THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Baldor Electric Company (BEZ)

3/16/2006 Proxy Information

Of the directors, John A. McFarland was an executive officer of Baldor during fiscal year 2005, R. S. Boreham, Jr. was an executive officer of Baldor through 2004, and R. L. Qualls was an executive officer of Baldor through 2000. In fiscal year 2005, Dr. Qualls provided management consulting services for Baldor for which he was paid $72,000. These services were provided on an as-needed basis and there was no formal arrangement between Baldor and Dr. Qualls as to the terms of the consulting services. Mr. Boreham retired as Chairman of the Board effective the end of fiscal year 2004; however, Mr. Boreham continued to be an employee of the Company with an annual salary of $150,000 and a director of the Company but was not paid any director fees. There was no formal arrangement between Baldor and Mr. Boreham regarding his employment. Mr. Boreham passed away unexpectedly on February 5, 2006. Richard E. Jaudes, a member of the Board of Directors of the Company, is a partner at Thompson Coburn LLP, a law firm that provides legal counsel to the Company.

3/16/2005 Proxy Information

R. S. Boreham, Jr. and John A. McFarland were executive officers of Baldor during fiscal year 2004 and R. L. Qualls was an officer of Baldor through 2000. In fiscal year 2004, Dr. Qualls provided management consulting services for Baldor for which he was paid $72,000. These services were provided on an as-needed basis and there was no formal arrangement between Baldor and Dr. Qualls as to the terms of the consulting services. Mr. Boreham retired as Chairman of the Board effective the end of fiscal year 2004; however, Mr. Boreham continues to be an employee of the Company with an annual salary of $150,000 and a director of the Company but is not paid any director fees. There is no formal arrangement between Baldor and Mr. Boreham regarding his employment. Richard E. Jaudes, a member of the Board of Directors of the Company, is also a partner at Thompson Coburn LLP, a law firm that provides legal counsel to the Company.

3/18/2004 Proxy Information

Compensation Committee Interlocks and Insider Participation

Baldor’s Board of Directors established a Compensation Committee in August 2002. The main responsibility of the Compensation Committee is to approve the salary and contingent compensation arrangements for the Named Executive Officers. The Compensation Committee, in combination with the Company’s Stock Option Committee, also approves any stock options granted to the Named Executive Officers. Prior to the establishment of the Compensation Committee, the Company had no standing compensation committee. The Executive Committee performed functions similar to those customarily performed by such committee by making recommendations to the Board; however, the Board of Directors, as a whole, approved the salary and contingent compensation arrangements for executive officers. The Stock Option Committee administers the 1987 Plan and the 1994 Plan, both Plans relating to employees. The Executive Committee administers the 1989 Plan, the 1996 Plan, and the Director Plan, all relating to non-employee directors. The 1987 Plan, the 1989 Plan, and the 1996 Plan have expired except for options outstanding. The members of the Executive, Compensation, and Stock Option Committees, and descriptions of each committee, are listed in this proxy statement under the caption “Information About the Board of Directors and Committees of the Board”. Of the directors, R. S. Boreham, Jr. and John A. McFarland were executive officers of Baldor during fiscal year 2003 and R. L. Qualls was Vice Chairman of Baldor Electric Company from 1996 through 2000, Chief Executive Officer from 1993 through 1997 and President from 1990 through 1996. In fiscal year 2003, Dr. Qualls provided management consulting services for Baldor for which he was paid $48,000. These services were provided on an as-needed basis and there was no formal arrangement between Baldor and Dr. Qualls as to the terms of the consulting services.

3/28/2003 Proxy Information

Richard E. Jaudes is a partner at Thompson Coburn LLP, a law firm that provides legal counsel to Baldor, since 1997.

In fiscal year 2002, Dr. Qualls provided management consulting services for Baldor for which he was paid $44,000. These services were provided on an as-needed basis and there was no formal arrangement between Baldor and Dr. Qualls as to the terms of the consulting services.