EXHIBIT 10(xi)(a)
Effective--May 20, 1997
THE STANLEY WORKS
SUPPLEMENTAL EXECUTIVE RETIREMENT PROGRAM
The Supplemental Executive Retirement Program ("SERP")
provides a supplemental retirement benefit to its Participants. As explained
below, this supplemental benefit is a supplement to the defined benefit under
Stanley's pension plans.
1. TARGET BENEFIT. The "Target Benefit" for a Participant, expressed as a
life annuity equal to a percentage of Average Pay and subject to discount and
to certain Offsets, will be based on years of service according to the
following schedule.
3% for each of the first 5 years
2% for each of the next 15 years
1% for each of the 5 years thereafter
For example, upon a Participant's retiring at age 60 after 20 years of service,
the Participant's Target Benefit would be 45% of Average Pay.
2. TERMINATION PRIOR TO AGE 60.
(a) TERMINATION BEFORE AGE 54. No SERP benefit will be paid to any
Participant whose employment terminates before the age of 54.
(b) DISCOUNT FOR RETIREMENT PRIOR TO AGE 60. For each month prior to
age 60 that the Participant retires, the Target Benefit will be reduced
.167% (i.e., 2% per year). For example, a Participant who retires at age
55 after 20 years of service would have a benefit, before Offsets, equal
to 90% of the Target Benefit, or 40.5% (45% x 90% = 40.5%) of Average Pay.
3. OFFSETS. The benefit otherwise payable under the SERP as explained in
sections 1 and 2 will be reduced by the "Offsets" described in sections 3(a)
and 3(b)
(a) the benefit under Stanley's pension plan including pension
benefits restored by Stanley's excess benefit plan; and
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(b) the Participant's Social Security benefit;1
resulting in the benefit net of Offsets.
4. PARTICIPANTS. The Participants (the "Participants") in the SERP will be
Stanley's chief executive officer and such other executives not to exceed 24 as
shall be designated by the chief executive officer and whose names shall be
filed with the records of the Compensation and Organization Committee (the
"Committee") of Stanley's Board.
5. TIME FOR PAYING BENEFITS; FORM OF PAYMENT. Amounts payable under the
SERP will be distributed when benefit payments commence under Stanley's pension
plan. The form of payment of benefits under the SERP will be a life annuity
unless a timely election is made to receive a lump sum, in which case the form
of payment will be a lump sum computed in the same manner as under the Stanley
pension plan. To be timely, an election to receive a lump sum payment must be
made in writing prior to the beginning of the one-year period preceding the
date on which the Participant dies, becomes disabled, or otherwise separates
from service; an election made after the beginning of such one-year period will
be considered timely only with the approval of the Committee.
6. AVERAGE PAY. Average pay will be one-third of the Participant's highest
total pay (salary and management incentive) as measured for purposes of
Stanley's pension plan (including the restoration of pension benefits by
Stanley's excess benefit plan) for any consecutive 36-month period.
7. DEATH BENEFICIARY. Upon a Participant's death, any benefit payment will
be made to the beneficiary determined under Stanley's qualified pension plan
unless the Participant designated in writing a different beneficiary to receive
such benefit.
8. MISCELLANEOUS.
(a) AMENDMENT. The Committee may at any time amend the SERP so long
as the benefits of no one then a Participant are diminished as a result.
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1 If the Participant retires prior to being eligible for Social Security, the
Social Security benefit offset will not commence until the Participant is
eligible for Social Security. For example, for a retirement in 1997 by a
Participant who is 60 years old, there would be no Social Security offset until
the Participant is 62, the age of eligibility for Social Security.
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(b) ADMINISTRATION OF THE SERP. The SERP will be administered by the
Committee. The Committee is vested with full authority (including full
discretionary authority) to administer, interpret, and make rules
regarding the SERP as it may deem advisable and to make determinations in
its discretion that shall be final, binding, and conclusive upon all
persons. No member of the Board of Directors or the Committee will be
liable for any action or determination made in good faith with respect to
the SERP.
(c) GOVERNING TEXT. The SERP, including any amendments, will
constitute the entire agreement between Stanley and any Participant or
beneficiary regarding the subject matter of the SERP. The SERP, including
any amendments, will be binding on Stanley, Participants, beneficiaries,
and their respective heirs, administrators, trustees, successors, and
assigns.
(d) RIGHTS OF PARTICIPANT. Any person entitled to receive benefits
under the SERP will have the rights of an unsecured general creditor of
Stanley.
(e) CLAIMS OF CREDITORS. The right of any Participant or beneficiary
to a benefit under the SERP will not be subject to attachment or other
legal process for the debts of such Participant or beneficiary. A benefit
of a Participant or beneficiary will not be subject to anticipation,
alienation, sale, transfer, assignment, or encumbrance.
(f) SPECIAL DISTRIBUTIONS. Whenever, in the opinion of the Committee,
a person entitled to receive a benefit under the SERP is unable to manage
his or her financial affairs, the Committee may direct that payment be
made to a legal representative or relative of such person for his or her
benefit. Alternatively, the Committee may direct that any payment be
applied for the benefit of such person in such manner as the Committee
considers advisable. Any payment made in accordance with this section will
be a complete discharge of any liability for the making of such payment
under the provisions of the SERP.
(g) TERMS OF EMPLOYMENT. Participation in the SERP will not give an
individual any right to remain in the service of Stanley, and an
individual will remain subject to discharge to the same extent as if the
SERP had not been adopted.
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