Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On March 13, 2009, Thomas Kittel entered into an Employment Contract (the "Agreement") with Sauer-Danfoss GmbH & Co. OHG ("OHG"), a German subsidiary of Sauer-Danfoss Inc. (the "Company"). Mr. Kittel is presently the Executive Vice President and President-Propel Division of the Company, a position he will retain under the Agreement. Mr. Kittel is based in the offices of OHG in Neumünster, Germany, so the Agreement has been drafted to conform to German employment laws. The Agreement replaces Mr. Kittel's previous Executive Employment Agreement with the Company dated December 1, 2002, a copy of which is attached as Exhibit 10.1(q) to the Company's Form 10-K filed on March 12, 2003, and the related Addendum to Executive Employment Agreement dated December 1, 2002, a copy of which is attached as Exhibit 10.1(r) to the Company's Form 10-K filed on March 12, 2003.

The material terms of the Agreement are as follows:

† The Agreement reflects an annual base salary of EUR 280,000 (approximately US $367,000 at current exchange rates). Consistent with the Company's decision to reduce all executive officers' pay by 10% to 15%, Mr. Kittel's base salary, effective March 1, 2009, will be EUR 252,000 (approximately US $330,000 at current exchange rates).

† The base salary will be subject to annual review by the Compensation Committee of the Company's Board of Directors (the "Compensation Committee").

† Mr. Kittel will be eligible to earn an annual incentive under the Company's 2006 Omnibus Incentive Plan, and any successor plan, subject to achievement of such performance goals as may be established by the Compensation Committee. The Company, however, has determined that it will not issue annual incentive awards in 2009.

† Mr. Kittel will be eligible to receive long-term incentive awards under the Company's 2006 Omnibus Incentive Plan, and any successor plan, subject to achievement of such performance goals as may be established by the Compensation Committee. The Company, however, has determined that it will not issue long-term incentive awards in 2009.

† Mr. Kittel will be eligible for certain perquisites and reimbursements described in the Agreement and applicable Company policies.

† The Agreement will remain in effect indefinitely until terminated pursuant to its provisions.

† Upon certain termination events (e.g., termination by the Company without Cause (as defined in the Agreement) or termination within two years following a Change in Control (as defined in the Agreement)), Mr. Kittel is entitled to receive any accrued payments due at the time of termination, a pro rata portion of the annual incentive he would have earned had he remained employed by the Company through the end of the year, a lump sum severance payment of 1.0 times the sum of his base salary and target incentive opportunity, and (except in the event of a termination following a Change in Control) 12 months' executive outplacement services.

† The Agreement contains non-competition, non-solicitation, confidentiality, and related provisions that are relatively standard for executive employment agreements of this type.

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