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Exhibit 10(iv)
As amended December 19, 1995
MANAGEMENT INCENTIVE COMPENSATION
CORPORATE PLAN
I. COMPENSATION PLAN
The Plan will be based upon such performance measures as are determined
from time to time by the Compensation and Organization Committee (the
"Committee") such as (a) the consolidated net earnings of the Company as
a percentage return on shareholders' equity, (b) growth in net sales, and
(c) earnings per share. In the discretion of the Committee (in the case
of the Executive Officers) and in the discretion of the Chief Executive
Officer (in the case of non-Executive Officers), payment under the Plan
may be increased or decreased up to 50%.
II. DEFINITION OF TERMS
A. SHAREHOLDER EQUITY - the average of the opening and closing
"Shareholders' equity" of the Company.
B. NET EARNINGS - Consolidated full year's net earnings as shown in
the Annual Report to Shareholders.
C. GROWTH IN NET SALES - Consolidated net sales in the Plan Year
compared to consolidated net sales in the year immediately preceding
the Plan Year, in each case as shown in the Annual Report to
Shareholders, expressed as a percent.
D. EARNINGS PER SHARE - Consolidated full year's earnings per share,
exclusive of restructuring charges, asset write-offs and
restructuring related charges, as shown in the Annual Report to
Shareholders.
E. SALARY - Base salary for the Plan Year.
F. THRESHOLD - Minimum acceptable performance at which incentive
compensation is warranted.
G. TARGETED PERFORMANCE - The performance that is considered
satisfactory and at which performance level management will be
compensated at certain targeted incentive compensation levels.
H. TARGETED INCENTIVE RATE - The percent of base salary that would be
paid if targeted performance is met.
I. MAXIMUM PAYMENT - The percentage of targeted incentive rate which
reflects the maximum annual payment which will be made, before
application of the discretion referred to in Section I.
J. PLAN YEAR - The fiscal year of the Company.
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III. LIMITATIONS
A. To be eligible to receive incentive compensation under this plan,
the individual must be employed by the Company and rendering
services at the end of the fiscal year, except in the case of
retirement, death, or disability or special circumstances as
determined by the Chief Executive Officer, in which event incentive
compensation shall be paid on the basis of the portion of the year
for which services were rendered prior to such retirement, death, or
disability. Periods of vacation will be considered periods during
which services are being rendered.
B. This plan does not constitute a contract between The Stanley Works
and the employee. Participation in the plan in no way constitutes
an employment agreement or guarantee of employment.
IV. DEFINITION OF CHANGE IN CONTROL
For purposes of this Plan, a "Change in Control of the Company" shall be
deemed to have occurred if
A. any "person," as such term is defined in Section 3(a)(9) and
modified and used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company (or of any subsidiary of the
Company), or any corporation owned, directly or indirectly by the
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the
Company's then outstanding securities;
B. during any period of two consecutive years (not including any period
prior to the adoption of this amendment to this Plan), individuals
who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in clause (a), (c) or (d) of this definition) whose
election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute at
least a majority thereof;
C. the shareholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (1) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 75% of the
combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected to implement
a
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recapitalization of the Company (or similar transaction) in which no
"person" (with the exceptions specified in clause (a) of this
definition) acquires 25% or more of the combined voting power of the
Company's then outstanding securities; or
D. the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
V. PRO-RATA PAYMENT FOLLOWING CHANGE IN CONTROL
Notwithstanding any of the preceding provisions of this Plan, upon the
occurrence of any Change in Control of the Company, it shall be deemed,
solely for purposes of this Plan, that the employment of each individual
who is covered under this Plan for the Plan Year in which such Change in
Control occurs has terminated on the date of such Change in Control by
reason of retirement. As soon as may be practicable, each such
individual shall then be paid incentive compensation for such Plan Year
in accordance with Section III(A) hereof but without the application of
the discretion referred to in Section I; provided, however, that the
calculation of such incentive compensation shall be based on the Net
Earnings, the Net Sales, and the Earnings Per Share of the Company and
the individual's Salary during an abbreviated Plan Year which shall
include only those Company fiscal months completed prior to the Change in
Control for which Salary was paid to the individual; and provided further
that all elements entering into such calculation shall be appropriately
adjusted for such short Plan Year.
VI. PAYMENT OF PREVIOUSLY UNPAID AMOUNT FOLLOWING CHANGE IN CONTROL
Notwithstanding any of the preceding provisions of this Plan, upon the
occurrence of any Change in Control of the Company, if any incentive
compensation which any individual earned under this Plan during any Plan
Year which ended prior to the Change in Control has neither been paid to
such individual nor credited to such individual's deferred account under
The Stanley Deferred Compensation Plan for Participants in Stanley's
Management Incentive Plans, such incentive compensation shall be paid to
such individual immediately following the first date on which such
incentive compensation can be calculated and shall in no event be paid
later than the later of (i) the first March 1 following the Plan Year
with respect to which such incentive compensation was earned or (ii) the
fifteenth (15th) day following the Change in Control.
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