other things: (i) not to
compete with, or solicit to hire the employees of, the Company during the
two-year term of the consulting contract and for an additional period of two
years thereafter; (ii) not to use or disclose any confidential information of
the Company; and (iii) to reaffirm his obligations under all existing
non-competition agreements with the Company.

Under the letter agreement, Mr. Withers continued to receive his current
annual base salary through November 30, 2007 and was eligible to receive a
cash bonus for the fiscal year ended September 30, 2007. As provided in the
1997 Incentive Shares Plan, he was eligible to receive the scheduled payout of
the performance shares granted to him under the Company's 2004 performance
shares program, subject to the terms of the program and the Company achieving
the financial objectives under the program, 60% of which was paid after the
end of fiscal 2007 and the remaining 40% of which is to be paid one year after
the end of the performance period, subject to continued service to the
Company. As permitted under the 1997 Incentive Shares Plan, an unvested
restricted stock award of 50,000 shares with a three year term, which was
previously granted to Mr. Withers, will be permitted to vest as scheduled in
October, 2009.

As a result of his retirement from the Company, commencing on December 1, 2007
Mr. Withers is eligible to receive his monthly pension benefits earned as of
that date under, and pursuant to the terms of, the Pension Restoration Plan.
In addition, Mr. Withers will be permitted to exercise his outstanding stock
options in accordance with the provisions of the stock option plans described
above relating to retiring participants.

If Mr. Withers violates any of his obligations to the Company under the letter
agreement, the consulting contract or otherwise, he will forfeit any
outstanding portions of the performance share award payable under the 2004
performance shares program, the restricted stock and the benefits under the
supplemental retirement plan described above, and the Company will have the
right to recover from him any gain he has realized on the exercise of the
stock options described above.

During the two-year consulting contract term, Mr. Withers agrees to be
available to provide consulting and legal advisory services on a full-time
basis for the first six months following his retirement and on a part-time
basis for the remaining 18 months. Mr. Withers will receive consulting fees of
$43,333 per month for the first six months of the consulting contract term,
payable monthly, and $21,666 per month for the remaining 18 months of the
term, payable monthly. The Company will also reimburse Mr. Withers for
necessary and ordinary business expenses incurred in connection with the
consulting services and, during the term of the consulting contract, the
Company will continue to pay for a leased automobile, financial planning, a
club membership and a dinner club membership, the value of which the Company
estimates will be less than $50,000 per year.

QUANTIFICATION OF PAYMENTS AND BENEFITS

The following tables quantify the potential payments and benefits upon
termination or a Change of Control of the Company for each of the named
executive officers, assuming the named executive officer's employment
terminated on September 30, 2007, given the named executive officer's
compensation and service level as of that date and, if applicable, based on
the Company's closing stock price of $53.22 on that date. Other assumptions
made with respect to specific payments or benefits are set forth in applicable
footnotes to the tables. Due to the number of factors that affect the nature
and amount of any payments or benefits provided upon a termination or Change
of Control, including, but not limited to, the date of any such event, the
Company's stock price and the named executive officer's age, any actual
amounts paid or distributed may be different. See "Description of W. W.
Withers Retirement Agreements" above for a description of the Mr. Withers'
retirement arrangements. None of the payments set forth below will be
grossed-up for taxes.

D. N. FARR
------------------------------------------------------------------------------------------------------------------------------------

EXECUTIVE BENEFITS AND VOLUNTARY OR FOR INVOL. TERM. NOT CHANGE OF
PAYMENTS UPON TERMINATION RETIREMENT ($) DEATH ($) DISABILITY ($) CAUSE TERM. ($) FOR CAUSE ($) CONTROL ($)
------------------------------------------------------------------------------------------------------------------------------------

Annual Cash Incentive 2,700,000(1)(2) 2,700,000(1)(2) 2,700,000(1)(2) --(1)(3) 2,700,000(1)(2) --(4)
------------------------------------------------------------------------------------------------------------------------------------
Stock Options 1,799,389(5) 1,799,389(5) -- -- -- 1,799,389(5)
------------------------------------------------------------------------------------------------------------------------------------
Performance Shares 8,515,200(6)(7) 8,515,200(6)(7) 8,515,200(6)(7) --(3)(6) 8,515,200(6)(7) 32,996,400(8)
------------------------------------------------------------------------------------------------------------------------------------
Restricted Stock --(9) 14,404,880(10) 14,404,880(10) --(9) --(9) 25,013,400(11)
------------------------------------------------------------------------------------------------------------------------------------
Pension Restoration Plan N/A N/A N/A N/A N/A 496,000(12)
------------------------------------------------------------------------------------------------------------------------------------
Life Insurance Benefits -- 200,000(13) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------

W. J. GALVIN
------------------------------------------------------------------------------------------------------------------------------------
EXECUTIVE BENEFITS AND VOLUNTARY OR FOR INVOL. TERM. NOT CHANGE OF
PAYMENTS UPON TERMINATION RETIREMENT ($) DEATH ($) DISABILITY ($) CAUSE TERM. ($) FOR CAUSE ($) CONTROL ($)
------------------------------------------------------------------------------------------------------------------------------------

Annual Cash Incentive 1,025,000(1)(2) 1,025,000(1)(2) 1,025,000(1)(2) --(1)(3) 1,025,000(1)(2) --(4)
------------------------------------------------------------------------------------------------------------------------------------
Stock Options 1,223,582(5) 1,223,582(5) -- -- -- 1,223,582(5)
------------------------------------------------------------------------------------------------------------------------------------
Performance Shares 3,193,200(6)(7) 3,193,200(6)(7) 3,193,200(6)(7) --(3)(6) 3,193,200(6)(7) 13,837,200(8)
------------------------------------------------------------------------------------------------------------------------------------
Restricted Stock --(9) 5,889,680(10) 5,889,680(10) --(9) --(9) 7,983,000(11)
------------------------------------------------------------------------------------------------------------------------------------
Pension Restoration Plan N/A N/A N/A N/A N/A 123,000(12)
------------------------------------------------------------------------------------------------------------------------------------
Life Insurance Benefits -- 200,000(13) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------

E. L. MONSER
------------------------------------------------------------------------------------------------------------------------------------
EXECUTIVE BENEFITS AND VOLUNTARY OR FOR INVOL. TERM. NOT CHANGE OF
PAYMENTS UPON TERMINATION RETIREMENT ($) DEATH ($) DISABILITY ($) CAUSE TERM. ($) FOR CAUSE ($) CONTROL ($)
------------------------------------------------------------------------------------------------------------------------------------

Annual Cash Incentive 725,000(1)(2) 725,000(1)(2) 725,000(1)(2) --(1)(3) 725,000(1)(2) --(4)
------------------------------------------------------------------------------------------------------------------------------------
Stock Options 719,764(5) 719,764(5) -- -- -- 719,764(5)
------------------------------------------------------------------------------------------------------------------------------------
Performance Shares 2,128,800(6)(7) 2,128,800(6)(7) 2,128,800(6)(7) --(3)(6) 2,128,800(6)(7) 10,644,000(8)
------------------------------------------------------------------------------------------------------------------------------------
Restricted Stock --(9) 1,410,330(10) 1,410,330(10) --(9) --(9) 3,193,200(11)
------------------------------------------------------------------------------------------------------------------------------------
Pension Restoration Plan N/A N/A N/A N/A N/A 36,000(12)
------------------------------------------------------------------------------------------------------------------------------------
Life Insurance Benefits -- 200,000(13) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------

C. A. PETERS
------------------------------------------------------------------------------------------------------------------------------------
EXECUTIVE BENEFITS AND VOLUNTARY OR FOR INVOL. TERM. NOT CHANGE OF
PAYMENTS UPON TERMINATION RETIREMENT ($) DEATH ($) DISABILITY ($) CAUSE TERM. ($) FOR CAUSE ($) CONTROL ($)
------------------------------------------------------------------------------------------------------------------------------------

Annual Cash Incentive 725,000(1)(2) 725,000(1)(2) 725,000(1)(2) --(1)(3) 725,000(1)(2) --(4)
------------------------------------------------------------------------------------------------------------------------------------
Stock Options 719,764(5) 719,764(5) -- -- -- 719,764(5)
------------------------------------------------------------------------------------------------------------------------------------
Performance Shares 1,703,040(6)(7) 1,703,040(6)(7) 1,703,040(6)(7) --(3)(6) 1,703,040(6)(7) 8,089,440(8)
------------------------------------------------------------------------------------------------------------------------------------
Restricted Stock --(9) 2,661,000(10) 2,661,000(10) --(9) --(9) 5,322,000(11)
------------------------------------------------------------------------------------------------------------------------------------
Pension Restoration Plan N/A N/A N/A N/A N/A 151,000(12)
------------------------------------------------------------------------------------------------------------------------------------
Life Insurance Benefits -- 200,000(13) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------

--------
(1) The Committee has discretion as to whether to pay or not pay a bonus,
subject to satisfaction of performance conditions.

(2) Assumes Committee would exercise its discretion and award a bonus,
subject to achievement of performance conditions. For illustrative
purposes only, this table shows the bonus paid for fiscal 2007.

(3) Assumes Committee would not pay a bonus or make a performance shares
payout.

(4) There would be no additional acceleration or special treatment for
incentive opportunities for the fiscal year in which the Change of
Control occurs.

(5) Represents market value of $53.22 per share minus exercise price for all
unvested options. The number of unvested options for each named executive
officer is set forth in the Outstanding Equity Awards at Fiscal Year End
table.

(6) The Committee has discretion to provide a prorated, other or no payout,
subject to the achievement of performance conditions.

(7) For illustrative purposes only, assumes Committee exercises its
discretion to allow payout of the 40% portion of the awards granted in
2004, which are subject to forfeiture for one additional year and for
which financial targets have been satisfied, but assumes Committee does
not allow any payout for the performance share awards granted in 2007.
See Outstanding Equity Awards at Fiscal Year-End table at page 28 above.

(8) The amount shown includes the 40% portion of the 2004 awards not yet paid
and the entire amount of 2007 awards.

(9) The Committee has discretion to provide for continued vesting of unvested
restricted stock or to reduce the vesting period to not less than three
years. Assumes Committee would exercise its discretion to not allow any
further vesting.

(10) Represents a prorated amount of the value of all unvested shares of
restricted stock, based on number of years elapsed and rounding up to
whole years. See Outstanding Equity Awards at Fiscal Year-End table at
page 28 above.

(11) The amount shown includes the value of all unvested shares of restricted
stock. See Outstanding Equity Awards at Fiscal Year-End table.

(12) Amounts shown include any difference between the discounted present value
of benefits in such event compared to amounts shown in the Pension
Benefits table. Upon a Change of Control, the amounts shown also include
the discounted present value of any unvested amounts under the Pension
Restoration Plan.

(13) Represents face amount of policies paid for by the Company which are not
generally available to all employees.

II. RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-----------------------------------------------------------------

In accordance with its Charter, the Audit Committee has selected KPMG LLP,
independent registered public accounting firm, to audit the Company's
consolidated financial statements for fiscal 2008. KPMG LLP served as the
Company's independent registered public accounting firm for fiscal 2007. The
Audit Committee is asking the stockholders to ratify the appointment of KPMG
LLP as the Company's independent registered public accounting firm for the
fiscal year ending September 30, 2008.

The Audit Committee is not required to take any action as a result of the
outcome of the vote on this proposal. In the event stockholders fail to ratify
the appointment, the Audit Committee may reconsider this appointment. Even if
the appointment is ratified, the Audit Committee, in its discretion, may
direct the appointment of a different independent accounting firm at any time
during the year if the Audit Committee determines that such a change would be
in the Company's and the stockholders' best interests.

The Audit Committee has approved in advance all services provided by KPMG LLP.
A member of KPMG LLP will be present at the meeting with the opportunity to
make a statement and respond to appropriate questions from stockholders.

BOARD AND AUDIT COMMITTEE RECOMMENDATION. THE BOARD OF DIRECTORS AND THE AUDIT
----------------------------------------
COMMITTEE UNANIMOUSLY RECOMMEND A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
---
OF KPMG LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

III. VOTING
-----------

Shares may be represented by proxy at the meeting by completing and returning
the proxy card or voting by telephone or by Internet. If a quorum is present,
the affirmative vote of a majority of the shares entitled to vote which are
present in person or represented by proxy at the 2008 Annual Meeting is
required to elect Directors, to ratify the appointment of KPMG LLP as the
Company's independent registered public accounting firm for fiscal 2008, and
to act on any other matters properly brought before the meeting. Shares
represented by proxies which are marked or voted "withhold authority" with
respect to the election of any one or more nominees for election as Directors,
proxies which are marked or voted "abstain" on the proposal to ratify the
appointment of KPMG LLP as the Company's independent registered public
accounting firm for fiscal 2008, and proxies which are marked or voted to deny
discretionary authority on other matters will be counted for the purpose of
determining the number of shares represented by proxy at the meeting. Such
proxies will thus have the same effect as if the shares represented thereby
were voted against such nominee or nominees, against the proposal to ratify
the appointment of KPMG LLP as the Company's independent registered public
accounting firm for fiscal 2008 and against such other matters, respectively.
If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares
will not be considered as present and entitled to vote with respect to that
matter.

The Company knows of no other matters to come before the meeting. If any other
matters properly come before the meeting, the proxies solicited hereby will be
voted on such matters in the discretion of the persons voting such proxies,
except proxies which are marked to deny discretionary authority.

IV. STOCKHOLDERS' PROPOSALS
---------------------------

Proposals of stockholders intended to be presented at the 2009 Annual Meeting
scheduled to be held on February 3, 2009, must be received by the Company by
August 16, 2008 for inclusion in the Company's proxy statement and proxy
relating to that meeting. Upon receipt of any such proposal, the Company will
determine whether or not to include such proposal in the proxy statement and
proxy in accordance with regulations governing the solicitation of proxies.

In order for a stockholder to nominate a candidate for Director, under the
Company's Bylaws timely notice of the nomination must be received by the
Company in advance of the meeting. Ordinarily, such notice must be received
not less than 90 nor more than 120 days before the meeting, i.e., between
October 6 and November 5, 2008 for the 2009 Annual Meeting (but if the Company
gives less than 100 days' (1) notice of the meeting or (2) prior public
disclosure of the date of the meeting, then such notice must be received
within 10 days after notice of the meeting is mailed or other public
disclosure of the meeting is made). The stockholder filing the notice of
nomination must describe various matters regarding the nominee, including, but
not limited to, such information as name, address, occupation and shares held.

In order for a stockholder to bring other business before a stockholder
meeting, timely notice must be received by the Company within the time limits
described in the preceding paragraph. Such notice must include a description
of the proposed business, the reasons therefor, and other specified matters.
These requirements are separate from the requirements a stockholder must meet
to have a proposal included in the Company's proxy statement. The foregoing
time limits also apply in determining whether notice is timely for purposes of
rules adopted by the Securities and Exchange Commission relating to the
exercise of discretionary voting authority.

In each case the notice must be given to the Secretary of the Company, whose
address is 8000 West Florissant Avenue, St. Louis, Missouri 63136. Any
stockholder desiring a copy of the Company's Bylaws will be furnished one
without charge upon written request to the Secretary. A copy of the Bylaws is
available on the Company's Web site at www.emerson.com, Investor Relations,
Corporate Governance, Bylaws.

V. MISCELLANEOUS
----------------

HOUSEHOLDING OF PROXIES

The Securities and Exchange Commission has adopted rules that permit companies
and intermediaries such as brokers to satisfy delivery requirements for annual
reports and proxy statements with respect to two or more stockholders sharing
the same address by delivering a single annual report and/or proxy statement
addressed to those stockholders. This process, which is commonly referred to
as "householding," potentially provides extra convenience for stockholders and
cost savings for companies. The Company and some brokers household annual
reports and proxy materials, delivering a single annual report and/or proxy
statement to multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders.

Once you have received notice from your broker or the Company that your broker
or the Company will be householding materials to your address, householding
will continue until you are notified otherwise or until you revoke your
consent. You may request to receive at any time a separate copy of our annual
report or proxy statement, by sending a written request to Emerson Electric
Co., 8000 West Florissant Avenue, St. Louis, Missouri 63136, Attn: Investor
Relations, or by telephoning 314-553-2197 or by visiting our Web site.

If, at any time, you no longer wish to participate in householding and would
prefer to receive a separate annual report and/or proxy statement in the
future, please notify your broker if your shares are held in a brokerage
account or the Company if you hold registered shares. You can notify the
Company by sending a written request to Emerson Electric Co., 8000 West
Florissant Avenue, St. Louis, Missouri 63136, Attn: Investor Relations, or by
telephoning 314-553-2197.

If, at any time, you and another stockholder sharing the same address wish to
participate in householding and prefer to receive a single copy of the
Company's annual report and/or proxy statement, please notify your broker if
your shares are held in a brokerage account or the Company if you hold
registered shares. You can notify the Company by sending a written request to
Emerson Electric Co., 8000 West Florissant Avenue, St. Louis, Missouri 63136,
Attn: Investor Relations, or by telephoning 314-553-2197.

ADDITIONAL FILINGS

The Company's Forms 10-K, 10-Q, 8-K and all amendments to those reports are
available without charge through the Company's Web site on the Internet as
soon as reasonably practicable after they are electronically filed with, or
furnished to, the Securities and Exchange Commission. They may be accessed as
follows: www.emerson.com, Investor Relations, SEC filings.

APPENDIX A

EMERSON DIRECTOR INDEPENDENCE STANDARDS

In order to be considered independent under the rules of the New York Stock
Exchange, the Board must determine that a director does not have any direct or
indirect material relationship with Emerson Electric Co. ("Emerson"). The
Board has established the following guidelines to assist it in determining
director independence under the NYSE rules. Any Director who meets the
following standards will be deemed independent by the Board:

1. The Director was not employed by Emerson, and no immediate family member of
the Director was employed by Emerson as an executive officer, within the
preceding three years;

2. The Director is not a partner or employee of Emerson's independent auditor,
and no immediate family member of the Director is a partner of, or employed in
the audit, assurance or tax compliance practices of Emerson's independent
auditor, and neither the Director nor any immediate family member has been
within the preceding three years a partner of or employed by Emerson's
independent auditor and personally worked on Emerson's audit;

3. The Director was not employed by, and no immediate family member of the
Director was employed as an executive officer by, any company at the same time
any Emerson executive officer served as a member of such company's
compensation committee within the preceding three years;

4. Neither the Director, nor any member of the Director's immediate family
received in any twelve-month period during any of Emerson's last three fiscal
years direct compensation in excess of $100,000 from Emerson other than
regular director compensation, pension and other deferred payments that are
not in any way contingent on continued service to Emerson, and compensation
received by an immediate family member for service as a non-executive officer
of Emerson;

5. If the Director is an executive officer or an employee of, or if any
immediate family member is an executive officer of, another organization that
does business with Emerson, the annual sales to, or purchases from, Emerson by
such company in each of the last three fiscal years were less than the greater
of two percent of the annual revenues of such company or $1,000,000;

6. If the Director is an executive officer of another organization which is
indebted to Emerson, or to which Emerson is indebted, the total amount of
either company's indebtedness to the other is less than two percent of the
total consolidated assets of the company the Director serves as an executive
officer;

7. If the Director is, or is a director, executive officer or greater than 10%
owner of an entity that is, a paid advisor, paid consultant or paid provider
of professional services to Emerson, any member of Emerson's senior management
or any immediate family member of a member of Emerson's senior management, the
amount of such payments is less than the greater of 2% of such firm's annual
revenues or $1,000,000 during Emerson's current fiscal year;

8. If the Director is a partner, principal or counsel in a law firm that
provides professional services to Emerson, the amount of payments for such
services is less than the greater of 2% of such law firm's annual revenues or
$1,000,000 during Emerson's current fiscal year;

9. If the Director serves as an officer, director or trustee of a charitable
organization to which Emerson makes contributions: (i) Emerson's discretionary
contributions to such organization are less than the greater of two percent of
such organization's total annual charitable receipts or $1 million; (ii)
Emerson's contributions are normal matching charitable gifts and similar
programs available to all employees and independent directors; or (iii) the
charitable donation goes through the normal corporate charitable donation
approval processes, and is not made "on behalf of" a Director;

A-1

10. The Director's ownership of Emerson stock, direct or indirect, is less
than 1% of the total outstanding Emerson stock;

11. If the Director is affiliated with, or provides services to, an entity in
which Emerson has an ownership interest, such ownership interest is less than
20%; and

12. Any other relationship between the Director and Emerson not covered by the
standards set forth above is an arrangement that is usually and customarily
offered to customers of Emerson.

If any relationship exists between Emerson and any Director that is not
addressed by the standards set forth above, the Directors meeting these
standards shall determine whether such relationship impairs the independence
of such Director.

A-2

[Emerson logo]

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned, revoking all prior proxies, does hereby appoint D. N. FARR,
F. L. STEEVES, and T. G. WESTMAN, or any of them, with full powers of
substitution, the true and lawful attorneys in fact, agents and proxies of the
undersigned to represent the undersigned at the Annual Meeting of the
Stockholders of EMERSON ELECTRIC CO., to be held on February 5, 2008,
commencing at 10:00 A.M., St. Louis Time, at the Headquarters of the Company,
8000 West Florissant Avenue, St. Louis, Missouri, and at any and all
adjournments of said meeting, and to vote all the shares of Common Stock of
the Company standing on the books of the Company in the name of the
undersigned as specified and in their discretion on such other business as may
properly come before the meeting. The matters stated on the reverse side were
proposed by the Company, except as indicated.

(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)

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ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
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^ FOLD AND DETACH HERE ^

[Emerson logo]

ADMISSION TICKET

ANNUAL MEETING OF STOCKHOLDERS

TUESDAY, FEBRUARY 5, 2008
10:00 A.M.
EMERSON ELECTRIC CO. HEADQUARTERS
8000 WEST FLORISSANT AVENUE
ST. LOUIS, MO 63136

================================
PLEASE PRESENT THIS
NON-TRANSFERABLE TICKET
AT THE REGISTRATION DESK
UPON ARRIVAL
================================

THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION Please / /
IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES IN Mark Here
PROPOSAL 1 AND FOR PROPOSAL 2. for Address
Change or
Comments
SEE REVERSE SIDE

MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING:
---
1. ELECTION OF DIRECTORS

FOR all nominees WITHHOLD AUTHORITY
listed below to vote for the
(except as marked nominees
to the contrary) listed below
/ / / /

01 D. N. Farr 03 C. A. Peters
02 R. B. Horton 04 J. W. Prueher

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR I PLAN / /
ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE TO ATTEND THE
NOMINEE'S NAME IN THE LIST ABOVE.) ANNUAL MEETING

MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING:
--- FOR AGAINST ABSTAIN
2. Ratification of KPMG LLP as Independent Registered / / / / / /
Public Accounting Firm

The undersigned hereby acknowledges receipt of Notice of Annual Meeting and
accompanying Proxy Statement.

SIGNATURE SIGNATURE DATE
------------------------- ------------------------- -------
NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH.

^ FOLD AND DETACH HERE ^

WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.

INTERNET AND TELEPHONE VOTING IS AVAILABLE THROUGH 11:59 PM EASTERN TIME
THE DAY PRIOR TO ANNUAL MEETING DAY.

YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.

--------------------------------------
INTERNET
http://www.proxyvoting.com/emr

Use the internet to vote your proxy.
Have your proxy card in hand when
you access the web site.
--------------------------------------

--------------------------------------
TELEPHONE
1-866-540-5760

Use any touch-tone telephone to
vote your proxy. Have your proxy
card in hand when you call.
--------------------------------------

If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and
return it in the enclosed postage-paid envelope.

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Choose MLink(SM) for fast, easy and secure 24/7 online access to your future
proxy materials, investment plan statements, tax documents and more. Simply
log on to Investor ServiceDirect(R) at www.bnymellon.com/shareowner/isd where
step-by-step instructions will prompt you through enrollment.
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