EXHIBIT 10.2
BARNES GROUP INC.
1996 LONG TERM INCENTIVE PLAN
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SECTION 1. PURPOSE
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The 1996 Long Term Incentive Plan ("LTIP") is designed to
provide incentive compensation to key executives of Barnes Group
Inc. (the "Company") and its subsidiaries in a form which
relates the financial reward to an increase in the value of the
Company to its shareholders. The plan shall be administered by
the Compensation Committee of the Board of Directors (the
"Committee"). This plan shall be effective for awards granted
with the 1996-1998 Incentive Award Period.
SECTION 2. DEFINITIONS
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2.1 Total Cost of Equity. Total Cost of Equity equals Average
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Stockholders' Equity, multiplied by a percentage cost of
equity selected by the Committee which shall be held
constant throughout the Incentive Award Period.
Average Stockholders' Equity shall be computed by adding
stockholders' equity on December 31st of the prior year to
stockholders' equity at the end of each month of the
applicable year and dividing the result by 13.
2.2 Economic Return. Economic Return for any year equals Cash
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Flow From Operations less the Cost of Equity divided by the
average number of common shares outstanding for the year.
In computing Economic Return, the Committee may make
adjustments for any extraordinary changes which occur during
an Incentive Award Period.
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2.3 Cash Flow from Operations. Cash Flow From Operations equals
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net income, less any dividends on preferred stock, plus
depreciation and amortization, plus any losses, less any
gains, on the sale of plant, property and equipment or other
assets where the gain or loss exceeds $500,000 for each
individual transaction.
2.4 Performance Unit. A Performance Unit is the form of award
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under the LTIP. Its value in any year is equal to the sum
of the Economic Returns per share for the current year and
preceding four years.
SECTION 3. ADMINISTRATION
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The Committee shall designate participants, award a number
of Performance Units to each participant, and perform all other
actions necessary to the proper administration of the LTIP. The
interpretation by the Committee of the LTIP and any awards made
hereunder shall be binding upon the participants and the Company.
SECTION 4. PARTICIPANTS
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Key senior executives of the Company and its subsidiaries
whose activities can contribute significantly to the performance
of the Company are eligible to participate in the LTIP.
SECTION 5. GRANT OF INCENTIVE AWARDS
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5.1 Prior to March 1 of each year, the Committee shall determine
whether or not Performance Units will be granted in the
current year. If they are to be granted, the Committee
shall:
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(a) establish an Incentive Award Period which will commence
on January 1 of the current year and terminate on
January 1 of the year selected by the Committee; provided,
however, that in no event shall it be less than 24 months;
and
(b) designate recipients of Performance Units and the
number of Performance Units to be awarded to each
participant.
5.2 During an Incentive Award Period, new employees and
employees who are promoted or transferred may be granted new
or additional Performance Units.
SECTION 6. PAYMENT
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6.1 Incentive award payments shall be calculated by multiplying
the number of Performance Units held by a participant times
the increase, if any, in the value of the Performance Unit
between the beginning and end of the Incentive Award Period.
6.2 If a participant becomes employed by the Company after the
beginning of an Incentive Award Period, payment under any
such Performance Unit will be reduced by multiplying its
value by a fraction, the numerator of which shall be the
number of full calendar months of the Incentive Award Period
during which the Participant was employed by the Company,
and the denominator of which shall be the number of calendar
months in the Incentive Award Period.
6.3 Notwithstanding anything in the LTIP to the contrary, the
amount of payment made to each participant shall be in the
sole discretion of the Committee. The amount of all such
payments shall be determined by the Committee within 90 days
after the end of the Incentive Award Period.
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6.4 The Committee, in its sole discretion, shall determine
whether all or any portion of any payment made with respect
to the Performance Units held by each participant shall be
deferred and credited to a participant's Incentive Deferred
Compensation Account.
6.5 As soon as practical after the amount of any award is
determined, it shall be paid in cash to the participant or
all or part of it shall be credited to the participant's
Incentive Deferred Compensation Account, all in accord with
the procedures specified in paragraph 9.
SECTION 7. EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH
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If a participant ceases to be an employee prior to the end
of an Incentive Award Period other than by reason of death,
disability, or retirement after attaining age 55, then the
Performance Units granted to the participant shall terminate. If
a participant ceases to be an employee because of death,
disability, or retirement after attaining age 55, then payment
under his Performance Units may be adjusted as set forth in
paragraph 6.2.
SECTION 8. TRANSFERABILITY
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Performance Units and any amount standing to a person's
credit in the Incentive Deferred Compensation Account may not be
transferred or assigned by a participant except by will or by the
laws of descent and distribution.
SECTION 9. INCENTIVE DEFERRED COMPENSATION ACCOUNT
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9.1 To the extent that the Committee decided to defer payment of
any award made under the LTIP, the amount of such deferred
award shall be credited to the
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Company's Incentive Deferred Compensation Account. The
Company shall not be required to segregate or earmark assets
with respect to such account and participants shall have no
interest in any specific asset as a result of the creation
of such account or of any award under the LTIP. All funds
in such accounts shall be available for general corporate
purposes.
9.2 Interest will be credited quarterly on the unpaid amount
standing to any participant's credit in the Incentive
Deferred Compensation Account at the end of each quarter.
On or as soon as practical after the first business day of
January, the Company will pay to each participant who is
less than 60 years old the interest credited to his account
with respect to the prior year. No cash payment will be
made to participants who are employed by the Company and who
have attained age 60.
9.3 The interest rate for purposes of computing interest under
paragraph 9.2 shall be the rate of interest for prime
commercial loans of 90-day maturities charged by Chemical
Bank (or such other New York City bank as the Committee may
select) on the first business day of each quarter.
9.4 Payments from the amount standing to a participant's credit
in the Incentive Deferred Compensation Account shall begin
on the first day of the month following the month in which
the participant ceases to be an employee of the Company.
Payments shall be made in 120 monthly installments (as equal
as possible); provided, however, that, except if otherwise
decided by the Committee, the entire amount then standing to
the participant's credit in the Incentive Deferred
Compensation Account shall be paid in one lump sum to any
person whose employment is terminated other than by death or
by early or normal retirement
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under the applicable retirement plan. Notwithstanding
anything in this section to the contrary, the Committee may
in its discretion either:
(i) without the consent of the participant, advance the time of
payment of any unpaid portion of the award; or
(ii) if the consent of the participant is obtained, further defer
the time of payment of any unpaid portion of the award to a
time not later than 15 years after the termination of the
participant's employment.
9.5 No amendment or termination of the LTIP shall reduce or
cancel any amount standing to a participant's credit in the
Incentive Deferred Compensation Account, prior to the
effective date of such amendment or termination.
9.6 In the event of the death of a participant while there is
still an amount standing to the participant's credit in the
Incentive Deferred Compensation Account, the amount shall be
paid to the beneficiary designated by the participant in
installments; provided, however, that (a) if the beneficiary
is the participant's estate, the funds shall be paid in a
lump sum, and (b) notwithstanding anything in this section
to the contrary, the Committee may advance the time of
payment to a beneficiary of any unpaid funds credited to the
Incentive Deferred Compensation Account. In the absence of
a designated beneficiary, any amount standing to the
participant's credit in the Incentive Deferred Compensation
Account shall be paid in a lump sum to the participant's
estate.
SECTION 10. AMENDMENT
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The LTIP may be amended at any time by the Committee.
Amended: 2/16/96
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