Exhibit 10.2
Terms and Conditions Applicable to
Long Term Performance Awards
issued pursuant to the Stanley Works 2001 Long Term Incentive Plan
This document sets forth the Terms and Conditions applicable to long term
performance awards ("Performance Awards") issued to eligible Employees pursuant
to The Stanley Works 2001 Long-Term Incentive Plan (the "Plan") as described in
the Award Document.
Each Performance Award represents the right of the Participant to receive a
number of Shares to be issued if the Company achieves Performance Goals for the
Measurement Period as set forth in the Award Document.
1. Time and Manner of Settlement. As soon as practicable following
completion of the applicable Measurement Period and assuming that the
Threshold Performance Goals are achieved and employment requirements
are satisfied, the Company shall issue a number of Shares to the
Participant, in settlement of the Participant's Performance Award,
equal to (i) the number of Shares specified in the Award Document to be
issued based upon the Performance Goals achieved plus (ii) in the event
performance falls between the Threshold and Target or Target and
Maximum Goals as specified in the Award Document, a pro rata number of
Shares calculated as follows (rounded to the closest whole number):
S = (A-L/N-L)x(SN-SL)
where:
S =the additional number of Shares to be issued
A =the actual EPS or ROCE achieved
L =the EPS or ROCE Goal reached
N =the next highest EPS or ROCE Goal
SN =the number of Shares designated for issuance at the next
highest EPS or ROCE Goal; and
SL = the number of Shares
designated for issuance at the EPS or ROCE Goal reached.
If, at the time of settlement, the Participant meets or exceeds the
Minimum Ownership Guidelines, Shares shall be issued in the form of
Unrestricted Stock. If the Participant does not meet the applicable
Minimum Ownership Guidelines at the time of settlement, the Shares
shall be issued in the form of Restricted Stock to the extent necessary
for such Participant to meet such Minimum Ownership Guidelines at the
time of settlement. Any additional Shares shall be issued in the form
of Unrestricted Stock.
2. Rights of a Shareholder. The Participant shall not have any rights
of a shareholder with respect to the Performance Awards or any
Shares issued in settlement thereof prior to the date of
settlement.
3. Transferability. Transferability shall be as set forth in the
Plan.
4. Adjustments. Notwithstanding any other provision hereof, the
Committee shall have authority to make adjustments in the terms
and conditions of, and the criteria included in, Performance
Awards granted hereunder, as set forth in the Plan.
5. Miscellaneous. The Committee shall have full discretionary
authority to administer the Performance Awards and to interpret
the terms of the Award Document and this document, which authority
includes the authority to waive certain conditions in appropriate
circumstances. All decisions or interpretations of the Committee
with respect to any question arising in respect of the Performance
Awards shall be binding, conclusive and final. The waiver by
Stanley of any provision of this document or an Award Document
shall not operate as or be construed to be a subsequent waiver of
the same provision or a waiver of any other provision of this
document or any Award Document. The validity and construction of
the terms of this document and any Award Document shall be
governed by the laws of the State of Connecticut. The terms and
conditions set forth in this document and any Award Document are
subject in all respects to the terms and conditions of the Plan,
which shall be controlling. The Participant agrees to execute such
other agreements, documents or assignments as may be necessary or
desirable to effect the purposes hereof.
6. Unfunded Arrangement. The Performance Awards represented in any
Award Document constitute an unfunded unsecured promise of Stanley
and the rights of the Participant in respect of the Performance
Awards are no greater than the rights of an unsecured creditor of
Stanley.
7. Capitalized Terms. The following capitalized terms shall have the
meaning set forth below for purposes of any Award Document. All
other capitalized terms used in this document shall have the
meanings set forth in the Plan.
Award Document. A letter or combination of letters to a
Participant that advises the Participant that he or she has been
selected to Participate in the program and sets forth the EPS
Performance Goals, ROCE Performance Goals and Shares at the
Threshold, Target and Maximum Levels, signed by the Chairman of
the Committee, in the case of an Award Document to the Chief
Executive Officer, and by the Chief Executive Officer, in the case
of an Award Document to any other Participant.
EPS Performance Goals. Threshold, Target and Maximum earnings per
share ("EPS") performance to be achieved over the Measurement
Period as set forth in the Award Document.
Measurement Period. The period during which financial performance
is measured against the applicable Performance Goals as set forth
in the Award Document.
Minimum Ownership Guidelines. Minimum levels of stock ownership
Participants are expected to reach over time, as set forth in the
Award Document.
Performance Goals. EPS Performance Goals and ROCE Performance
Goals as defined herein.
Restricted Stock. Common Stock of the Company that confers on
holders the right to vote and receive dividends, but that is
subject to certain restrictions on sale and transfer. All
restrictions on sale and transfer of such stock shall lapse on the
date the Participant's employment with the Company or any
Affiliate terminates, regardless of the reason for termination,
provided, however, that a transfer of employment from the Company
to any Affiliate or from any Affiliate to another Affiliate or to
the Company shall not be deemed a termination of employment
hereunder. In addition, if through the acquisition of additional
Shares or otherwise, the total market value of shares owned by a
Participant (restricted and unrestricted) exceeds the applicable
Minimum Ownership Guidelines, the restrictions on the sale and
transfer of that number of Shares of Restricted Stock in excess of
the number required to meet the applicable Minimum Ownership
Guidelines shall lapse.
ROCE Performance Goals. Threshold, Target and Maximum return on
capital employed ("ROCE") performance to be achieved over the
Measurement Period as set forth in the Award Document.
Shares. Shares of Restricted Stock or Unrestricted Stock to be
issued if Performance Goals are achieved, as specified in an Award
Document, with 50% of Shares allocated to EPS Performance Goals
and 50% of Shares allocated to ROCE Performance Goals.
Unrestricted Stock. Common Stock of the Company that may be sold
at any time.