Vice President, Human Resources Employment Agreement

Exhibit 10.1(v)


Employment Agreement for Ronald C. Hanson


Sauer-Danfoss Inc.

December 31, 2008


EXECUTIVE EMPLOYMENT AGREEMENT


THIS AGREEMENT (this " Agreement" ) is made as of the 31st day of December, 2008 (the " Effective Date" ), by and between Sauer-Danfoss Inc. (the " Company" ) and Ronald C. Hanson (the " Executive" ). The existing Employment Agreement between the Company and the Executive dated July 1, 2003 shall terminate by mutual agreement as of December 30, 2008 and will be replaced, in its entirety by this Agreement.


WHEREAS, the Company desires to provide for the continued employment of the Executive on the terms and conditions set forth herein, in the best interest of the Company and its constituencies; and


WHEREAS, the Executive desires to continue to be employed by the Company as provided herein; and


NOW, THEREFORE, in consideration of the premises and the respective covenants, promises and agreements of the parties herein contained, the parties agree as follows:

1. Employment . The Company agrees to continue to employ the Executive and the Executive agrees to continue to be employed on a full-time basis by the Company for the period and upon the terms and conditions specified herein. 2. Term; Employment Period . The term of this Agreement (the " Term" ) shall begin on the Effective Date and continue until terminated according to Section 6 of this Agreement. The period during which the Executive is employed by the Company is referred to as the " Employment Period." The date on which the termination of the Executive' s employment becomes effective is referred to as the " Termination Date" . 3. Position and Duties . During the Employment Period, the Executive shall serve as Vice President, Human Resources of the Company and shall have such responsibilities, duties and authority as set forth in the Bylaws of the Company and such additional responsibilities, duties and authority as the Company' s President and Chief Executive Officer or the Company' s Board of Directors (the " Board" ) shall determine from time to time. During the Employment Period, the Executive shall report to the Company' s President and Chief Executive Officer or designee. The Executive shall fully comply with the Company' s Worldwide Code of Legal and Ethical Business Conduct as in effect from time to time, or any successor or similar Code. The Executive shall devote substantially all his working time and efforts to the business and affairs of the Company and shall use his best efforts to carry out his responsibilities faithfully and efficiently in a professional and ethical manner. Notwithstanding the foregoing, it is understood that during the Employment Period, subject to any conflict of interest policies of the Company and Section 9, the Executive may (a) serve in any capacity with any civic, charitable, educational or professional organization provided that such service does not materially interfere with his duties and responsibilities to the Company, (b) make and manage personal investments of his choice, and (c) with the prior consent of the

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Company' s President and Chief Executive Officer, which shall not be unreasonably withheld, serve on the board of directors of one (1) for-profit business enterprise. The Executive may serve from time to time as a director and/or member of a committee of the Company and/or as a director and/or member of a committee and/or officer of one or more subsidiaries or related or affiliated companies or joint ventures of the Company. The Executive agrees to fulfill his duties as such director, member of committee or officer without additional compensation other than the compensation provided for in this Agreement. 4. Place of Performance . During the Employment Period, the Executive' s place of performance of his services shall be at the Company' s Ames, Iowa USA offices, except for required travel by the Executive on the Company' s business or as may be reasonably required by the Company. 5. Compensation and Benefits . (a) Salary . During the Employment Period, the Company shall pay to the Executive an initial annual base salary of Two Hundred Fifty One Thousand Five Hundred Dollars ($251,500) on an annualized basis (as the same may be increased from time to time, the " Base Salary" ), such salary to be paid in periodic installments in accordance with the Company' s payroll practices as in effect from time to time. The Base Salary shall be reviewed annually by the Compensation Committee of the Board and may be increased from time to time in accordance with normal business practices of the Company and, if so increased, shall not thereafter be reduced. Notwithstanding the foregoing, the Base Salary may be reduced at any time and from time to time as part of across-the-board reductions applied similarly to all of the Company' s senior executives. All payments of Base Salary or other compensation hereunder shall be less such deductions or withholdings as are required by applicable law and regulations. (b) Annual Incentive . During the Employment Period, the Executive shall be eligible to earn an annual incentive under the Company' s 2006 Omnibus Incentive Plan, or a successor plan thereto, as in effect from time to time (the " Incentive Plan" ), subject to achievement of performance goals determined in accordance with the terms of the Incentive Plan (such annual incentive referred to herein as the " Annual Incentive" ). Except as otherwise specifically provided in this Agreement, the Executive shall only be eligible to receive the Annual Incentive if the Executive is employed by the Company through the last day of the fiscal year for which the Annual Incentive is to be paid. The actual amount of any Annual Incentive and the timing for payment shall be determined by and in accordance with the terms of the Incentive Plan. (c) Expenses . During the Employment Period, the Company shall promptly reimburse the Executive for all reasonable out-of-pocket expenses actually incurred by the Executive in connection with the business of the Company and the performance of his duties under this Agreement in accordance with the terms of the Company' s policies and upon presentation of expense statements or vouchers or such other supporting information as the Company may customarily require of its senior executives; provided however, in no event shall any such reimbursement be provided later than December 31

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of the calendar year following the calendar year in which such business expense was incurred. (d) Benefit Plans . During the Employment Period, the Executive shall be entitled to participate in all of the employee benefit plans, long term incentive plans, retirement plans, programs, agreements and arrangements provided to senior executives of the Company, as such are in effect, subject to the eligibility requirements and terms and conditions of such plans, programs, agreements and arrangements. The Company reserves the right, in its sole discretion, to adopt, modify, amend or terminate such plans, programs, agreements and arrangements at any time. (e) Perquisites . During the Employment Period, the Executive shall be entitled to participate in those perquisites provided to senior executives of the Company, as such are in effect, subject to the eligibility, payment requirements and other terms and conditions of such perquisites, as outlined in the underlying Company policy. The Company reserves the right, in its sole discretion, to adopt, modify, amend or terminate such perquisites at any time. (f) Vacations . During the Employment Period, the Executive shall be entitled to paid vacation time, paid holidays and personal days, determined in accordance with the Company' s policy with respect to its senior executives, as such are in effect, it being understood that the Executive shall be entitled to not less than four weeks' paid vacation in any 12-month period during the Employment Period. 6. Termination of Employment . (a) Accrued Benefits . In the event of the termination of the Executive' s employment hereunder for any reason, the Executive (or his estate or representative, as applicable) shall be entitled to receive any Base Salary, Annual Incentive, vacation time and expenses that have in each case accrued but are unpaid as of the Termination Date as well as any post-termination benefits to which he may be entitled according to the Company' s retirement, insurance and other benefit plans, programs and arrangements as in effect immediately prior to the Termination Date, other than medical benefit plans (the " Accrued Benefits" ). Accrued Benefits will be paid in accordance with the underlying plan or policy. If no underlying plan or policy exists for a particular component of the Accrued Benefits, such component will be paid no later than sixty (60) days following the Termination Date. (b) Retirement . The Executive' s employment shall terminate as of the date of his Retirement (as defined in the retirement benefit plan in effect immediately prior to such Retirement). Upon the termination of the Executive' s employment because of his Retirement, the Executive shall be entitled to receive the Accrued Benefits. (c) Death . The Executive' s employment shall terminate as of the date of his death. Upon the termination of the Executive' s employment because of his death, the Executive' s estate or representative, as the case may be, shall be entitled to receive the following:

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(i) the Accrued Benefits; and (ii) a lump sum payment in cash equal to one year' s Base Salary as in effect on the Termination Date with such amount being payable no later than thirty (30) days following the Termination Date; and (iii) a lump sum payment in cash equal to the actual annual incentive compensation such Executive would have received, if any, under the Incentive Plan for the fiscal year which includes his Termination Date and assuming that the Executive had been employed through the last day of such fiscal year, multiplied by a fraction (the numerator of which shall be the number of whole months worked by the Executive during the Company' s fiscal year in which the Termination Date occurs and the denominator of which shall be the number 12) (the " Pro Rata Annual Incentive" ). The Pro Rata Annual Incentive shall be payable in accordance with the terms of the relevant underlying Incentive Plan and at the same time payments are made to other Company executives pursuant to such Incentive Plan. In addition, those immediate family members who were participating in the Company' s medical benefit plans as of the date of the Executive' s death shall continue to participate in the Company' s medical benefit plans at active employee contribution rates for the one-year period immediately following the date of the Executive' s death. Any continuing medical coverage pursuant to this clause is intended to be exempt from Code Section 409A to the extent permitted under Treasury Regulation a71.409A-1(B)(9)(v)(B) or a71.409A-3(I)(1)(iv)(B). However, if it is determined that the continuing medical coverage pursuant to this clause does not qualify for exemption under Code Section 409A the medical coverage will expire as of the date of the Employee' s death. If the medical coverage expires early, as provided in the previous sentence, the Company shall provide Executive' s immediate family members with a lump sum cash payment equal to twelve (12) times the then applicable monthly premium for the relevant medical plan which the Executive participated in. Such lump sum payment amount, if any, will be paid no later than sixty (60) days after the date on which such medical coverage expires. (d) Disability . The Executive' s employment may be terminated by the Company during the Employment Period if the Executive is incapable of performing his principal duties because of physical or mental incapacity for a period of 180 consecutive days in any 12-month period (" Disability" ). In the event that the Executive' s employment is to be terminated by the Company for Disability: (i) this Agreement shall terminate on the date specified in the notice of termination delivered to the Executive by the Company; and (ii) the Executive shall as of such date resign from all of his positions, duties and authorities hereunder. In the event of a termination due to Disability, the Executive (or his representative, as applicable) shall be entitled to receive the following:

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(1) the Accrued Benefits; and (2) the Pro Rata Annual Incentive as defined in Section 6(c)(iii) above. The Pro Rata Annual Incentive shall be payable in accordance with the terms of the relevant underlying Incentive Plan and at the same time payments are made to other Company executives pursuant to such Incentive Plan; and (3) a lump sum payment in cash equal to one year' s Base Salary as in effect on the Termination Date (the " Disability Payment" ). The Disability Payment shall be payable on the seven month anniversary of such termination. In addition, the disabled Executive shall be eligible for the continuation of medical benefit plans at the levels in effect as of the Termination Date, at no additional cost to the Executive than that which was in effect as of the Termination Date, for the one-year period immediately following the Termination Date; provided , however , that such medical benefits shall be reduced to the extent comparable medical benefits are made available to the Executive from a successor employer, and the Executive shall be obligated to report such benefits to the Company. Any continuing medical coverage pursuant to this clause is intended to be exempt from Code Section 409A to the extent permitted under Treasury Regulation a71.409A-1(B)(9)(v)(B) or a71.409A-3(I)(1)(iv)(B). However, if it is determined that the continuing medical coverage pursuant to this clause does not qualify for exemption under Code Section 409A the medical coverage will expire as of the Termination Date. If the medical coverage expires early, as provided in the previous sentence, the Company shall provide Executive with a lump sum cash payment equal to twelve (12) times the then applicable monthly premium for the relevant medical plan which the Executive participated in. Such lump sum payment amount, if any, will be paid no later than sixty (60) days after the date on which such medical coverage expires. It is acknowledged and agreed by the Executive that he shall be precluded from terminating his employment for Good Reason in the event that his employment is terminated under this Section 6(d). (e) For Cause; Without Good Reason . The Executive' s employment hereunder may be terminated during the Employment Period: (i) by the Company for Cause (as defined below); or (ii) by the Executive without Good Reason (as defined below). In the event that the Company terminates the Executive' s employment hereunder for Cause, the Termination Date shall be the date specified in the notice of termination for Cause delivered by the Company to the Executive. In the event that the Executive terminates his employment hereunder without Good Reason, the Termination Date shall be no earlier than 30 days following the date on which a notice of termination is delivered by the Executive to the Company. In the event that the Executive' s employment is terminated under this Section 6(e), the Executive shall be entitled to the Accrued Benefits.

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(f) Without Cause; For Good Reason . The Executive' s employment may be terminated during the Employment Period: (i) by the Company without Cause; or (ii) by the Executive for Good Reason. In the event that the Executive' s employment is terminated under this Section 6(f) (whether by the Company or by the Executive), the Termination Date shall be no earlier than 30 days following the date on which a notice of termination is delivered by one party to the other. In the event that the Executive' s employment is terminated under this Section 6(f), the Executive (or his estate or representative, as the case may be) shall be entitled to receive: (1) the Accrued Benefits; and (2) executive level career outplacement services by a mutually agreeable outplacement firm and paid for, as actually incurred by Executive, by the Company. The Executive must commence the outplacement services no later than sixty (60) days following his Termination Date and in no event shall such services be provided beyond December 31 of the second year following the year of termination or, if earlier, the first acceptance by the Executive of an offer of employment; and (3) the Pro Rata Annual Incentive as defined in Section 6(c)(iii) above. The Pro Rata Annual Incentive shall be payable in accordance with the terms of the relevant underlying Incentive Plan and at the same time payments are made to other Company executives pursuant to such Incentive Plan; and (4) a lump sum payment in cash equal to the Executive' s Base Salary and Target Incentive Opportunity as in effect on the Termination Date multiplied by one and one/half (1.5) (the " Separation Payment" ). The Separation Payment shall be payable as follows: (A) an amount equal to the least of the following:

(I) the Separation Payment amount; or (II) two (2) times the Executive' s Base Salary as in effect on the Termination Date; or

(III) two (2) times the annual compensation limit under Code Section 401(a)(17) (i.e., $460,000 for 2008) shall be paid to the Executive in a lump sum thirty (30) days following Executive' s Termination Date; and

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(B) the remainder of the Separation Payment amount, if any, shall be paid to the Executive in a lump sum on the seventh month anniversary of the Executive' s Termination Date.

In addition, an Executive whose employment is terminated under this Section 6(f) shall be eligible for the continuation of medical plan benefits at the levels in effect as of the Termination Date at no additional cost to the Executive than that which was in effect as of the Termination Date for a period of one year; pr ...