Compensation and Organization Committee
Report
The Compensation
and Organization Committee has reviewed and discussed with management the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K.
Based on this review and discussion, the Compensation and Organization Committee
recommended to the Board of Directors that the Compensation Discussion and
Analysis be included in the Companys Proxy Statement and its Annual Report on
Form 10-K.
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Compensation and Organization
Committee
|
|
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Benjamin H. Griswold, IV
(Chair)
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George W. Buckley
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Carlos M. Cardoso
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Marianne M.
Parrs
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10
Executive Compensation
Compensation Discussion and
Analysis
Executive Summary
The merger with
The Black & Decker Corporation was an important achievement in our ongoing
strategy to diversify, transform and profitably expand our business portfolio.
The Merger, which was completed on March 12, 2010, expanded the Companys global
reach in both hand and power tools and enhanced our global cost leadership. The
Merger will permit us to successfully unlock approximately $500 million of cost
synergies in three years, $150 million greater than was projected at the time of
the Merger. We have realized $450 million of this to date with the incremental
$50 million expected to be realized in 2013. We also remain on track to attain
the expected $300-$400 million in revenue synergies by the end of
2013.
The work we
have done since the Merger contributed to these results, as we continued to
introduce new and innovative products in various businesses around the world,
increase the diversity of our customer base, and expand in various geographies
through acquisition. From the date the Merger was announced to December 31,
2012, those shareholders who held Black & Decker stock have seen a 99%
increase in the stock price (reflecting the issuance of 1.275 shares of The
Stanley Works common stock for each share of Black & Decker stock) and
shareholders who held The Stanley Works stock have seen a 64% increase in stock
price. For shareholders of both companies, the increase is well above the 37%
increase seen by investors in the S&P 500 over the same period of time.
Additionally, when factoring in the consistently increasing dividend since the
Merger, the amount of capital returned to both legacy shareholders has made the
total return even greater.
Our post-Merger
compensation programs have had an important and direct influence on the
financial goals we have attained and the value that has been delivered to
shareholders. As depicted in the chart below, approximately 75- 85% of our
executives compensation is variable, tied directly to the achievement of the
financial goals we have described above or share price performance. The result
has been strong pay for performance alignment.
2012 Named Executive Officer Pay
Mix
The rewards
earned by our executives in 2012 reflect our achievement relative to our
pre-established goals, including:
-
Pay and Performance:
Considering all
elements of compensation (salary, annual incentives, performance units and an annual portion of our long-term retention
grants), we found that our executives pay is strongly aligned with our compensation philosophy as well as our
operational and total shareholder return (TSR) performance, measured relative to our compensation peer
group.
-
Pay Opportunity:
Total compensation opportunity for our named executive officers is
targeted to and aligned with the 50
th
percentile of our
peer group.
-
Pay and Performance:
An analysis of Chief Executive Officer realizable pay, as
a percentage of targeted pay opportunity, is strongly aligned with the
change in our TSR over the most recent 1- and 3-year periods. Further,
analysis of actual compensation of our executives indicates that they were
paid, in the aggregate, at the 66
th
percentile relative to peers
in 2011 (the latest year available for consistent comparisons). This
compares with our pro-forma composite performance over the most recent 1-,
2- and 3-year periods that varied by performance metric between the
59
th
percentile and the
72
nd
percentile.
-
Annual Incentive Compensation - Management
Incentive Compensation Plan (MICP):
Our
executives helped us achieve performance in 2012 that resulted in a weighted
payout across all measures of 124% of target.
11
-
Long-Term Incentives - Performance
Units:
We achieved TSR at the
25
th
percentile of the LTIP peer group and achieved earnings per
diluted share (EPS) and return on capital employed (ROCE) goals
established for the performance period as detailed in the table on page
18.
-
Long-Term Incentives - Time Based Equity
Awards:
We also provide our executives an
annual equity grant, comprised of time-vested restricted stock units and stock
options, which represents 20% of target annual total pay, on average, and
supports the retention and stability goal within our program while also
maintaining alignment with shareholders as the value of restricted stock units
and stock options is tied to our share price.
In addition,
our compensation programs follow executive compensation governance best
practices, including:
-
Robust stock ownership guidelines of 10x base
salary for our Chairman and Chief Executive Officer,
5x for our President and Chief Operating Officer and Chief Financial
Officer and 3x for all other executive officers.
-
Holding period requirement of 1-year after vesting
of restricted stock units or the exercise of stock options
to further align executive ownership with shareholder
returns.
-
No future excise tax gross-ups will be provided in any new change-in-control severance arrangements.
-
Double trigger vesting provisions
requiring both the occurrence of a change-in-control of the Company and termination of employment in order for replacement
awards to vest under our annual MICP and our Long-Term Incentive Compensation
Plan.
-
No tax gross-ups on perquisites.
-
Compensation program risk assessment conducted
annually and reviewed by the Compensation Committee.
-
Policy regarding forfeiture of incentive awards in the event of a financial
restatement under
certain circumstances.
-
Policies prohibiting hedging and discouraging
pledging of Company stock are maintained.
-
Executive compensation opportunity is
benchmarked at the 50
th
percentile of our peers.
-
Chief Executive Officer long-term incentive compensation mix historically has been at least 50%
performance units.
-
Dividend equivalents are paid on equity compensation awards only if the underlying
award is earned
or vested.
-
Internal pay ratio between our Chairman and Chief
Executive Officer and our President and Chief
Operating Officer is reasonable.
-
Our 2009 Long-Term Incentive Plan and the proposed 2013 LTIP each expressly prohibit option re-pricing
and cash buyouts of so called “out-of-the-money” options without shareholder approval.
-
Realizable pay analysis is conducted to
demonstrate the impact of performance on pay actually realizable
to our Chairman and Chief Executive Officer.
Our Response to the Say on Pay Vote:
In response to
shareholder concerns raised in 2011, we enhanced the Companys corporate
governance and compensation practices in a number of areas. We believe that
these changes directly contributed to the favorable shareholder Say on Pay vote
in early 2012, when 93.7% of shareholders voted in support of our Management Say
on Pay proposal.
The Board has
reviewed current views on corporate governance best practices and considered the
strong shareholder support for our programs as evidenced by last years Say on
Pay vote and determined that our executive compensation programs are designed to
reward pay for performance.
At the 2013
Annual Meeting of Shareholders, we will again hold an advisory vote to approve
executive compensation. The Compensation Committee will continue to consider the
results of these annual advisory votes in the governance and design of executive
compensation programs as it evaluates what is in the best interest of the
Companys shareholders.
12
Our Executive Compensation
Program
The purpose of our executive compensation
program is to attract and retain talent and to reward our executives for
performance that benefits the Company. To that end, we seek to compensate our
executives in a manner that:
-
is competitive;
-
rewards performance that creates shareholder
value, while maintaining an appropriate balance between profitability and
stability; and
-
encourages executives to drive efficiencies by
using capital judiciously.
Setting Compensation
Philosophy
As a general
proposition, the Compensation Committee believes that aggregate expenditures for
executive base salaries should be managed to the median of salary expenditures
when compared to comparable companies. The Compensation Committee also believes
that annual and long-term incentive compensation expenditures should be targeted
at median market levels. Targeting the market median, while giving executives
the opportunity to earn more (or less) than this amount based on Company
performance, ensures that the Company can attract and retain the high caliber of
executive talent it seeks. In October 2012, the Compensation Committee reviewed
market data prepared by Pay Governance LLC (Pay Governance) and Towers Watson.
The Compensation Committee found that, on average for the named executive
officers (other than Mr. Archibald), actual compensation was in fact targeted
very close to the intended median positioning. Mr. Archibalds compensation
levels were negotiated in connection with the Merger (as discussed elsewhere in
this Proxy Statement) and were based on various legacy Black & Decker
practices and other Merger-related factors.
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|
|
|
|
|
|
Target Total Compensation
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|
|
|
Base
Salary
|
|
Target Total
Cash
|
|
(excluding Merger
Specific Awards)
|
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Targeted Positioning:
|
|
Median
|
|
Median
|
|
Median
|
|
Actual Positioning:
|
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- vs. Peer Group
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5% Above Median
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1% Above Median
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At the
Median
|
Process
In developing
and maintaining appropriate compensation programs and target compensation levels
for our executive officers, including our named executive officers, the
Compensation Committee:
-
monitors and evaluates executive compensation by
periodically reviewing detailed tally sheets for each named executive
officer. The tally sheets provide an overview of annual compensation and
benefit values offered to each executive, the value of all outstanding equity
awards, the accrued value of retirement benefits, and the amount of the
Companys other obligations in the event the executives employment terminates
under various circumstances, including death, disability, involuntary
termination without cause, or in connection with a change in control of the
Company.
-
annually reviews market data prepared by our
compensation consultant to ensure that compensation levels are in line with
the labor markets in which we compete for executive talent. The primary set of
market data comes from the compensation information publicly filed by the
following 17 companies (our Peer Group).
Cooper Industries
|
Illinois Tool Works
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Sherwin Williams
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Danaher Corp.
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Ingersoll-Rand
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SPX Corp.
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Dover Corp.
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Jarden Corp.
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Textron
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Eaton Corporation
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Masco Corp.
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Tyco International
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Emerson Electric
|
Newell Rubbermaid
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W. W. Grainger
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Parker Hannifin
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Whirlpool Corp.
|
The Peer Group
is the same used for the 2011 review, with the exception of Fortune Brands.
Fortune Brands reorganized and its new size is too small for meaningful
comparison purposes.
13
These data
points create ranges of compensation values that the Compensation Committee
considers in setting executive salary levels and incentive opportunities that
are consistent with the Companys overall objectives. The benchmark data reviewed by the Compensation
Committee are statistical summaries of the pay practices at these companies
and are not representative of the compensation levels at any one
organization.
-
annually reviews the Companys financial
performance, including an assessment provided by our compensation consultant
of actual compensation received by the named executive officers and also the
compensation realizable by our Chairman and Chief Executive Officer in
relation to the performance of the Company. Based on the results of this
assessment and within the broader framework of the Companys annual and
long-term financial results, the Compensation Committee assesses whether the
Companys incentive programs are working as intended and paying for
performance. As noted in the Executive Summary, compensation realizable by our
Chairman and Chief Executive Officer and received by our executive officers
was strongly aligned with our performance in 2012 and over the three-year
period ending in 2012.
-
discusses compensation matters, other than those
pertaining to the Chairman and Chief Executive Officer, with our Chairman and
Chief Executive Officer and other management representatives, and meets in
executive session with our compensation consultant, without management
present, to evaluate managements input. The Compensation Committee also
solicits comments from other Board members regarding its recommendations at
regularly scheduled Board meetings.
-
establishes performance goals for the Companys
short-term and long-term performance award programs. Performance goals for our
performance award programs are recommended by management based on the
Companys historical performance, strategic direction, and anticipated future
operating environment, and are generally established during the first quarter
of a performance cycle. These goals are tied to the Companys annual business
plan and operating budget, which are approved by our Board of Directors at or
prior to the time the goals are set. The Compensation Committee evaluates the
appropriateness of the proposed goals, and from time to time requests our
compensation consultant to opine on the degree of difficulty inherent in
achieving those goals. The Compensation Committee has final authority over
goal-setting and approves the goals when satisfied that they are set at
reasonable but appropriately challenging levels.
Role of
Consultant
To enhance the Compensation Committees
ability to perform its responsibilities, the Compensation Committee has in
recent years retained the services of an independent compensation consultant.
The Compensation Committee has retained Pay Governance to consult and advise on
executive compensation issues since October 2011. As advisor to the Compensation
Committee, Pay Governance reviewed the total compensation strategy and pay
levels for the Companys named executive officers, examined all aspects of the
Companys executive compensation programs to ensure their ongoing support of the
Companys business strategy, informed the Compensation Committee of developing
legal and regulatory considerations affecting executive compensation and benefit
programs, and provided general advice to the Compensation Committee with respect
to compensation decisions pertaining to the Chairman and Chief Executive Officer
and senior executives. Pay Governance works exclusively for the Compensation
Committee and provides no other services to the Company.
Compensation
Components
Pay Mix
The Compensation Committee believes that a
significant portion of each executive officers compensation opportunity should
be variable in order to ensure that median or above-median compensation is only
delivered when business results are strong and we have created value for our
shareholders. The Compensation Committee also believes, however, that it is
important to pay base salaries that relate appropriately to each executives
level of responsibility, talent and experience in order to provide financial
predictability to the individual. As illustrated in the Executive Summary, the
mix of compensation between base salary, annual management incentive
compensation and annual long-term incentive awards is targeted such that 75%85%
of our named executive officers total annual compensation is variable and
dependent on performance results. The Compensation Committee believes this mix
provides an appropriate balance between the financial security required to
attract and retain qualified individuals and the Compensation Committees goal
of ensuring that executive compensation rewards performance that benefits our
shareholders over the long term.
14
Base
Salaries
The table below
illustrates the 2011 and 2012 base salaries of our named executive officers.
Salaries may exceed or trail the median for a variety of reasons, including
performance considerations, experience level, length of service in current
position, additional responsibilities, value to the Company beyond the core job
description, or retention risk. As noted above, the named executive officers
(other than Mr. Archibald) are aligned with median market levels.
|
|
December 31, 2011
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|
December 31, 2012
|
John F. Lundgren
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$1,250,000
|
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$1,300,000
|
Donald Allan, Jr.
|
|
$575,000
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$625,000
|
Jeffery D.
Ansell
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$525,000
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$575,000
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Nolan D. Archibald
|
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$1,500,000
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$1,500,000
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James M. Loree
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$780,000
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$810,000
|
Annual
Incentive Compensation - MICP
All of our
executive officers, including the named executive officers, participate in the
annual incentive compensation programs under the Companys 2012 MICP. These
programs are designed to balance the complementary short-term goals of
profitability and stability, encouraging our executives to maximize
profitability and efficiency while promoting stability in our annual operating
condition. The program measures are evenly weighted between EPS and cash flow
multiple (operating cash flow less capital expenditures divided by net
earnings). The Compensation Committee believes evenly weighting these two
metrics supports the objective of maximizing profitability and efficiency while
promoting stability in our annual operating condition, as both EPS and cash flow
are essential for high quality earnings. Executives with group or divisional
responsibility have additional measurements that can include such measures as
divisional operating margin, working capital management and gross margin
percent. The Compensation Committee believes including these measurements for
those with group or divisional responsibility, and providing appropriate weight
among all such metrics for these executives, provides incentive for such
executives to exercise financial discipline while growing their businesses and
to bear in mind the interests of the Company as a whole, rather than only those
of the groups or divisions they oversee, as part of the decision making process.
With the exception of Mr. Archibalds award, which was established in his
Employment Agreement at $1,875,000, target awards are set as a percentage of
each officers base salary. For 2012, the named executive officer target bonus
opportunities were: Mr. Lundgren 150%, Mr. Allan 80%, Mr. Ansell 80%, and
Mr. Loree 100%. MICP payouts will vary from 0% to 200% of the target bonus
opportunity depending on actual performance. The weighting of measures,
potential bonus payouts, and actual bonuses earned for 2012 performance are
illustrated in the table below.
MICP Payout for 2012 Performance
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Weighting of
Measures
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Corporate
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Group
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Potential
Bonus Payouts
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Weighted
Avg.
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Gross
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Payout on
All
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Cash
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Operating
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Working
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Margin
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Measures
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EPS
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Flow
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Margin
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Capital
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Percent
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Threshold
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Target
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Maximum
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(% of target)
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Payout
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John F. Lundgren
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50%
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50%
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0%
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0%
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0%
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$937,500
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$1,875,000
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$3,750,000
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124%
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$2,325,000
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Donald Allan, Jr.
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50%
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50%
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0%
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0%
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0%
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$230,000
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$460,000
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$920,000
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124%
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$570,400
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Jeffery D.
Ansell
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25%
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25%
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20%
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10%
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20%
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$210,000
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$420,000
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$840,000
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137%
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$575,400
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Nolan D. Archibald
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50%
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50%
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0%
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0%
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0%
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$1,875,000
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100%
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$1,875,000
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James M. Loree
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50%
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50%
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0%
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0%
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0%
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$390,000
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$780,000
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$1,560,000
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124%
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$967,200
|
Actual
performance in 2012 with respect to corporate performance goals resulted in a
weighted average payout across all measurements equal to 124% of target for
corporate executives. The corporate performance goals and results for the 2012
performance period are illustrated below:
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2012
Result
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Threshold
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Target
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Maximum
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(% of target)
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EPS
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$5.56
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$5.85
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$6.14
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91%
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Cash Flow Multiple
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80%
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100%
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120%
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121%
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15
Based on the
corporate results discussed above and the results of his division, Mr. Ansell
earned a bonus equal to 137% of his target bonus. The specific divisional
operating margin, working capital and gross margin percent goals and results are
not disclosed as the disclosure of such information would result in competitive
harm to the Company and would be of limited additional use to investors. The
Company does not disclose goals and results for specific divisions.
Long-Term
Incentive Compensation
The
Compensation Committee believes that establishing a culture of stock ownership
is an effective way to incentivize executives to achieve sustainable performance
results and maximize long-term shareholder value. To that end, the Company is
authorized to grant equity-based awards, including stock options, time-vesting
restricted shares or units (RSUs), and performance-vesting shares or units
(performance units) under its 2009 Long-Term Incentive Plan and, subject to
shareholder approval, under its new 2013 Long-Term Incentive Plan. In 2012, the
Company granted stock options, RSUs and performance-vesting units to its named
executive officers as part of their regular compensation packages. The
Compensation Committee believes stock options and RSUs are useful vehicles for
rewarding management for successful share price appreciation, aligning their
interests with shareholders and bolstering retention. The performance units are
a key component linking pay with performance and aligning management with the
Companys key strategic initiatives. The stock options and RSUs vest in four
equal annual installments on the first four anniversaries of the grant date; the
stock options expire 10 years from the grant date. The performance units for the
performance period commencing in 2012 will be earned or forfeited following the
conclusion of a three year performance cycle depending on the achievement of
pre-established EPS and ROCE performance goals for each year in the cycle and a
three-year TSR goal.
The
Compensation Committee includes EPS as a performance goal in both the annual
incentive and long-term performance award program because it believes EPS is a
critical driver of shareholder value that must be balanced over both near- and
longer-term time horizons. The Compensation Committee does not want managers
pursuing other goals without considering the effect of such goals on EPS.
Further, the metric is weighted differently in the two plans. Because earnings
growth is felt to be more readily achievable in the near-term, EPS is weighted
50% in the MICP but only at 35% in the performance unit plan (as described in
more detail below).
The
Compensation Committee believes that the mix of stock options, RSUs and
performance units places a substantial portion of compensation at risk and
effectively links equity compensation values to shareholder value creation and
financial results. The allocation of the long-term incentive values among stock
options, RSUs and performance units varies by named executive officer. Our most
senior officers have a greater percentage of their long-term incentive awards
allocated to performance units than other officers and employees do because they
have the greatest ability to influence the financial measures underlying the
program. For Messrs. Lundgren and Loree, this equity mix has resulted in
approximately 50% or more of the total long-term incentive value delivered in
performance units. The following table shows the 2011 and 2012 allocation of
regular long-term incentive awards for our named executive officers (other than
Mr. Archibald):
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2012
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2011
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Stock
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Performance
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Stock
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Performance
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Options
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RSUs
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Units
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Options
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RSUs
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Units
|
John F. Lundgren
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19%
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27%
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54%
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20%
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24%
|
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56%
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Donald Allan, Jr.
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28%
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37%
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35%
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30%
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36%
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34%
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Jeffery D.
Ansell
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28%
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39%
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33%
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30%
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36%
|
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34%
|
James M. Loree
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22%
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30%
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48%
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23%
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28%
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49%
|
The performance
unit component of our current long-term incentive program is designed to pay out
at market-competitive levels only when we achieve and sustain profitability and
market return goals over three years. Accordingly, 40% of performance unit
payouts are contingent upon improvement in ROCE, 35% on EPS growth, and 25% on
TSR relative to our peers. The weighting of these goals is designed to encourage
participants to focus first on capital efficiency, second on long-term
profitability, and third on value creation relative to our peers. This approach
recognizes that returns typically take longer to develop versus earnings and
that relative to TSR, while an important assessment of long-term performance,
returns are not as directly influenced by our management team. The ROCE
computation is defined as net earnings divided by a two point average of capital
employed; net earnings adds back after-tax interest expense and intangibles
amortization, and capital employed represents debt plus equity less cash. The
TSR calculation is based on an annualized rate of return reflecting share price
appreciation and dividends paid during the measurement period with starting and
ending prices measured as 20-day averages to account for daily
16
trading
volatility. While we may re-evaluate the measures used in the performance unit
program in future years, or the weighting of those measures, we believe that
ROCE, EPS, and TSR currently provide effective tools for measuring the value we
create and sustain, assessing our achievement of strategic goals, and evaluating
our long-term performance and potential.
Performance
goals for each performance cycle are recommended by management based on the
Companys historical performance, strategic direction, and anticipated future
operating environment, and are generally established during the first quarter of
the performance cycle. The Compensation Committee considers managements
recommended performance goals, the Companys performance-to-date and strategic
direction, and the nature of the Companys future operating environment, and
once satisfied with the degree of difficulty associated with goal achievement,
approves the targets for each performance cycle. As a general rule, the
Compensation Committee seeks to establish goals such that the likelihood of
missing the target goal is at least as high as the likelihood of achieving the
target goal based on reasonable assumptions and projections at the time of
grant. The Compensation Committee may establish the target at a higher or lower
level in appropriate circumstances.
Threshold,
target and maximum EPS and ROCE goals are established for each fiscal year, or
portion thereof, during the performance period. At the end of the performance
period, a weighted average payment is made based on performance achieved by the
end of each fiscal year during the period relating to these goals plus an amount
related to achievement of TSR goals. The threshold and maximum performance goals
for the 2011-2013 and 2012-2014 performance cycles are as follows:
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EPS
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ROCE
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TSR
|
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Threshold
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Maximum
|
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Threshold
|
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Maximum
|
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Threshold
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Maximum
|
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2011-2013
|
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Year 1
|
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$4.60
|
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$5.09
|
|
Year 1
|
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10.4%
|
|
12.4%
|
|
|
|
|
|
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Performance
|
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Year 2
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$4.95
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$6.05
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Year 2
|
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11.8%
|
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13.8%
|
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25
th
|
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75
th
|
|
|
Cycle
|
|
Year 3
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$5.40
|
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$6.60
|
|
Year 3
|
|
13.3%
|
|
15.3%
|
|
percentile
|
|
percentile
|
|
|
|
|
2012-2014
|
|
Year 1
|
|
$5.26
|
|
$6.43
|
|
Year 1
|
|
12.0%
|
|
14.0%
|
|
|
|
|
|
|
Performance
|
|
Year 2
|
|
$5.80
|
|
$7.09
|
|
Year 2
|
|
13.3%
|
|
15.3%
|
|
25
th
|
|
75
th
|
|
|
Cycle
|
|
Year 3
|
|
$6.38
|
|
$7.80
|
|
Year 3
|
|
13.9%
|
|
15.9%
|
|
percentile
|
|
percentile
|
|
For the
2012-2014 performance cycle, which commenced January 2, 2012, the Compensation
Committee determined that the likelihood of missing the target goal is at least
as high as the likelihood of achieving the target goal.
The following
tables illustrate the award opportunities associated with the 2012-2014
performance cycle and the goals, actual performance results and payouts
associated with the recently completed 2010-2012 performance cycle. The award
opportunities associated with the 2011-2013 performance cycle are set forth in
the Companys March 9, 2012 Proxy Statement on page 21.
2012-2014 Performance
Cycle*
|
|
Potential
Performance Units Earned
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
John F. Lundgren
|
|
23,767
|
|
47,535
|
|
79,224
|
Donald Allan, Jr.
|
|
2,915
|
|
5,831
|
|
11,662
|
Jeffery D.
Ansell
|
|
2,662
|
|
5,324
|
|
10,648
|
James M. Loree
|
|
12,359
|
|
24,718
|
|
39,549
|
|
*
|
|
Mr. Archibald will
receive a cost synergy bonus pursuant to his employment agreement,
provided certain goals are met, and therefore is not a participant in the
Companys long-term performance award programs.
|
17
2010-2012 Performance
Cycle
|
|
Goals
|
EPS
|
|
ROCE
|
|
TSR
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Achieved
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Achieved
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Achieved
|
Y 1
|
|
$1.56
|
|
$1.73
|
|
$1.90
|
|
> $1.90
|
|
Y 1
|
|
8.0%
|
|
9.0%
|
|
10.0%
|
|
|
> 10.0
|
%
|
|
|
25
th
percentile
|
|
50
th
percentile
|
|
75
th
percentile
|
|
25
th
percentile
|
Y
2
|
|
$3.78
|
|
$4.20
|
|
$4.62
|
|
> $4.62
|
|
Y 2
|
|
9.5%
|
|
10.5%
|
|
11.5%
|
|
|
>
11.5
|
%
|
|
|
|
|
|
Y 3
|
|
$4.36
|
|
$4.85
|
|
$5.33
|
|
> $5.33
|
|
Y 3
|
|
11.0%
|
|
12.0%
|
|
13.0%
|
|
|
12.4
|
%
|
|
|
|
|
|
*
|
|
In
determining whether the ROCE performance goals were met for the 2010-2012
performance cycle, certain adjustments were made to reflect the impact of
recent acquisitions. The results shown in the foregoing table reflect
these adjustments.
|
|
|
Potential Performance
Units Earned
|
|
Payout
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
(shares)
|
John F. Lundgren
|
|
|
36,721
|
|
|
|
73,443
|
|
|
|
122,405
|
|
|
|
100,103
|
|
Donald Allan, Jr.
|
|
|
3,721
|
|
|
|
7,442
|
|
|
|
14,884
|
|
|
|
11,498
|
|
Jeffery D. Ansell
|
|
|
3,721
|
|
|
|
7,442
|
|
|
|
14,884
|
|
|
|
11,498
|
|
James M. Loree
|
|
|
18,361
|
|
|
|
36,721
|
|
|
|
58,754
|
|
|
|
48,730
|
|
Benefits &
Perquisites
Retirement
Benefits
The
Compensation Committee believes that offering a full complement of compensation
and benefit programs typically extended to senior executive officers is crucial
to the attraction and retention of high-caliber executive talent. To that end,
the Company currently offers retirement programs to its executive officers under
two plans: the Stanley Black & Decker Retirement Account Plan (known prior
to its restatement effective January 1, 2011, as the Stanley Account Value Plan)
and the Stanley Black & Decker Supplemental Retirement Account Plan (known
prior to its restatement effective January 1, 2011, as the Supplemental
Retirement and Account Value Plan for Salaried Employees of The Stanley Works),
which are more fully described on pages 22-24 and 32, respectively. In addition,
the Company entered into a CEO Make-Whole Retirement Arrangement with Mr.
Lundgren when he was originally hired in 2004, as more fully described on pages
30-31. Prior to 2007, when the program was closed to new participants, the
Company provided supplemental retirement benefits to certain executives pursuant
to The Stanley Works Supplemental Executive Retirement Program. Those
executives, who were participants in the program prior to 2007, including
Messrs. Lundgren and Loree, retain this benefit. This Program is described on
page 31. Prior to the Merger, Mr. Archibald and other Black & Decker
executives accrued benefits under plans sponsored by Black & Decker,
including The Black & Decker Pension Plan (known, effective as of January 1,
2013, as the Stanley Black & Decker Pension Plan), The Black & Decker
Supplemental Pension Plan and The Black & Decker Supplemental Executive
Retirement Plan. Mr. Archibald ceased to be a participant in these plans
immediately following the Merger, while other Black & Decker executives
continued to participate in these plans until December 31, 2010. Effective
January 1, 2011, those executives became eligible to participate in the Stanley
Black & Decker Retirement Account Plan and the Stanley Black & Decker
Supplemental Retirement Account Plan. Effective January 1, 2011, their benefits
under The Black & Decker Pension Plan and The Black & Decker
Supplemental Pension Plan were frozen, and their benefits under The Black &
Decker Supplemental Executive Retirement Plan ceased to accrue unless there were
accruals during a salary continuation period, as provided under such plan.
Pursuant to elections made by Mr. Archibald prior to the Merger, his benefits
under The Black & Decker Supplemental Pension Plan and The Black &
Decker Supplemental Executive Retirement Plan were distributed to him on or
about September 30, 2011.
Employment Agreements
The Company has
followed the practice of entering into a written employment agreement with its
chief executive officer for many years in order to provide continuity of
leadership. Consistent with this practice, the Company entered into an
employment agreement with Mr. Lundgren in March 2004, which was amended and
restated on December 10, 2008 to comply with rules enacted under Section 409A of
the Internal Revenue Code of 1986, as amended (the Code). In 2009, Mr.
Lundgrens agreement was again amended and restated in connection with the
Merger and became effective upon completion of the Merger on March 12, 2010. On
January 13, 2013, the Company and Mr. Lundgren agreed that his employment
agreement is to be construed and interpreted to reflect (i) that he has ceased
to serve as the
18
President of
the Company and (ii) that effective March 13, 2013, he will assume the
additional role and responsibilities of Chairman of the Board of the
Company.
In connection
with the Merger, the Company also entered into written employment agreements
with James M. Loree, as Executive Vice President and Chief Operating Officer,
and Nolan D. Archibald, as Executive Chairman. Both of these
agreements became effective upon completion of the Merger on March 12, 2010. Mr.
Archibalds agreement expired on March 12, 2013 and he has retired from his
position as Executive Chairman of the Company. On January 13, 2013, the Company
and Mr. Loree agreed that his employment agreement is to be construed and
interpreted to reflect (i) that he has ceased to serve as Executive Vice
President of the Company and (ii) that he will serve as President and Chief
Operating Officer of the Company.
Detailed
descriptions of the employment agreements with Messrs. Lundgren, Loree and
Archibald are set forth under the heading
Executive Officer Agreements
on pages
33-35.
Change in Control
Agreements and Severance Agreements
The
Compensation Committee has determined that to be competitive with prevailing
market practices, to enhance the stability of the executive team, and to
minimize turnover costs associated with a corporate change in control, it is
important to extend special severance protection for termination of employment
as a result of a change in corporate control to certain employees. Therefore,
the Company has entered into change in control agreements with certain members
of senior management, including the named executive officers (other than Mr.
Archibald). Severance protections were established based on prevailing market
practices when these agreements were put in place for each of our named
executive officers. The severance benefits that would have been payable at
December 29, 2012 to Messrs. Lundgren, Allan, Ansell and Loree in the event of
termination following a change in control are set forth under the heading
Termination and Change in Control
Provisions
beginning on page 36. Golden
parachute excise tax gross-ups have not and will not be included in any new
change in control or severance agreement or arrangement entered into after
2010.
Perquisites
The Company
provides certain perquisites to its executive officers as part of its overall
compensation program. These perquisites do not constitute a significant
percentage of any executives total compensation package and are comparable to
perquisites offered by the companies with whom the Company competes for talent.
The perquisites currently provided are: financial planning services, life and
long-term disability insurance, car allowance, home security system services,
executive medical exams, up to $5,000 of Company products for Messrs. Lundgren
and Archibald and $2,000 of Company products for other executive officers as
more fully set forth on pages 23-24. The provision of financial planning
services, life and long-term disability insurance, a car allowance and executive
medical exams is consistent with general market practice and, the Compensation
Committee believes, provides benefit to the Company in encouraging the Companys
executives to maintain their health and financial well-being. The Company
provides home security services to certain executives to help ensure their
safety and that of their families. The Company product programs are designed to
encourage Company executives to use, and encourage others to use, Company
products. In the employment agreement executed with Mr. Archibald in connection
with the Merger, the Company agreed to continue to provide Mr. Archibald with
certain perquisites that he had been receiving as of December 31, 2008 pursuant
to his employment agreement with Black & Decker prior to the Merger,
including business and personal use of Black & Deckers aircraft (now the
Companys aircraft), as is more fully set forth on pages 23-24. The Company does
not provide tax gross-ups on any perquisites other than gross-ups relating to
certain perquisites provided to Mr. Archibald, which he was entitled to under
his employment agreement, which agreement expired on March 12, 2013 in
connection with his retirement.
Other Compensation
Policies
Stock
Ownership Policy
In furtherance
of the Companys objective to create an ownership culture and because the
Compensation Committee believes the meaningful investment by executive officers
in the Company better aligns their interests with those of the Companys
shareholders, the Company maintains a Stock Ownership Policy for Executive
Officers. This policy requires stock ownership to reach the minimum levels laid
out in the table below within a five-year period commencing on the date of hire
or promotion to a senior management position. Awards to participants under the
Companys long-term incentive programs are subject to transferability
restrictions to the extent that a participant does not hold the minimum
ownership levels at the time the award is distributed. This policy also requires
that executive officers hold
19
the net after
tax shares received upon vesting of RSUs or the exercise of stock options
granted on or after February 14, 2012 for a period of one year post vesting or
exercise, as applicable. A copy of this policy is available on the Corporate
Governance section of the Companys website at
www.stanleyblackanddecker.com
.
|
|
Minimum Ownership
|
CEO
|
|
1,000% of base salary
|
COO and CFO
|
|
500% of base salary
|
Other Executive
Officers
|
|
300% of base salary
|
Timing of Stock Option and
RSU Grants
With the
exception of grants made to French participants, annual grants of stock options
and RSUs to executive officers are usually made at a regularly scheduled meeting
of the Compensation Committee held during the fourth quarter of each year. The
grant date of stock option and RSU awards is the date of the Board meeting held
during the fourth quarter (typically the day after the Compensation Committee
meeting) and grants to other eligible employees typically are approved on the
same date. The exercise price for all stock option grants other than those to
French participants is the average of the high and low price of a share as
quoted on the New York Stock Exchange Composite Tape on the date of grant. The
grant date for awards to French participants is the first date on which grants
may be made consistent with French legal and tax requirements following the date
on which annual grants are made to our other employees. The exercise price of
stock options for French participants is the higher of the average of the high
and low stock price on the date of grant and 80% of the average opening price on
the New York Stock Exchange for the 20 days preceding the date of
grant.
The
Compensation Committee may occasionally make off-cycle grants during the year.
These are typically associated with promotions, hiring, acquisitions, or other
significant business events that would likely have an adverse impact on our
ability to retain management talent. The Compensation Committee has delegated
authority to the Companys Chief Executive Officer to make annual grants and
occasional off-cycle grants to employees who are not executive officers of the
Company. The grant date for any grants made by the Companys Chief Executive
Officer is either the date the grant authorization is signed by the Chief
Executive Officer or a later date specified in the grant
authorization.
Tax Deductibility Under Section
162(m)
Under Section
162(m) of the Code, the Company may not be able to deduct certain forms of
compensation in excess of $1,000,000 paid to the Chief Executive Officer and the
three other most highly compensated named executive officers employed at the end
of the year (other than the Chief Financial Officer). The Company believes that
it is generally in the Companys best interests to satisfy the requirements for
deductibility under Section 162(m). Accordingly, the Company has taken
appropriate actions, to the extent it believes feasible, to preserve the
deductibility of annual incentive and long-term performance awards. However,
notwithstanding this general policy, the Company also believes there may be
circumstances in which the Companys interests are best served by maintaining
flexibility in the way compensation is provided, whether or not compensation is
fully deductible under Section 162(m).
Hedging; Pledging
The Companys
Board of Directors has adopted a policy against hedging transactions and
discouraging pledging transactions. Pursuant to the policy, hedging is not
permitted, and any officer, director or employee who wishes to pledge shares
must obtain the prior approval of the General Counsel. This policy is included
in the Companys Business Conduct Guidelines, which are available on the
Corporate Governance section of the Companys website at
www.stanleyblackanddecker.com
.
Forfeiture of Awards in the Event of Restatement
The Board of
Directors has adopted a recoupment policy relating to unearned incentive
compensation of executive officers. Pursuant to this policy, in the event our
Board or an appropriate committee thereof determines that any fraud, negligence
or intentional misconduct by an executive officer was a significant contributing
factor to the Company having to restate all or a portion of its financial
statements, the Board (or committee thereof) will take, in its discretion, such
action as it deems necessary to remedy the misconduct and prevent its
recurrence. Such actions may include requiring reimbursement of bonuses or
incentive compensation paid to the officer after January 1, 2007, requiring
reimbursement of gains realized upon the exercise of stock options, and
cancellation of restricted or deferred stock awards and outstanding stock
options. In determining what actions are appropriate, the Board (or committee
thereof)
20
will take into
account all relevant factors, including whether the restatement was the result
of fraud, negligence or intentional misconduct. A copy of this policy is
available on the Corporate Governance section of the Companys website at
www.stanleyblackanddecker.com.
Assessment of Risk Arising from
Compensation Policies and Practices
The Company has considered whether its
compensation policies and practices create risks that are reasonably likely to
have a material adverse effect on the Company and has concluded that the
Companys compensation practices and policies do not create such risks. This
conclusion was based on the following considerations:
As discussed above on
pages 15-16, under the MICP, each participant has an opportunity to earn a
threshold, target or maximum bonus amount that is contingent on achieving
established performance goals. For 2012, the corporate goals consisted of EPS
and cash flow multiple (operating cash flow less capital expenditures divided by
net earnings); divisional managers had additional performance goals with respect
to divisional operating margin, working capital management and gross margin
percent, each of which had been deemed by the Compensation Committee to be an
important measure of divisional contribution to overall corporate success.
Further, achievement of corporate goals and divisional goals are weighted
equally in determining bonuses, making it unlikely any employee or group of
employees would pursue achievement of divisional goals in a manner that would
have an adverse impact on the overall corporate goals. While managers other than
named executive officers might have individual performance goal targets as a
component of their MICP award as well, achievement of individual goals would
account for only a small percentage of the total bonus opportunity, making it
unlikely that any individual would pursue achievement of an individual goal in a
manner that would jeopardize performance of his or her division as a whole or
the Company as a whole.
The Companys long-term incentive programs
similarly are not likely to create risks that are reasonably likely to have a
material adverse effect on the Company. As discussed above on pages 16-18, there
are two elements to the Companys long-term incentive programs: (i) grants of
stock options and/or RSUs that vest over time (typically four years) and (ii)
grants of performance units that vest based on performance over a specified
period of time (typically three years). The RSU and stock option grants align
recipients interests with those of the Companys shareholders in maintaining or
increasing share value, making it unlikely that award recipients will pursue
behaviors that create a material risk to the Company. Performance grants
generally are earned based on achievement of corporate performance goals. A
portion of each performance award is contingent on achieving stated levels in
EPS during the performance period, a portion is based on targets relating to
ROCE, and a portion is contingent on achieving TSR relative to a peer group. As
noted on pages 16-17, the Company believes that using EPS and ROCE as
performance measures provides appropriate incentives for management to optimize
the principal financial drivers that generate shareholder return and reinforce
the Companys quest for continued growth; including TSR as a performance measure
encourages management to continuously benchmark Company performance against that
of a broadly defined group of comparable companies, further supporting the
Companys quest for growth. In determining whether EPS and ROCE goals have been
met, the Compensation Committee retains the discretion to adjust the manner in
which achieved EPS and ROCE are determined to take into account certain
nonrecurring events (such as significant acquisitions or divestitures).
Providing the Compensation Committee this discretion allows the Compensation
Committee to ensure the results are comparable to the originally established
targets. It also has the effect of eliminating any incentive to take a
particular action in order to increase the bonus that would be distributed at
the end of the applicable performance period.
The Company has occasionally
granted long-term incentive awards to employees to encourage them to reach goals
different from those above, such as the working capital turns and inventory
turns objectives that were established for the Working Capital Incentive Program
that was approved by the Compensation Committee in 2010. Typically, such
programs are designed to incentivize employees to improve the overall
performance of the Company, or a particular business, by requiring improvement
in processes and, as such, are unlikely to encourage behavior that would have a
material adverse effect on the Company.
Other incentive programs that may be
available are common in companies in durable goods and services businesses, such
as commissions on sales for sales representatives. None of these programs
accounts for a significant percentage of the relevant business units revenues,
and no one business unit carries a significant portion of the Companys risk
profile.
Based on all of the above, the Company has
concluded that its compensation policies and practices for its employees do not
create risks that are likely to have a material adverse effect on the
Company.
21
Summary Compensation
Table
The table below summarizes the total
compensation for the applicable periods for: those individuals who served as
Chief Executive Officer or Chief Financial Officer of the Company during the
fiscal year ended December 29, 2012 (fiscal year 2012) and for the three most
highly compensated executive officers of the Company serving as such at the end
of fiscal year 2012 other than the CEO and CFO (collectively the named
executive officers).
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
All
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Award(s)
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
|
Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Total
|
John F.
Lundgren,
|
|
2012
|
|
1,270,833
|
|
0
|
|
5,325,146
|
|
1,301,250
|
|
2,325,000
|
|
2,324,469
|
|
511,175
|
|
13,057,873
|
Chairman and CEO
|
|
2011
|
|
1,250,000
|
|
0
|
|
5,409,678
|
|
1,359,000
|
|
3,504,375
|
|
1,620,596
|
|
584,222
|
|
13,727,871
|
|
|
2010
|
|
1,208,433
|
|
0
|
|
25,347,725
|
|
1,255,500
|
|
4,342,800
|
|
159,663
|
|
416,138
|
|
32,730,259
|
|
Donald Allan,
Jr.,
|
|
2012
|
|
579,167
|
|
0
|
|
907,440
|
|
347,000
|
|
570,400
|
|
0
|
|
132,991
|
|
2,536,998
|
Senior Vice President
and
|
|
2011
|
|
516,667
|
|
0
|
|
834,156
|
|
362,400
|
|
710,220
|
|
0
|
|
190,167
|
|
2,613,610
|
CFO
|
|
2010
|
|
443,850
|
|
0
|
|
4,002,349
|
|
334,800
|
|
848,920
|
|
0
|
|
125,656
|
|
5,755,575
|
|
Jeffery D.
Ansell,
|
|
2012
|
|
529,167
|
|
0
|
|
869,471
|
|
347,000
|
|
705,400
|
|
0
|
|
103,883
|
|
2,554,921
|
Senior Vice President
and
|
|
2011
|
|
495,833
|
|
0
|
|
792,359
|
|
362,400
|
|
510,000
|
|
0
|
|
161,395
|
|
2,321,987
|
Group Executive,
|
|
2010
|
|
456,250
|
|
290,000
|
|
4,002,349
|
|
334,800
|
|
878,560
|
|
0
|
|
132,555
|
|
6,094,514
|
Construction &
DIY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nolan D.
Archibald,
|
|
2012
|
|
1,500,000
|
|
0
|
|
3,325,025
|
|
3,325,002
|
|
1,875,000
|
|
5,946
|
|
554,165
|
|
10,585,138
|
Former Executive
Chairman
|
|
2011
|
|
1,500,000
|
|
0
|
|
3,325,025
|
|
3,325,000
|
|
1,875,000
|
|
1,657,541
|
|
627,900
|
|
12,310,466
|
|
|
2010
|
|
1,187,500
|
|
0
|
|
3,325,031
|
|
19,665,004
|
|
1,875,000
|
|
1,579,878
|
|
604,152
|
|
28,236,565
|
|
James M. Loree,
|
|
2012
|
|
785,000
|
|
0
|
|
3,027,988
|
|
867,500
|
|
967,200
|
|
1,480,620
|
|
203,877
|
|
7,332,185
|
President and
COO
|
|
2011
|
|
765,000
|
|
0
|
|
2,956,745
|
|
906,000
|
|
1,401,750
|
|
987,233
|
|
315,838
|
|
7,332,566
|
|
|
2010
|
|
720,833
|
|
0
|
|
14,945,442
|
|
837,000
|
|
1,914,960
|
|
530,983
|
|
293,685
|
|
19,242,903
|
Footnote to Column (d) of Summary
Compensation Table
The amount set forth in
this column reflects a bonus paid to Mr. Ansell in connection with his
relocation to Maryland following the Merger.
Footnote to Column (e) of Summary
Compensation Table
This column reflects
the aggregate grant date fair value of all RSUs and performance awards granted
during the fiscal years ended December 29, 2012, December 31, 2011 and January
1, 2011, respectively, in accordance with Financial Accounting Standards Board
Codification Topic 718Stock Compensation. See footnote J of the Companys
report on Form 10-K for the applicable fiscal year for assumptions used in the
valuation of these awards and related disclosures. The grant date fair value of
performance award grants included in this column, assuming performance at
maximum, for grants made in fiscal years 2012, 2011, and 2010, respectively, is
as follows: Mr. Lundgren, $5,933,085/$5,568,599/$7,297,936; Mr. Allan,
$873,367/$672,562/$1,026,944; Mr. Ansell $797,429/$672,562/$1,026,944; Mr.
Loree, $2,961,825/$2,677,352/$3,365,271. The dollar amounts listed do not
necessarily reflect the dollar amounts of compensation actually realized or that
may be realized by our named executive officers.
Footnote to Column (f) of Summary
Compensation Table
This column reflects
the aggregate grant date fair value of all stock options granted during the
fiscal years ended December 29, 2012, December 31, 2011 and January 1, 2011,
respectively, in accordance with Financial Accounting Standards Board
Codification Topic 718Stock Compensation. See footnote J of the Companys
report on Form 10-K for the applicable fiscal year for assumptions used in the
valuation of these awards and related disclosures.
Footnote to Column (g) of Summary
Compensation Table
The dollar amounts set
forth in this column for 2010 reflect (i) incentive compensation earned pursuant
to the 2007-2009 Special Bonus Program, as discussed in our March 11, 2011 Proxy
Statement, and (ii) incentive compensation earned pursuant to the Companys MICP
for the 2010 fiscal year. For 2012 and 2011, the dollar amounts reflect
incentive compensation earned pursuant to the Companys MICP for the 2012 and
2011 fiscal years, respectively, plus, for Mr. Ansell, a retention bonus
established in March 2010 in connection with the Merger. MICP incentive
compensation for 2012 is paid during the first quarter of the 2013 calendar
year.
Footnote to Column (h) of Summary
Compensation Table
The amounts included in
this column are attributable to the following plans:
Increase in actuarial present value of
Mr. Lundgrens benefit under The Stanley Works Supplemental Executive Retirement
Program for fiscal year 2012 was $2,324,469. See the footnote to Column (d) of
the Pension Benefits Table on page 31 for the assumptions used in making this
calculation. For fiscal year 2011, the increase in actuarial present value of
Mr. Lundgrens benefit under The Stanley Works Supplemental Executive Retirement
Program was $1,620,596. For fiscal year 2010, the increase in actuarial present
value of Mr. Lundgrens benefit under the CEO Make-Whole Retirement Arrangement
was $159,663.
22
Increase in
actuarial present value of Mr. Lorees benefit under The Stanley Works
Supplemental Executive Retirement Program for fiscal year 2012 is $1,480,620.
See the footnote to Column (d) of the Pension Benefits Table on page 31 for the
assumptions used in making this calculation. For fiscal year 2011, the increase
in actuarial present value of Mr. Lorees benefit under The Stanley Works
Supplemental Executive Retirement Program was $987,233. For fiscal year 2010,
the increase in actuarial present value of Mr. Lorees benefit under The Stanley
Works Supplemental Executive Retirement Program was $530,983.
Increase in
actuarial present value of Mr. Archibalds benefit under The Black & Decker
Pension Plan (known, effective January 1, 2013, as the Stanley Black &
Decker Pension Plan) for fiscal year 2012 was $5,946. Mr. Archibald no longer
has a benefit under The Black & Decker Supplemental Executive Retirement
Plan or under The Black & Decker Supplemental Pension Plan. See the footnote
to Column (d) of the Pension Benefits Table on page 31 for the assumptions used
in making these calculations. Increase in actuarial present value of Mr.
Archibalds benefit for fiscal year 2011 for the plans in which he was a
participant are as follows: $39,455 under The Black & Decker Pension Plan,
$1,019,303 under The Black & Decker Supplemental Executive Retirement Plan
and $598,783 under The Black & Decker Supplemental Pension Plan. Mr.
Archibald received payments during fiscal year 2011 under The Black & Decker
Supplemental Executive Retirement Plan and under The Black & Decker
Supplemental Pension Plan. For the period March 12, 2010 through December 31,
2010 for the plans in which Mr. Archibald was a participant the increase in
actuarial present value of his benefit was as follows: $14,216 under The Black
& Decker Pension Plan, $847,303 under The Black & Decker Supplemental
Executive Retirement Plan and $718,359 under The Black & Decker Supplemental
Pension Plan.
Footnote to Column (i) of Summary
Compensation Table
This column reflects
Company contributions and allocations for Messrs. Lundgren, Allan, Ansell,
Archibald and Loree under the Stanley Black & Decker Retirement Account Plan
(known prior to January 1, 2011 as the Stanley Account Value Plan) (matching and
Core Account (as defined below) for Messrs. Lundgren, Allan, Ansell and Loree,
and matching for Mr. Archibald) and the Stanley Black & Decker Supplemental
Retirement Account Plan (known prior to January 1, 2011 as the Supplemental
Retirement and Account Value Plan for Salaried Employees of The Stanley Works)
(supplemental matching and supplemental Core for Messrs. Lundgren, Allan, Ansell
and Loree and supplemental matching for Mr. Archibald), and Company costs
related to life insurance premiums, car allowances, financial planning services,
annual physicals, products acquired through the Companys Product Programs,
reimbursement for club dues, personal use of tickets to athletic and other
entertainment events, and maintenance of home security systems as set forth in
the table below. Perquisites provided to Mr. Archibald also include personal use
of Company aircraft; the cost incurred by the Company for such use is reflected
below. Certain contributions and allocations under the Stanley Black &
Decker Retirement Account and the Stanley Black & Decker Supplemental
Retirement Account Plan for Messrs. Lundgren and Loree will offset pension
benefits as described on pages 30-31.
|
|
|
|
Defined
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
|
|
Personal Use
|
|
|
|
|
|
|
Contribution
|
|
|
|
|
|
Financial
|
|
Annual
|
|
Product
|
|
Club
|
|
|
|
Security
|
|
of Corporate
|
|
Column
(i)
|
|
|
|
|
Plans
|
|
Insurance
|
|
Car
|
|
Planning
|
|
Physical
|
|
Program
|
|
Dues
|
|
Tickets
|
|
System
|
|
Aircraft
|
|
Total
|
Name
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
John F. Lundgren
|
|
2012
|
|
437,144
|
|
37,371
|
|
25,451
|
|
6,416
|
|
0
|
|
1,281
|
|
0
|
|
0
|
|
3,512
|
|
0
|
|
511,175
|
Donald Allan, Jr.
|
|
2012
|
|
89,845
|
|
10,418
|
|
19,918
|
|
9,000
|
|
2,500
|
|
1,310
|
|
0
|
|
0
|
|
0
|
|
0
|
|
132,991
|
Jeffery D.
Ansell
|
|
2012
|
|
79,052
|
|
6,296
|
|
18,535
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
103,883
|
Nolan D. Archibald
|
|
2012
|
|
52,500
|
|
123,000
|
|
16,200
|
|
35,820
|
|
0
|
|
5,000
|
|
6,060
|
|
1,000
|
|
12,234
|
|
302,351
|
|
554,165
|
James M. Loree
|
|
2012
|
|
144,215
|
|
14,874
|
|
16,485
|
|
8,100
|
|
0
|
|
1,885
|
|
0
|
|
0
|
|
18,318
|
|
0
|
|
203,877
|
Effective January 1, 2011, the Stanley
Account Value Plan, an Internal Revenue Code Section 401(k) retirement plan that
covered certain employees of the Company and its U.S. affiliates who were
subject to the income tax laws of the United States, was restated as the Stanley
Black & Decker Retirement Account Plan. The Stanley Account Value Plan
featured two accounts, a Choice Account, which continues to be maintained under
the Stanley Black & Decker Retirement Account Plan, and a Cornerstone
Account, which has been renamed the Core Account under the Stanley Black &
Decker Retirement Account Plan.
The Choice Account offers eligible
participants the opportunity for tax-deferred savings and a choice of investment
options. For each calendar year prior to 2009, and for 2010, 2011 and 2012
calendar years, a 50% matching allocation was provided on the first 7% of pay
contributed by a participant on a pre-tax basis for the year. For the 2009
calendar year, a 25% matching allocation was provided on the first 7% of pay
contributed by a participant on a pre-tax basis for the year. Pay ordinarily
includes salary, management incentive bonuses, certain other taxable
compensation and elective contributions by a participant to the Stanley Black
& Decker Retirement Account Plan or another plan sponsored by Stanley Black
& Decker (or one of its wholly-owned subsidiaries) that meets the
requirements of Section 125 or 401(k) of the Code. Annual pay and the amount of
elective contributions are subject to limits set forth in the tax law.
Participants are permitted to direct the investment of all funds credited to
their Choice Accounts. Prior to 2011, matching allocations to the Choice
Accounts were 100% vested upon completion of three years of service; effective
January 1, 2011, matching allocations are vested upon the earlier of a
participants completion of one year of service or his/her attainment of age 55
while employed by Stanley Black & Decker (or one of its wholly-owned
subsidiaries). Vesting is accelerated in certain circumstances, as described
below.
The Cornerstone Account (renamed the Core Account effective January 1,
2011) provides a Core retirement benefit for certain participants. This
account is 100% funded by separate allocations that are not dependent on
contributions by participants. Effective June 28, 2008, Cornerstone Accounts
became subject to participant investment direction. No allocation was made to
Cornerstone Accounts in 2009. For calendar years prior to 2009, and for the 2010
calendar year, a regular allocation to a participants Cornerstone Account for
the year was based on the participants age on the last day of the year and the
participants pay (as described above and subject to limits set forth in the tax
law) for each calendar quarter during the year (with pay recognized for a
calendar quarter only if the participant had employment status on the last day
of the calendar quarter) as follows:
Age
|
|
Allocation Amount (% of
Pay)
|
Less than 40
|
|
|
3
|
%
|
|
40 - 54
|
|
|
5
|
%
|
|
55 and older
|
|
|
9
|
%
|
|
There were additional Cornerstone
allocations for certain participants for calendar years prior to 2009 and for
calendar year 2010. None of the Companys named executive officers was eligible
for these additional Cornerstone allocations.
Effective January 1, 2011, there are
separate allocations to Core Accounts for certain participants that are not
dependent on contributions by the participants. The Core Accounts are subject to
investment direction by participants. Regular allocations to a Core Account for
a calendar year are based on the participants age as of the last day of the
year and pay for each calendar quarter during the year, as described above, and
are subject to the limits of the tax law, with allocations for a calendar
quarter contingent upon a participant having employment status on the last day
of the calendar quarter, as follows:
Age
|
|
Allocation Amount (% of
Pay)
|
Less than 40
|
|
|
2
|
%
|
|
40 - 54
|
|
|
4
|
%
|
|
55 and older
|
|
|
6
|
%
|
|
23
There also is a Core Transition Benefit
allocation to the Core Account, during the five calendar years that begin with
the 2011 year, for those individuals who are eligible for regular allocations to
the Core Account during the year and, in addition, received Cornerstone
allocations under the Stanley Account Value Plan during 2010 or who accrued
benefits during 2010 under The Black & Decker Pension Plan or the Retirement
Plan for Hourly-Rated Employees of Porter Cable Corporation. Messrs. Lundgren,
Allan, Ansell and Loree are eligible for this benefit. The Core Transition
Benefit allocation increases an individuals Core Allocation by the following
percentages of pay (as described above and subject to the limits applied under
the tax laws):
Age
|
2011
|
2012
|
2013
|
2014
|
2015
|
Less than 40
|
1%
|
1%
|
0.5%
|
0.5%
|
0.5%
|
40-54
|
1%
|
1%
|
0.5%
|
0.5%
|
0.5%
|
55 and over
|
3%
|
3%
|
1.5%
|
1.5%
|
1.5%
|
There are also Additional Core Transition
Benefit allocations to the Core Accounts of certain individuals. None of the
Companys named executive officers is eligible for Additional Core Transition
Benefits.
Allocations to a participants Cornerstone
or Core Account become 100% vested upon completing three years of service,
except as described below. Prior to January 1, 2011, regardless of the number of
years of service, a participant became fully vested in the matching allocations
to a Choice Account and the allocations to the Cornerstone Account if, while
employed by the Company, the participant reached age 65, became permanently
disabled or died. Effective January 1, 2011, a participant becomes fully vested
in the matching allocations to the Choice Account and the allocations credited
to the Core Account in accordance with these same rules, except that full
vesting also applies upon reaching age 55 while employed by the
Company.
The vested accounts are payable to a
participant in a lump sum upon termination of employment and, effective January
1, 2011, if payments are made after a participant reaches age 70-1/2, the
participant may elect instead to receive annual installment payments equal to
the minimum required distributions under the tax law. If a participant dies, the
total vested value of the participants accounts (including amounts that became
vested upon death while employed by the Company) is payable in a lump sum to his
or her beneficiary.
The CEO Make-Whole Retirement Arrangement
and The Stanley Works Supplemental Executive Retirement Program are described on
pages 30-31 under the heading Pension Benefits. The Stanley Black & Decker
Supplemental Retirement Account Plan, known prior to January 1, 2011 as the
Supplemental Retirement and Account Plan for Salaried Employees of The Stanley
Works, is described on pages 31-32 under the heading
Non-Qualified Defined Contribution and Deferred Compensation Plans.
The amounts under the column entitled
Club Dues and Personal Use of Corporate Aircraft for Mr. Archibald include
reimbursement for taxes owed with respect to such benefits in the amounts of
$3,384 and $146,920, respectively. The Company has discontinued all gross-ups to
cover taxes for perquisits except for the gross-ups provided to Mr. Archibald
that he was entitled to receive under the terms of his employment agreement,
which agreement expired on March 12, 2013.
24
Grants of Plan Based Awards Table 2012 Grants
This table sets forth
information
concerning
equity grants to the named
executive
officers
during
the fiscal year ended
December
29, 2012 as well as the range of future
payouts
under non-equity
incentive
programs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
All Other
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Option
|
|
Exercise
|
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Awards:
|
|
or Base
|
|
|
|
of Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Shares
|
|
Number of
|
|
Price of
|
|
Closing
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
Securities
|
|
Option
|
|
Price at Date
|
|
Option
|
|
|
|
|
Estimated Future Payouts Under
|
|
Estimated Future Payouts Under
|
|
or Units
|
|
Underlying
|
|
Awards
|
|
of Grant
|
|
Awards
|
|
|
|
|
Non-Equity Incentive Plan
Awards
|
|
Equity Incentive Plan Awards
|
|
(#)
|
|
Options
(#)
|
|
($/Sh)
|
|
($/Sh)
|
|
($)
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
(k)
|
|
|
|
(l)
|
John F. Lundgren
|
|
February 13, 2012
|
|
937,500
|
|
1,875,000
|
|
3,750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 27, 2012
|
|
|
|
|
|
|
|
23,767
|
|
47,535
|
|
79,224
|
|
|
|
|
|
|
|
|
|
3,559,896
|
|
|
December 6, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
1,765,250
|
|
|
December 6, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
70.61
|
|
71.05
|
|
1,301,250
|
|
Donald Allan, Jr.
|
|
February 13, 2012
|
|
230,000
|
|
460,000
|
|
920,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 27, 2012
|
|
|
|
|
|
|
|
2,915
|
|
5,831
|
|
11,662
|
|
|
|
|
|
|
|
|
|
436,684
|
|
|
December 6, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,667
|
|
|
|
|
|
|
|
470,757
|
|
|
December 6, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
70.61
|
|
71.05
|
|
347,000
|
|
Jeffery D. Ansell
|
|
February 13, 2012
|
|
210,000
|
|
420,000
|
|
840,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 27, 2012
|
|
|
|
|
|
|
|
2,662
|
|
5,324
|
|
10,648
|
|
|
|
|
|
|
|
|
|
398,714
|
|
|
December 6, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,667
|
|
|
|
|
|
|
|
470,757
|
|
|
December 6, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
70.61
|
|
71.05
|
|
347,000
|
|
Nolan D. Archibald
|
|
February 13, 2012
|
|
1,875,000
|
|
1,875,000
|
|
1,875,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 6, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,090
|
|
|
|
|
|
|
|
3,325,025
|
|
|
December 6, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,825
|
|
70.61
|
|
71.05
|
|
3,325,002
|
|
James M. Loree
|
|
February 13, 2012
|
|
390,000
|
|
780,000
|
|
1,560,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 27, 2012
|
|
|
|
|
|
|
|
12,359
|
|
24,718
|
|
39,549
|
|
|
|
|
|
|
|
|
|
1,851,131
|
|
|
December 6, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,667
|
|
|
|
|
|
|
|
1,176,857
|
|
|
December 6, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
70.61
|
|
71.05
|
|
867,500
|
25
Footnote to Columns (c), (d) and (e) of
Grants of Plan-Based Awards Table
The
amounts set forth in these columns are (i) the threshold, target and maximum
bonuses each of the named executive officers was eligible to receive pursuant to
the Companys MICP covering the period from January 2, 2012 through December 29,
2012. The bonuses payable, which are paid during the first quarter of 2013, are
set forth in Column (g) of the Summary Compensation Table.
Footnote to Columns (f), (g) and (h)
of Grants of Plan-Based Awards Table
The
performance awards identified in columns (f), (g) and (h) cover a performance
period that commenced on January 2, 2012 and expires at the end of the Companys
2014 fiscal year. Each performance award represents the right to receive the
number of Company shares shown in the table, subject to the attainment of
performance goals at the end of the performance period and continued employment.
An award recipient must generally remain employed until the time of settlement
of performance awards, but pro-rated awards will vest and be paid if the
performance goals are met and the participants employment terminates as a
result of retirement, death or disability. Thirty-five percent of the potential
award is contingent on the achievement of earnings per share growth, forty
percent is contingent on the achievement of return on capital employed, and
twenty-five percent is contingent on total shareholder return.
The number of performance shares that
each executive would be eligible to receive pursuant to these awards was
determined by multiplying the executives base salary as of January 1, 2012 by
the applicable performance factor, which ranged from 40-150% in the case of
threshold performance, 80-300% in the case of target performance, and 160-500%
in the case of maximum performance for the named executive officers, and
dividing the resulting number by the average of the high and low price of
Company stock on the date of grant. Unless the Compensation Committee otherwise
determines, no shares will be issued in respect of a performance goal unless
threshold performance is achieved for that goal and the number of shares to be
issued will be pro-rated in the event performance falls between threshold and
target or target and maximum performance.
Footnote to Column (i) of Grants of
Plan-Based Awards Table
The restricted
stock awards identified in this column are RSUs awarded on December 6, 2012 that
will vest in four equal installments on the first four anniversaries of the date
of grant. An award recipient must generally remain employed until the time of
vesting of awards, but awards will vest in full if the participants employment
terminates as a result of retirement, death or disability. Employment beyond
March 12, 2013 is not a condition to vesting of Mr. Archibalds grant. The grant
to Mr. Archibald will become immediately and fully vested under certain
circumstances, as more fully described below in the section titled
Agreement with Nolan D. Archibald, Former
Executive Chairman
.
Footnote to Column (j) of Grants of
Plan-Based Awards Table
The stock options
identified in this column are stock options granted on December 6, 2012 that
will vest in four equal installments on the first four anniversaries of the date
of grant. An award recipient must generally remain employed until the time of
vesting of awards, but awards will vest in full if the participants employment
terminates as a result of retirement, death or disability. Employment beyond
March 12, 2013 is not a condition to vesting of Mr. Archibalds grant. The grant
to Mr. Archibald will become immediately and fully vested under certain
circumstances, as more fully described below in the section titled
Agreement with Nolan D. Archibald, Former
Executive Chairman
.
Footnote to Column (k) of Grants of
Plan-Based Awards Table
All stock option
grants were made pursuant to the Companys 2009 Long-Term Incentive Plan (the
2009 Plan). The 2009 Plan, which has been approved by the Companys
shareholders, provides that the purchase price per share purchasable under an
option may not be less than the Fair Market Value of a share on the date of
grant. The 2009 Plan defines the Fair Market Value of a share as the average of
the high and low price of a share as quoted on the New York Stock Exchange
Composite Tape on the date as of which Fair Market Value is to be determined.
The grant price may, therefore, be higher or lower than the closing price per
share on the date of grant. The closing price per share on the date of grant is
set forth in the column immediately adjacent to column (k).
Footnote to Column (l) of Grants of
Plan-Based Awards Table
This column
reflects the grant date fair value computed in accordance with FASB Codification
Topic 718, CompensationStock Compensation of the stock option grants, RSU
grants and performance awards identified in this table. See footnote J of the
Companys report on Form 10-K for assumptions used in the valuation of these
awards and related disclosures. The grant date fair value of performance award
grants included in this column for the performance award period that runs from
January 2, 2012 through the end of the Companys 2014 fiscal year, assuming
performance at maximum, is as follows: Mr. Lundgren, $5,933,085; Mr. Allan,
$873,367; Mr. Ansell, $797,429; and Mr. Loree, $2,961,825.
26
Outstanding Equity Awards at Fiscal Year End
The
following
table sets forth
information
regarding
outstanding
stock
options,
option
awards,
and RSU awards held by the named
executive
officers
on
December
29, 2012.
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Incentive
|
|
|
Number
|
|
Number
|
|
|
|
|
|
|
|
Number of
|
|
Market Value
|
|
Equity
Incentive
|
|
Plan
Awards:
|
|
|
of Shares
|
|
of Shares
|
|
Equity Incentive
Plan
|
|
|
|
|
|
Shares or
|
|
of Shares
or
|
|
Plan
Awards:
|
|
Market or
Payout
|
|
|
Underlying
|
|
Underlying
|
|
Awards:
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Number of
Unearned
|
|
Value of
Unearned
|
|
|
Unexercised
|
|
Unexercised
|
|
Number of
Securities
|
|
|
|
|
|
Stock that
|
|
Stock That
|
|
Shares,
Units
|
|
Shares, Units
or
|
|
|
Options
(#)
|
|
Options
(#)
|
|
Unexercised
|
|
Option
Exercise
|
|
Option
Expiration
|
|
Have Not
|
|
Have Not
|
|
or other Rights
That
|
|
Other Rights
that
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Unearned Options
(#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
|
|
Have Not Vested
(#)
|
|
Have Not Vested
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
John F. Lundgren
|
|
150,000
|
|
0
|
|
--
|
|
41.43
|
|
10/15/2014
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
0
|
|
--
|
|
47.29
|
|
12/12/2015
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
0
|
|
--
|
|
51.14
|
|
12/11/2016
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
0
|
|
--
|
|
51.13
|
|
12/10/2017
|
|
|
|
|
|
|
|
|
|
|
95,110
|
|
0
|
|
--
|
|
33.35
|
|
12/9/2018
|
|
|
|
|
|
|
|
|
|
|
56,250
|
|
18,750
|
|
--
|
|
49.02
|
|
12/9/2019
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
37,500
|
|
--
|
|
63.72
|
|
12/9/2020
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
56,250
|
|
--
|
|
64.79
|
|
12/8/2021
|
|
|
|
|
|
|
|
|
|
|
0
|
|
75,000
|
|
--
|
|
70.61
|
|
12/6/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
526,604
|
|
37,947,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,371
|
|
1,684,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,341
|
|
1,393,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,541
|
|
1,984,604
|
|
Donald Allan,
Jr.
|
|
15,000
|
|
0
|
|
--
|
|
51.13
|
|
12/10/2017
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
0
|
|
--
|
|
33.35
|
|
12/9/2018
|
|
|
|
|
|
|
|
|
|
|
11,250
|
|
3,750
|
|
--
|
|
49.02
|
|
12/9/2019
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
10,000
|
|
--
|
|
63.72
|
|
12/9/2020
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
15,000
|
|
--
|
|
64.79
|
|
12/8/2021
|
|
|
|
|
|
|
|
|
|
|
0
|
|
20,000
|
|
--
|
|
70.61
|
|
12/6/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,728
|
|
5,889,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,867
|
|
206,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,960
|
|
141,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,582
|
|
402,239
|
|
Jeffery D.
Ansell
|
|
3,750
|
|
0
|
|
--
|
|
51.13
|
|
12/10/2017
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
0
|
|
--
|
|
33.35
|
|
12/9/2018
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
3,750
|
|
--
|
|
49.02
|
|
12/9/2019
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
10,000
|
|
--
|
|
63.72
|
|
12/9/2020
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
15,000
|
|
--
|
|
64.79
|
|
12/8/2021
|
|
|
|
|
|
|
|
|
|
|
0
|
|
20,000
|
|
--
|
|
70.61
|
|
12/6/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,661
|
|
5,884,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,618
|
|
188,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,960
|
|
141,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,582
|
|
402,239
|
27
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Incentive
|
|
|
Number
|
|
Number
|
|
|
|
|
|
|
|
Number of
|
|
Market Value
|
|
Equity
Incentive
|
|
Plan
Awards:
|
|
|
of Shares
|
|
of Shares
|
|
Equity Incentive
Plan
|
|
|
|
|
|
Shares or
|
|
of Shares
or
|
|
Plan
Awards:
|
|
Market or
Payout
|
|
|
Underlying
|
|
Underlying
|
|
Awards:
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Number of
Unearned
|
|
Value of
Unearned
|
|
|
Unexercised
|
|
Unexercised
|
|
Number of
Securities
|
|
|
|
|
|
Stock that
|
|
Stock That
|
|
Shares,
Units
|
|
Shares, Units
or
|
|
|
Options
(#)
|
|
Options
(#)
|
|
Unexercised
|
|
Option
Exercise
|
|
Option
Expiration
|
|
Have Not
|
|
Have Not
|
|
or other Rights
That
|
|
Other Rights
that
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Unearned Options (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)
|
|
Have Not Vested (#)
|
|
Have Not Vested ($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
Nolan D.
Archibald
|
|
382,500
|
|
0
|
|
--
|
|
31.17
|
|
4/27/2013
|
|
|
|
|
|
|
|
|
|
|
191,250
|
|
0
|
|
--
|
|
47.21
|
|
4/25/2014
|
|
|
|
|
|
|
|
|
|
|
191,250
|
|
0
|
|
--
|
|
64.52
|
|
4/24/2015
|
|
|
|
|
|
|
|
|
|
|
191,250
|
|
0
|
|
--
|
|
72.44
|
|
4/18/2016
|
|
|
|
|
|
|
|
|
|
|
191,250
|
|
0
|
|
--
|
|
69.31
|
|
4/17/2017
|
|
|
|
|
|
|
|
|
|
|
191,250
|
|
0
|
|
--
|
|
53.37
|
|
4/15/2018
|
|
|
|
|
|
|
|
|
|
|
234,185
|
|
78,062
|
|
--
|
|
30.03
|
|
4/28/2019
|
|
|
|
|
|
|
|
|
|
|
0
|
|
1,000,000
|
|
--
|
|
57.50
|
|
3/15/2020
|
|
|
|
|
|
|
|
|
|
|
91,096
|
|
91,096
|
|
--
|
|
63.72
|
|
12/9/2020
|
|
|
|
|
|
|
|
|
|
|
43,294
|
|
129,883
|
|
--
|
|
64.79
|
|
12/8/2021
|
|
|
|
|
|
|
|
|
|
|
0
|
|
184,825
|
|
--
|
|
70.61
|
|
12/6/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
299,993
|
|
21,617,494
|
|
|
|
|
|
James M. Loree
|
|
50,000
|
|
0
|
|
--
|
|
41.43
|
|
10/15/2014
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
0
|
|
--
|
|
47.29
|
|
12/12/2015
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
0
|
|
--
|
|
51.14
|
|
12/11/2016
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
0
|
|
--
|
|
51.13
|
|
12/10/2017
|
|
|
|
|
|
|
|
|
|
|
15,850
|
|
0
|
|
--
|
|
33.35
|
|
12/9/2018
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
12,500
|
|
--
|
|
49.02
|
|
12/9/2019
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
25,000
|
|
--
|
|
63.72
|
|
12/9/2020
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
37,500
|
|
--
|
|
64.79
|
|
12/8/2021
|
|
|
|
|
|
|
|
|
|
|
0
|
|
50,000
|
|
--
|
|
70.61
|
|
12/6/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
307,877
|
|
22,185,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,153
|
|
875,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,670
|
|
696,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,017
|
|
793,885
|
28
Footnote to column
(c)
All of the options identified in
column (c) expire 10 years from the date of grant; the grant date therefore can
be determined by subtracting 10 years from the expiration date set forth in
column (f). All of the option grants identified in column (c) that were made
prior to October 15, 2003 vested in two installments: 50% vested on the third
anniversary of the date of grant and 50% vested on the fifth anniversary of the
date of grant. With the exception of the March 15, 2010 grant to Nolan
Archibald, which vested in full on March 12, 2013, all of the options that were
granted on or after October 15, 2003 vest in four equal annual installments on
the first four anniversaries of the date of grant. An award recipient must
generally remain employed until the time of vesting of awards, but awards will
vest in full if the participants employment terminates as a result of
retirement, death or disability. Employment beyond March 12, 2013 is not a
condition to vesting of Mr. Archibalds grants.
Footnote to column
(g)
The awards identified in this column
are (i) time vesting RSUs that have not yet vested; (ii) the performance awards
for the 2010-2012 performance program, which vested upon distribution in the
first quarter of 2013 based on achievement of performance goals as set forth in
the Compensation Discussion and Analysis on page 18; (iii) a portion of the
performance awards for the 2011-2013 performance program, which will vest
following the end of the performance period, based on achievement of the maximum
2011 EPS goal $5.09, performance between the 11.4% target and the 12.4% maximum
2011 ROCE goal, performance between the $4.95 per share threshold and $5.50 per
share target 2012 EPS goal, and performance between the 11.8% threshold and the
12.8% target 2012 ROCE goal, established for the 2011-2013 performance program;
and (iv) a portion of the performance awards for the 2012-2014 performance award
program, which will vest following the end of the performance period, based on
performance between the $5.26 per share threshold and $5.85 per share target
2012 EPS goal and achievement of the 12.0% threshold 2012 ROCE goal, established
for the 2012-2014 performance program. The number of time vesting RSUs granted
to each executive that had not vested as of December 29, 2012 is as set forth in
the table below. Unless otherwise indicated, awards vest in four equal
installments on the first four anniversaries of the grant date.
Grantee
|
|
Grant Date
|
|
Vesting Schedule
|
|
Number of Units not yet
vested
|
John F. Lundgren
|
|
April 23, 2009
|
|
|
|
|
3,760
|
|
|
|
December 9, 2009
|
|
|
|
|
6,250
|
|
|
|
March 15, 2010
|
|
Vests in two equal
installments on March 12, 2014 and
|
|
|
325,000
|
|
|
|
|
|
March 12, 2015
|
|
|
|
|
|
|
December 9, 2010
|
|
|
|
|
12,500
|
|
|
|
December 8, 2011
|
|
|
|
|
18,750
|
|
|
|
December 6, 2012
|
|
|
|
|
25,000
|
|
|
|
Donald Allan,
Jr.
|
|
December 9, 2009
|
|
|
|
|
1,250
|
|
|
|
March 12, 2010
|
|
Vests in two equal
installments on March 12, 2014 and
|
|
|
50,000
|
|
|
|
|
|
March 12, 2015
|
|
|
|
|
|
|
December 9, 2010
|
|
|
|
|
3,334
|
|
|
|
December 8, 2011
|
|
|
|
|
5,001
|
|
|
|
December 6, 2012
|
|
|
|
|
6,667
|
|
|
|
Jeffery D.
Ansell
|
|
December 9, 2009
|
|
|
|
|
1,250
|
|
|
|
March 12, 2010
|
|
Vests in two equal
installments on March 12, 2014 and
|
|
|
50,000
|
|
|
|
|
|
March 12, 2015
|
|
|
|
|
|
|
December 9, 2010
|
|
|
|
|
3,334
|
|
|
|
December 8, 2011
|
|
|
|
|
5,001
|
|
|
|
December 6, 2012
|
|
|
|
|
6,667
|
|
|
|
Nolan D.
Archibald
|
|
April 29, 2009
|
|
Vests on April 29,
2013
|
|
|
188,317
|
|
|
|
December 9, 2010
|
|
|
|
|
26,093
|
|
|
|
December 8, 2011
|
|
|
|
|
38,493
|
|
|
|
December 6, 2012
|
|
|
|
|
47,090
|
|
|
|
James M. Loree
|
|
December 9, 2009
|
|
|
|
|
4,167
|
|
|
|
March 15, 2010
|
|
Vests in two equal
installments on March 12, 2014 and
|
|
|
200,000
|
|
|
|
|
|
March 12, 2015
|
|
|
|
|
|
|
December 9, 2010
|
|
|
|
|
8,334
|
|
|
|
December 8, 2011
|
|
|
|
|
12,501
|
|
|
|
December 6, 2012
|
|
|
|
|
16,667
|
|
Awards under the 2011-2013 and
2012-2014 performance programs will vest when awards are distributed, which is
generally during the first quarter following completion of the performance
cycle. An award recipient must generally remain employed until the time of
vesting of awards, but awards will vest in full if the participants employment
terminates as a result of retirement, death or disability. Employment beyond
March 12, 2013 is not a condition to vesting of Mr. Archibalds grants. The
March 15, 2010 grants to Mr. Lundgren and Mr. Loree are subject to the terms of
their employment agreements, which provide for full and immediate vesting in
certain circumstances.
Footnote to column
(i)
The shares identified in this column
are the number of shares that may be issued pursuant to performance awards (i)
at target for the 2013 EPS and ROCE components and threshold for the TSR
component of the awards for the 2011-2013 performance program; (ii) at target
and threshold for the 2013 EPS and ROCE components, respectively, at target and
threshold for 2014 EPS and ROCE components, respectively, and at threshold for
the TSR component of the awards for the 2012-2014 performance program; and (iii)
at threshold for the 2010 Working Capital Incentive Program, for which the
performance period ends on December 31, 2013. The awards for the performance
periods ending at the end of fiscal years 2013 and 2014 vest upon distribution,
which will occur during the first quarter of the fiscal year immediately
following the performance period, following release of the Companys financial
statements. The Working Capital Incentive Program Awards also vest upon
distribution, which will occur no later than the first quarter of 2014 provided
the working capital performance goal is met prior to June 30, 2013 and sustained
for at least six months. An award recipient must generally remain employed until
the time of settlement of performance awards, but pro-rated awards will vest and
be paid if the performance goals are met and the participants employment
terminates as a result of retirement, death or disability.
29
Option
Exercises and Stock Vested During 2012 Fiscal Year
The following table provides information concerning options exercised and
shares vested for each named executive officer during the Companys 2012 fiscal
year.
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares
Acquired
|
|
Value
Realized
|
|
Shares
Acquired
|
|
Value
Realized
|
|
|
on
Exercise
|
|
on
Exercise
|
|
on Vesting
|
|
on
Vesting
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
John F. Lundgren
|
|
0
|
|
0
|
|
154,664
|
|
11,466,907
|
Donald Allan, Jr.
|
|
22,500
|
|
661,188
|
|
24,836
|
|
1,830,606
|
Jeffery D.
Ansell
|
|
0
|
|
0
|
|
26,815
|
|
1,979,417
|
Nolan D. Archibald
|
|
286,875
|
|
10,485,231
|
|
125,328
|
|
9,506,022
|
James M. Loree
|
|
47,550
|
|
2,003,819
|
|
69,906
|
|
5,155,460
|
Footnote to columns (d) and
(e)
Shares acquired are time-vesting RSUs
and performance awards for the 2009-2011 performance period that vested upon
distribution in February 2012; figures reported include shares withheld to cover
taxes upon vesting.
Pension
Benefits
The following table shows the present value of accumulated benefits
payable to each of the named executive officers, including years of service
credited, under the Companys non-qualified defined benefit pension
plans.
|
|
|
|
Number of
|
|
Present Value
of
|
|
Payments
|
|
|
|
|
Years Credited
|
|
Accumulated
|
|
During Last
|
|
|
|
|
Service
|
|
Benefit
|
|
Fiscal Year
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
John F. Lundgren
|
|
CEO Make-Whole Retirement
|
|
|
|
|
|
|
|
|
Arrangement
|
|
9
|
|
0
|
|
0
|
|
|
|
The Stanley Works Supplemental
|
|
|
|
|
|
|
|
|
Executive Retirement Program
|
|
9
|
|
7,571,835
|
|
0
|
|
Donald Allan, Jr.
|
|
--
|
|
--
|
|
--
|
|
--
|
|
Jeffery D. Ansell
|
|
--
|
|
--
|
|
--
|
|
--
|
|
Nolan D. Archibald
|
|
The Black & Decker Pension
Plan
|
|
23.4
|
|
842,369
|
|
0
|
|
James M. Loree
|
|
The Stanley Works Supplemental
|
|
|
|
|
|
|
|
|
Executive Retirement Program
|
|
13.5
|
|
4,334,839
|
|
0
|
Footnote to Column (b) of Pension
Benefits Table
CEO Make-Whole Retirement
Arrangement
In connection with Mr.
Lundgrens hiring in 2004, the Company agreed to keep Mr. Lundgren whole in
respect of the supplemental retirement benefit he would have reasonably expected
to have received from his prior employer had he continued his employment with
his prior employer and had his compensation increased at the rate of 5% per
year. The prior employers supplemental retirement benefit provides for a normal
retirement benefit, calculated as a benefit payable annually for life, equal to
50% of the greater of the average of the highest cash compensation paid in the
four consecutive years during the last ten years of employment or the average of
the last forty-eight months of cash compensation (Average Compensation). For
purposes of calculating the benefits he would have received from the prior
employer, it was assumed that Mr. Lundgrens 2003 compensation of $1,037,192
with his prior employer would have increased at the rate of 5% per
year.
The supplemental retirement benefit
payable by the Company to make Mr. Lundgren whole will be determined based on
Mr. Lundgrens Average Compensation upon retirement (i.e., $1,037,192 assuming a
compound 5% annual increase), but will be reduced by 4% per year for each year
by which Mr. Lundgren elects to receive the benefit prior to age 62. This
make-whole benefit will be offset by any retirement benefits that Mr. Lundgren
receives from his prior employer and by any retirement benefits that Mr.
Lundgren accrues under the Companys plans, including The Stanley Works
Supplemental Executive Retirement Program, that do not represent his elective
contributions (e.g., 401(k) plan contributions under the Stanley Black &
Decker Retirement Account Plan (known prior to January 1, 2011 as the Stanley
Account Value Plan) or the Stanley Black & Decker Supplemental Retirement
Account Plan (known prior to January 1, 2011 as the Supplemental Retirement and
Account Value Plan for Salaried Employees of The Stanley Works)) or his matching
allocations under the Stanley Black & Decker Retirement Account Plan. For
purposes of applying these offsets from the Companys plans, accrued retirement
benefits will be treated as payable at the time and in the form in which the
supplemental make-whole benefit is paid. At age 62, Mr. Lundgren will first be
eligible to receive a single life annuity of approximately $124,000 from his
prior employer and this amount will be applied as an offset with respect to the
make-whole benefit calculated as a life annuity payable after age 62.
30
During 2012, the present value of
accrued benefits under The Stanley Works Supplemental Executive Retirement
Program exceeded the present value of the benefit under the CEO Make-Whole
Retirement arrangement. Because The Stanley Works Supplemental Executive
Retirement Program is an offset to the CEO Make-Whole arrangement, the present
value of the benefit payable from the CEO Make-Whole arrangement is currently
zero.
The Stanley Works Supplemental
Executive Retirement Program
The
Stanley Works Supplemental Executive Retirement Program (plan) provides
benefits on a non-qualified basis to certain executive officers of the Company
(eligible employees). Pursuant to amendments approved in 2007, the plan has
been closed to new participants. Under the terms of the plan, an eligible
employee became a participant in the plan upon the later of his 50
th
birthday or the completion of five years of service as an eligible employee
(pre-participation service). Messrs. Lundgren and Loree are the only named
executive officers who are eligible employees in this plan. Under this plan, a
participant will be entitled to receive a supplemental retirement benefit,
before offsets, based on the following formula: 3% of average pay for each of
the first five years of service; plus 2% of average pay for each of the next 15
years of service; plus 1% of pay for each of the next five years of service. For
this purpose, average pay is equal to one-third of the participants highest
total pay (salary and management incentive pay) for any consecutive 36-month
period. Prior to 2009, a participants benefit will be reduced by the following
offsets: (a) Cornerstone Account benefits payable under the Stanley Account
Value Plan and the Supplemental Retirement and Account Value Plan for Salaried
Employees of The Stanley Works; (b) Social Security retirement benefits (with
such benefits being determined and the offset being made when the participant
has attained the earliest age at which he or she could retire and receive Social
Security benefits, if the participant has terminated employment before reaching
such age); and (c) Company-sponsored long-term disability benefits. The plan was
amended, effective January 1, 2009, to comply with regulations enacted under
section 409A of the Internal Revenue Code. As a result, effective January 1,
2009, the benefit will be reduced only by the Cornerstone Account benefits
payable under the Stanley Account Value Plan and the Supplemental Retirement and
Account Value Plan for Salaried Employees of The Stanley Works (now known as the
Core Account benefits payable under the Stanley Black & Decker Retirement
Account Plan and the Stanley Black & Decker Supplemental Retirement Account
Plan). Benefits become vested after a participant reaches age 54 and completes
five years of pre-participation service, and vested benefits will commence upon
the participants termination of employment. Benefits will also become vested
and commence if the participant becomes totally and permanently disabled after
reaching age 50, or dies after reaching age 50. Benefits will be reduced by
0.167% for each month (i.e., 2% per year) that benefits commence prior to the
participants attainment of age 60. The normal form of payment under the plan
for a married participant is a 100% joint and survivor annuity with the
participants spouse as the joint annuitant that is an actuarial equivalent of
the plan benefit determined as single life annuity unless an election is made to
receive an actuarial equivalent lump sum payment or the single life annuity. The
normal form of payment under the plan for an unmarried participant is the plan
benefit determined as a single life annuity unless either an election is made to
receive an actuarial equivalent lump sum payment or the participant was formerly
married, was to receive a 100% joint and survivor annuity with the former spouse
and elects a 100% joint survivor annuity with another beneficiary. Mr.
Lundgrens benefit is to be paid at the same time and in the same form as his
benefit under the CEO Make-Whole Retirement Arrangement.
Black & Decker Retirement
Plans
Pursuant to the terms of his
Employment Agreement, Mr. Archibald is entitled to receive distributions
pursuant to three retirement plans sponsored by Black & Decker: The Black
& Decker Pension Plan (known, effective January 1, 2013, as the Stanley
Black & Decker Pension Plan), The Black & Decker Supplemental Pension
Plan and The Black & Decker Supplemental Executive Retirement Plan. The
Black & Decker Pension Plan is a non-contributory, tax qualified defined
benefit plan that covers most salaried employees of Black & Decker (U.S.)
Inc. and its subsidiaries. All benefit accruals were frozen under The Black
& Decker Pension Plan, effective at the end of 2010. Mr. Archibald will
start to receive his monthly benefit under this plan on or about April 1, 2013.
The Black & Decker Supplemental Pension Plan is a nonqualified defined
benefit plan that provides benefits for certain executives that would have
accrued under The Black & Decker Pension Plan were it not for the limits
imposed under the tax laws. All benefit accruals under The Black & Decker
Supplemental Pension Plan were frozen, effective at the end of 2010. Benefits
may be forfeited in the event of fraud or willful misconduct or, in the event
that following termination of employment, there is an unauthorized disclosure or
use of confidential information. The Black & Decker Supplemental Executive
Retirement Plan is a nonqualified defined benefit plan that provides additional
benefits for certain executives that may not be provided under The Black &
Decker Pension Plan. Pursuant to an election made while he was an employee of
The Black & Decker Corporation, Mr. Archibalds benefits under The Black
& Decker Supplemental Pension Plan and The Black & Decker Supplemental
Executive Retirement Plan were distributed on or about September 30,
2011.
Footnote to Column (d) of Pension
Benefits Table
The present value of the
accumulated benefit of each named executive officer is based on the following
assumptions: (i) that Mr. Lundgren will receive benefits in a lump sum, based on
his written election, at the later of his actual age or his normal retirement
age set forth in The Stanley Works Supplemental Executive Retirement Program
(age 60); (ii) that Mr. Loree will receive benefits in a lump sum, based on his
written election, at the normal retirement age set forth in The Stanley Works
Supplemental Executive Retirement Program (age 60); (iii) that Mr. Archibald
will receive benefits immediately in the normal form under The Black &
Decker Pension Plan (known, effective January 1, 2013, as the Stanley Black
& Decker Pension Plan) and has received lump sum distribution on or about
September 30, 2011 under The Black & Decker Supplemental Pension Plan and
under The Black & Decker Supplemental Executive Retirement Plan based on the
terms of each plan; (iv) the individual will not die or withdraw funds before
retirement; (v) the 2013 PPA mortality table for annuitants and non-annuitants;
and (vi) a discount rate of 3.50% except for Mr. Archibalds benefit under The
Black & Decker Pension Plan with respect to which a 3.75% discount rate was
used. With respect to Mr. Lundgren and Mr. Loree, the accrued benefit in each
case has continued to grow; the increase in the present value of the benefit can
also be attributed to changes in assumptions, primarily the lower interest rate.
With respect to Mr. Archibald, his accrued benefit has not changed; the increase
in present value of his benefit is due to passage of time and change in
assumptions.
Non-Qualified Defined Contribution and Deferred Compensation
Plans
Participants in the Companys MICP, including its executive officers, may
defer receipt of annual awards pursuant to the MICP, provided the election to
defer receipt is made in the calendar year prior to grant of the
award.
The following relates to the Stanley Black & Decker Supplemental
Retirement Account Plan, a non-qualified defined contribution plan as it applies
to named executive officers and certain other employees.
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
|
|
|
|
|
Contributions
|
|
Contributions
|
|
Earnings
|
|
Withdrawals/
|
|
Aggregate
|
|
|
in Last FY
|
|
in Last FY
|
|
in Last FY
|
|
Distributions
|
|
Balance
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
at Last FYE ($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
John F. Lundgren
|
|
|
0
|
|
|
|
406,144
|
|
|
|
122,770
|
|
|
0
|
|
|
2,016,360
|
|
Donald Allan, Jr.
|
|
|
63,127
|
|
|
|
68,845
|
|
|
|
37,587
|
|
|
0
|
|
|
955,146
|
|
Jeffery D.
Ansell
|
|
|
30,917
|
|
|
|
58,053
|
|
|
|
116,488
|
|
|
0
|
|
|
944,527
|
|
Nolan D. Archibald
|
|
|
88,000
|
|
|
|
44,000
|
|
|
|
21,135
|
|
|
0
|
|
|
286,014
|
|
James M. Loree
|
|
|
109,378
|
|
|
|
123,216
|
|
|
|
242,940
|
|
|
0
|
|
|
2,628,515
|
|
31
Footnote to column (a) of
Non-Qualified Defined Contribution and Deferred Compensation Plans
Table
At the end of 2010, the Company
amended the Stanley Account Value Plan, a tax-qualified 401(k) Plan, the
Supplemental Retirement and Account Value Plan for Salaried Employees of The
Stanley Works and the Deferred Compensation Plan for Participants in the
Companys MICP. As a result of these amendments, the Stanley Account Value Plan
has been renamed the Stanley Black & Decker Retirement Account Plan, the
Supplemental Retirement and Account Value Plan for Salaried Employees of The
Stanley Works, as it applies to named executive officers and certain other
employees, has been renamed the Stanley Black & Decker Supplemental
Retirement Account Plan, and the Deferred Compensation Plan for Participants in
the Companys MICP has been closed to new deferrals. Certain employees may now
defer bonuses and other compensation pursuant to the Stanley Black & Decker
Supplemental Retirement Account Plan.
The compensation that could be deferred
by employees and the amounts that could be credited to their accounts under the
Stanley Black & Decker Retirement Account Plan were limited due to certain
provisions of the Code and the regulations. The Stanley Black & Decker
Supplemental Retirement Account Plan provided executive officers and certain
other employees with benefits that could not be provided under the Stanley Black
& Decker Retirement Account Plan.
Prior to January 1, 2011, pursuant to
the Supplemental Retirement and Account Value Plan for Salaried Employees of The
Stanley Works (now known as the Stanley Black & Decker Supplemental
Retirement Account Plan), an eligible employee could elect to defer a portion of
his or her compensation to be credited to a supplemental employee contributions
account. The total amount deferred under the Supplemental Retirement and Account
Value Plan for Salaried Employees of The Stanley Works, plus the amount the
employee could defer under the Stanley Account Value Plan (now known as the
Stanley Black & Decker Retirement Account Plan), could not exceed 15% of his
or her annual compensation. For this purpose, (i) compensation under the
Supplemental Retirement and Account Value Plan for Salaried Employees of The
Stanley Works included salary, bonuses earned during the year, certain other
amounts earned during the year as an employee of the Company that are includible
in taxable income, and such amounts deferred or contributed at the election of
the employee to the Stanley Account Value Plan or any other Company-sponsored
plan under an arrangement described in Section 401(k) or 125 of the Code or
under the Supplemental Retirement and Account Value Plan for Salaried Employees
of The Stanley Works, and (ii) compensation under the Stanley Account Value Plan
included such amounts paid during the Year. Effective January 1, 2011, an
eligible employee may defer up to 50% of base salary and up to 100% of his or
her management incentive bonus each year under the Stanley Black & Decker
Supplemental Retirement Account Plan. Prior to 2011, a matching contribution was
made for a calendar year other than 2009, under the Supplemental Retirement and
Account Value Plan for Salaried Employees of The Stanley Works, that was 50% of
the elective deferrals of the participant from up to 7% of the portion of
compensation earned during the year in excess of the compensation that could be
recognized under the Stanley Account Value Plan. A matching contribution was not
made for 2009 under the Supplemental Retirement and Account Value Plan for
Salaried Employees of The Stanley Works. Effective January 1, 2011, matching
contributions are made under the Stanley Black & Decker Supplemental
Retirement Account Plan equal to 50% of the elective deferral contributions from
up to 7% of the portion of compensation earned during the year that consists of
salary and management incentive bonuses, including elective contributions made
from such salary and management incentive bonuses under the Stanley Black &
Decker Supplemental Retirement Account Plan or an arrangement described in
Section 125 or 401(k) of the Code that exceeds the amount of such compensation
that may be recognized under the Stanley Black & Decker Retirement Account
Plan.
Prior to 2011, a supplemental
Cornerstone allocation was made for calendar years, other than 2009, for certain
participants under the Supplemental Retirement and Account Value Plan for
Salaried Employees of The Stanley Works, based on the Cornerstone allocation
formula in the Stanley Account Value Plan, as applied to compensation in excess
of the compensation that could be recognized under the Stanley Account Value
Plan. Special, additional supplemental Cornerstone allocations were also made
for particular participants for years other than 2009. A supplemental
Cornerstone allocation was not made for 2009. None of the Companys named
executive officers was eligible to receive a special, additional supplemental
Cornerstone allocation. Effective January 1, 2011, supplemental Core allocations
are made for certain participants in the Stanley Black & Decker Supplemental
Retirement Account plan, determined on the basis of the formulas in the Stanley
Black & Decker Retirement Account Plan for Core allocations, Core Transition
Benefit allocations, and additional Core Transition Benefit allocations, as
applied to compensation in excess of the compensation recognized under the
Stanley Black & Decker Retirement Account Plan. None of the Companys named
executive officers is eligible to receive supplemental additional Core
Transition Benefit allocations under the Stanley Black & Decker Supplemental
Retirement Account Plan. Mr. Archibald is not eligible to receive any
supplemental Core allocations.
Prior to 2011, matching and Cornerstone
allocations under the Supplemental Retirement and Account Value plan for
Salaried Employees of The Stanley Works were vested upon the completion of three
years of service or, if earlier, upon a participants reaching age 65, becoming
disabled, or death, while employed by the Company. Effective January 1, 2011,
all matching allocations credited under the Stanley Black & Decker
Supplemental Retirement Account Plan, including any supplemental matching
allocations that were made prior to 2011, are vested upon completion of one year
of service or, if earlier, upon an active employees reaching age 55, becoming
disabled, or death. Effective January 1, 2011, all Core allocations credited
under the Stanley Black & Decker Supplemental Retirement Account Plan,
together with prior supplemental Cornerstone allocations, are vested after three
years of service or, if earlier, upon a participants reaching age 55, becoming
disabled, or death, while employed by the Company.
All of the supplemental accounts that
are described above are credited with notional investment earnings or losses,
depending upon the investment options selected by the participants, which may be
changed on a daily basis by the participants. A participant ordinarily receives
a lump sum distribution of the vested supplemental account balances following
termination of employment unless he or she has elected a later distribution
date. Upon death, the vested supplemental account balances are payable in a lump
sum to the designated beneficiary of the participant. However, Mr. Lundgrens
vested accounts will be distributed at the same time and in the same form as his
benefit under The Stanley Works Supplemental Executive Retirement Program, and
Mr. Lorees vested accounts will be distributed at the same time and in the same
form as his benefit under The Stanley Works Supplemental Executive Retirement
Program.
Footnote to columns (b) and (c) of
Non-Qualified Defined Contribution and Deferred Compensation Plans
Table
The executive contributions listed
in column (b) are reported as compensation in column (c) of the Summary
Compensation Table.
The Company contributions listed in
column (c) are reported as compensation in column (i) of the Summary
Compensation Table.
Footnote to column (d) of
Non-Qualified Defined Contribution and Deferred Compensation Plans
Table
Participants in the Stanley Black
& Decker Supplemental Retirement Account Plan may elect to have their
account balances credited with notional earnings based on the performance of
certain investment options made available to the participants under this plan.
Participants may elect to change their investment elections at any time by
contacting the Retirement Service Center via telephone or Internet. During the
plan year ended December 31, 2012, the accounts of the named executive officers
under this plan were credited with earnings at the following rates, based on the
investment options which they elected: the Stanley Black & Decker Stock Fund
11.41%; Black Rock Money Market Fund 0.24%; SSgA US Intermediate
Government/Credit Bond Index Fund 3.80%; EB DL Non SL Aggregate Bond Index Fund
4.22%; SSgA US Inflation Protected Bond Index Fund 6.87%; EB DL Non SL Stock
Index Fund 16.01%; SSgA U.S. Total Market Index Fund 16.35%; SSgA US Extended
Market Index Fund 17.93%; SSgA Global Equity ex US Index Fund 17.84%; Neuberger
Berman Genesis Fund 10.10%; Dodge & Cox International Stock Fund 21.03%;
Black Rock LifePath Index Retirement Fund 8.48%; Black Rock LifePath Index 2015
Fund 9.53%; Black Rock LifePath Index 2020 Fund 10.85%; Black Rock LifePath
Index 2025 Fund 12.06%; Black Rock LifePath Index 2030 Fund 13.18%; Black Rock
LifePath Index 2035 Fund 14.04%; Black Rock LifePath Index 2040 Fund 14.92%;
Black Rock LifePath Index 2045 Fund 15.69%; Black Rock LifePath Index 2050 Fund
16.54%; Black Rock LifePath Index 2055 Fund 17.29%. The Company has not
included any portion of the earnings listed in column (d) as compensation in the
Summary Compensation Table.
Footnote to column (e) of
Non-Qualified Defined Contribution and Deferred Compensation Plans
Table
The amount set forth in column (e)
represents the distribution of funds held through the Black & Decker
Supplemental Retirement Savings Plan following the Merger, pursuant to the terms
of that Plan.
32
Retirement Programs covering Mr.
Archibald
As discussed above, Mr. Archibald will
start to receive a monthly benefit under The Black & Decker Pension Plan on
or about April 1, 2013 in connection with the termination of his employment with
the Company. He received distributions pursuant to The Black & Decker
Supplemental Pension Plan and The Black & Decker Supplemental Executive
Retirement Plan on or about September 30, 2011 pursuant to distribution
elections he made while he was an employee of The Black & Decker
Corporation. Mr. Archibald became eligible for coverage under the Stanley
Account Value Plan (known, effective January 1, 2011, as the Stanley Black &
Decker Retirement Account Plan) when he became an employee of the Company
immediately following the Merger but was not eligible for Cornerstone or Core
allocations under that plan. Effective January 1, 2011, Mr. Archibald became
eligible for coverage under the Stanley Black & Decker Supplemental
Retirement Account Plan, but was not eligible for Core allocations under that
plan. Prior to the Merger, Mr. Archibald was eligible for contributions under
The Black & Decker Retirement Savings Plan, a tax qualified 401(k) defined
contribution retirement plan that, prior to 2011, covered most salaried
employees of The Black & Decker Corporation and its subsidiaries.
Contributions were discontinued under The Black & Decker Retirement Savings
Plan at the end of 2010 and, effective January 1, 2011, The Black & Decker
Retirement Savings Plan was merged into and all of its assets and liabilities
were transferred to the Stanley Black & Decker Retirement Account
Plan.
Executive Officer
Agreements
Agreement with John F. Lundgren,
Chairman and Chief Executive Officer
In February 2004, the Company entered
into an employment agreement with Mr. Lundgren pursuant to which Mr. Lundgren
agreed to serve as the Companys Chairman and Chief Executive Officer. On
December 10, 2008, the employment agreement was amended and restated primarily
to comply with rules under Section 409A of the Code, governing time and form of
payments. The changes did not generally affect the scope or amount of benefits
Mr. Lundgren was entitled to receive under the employment agreement. On November
2, 2009, the employment agreement was again amended and restated in connection
with the Merger. Mr. Lundgrens amended and restated agreement became effective
upon completion of the Merger on March 12, 2010, at which time Mr. Lundgrens
position was changed to President, Chief Executive Officer and a Director of the
Company. On January 13, 2013, as the third anniversary of the Merger approached,
and the integration of the two companies nears completion, Mr. Lundgren was
elected by the Board of Directors to serve in the additional capacity as
Chairman of the Board of the Company effective March 13, 2013, following the
expiration of Nolan D. Archibalds term as Executive Chairman of the Board. As a
result, the Company and Mr. Lundgren have agreed that his employment agreement
is to be construed and interpreted to reflect (i) that he has ceased to serve as
the President of the Company and (ii) that he has assumed the additional role
and responsibilities of Chairman of the Board of the Company.
As provided in the amended agreement in
connection with the Merger, on March 15, 2010 Mr. Lundgren received a special
grant of 325,000 RSUs that vest in two equal installments on March 12, 2014 and
March 12, 2015 (the Merger RSUs). Pursuant to his agreement, Mr. Lundgrens
annual base salary is subject to review for increase at least annually and may
not be decreased except pursuant to across-the-board salary decreases similarly
affecting all senior Company executives. Pursuant to the terms of his agreement,
Mr. Lundgren is entitled to participate in the MICP with an annual target bonus
opportunity equal to 150% of his annual base salary, a threshold bonus
opportunity equal to 75% of his annual base salary, and a maximum potential
award equal to 300% of his annual base salary and he is entitled to receive (a)
annual performance awards with a target annual value (based on the full grant
date value as determined for purposes of the Companys financial reporting)
equal to 300% of his annual base salary, with a threshold potential annual
performance award equal to 150% of his annual base salary and a maximum
potential annual performance award equal to 500% of his annual base salary, and
(b) annual awards of options to purchase 150,000 shares of Company common stock.
Mr. Lundgren also is entitled to participate in all employee benefit plans as
are generally made available to the Companys senior officers.
Under his employment agreement, if Mr.
Lundgrens employment is terminated by the Company without cause or if Mr.
Lundgren terminates his employment as a result of a constructive termination of
employment, (i) Mr. Lundgren will receive a lump sum in cash equal to two times
his annual base salary and target annual bonus opportunity; (ii) the Merger RSUs
will immediately vest; (iii) Mr. Lundgren and his eligible dependents will
receive up to twenty-four months of continued health and welfare benefits
coverage; (iv) Mr. Lundgren will receive a pro-rata target annual bonus in
respect of the year in which the termination of employment occurs; and (v) Mr.
Lundgren will be subject to a twenty-four month non-competition and
non-solicitation covenant.
33
As a condition to receiving the
payments described above, Mr. Lundgren is required to execute a general release
of claims. In addition, upon termination of his employment, the Company will
provide Mr. Lundgren with access to retiree medical coverage, at his cost, on
the same terms and conditions as are generally made available to other retirees
of the Company; provided, however, the Company is not required to provide such
access if Mr. Lundgrens employment is terminated for cause. For a discussion of
the retirement provisions of the employment agreement, see
CEO Make-Whole Retirement Arrangement
discussed on pages 30-31. See the
Termination Provisions Summary
table on page 38, and the footnotes thereto, for information regarding
payments which would have become payable to Mr. Lundgren if his employment had
terminated effective December 29, 2012.
Agreement with James M. Loree,
President and Chief Operating Officer
On November 2, 2009, in connection with
the Merger, the Company entered into an employment agreement with James M.
Loree, then Executive Vice President and Chief Operating Officer of the Company.
Pursuant to the terms of the agreement, on March 15, 2010, Mr. Loree received a
special grant of 200,000 restricted stock units that vest in two equal
installments on March 12, 2014 and March 12, 2015 (the Merger RSUs). On
January 13, 2013, Mr. Loree had been elected by the Board of Directors to serve
as President and Chief Operating Officer of the Company. As a result, the
Company and Mr. Loree have agreed that his employment agreement is to be
construed and interpreted to reflect (i) that he has ceased to serve as
Executive Vice President of the Company and (ii) that he will serve as President
and Chief Operating Officer of the Company.
Mr. Lorees annual base salary is
subject to review for increase at least annually and may not be decreased except
pursuant to across-the-board salary decreases similarly affecting all senior
Company executives. Pursuant to the terms of his agreement, Mr. Loree is
entitled to participate in the MICP with an annual target bonus opportunity
equal to 100% of his annual base salary, a threshold bonus opportunity equal to
50% of his annual base salary, and a maximum potential award equal to 200% of
his annual base salary and to receive (a) annual performance awards with a
target annual value (based on the full grant date value as determined for
purposes of the Companys financial reporting) equal to 250% of his annual base
salary, with a threshold potential annual performance award equal to 125% of his
annual base salary and a maximum potential annual performance award equal to
400% of his annual base salary, and (b) annual awards of options to purchase
100,000 shares of Company common stock. Mr. Loree also is entitled to
participate in all employee benefit plans as are generally made available to the
Companys senior officers.
Under his employment agreement, if Mr.
Lorees employment is terminated by the Company without cause or if Mr. Loree
terminates his employment as a result of a constructive termination of
employment, the employment agreement provides that (i) Mr. Loree will receive a
lump sum in cash equal to two times his annual base salary and target annual
bonus opportunity; (ii) the Merger RSUs will immediately vest; (iii) Mr. Loree
and his eligible dependents will receive up to twenty-four months of continued
health and welfare benefits coverage; (iv) Mr. Loree will receive a pro-rata
target annual bonus in respect of the year in which the termination of
employment occurs; (v) Mr. Loree shall be deemed to have attained service
through the greater of his actual age as of the date of termination and age 54
for all purposes (including vesting and benefit accrual) under the Supplemental
Executive Retirement Plan; and (vi) Mr. Loree will be subject to a twenty-four
month non-competition and non-solicitation covenant.
As a condition to receiving the
payments described above, Mr. Loree is required to execute a general release of
claims. In addition, upon termination of his employment, the Company will
provide Mr. Loree with access to retiree medical coverage, at his cost, on the
same terms and conditions as are generally made available to other retirees of
the Company; provided, however, the Company is not required to provide such
access if Mr. Lorees employment is terminated for cause. See the
Termination Provisions
Summary
table on page 42, and the footnotes
thereto, for information regarding payments which would have become payable to
Mr. Loree if his employment had terminated effective December 29,
2012.
Agreement with Nolan D.
Archibald, Former Executive Chairman
On November 2, 2009, in connection with
the Merger, the Company entered into an agreement with Nolan D. Archibald, who
was then the Chairman, President and Chief Executive Officer of Black &
Decker. Under the terms of his agreement, which became effective on March 12,
2010, Mr. Archibald served as a member and Executive Chairman of the Companys
Board of Directors and as an employee of the Company until March 12, 2013 when
his agreement expired. While Mr. Archibald was employed by the Company, he
received an annual base salary of $1,500,000 and was entitled to participate in
the MICP, with an annual target bonus opportunity equal to $1,875,000. Pursuant
to his employment agreement, on March 15, 2010, Mr. Archibald received a special
grant of 1,000,000 stock options, which vested in full on March 12, 2013. During
the three
34
years that Mr. Archibald was employed
by the Company, Mr. Archibald also received annual equity awards with an
aggregate annual value (based on the full grant date value as determined for
purposes of the Companys financial reporting), equal to $6,650,000 and
comprised (based on value) of 50% stock options and 50% RSUs, restricted stock
units or other full-share type awards. Mr. Archibald is also eligible to receive
a cost synergy bonus based on the achievement of certain goals set forth in the
following table.
Cost Synergy
Level
|
|
Bonus
|
Attained
|
|
Amount
|
Less than $150
million
|
|
$0
|
$150 million
|
|
$0
|
$225 million
|
|
$15 million
|
$300 million
|
|
$30 million
|
$350 million
|
|
$45 million
|
More than $350 million
|
|
$45
million
|
For purposes of the cost synergy bonus,
the Cost Synergy Level Attained means the annual run-rate of cost savings
achieved by the Company as of March 12, 2013 that are attributable to the
Merger. The cost savings will be calculated on a pre-tax basis, applying
generally accepted accounting principles and otherwise consistent with the
timing and methods of cost synergy measurements used in reports provided to the
Board of Directors and included in the Companys public filings. The calculation
will not include any revenue synergies. To the extent the cost synergy level
attained is between two values set forth in the table above, the cost synergy
bonus will be determined by linear interpolation between the two corresponding
cost synergy bonus amount values. In addition, each bonus amount set forth in
the table above will be increased at an interest rate of 4.5% compounded
annually over the three-year period beginning on March 12, 2010.
Mr. Archibald also was entitled to
participate in all group welfare plans as are generally made available to the
Companys senior executives and all fringe benefit and perquisite programs as
are generally made available to Mr. Lundgren. In addition, Mr. Archibald was
entitled to receive certain perquisites and benefits that he had been receiving
as of December 31, 2008 pursuant to his employment agreement with Black &
Decker, including business and personal use of the Companys aircraft. The
Company will continue to honor certain of Mr. Archibalds entitlements under his
employment agreement with Black & Decker and other compensation plans or
arrangements of Black & Decker, including (i) a payment of $3,750,000 in
respect of Black & Deckers executive annual incentive plan for the 2009
performance period (to the extent not previously paid by Black & Decker),
(ii) a payment of $4,725,000 in respect of Black & Deckers 2008 Executive
Long Term Incentive/Retention Plan (to the extent not previously paid by Black
& Decker), (iii) any amounts owed to Mr. Archibald under Black &
Deckers Supplemental Executive Retirement Plan, Supplemental Pension Plan and
Supplemental Retirement Savings Plan, (iv) retiree medical benefit coverage for
Mr. Archibald and his spouse (to the extent Mr. Archibald is eligible to receive
such benefit coverage upon his retirement under Black & Deckers applicable
plans), and (v) reimbursement of all legal fees and expenses Mr. Archibald
incurs as a result of the application of Section 4999 of the Code to the
payments and benefits under his agreement with the Company.
Pursuant to Mr. Archibalds employment
agreement with Black & Decker, upon completion of the Merger, he would have
been entitled to a severance payment in the amount of $20,475,000, as well as a
gross-up payment if he were to be subject to the excise tax imposed by Section
4999 of the Code, based on Mr. Archibald not becoming chairman, president and
chief executive officer of the Company. Under the terms of Mr. Archibalds
agreement with the Company, however, Mr. Archibald agreed to waive his
entitlement to the severance payment and the gross-up payment that would have
been payable under the Black & Decker employment agreement upon completion
of the Merger.
Under his agreement with the Company,
if, prior to his retirement on March 12, 2013, Mr. Archibalds employment was
terminated by the Company without cause or if Mr. Archibald terminated his
employment as a result of a constructive termination of employment, (i) Mr.
Archibald would have received the cost synergy bonus described above (as if Mr.
Archibald had remained continuously employed by the Company through March 12,
2013 and based on the actual Cost Synergy Level Attained as of such date), (ii)
all outstanding equity awards would have immediately vested, (iii) Mr. Archibald
and his eligible dependents would have received continued health and welfare
benefits coverage until March 12, 2013, and (iv) Mr. Archibald would have been
subject to a non-competition covenant through March 12, 2013 and a twenty-four
month non-solicitation covenant. As a condition to receiving the payments
described above, Mr. Archibald would have been required to execute a general
release of claims. See the
Termination
Provisions Summary
table on page 41, and the
footnotes thereto, for information regarding payments which would have become
payable to Mr. Archibald if his employment had terminated effective December 29,
2012.
35
Termination and Change in Control
Provisions
The Company has adopted a separation
pay policy applicable to executive officers and certain other members of
management pursuant to which the Company will provide separation pay upon a
termination of employment that is permanent, involuntary, initiated by the
Company through no fault of the affected employee, and is the direct result of a
job elimination or combination with another position. The purpose of the policy
is to help affected individuals transition to new employment without any loss in
base compensation for a specified period. Pursuant to this policy, subject to
adjustment, as required to comply with Section 409A of the Code, a named
executive officer who qualifies for separation pay under the policy would
receive up to one years pay at his or her annual base salary at the date of
termination, continued life, AD&D, medical, dental and vision insurance
coverage through the end of the month in which he or she receives separation
pay, provided he or she makes the necessary contributions, and would be allowed
180 days plus two calendar months to exercise any vested but unexercised stock
options. Any employee who is at least 55 years of age and has at least 20 years
of consecutive service with the Company at the time of termination also would be
eligible to receive a special medical subsidy equal to 50% of normal COBRA costs
for a maximum of 18 months. The separation pay policy would not apply to Messrs.
Lundgren, Loree or Archibald, whose severance would be governed by the terms of
their agreements as described above.
The Companys MICP, its 2001 and
2009 Long-Term Incentive Plans (the 2001 LTIP, the 2009 LTIP, respectively),
the proposed 2013 LTIP (collectively with the 2001 LTIP and the 2009 LTIP, the
LTIPs) and change in control severance agreements with each of Messrs.
Lundgren, Allan, Ansell and Loree, and other senior officers of the Company
(Change in Control Agreements) include provisions for the acceleration of
payments and/or other benefits upon the occurrence of a Change in Control.
A change in control under the MICP, the
LTIPs and the Change in Control Agreements is generally deemed to have occurred
in any of the following circumstances: (i) subject to certain exceptions, a
person is or becomes the beneficial owner of securities representing 25% or more
of the combined voting power of the Companys then outstanding securities; (ii)
there is a change in the composition of the Board of Directors such that less
than a majority of the members were elected, nominated or appointed by at least
two thirds of the incumbent directors; (iii) consummation of a merger or
consolidation of the Company or any direct or indirect subsidiary of the Company
with any other corporation or entity other than (a) a merger or consolidation
where the voting securities of the Company continue to represent at least 50% of
the combined voting power of the surviving entity or any parent thereof or (b) a
merger or consolidation effected to implement a recapitalization of the Company
in which no person is or becomes the beneficial owner of securities representing
25% or more of the combined voting power of the Companys then outstanding
securities; or (iv) the Companys shareholders approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of its
assets unless the shareholders of the Company own at least 50% of the acquiring
entity in substantially the same proportions as their ownership of the Company
immediately prior to such sale.
With respect to awards granted pursuant
to the 2001 LTIP and the 2009 LTIP prior to October 13, 2011, and LTIP and MICP
awards granted after October 13, 2011 that are not assumed or replaced by a
resulting entity, unless otherwise determined by the Compensation Committee at
the time of grant of an award, upon the occurrence of a Change in Control of the
Company, (i) participants under the MICP will be entitled to a pro rata portion
of their award, assuming achievement of the applicable performance goal(s) at
target levels and (ii) with respect to awards under the LTIPs, all options will
become immediately exercisable in full and will remain outstanding for the
remainder of their terms, all performance awards will become payable or
distributable, pro rata, assuming achievement at target and all restrictions
applicable to restricted stock and RSUs will immediately lapse.
With respect to awards granted after
October 13, 2011, the LTIPs and the MICP generally provide for a so-called
double trigger acceleration in connection with a change in control (each as
defined in the applicable plan). Accordingly, no such awards would be
accelerated if such awards are assumed or replaced by the resulting entity with
an equivalent award and the participant does not incur a qualifying termination
prior to the end of the applicable performance period in the case of the MICP or
within two years following a change in control in the case of awards under the
LTIPs.
The Company initially entered into a
Change in Control Agreement with Mr. Lundgren when he commenced employment on
March 1, 2004 and with Mr. Loree on May 9, 2003. The Company entered into
amended and restated Change in Control Agreements with each of the foregoing
executives on December 10, 2008, in order to comply with the rules of Section
409A of the Code. The changes reflected in the amended and restated Change in
Control Agreements do not generally affect the scope or amount of benefits the
respective executive officer would be entitled to receive. The Company entered
into the amended and restated Change in Control Agreement with Mr. Allan on
February 23, 2009. The Forms of Change in Control Agreements executed with
Messrs. Allan, Ansell, Loree and Lundgren are on file as exhibits to the
Companys Annual Report on Form 10-K for the year ended January 3,
2009.
36
These agreements provide for a two year
term, subject to recurring one year extensions unless 90 days advance notice is
given not to extend the term. In addition, if a Change in Control occurs during
the term, the term of each such agreement will not expire earlier than two years
from the date of the Change in Control. In order to receive benefits under these
agreements, an executive officer must incur a qualifying termination of
employment during the term of the agreement. A qualifying termination of
employment will generally occur if the executive officers employment is
actually or constructively terminated within two years following a Change in
Control.
The agreements provide for the
following upon a qualifying termination: (i) a lump sum cash payment equal to 3
times (for Messrs. Lundgren and Loree) or 2.5 times (for Messrs. Allan and
Ansell) annual base salary; (ii) a cash payment equal to 3 times (for Messrs.
Lundgren and Loree) or 2.5 times (for Messrs. Allan and Ansell) average annual
bonus over the 3 years prior to termination; (iii) continuation of certain
benefits and perquisites for 3 years (for Messrs. Lundgren and Loree) or 2.5
years (for Messrs. Allan and Ansell) (or, if shorter, until similar benefits are
provided by the executive officers new employer); (iv) a payment reflecting the
actuarial value of an additional 3 years (for Messrs. Lundgren and Loree) or 2.5
years (for Messrs. Allan and Ansell) of service credit for retirement pension
accrual purposes under any defined benefit or defined contribution plans
maintained by the Company; and (v) outplacement services (with the cost to the
Company capped at $50,000). The executive officers will also be entitled to
receive additional payments to the extent necessary to compensate them for any
excise taxes payable by them under the federal laws applicable to excess
parachute payments.
Set forth on pages 38-42 are tables
setting forth the dollar amounts that would have been payable at December 29,
2012 under the various termination scenarios applicable for each named executive
officer. The figures set forth in the tables assume a stock price of $75.09, the
highest reported sale price of a share of Company stock in the sixty (60) days
preceding December 29, 2012, in calculating amounts payable in respect of RSUs
(other than pre-Merger grants to Nolan Archibald) and performance awards
following a Change in Control, and $72.06, the closing price of Company common
stock on December 28, 2012, which was the last business day of the Companys
2012 fiscal year, in calculating all other amounts payable in respect of equity
awards. The Companys 2012 fiscal year ended on December 29, 2012.
37
TERMINATION PROVISIONS
SUMMARY
John F. Lundgren
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
w/out
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause
or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
for
Good
|
|
w/out
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Involuntary
|
|
Reason
|
|
Cause
|
|
|
|
Death
|
|
|
|
|
Resignation
|
|
For Cause
|
|
(no CIC)
|
|
upon CIC
|
|
Disability
|
|
(Pre-retirement)
|
|
Retirement
|
Severance
|
|
0
|
|
0
|
|
6,350,000
|
|
13,479,375
|
|
0
|
|
0
|
|
0
|
Pro-rata bonus for year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
termination
|
|
0
|
|
0
|
|
1,875,000
|
|
1,875,000
|
|
1,875,000
|
|
1,875,000
|
|
0
|
SERP/Retirement
Plan
|
|
7,571,835
|
|
7,571,835
|
|
7,571,835
|
|
9,870,529
|
|
7,571,835
|
|
7,571,835
|
|
7,571,835
|
Supplemental Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Account contributions
|
|
0
|
|
0
|
|
0
|
|
1,575,819
|
|
0
|
|
0
|
|
0
|
Executive benefits
&
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
perquisites
|
|
0
|
|
0
|
|
0
|
|
127,536
|
|
0
|
|
0
|
|
0
|
Post-termination life
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
insurance
|
|
134,505
|
|
134,505
|
|
137,121
|
|
138,429
|
|
134,505
|
|
0
|
|
134,505
|
Post-termination
health &
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
welfare
|
|
0
|
|
0
|
|
30,799
|
|
46,198
|
|
0
|
|
0
|
|
0
|
Outplacement
|
|
0
|
|
0
|
|
0
|
|
50,000
|
|
0
|
|
0
|
|
0
|
280G tax
gross-up
|
|
0
|
|
0
|
|
0
|
|
14,751,162
|
|
0
|
|
0
|
|
0
|
Vesting of stock options
|
|
0
|
|
0
|
|
0
|
|
1,262,719
|
|
1,262,719
|
|
1,262,719
|
|
0
|
Vesting of
restricted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock units
|
|
23,419,500
|
|
0
|
|
23,419,500
|
|
29,379,657
|
|
28,194,142
|
|
28,194,142
|
|
23,419,500
|
Vesting of performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
|
|
0
|
|
0
|
|
0
|
|
10,992,613
|
|
12,192,672
|
|
12,192,672
|
|
0
|
Total
|
|
31,125,840
|
|
7,706,340
|
|
39,384,255
|
|
83,549,037
|
|
51,230,873
|
|
51,096,368
|
|
31,125,840
|
38
TERMINATION PROVISIONS
SUMMARY
Donald Allan, Jr.
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
w/out
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause
or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
for
Good
|
|
w/out
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Involuntary
|
|
Reason
|
|
Cause
|
|
|
|
Death
|
|
|
|
|
Resignation
|
|
For Cause
|
|
(no CIC)
|
|
upon CIC
|
|
Disability
|
|
(Pre-retirement)
|
|
Retirement
|
Severance
|
|
0
|
|
0
|
|
625,000
|
|
3,263,017
|
|
0
|
|
0
|
|
0
|
Pro-rata bonus for year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
termination
|
|
0
|
|
0
|
|
570,400
|
|
460,000
|
|
570,400
|
|
570,400
|
|
0
|
SERP/Retirement
Plan
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Supplemental Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Account contributions
|
|
0
|
|
0
|
|
0
|
|
257,877
|
|
0
|
|
0
|
|
0
|
Executive benefits
&
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
perquisites
|
|
0
|
|
0
|
|
0
|
|
80,000
|
|
0
|
|
0
|
|
0
|
Post-termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life insurance
|
|
0
|
|
0
|
|
11,546
|
|
28,865
|
|
0
|
|
0
|
|
0
|
Post-termination
health &
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
welfare
|
|
0
|
|
0
|
|
8,307
|
|
36,695
|
|
0
|
|
0
|
|
0
|
Outplacement
|
|
0
|
|
0
|
|
0
|
|
50,000
|
|
0
|
|
0
|
|
0
|
280G tax
gross-up
|
|
0
|
|
0
|
|
0
|
|
2,906,099
|
|
0
|
|
0
|
|
0
|
Vesting of stock options
|
|
0
|
|
0
|
|
0
|
|
307,938
|
|
307,938
|
|
307,938
|
|
0
|
Vesting of
restricted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock
units
|
|
0
|
|
0
|
|
0
|
|
4,974,769
|
|
4,774,029
|
|
4,774,029
|
|
0
|
Vesting of performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
|
|
0
|
|
0
|
|
0
|
|
1,313,359
|
|
1,535,181
|
|
1,535,181
|
|
0
|
Total
|
|
0
|
|
0
|
|
1,215,253
|
|
13,678,619
|
|
7,187,548
|
|
7,187,548
|
|
0
|
39
TERMINATION PROVISIONS
SUMMARY
Jeffery D. Ansell
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
w/out
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause
or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
for
Good
|
|
w/out
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Involuntary
|
|
Reason
|
|
Cause
|
|
|
|
Death
|
|
|
|
|
Resignation
|
|
For Cause
|
|
(no CIC)
|
|
upon CIC
|
|
Disability
|
|
(Pre-retirement)
|
|
Retirement
|
Severance
|
|
0
|
|
0
|
|
575,000
|
|
3,041,167
|
|
0
|
|
0
|
|
0
|
Pro-rata bonus for year
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
termination
|
|
0
|
|
0
|
|
575,400
|
|
420,000
|
|
575,400
|
|
575,400
|
|
0
|
SERP/Retirement
Plan
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Supplemental
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Account
contributions
|
|
0
|
|
0
|
|
0
|
|
223,633
|
|
0
|
|
0
|
|
0
|
Executive benefits
&
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
perquisites
|
|
0
|
|
0
|
|
0
|
|
76,875
|
|
0
|
|
0
|
|
0
|
Post-termination life
insurance
|
|
0
|
|
0
|
|
7,326
|
|
18,315
|
|
0
|
|
0
|
|
0
|
Post-termination
health &
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
welfare
|
|
0
|
|
0
|
|
15,186
|
|
53,345
|
|
0
|
|
0
|
|
0
|
Outplacement
|
|
0
|
|
0
|
|
0
|
|
50,000
|
|
0
|
|
0
|
|
0
|
280G tax
gross-up
|
|
0
|
|
0
|
|
0
|
|
2,290,472
|
|
0
|
|
0
|
|
0
|
Vesting of stock
options
|
|
0
|
|
0
|
|
0
|
|
307,938
|
|
307,938
|
|
307,938
|
|
0
|
Vesting of restricted
stock units
|
|
0
|
|
0
|
|
0
|
|
4,974,769
|
|
4,774,029
|
|
4,774,029
|
|
0
|
Vesting of performance
shares
|
|
0
|
|
0
|
|
0
|
|
1,300,762
|
|
1,527,619
|
|
1,527,619
|
|
0
|
Total
|
|
0
|
|
0
|
|
1,172,912
|
|
12,757,276
|
|
7,184,986
|
|
7,184,986
|
|
0
|
40
TERMINATION PROVISIONS
SUMMARY
Nolan D. Archibald
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
w/out
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
for Good
|
|
w/out
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Involuntary
|
|
Reason
|
|
Cause
|
|
|
|
Death
|
|
|
|
|
Resignation
|
|
For Cause
|
|
(no CIC)
|
|
upon CIC
|
|
Disability
|
|
(Pre-retirement)
|
|
Retirement
|
Severance
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Pro-rata bonus for year of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
termination
|
|
1,875,000
|
|
0
|
|
1,875,000
|
|
1,875,000
|
|
1,875,000
|
|
1,875,000
|
|
1,875,000
|
Black & Decker Pension Plan
|
|
842,369
|
|
842,369
|
|
842,369
|
|
842,369
|
|
842,369
|
|
436,553
|
|
842,369
|
Black & Decker SERP
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Black & Decker Supplemental
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Plan
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Supplemental Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Account
contributions
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Executive benefits &
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
perquisites
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Post-termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life
insurance
|
|
381,048
|
|
381,048
|
|
382,029
|
|
382,029
|
|
381,048
|
|
0
|
|
381,048
|
Post-termination health &
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
welfare
|
|
0
|
|
0
|
|
4,070
|
|
4,070
|
|
0
|
|
0
|
|
0
|
Outplacement
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
280G tax gross-up
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Vesting of stock options
|
|
1,212,893
|
|
1,212,893
|
|
19,814,025
|
|
19,814,025
|
|
19,814,025
|
|
19,814,025
|
|
1,212,893
|
Vesting of restricted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock/RSUs
|
|
11,158,934
|
|
6,167,111
|
|
11,439,903
|
|
11,778,282
|
|
11,439,903
|
|
11,439,903
|
|
11,158,934
|
Vesting of cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
synergy
bonus
|
|
0
|
|
0
|
|
51,352,476
|
|
51,352,476
|
|
51,352,476
|
|
51,352,476
|
|
0
|
Total
|
|
15,470,244
|
|
8,603,421
|
|
85,709,872
|
|
86,048,251
|
|
85,704,821
|
|
84,917,957
|
|
15,470,244
|
41
TERMINATION PROVISIONS
SUMMARY
James M. Loree
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
w/out
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause
or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
for
Good
|
|
w/out
|
|
|
|
|
|
|
|
|
Voluntary
|
|
Involuntary
|
|
Reason
|
|
Cause
|
|
|
|
Death
|
|
|
|
|
Resignation
|
|
For
Cause
|
|
(no CIC)
|
|
upon CIC
|
|
Disability
|
|
(Pre-retirement)
|
|
Retirement
|
Severance
|
|
0
|
|
0
|
|
3,180,000
|
|
6,298,950
|
|
0
|
|
0
|
|
0
|
Pro-rata bonus for
year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
termination
|
|
0
|
|
0
|
|
780,000
|
|
780,000
|
|
780,000
|
|
780,000
|
|
0
|
SERP/Retirement
Plan
|
|
4,938,285
|
|
4,938,285
|
|
4,938,285
|
|
6,106,950
|
|
4,938,285
|
|
4,938,285
|
|
0
|
Supplemental
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Account
contributions
|
|
0
|
|
0
|
|
0
|
|
721,628
|
|
0
|
|
0
|
|
0
|
Executive benefits
&
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
perquisites
|
|
0
|
|
0
|
|
0
|
|
147,053
|
|
0
|
|
0
|
|
0
|
Post-termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
life
insurance
|
|
0
|
|
0
|
|
32,364
|
|
48,546
|
|
0
|
|
0
|
|
0
|
Post-termination
health &
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
welfare
|
|
0
|
|
0
|
|
47,398
|
|
71,097
|
|
0
|
|
0
|
|
0
|
Outplacement
|
|
0
|
|
0
|
|
0
|
|
50,000
|
|
0
|
|
0
|
|
0
|
280G tax
gross-up
|
|
0
|
|
0
|
|
0
|
|
7,384,772
|
|
0
|
|
0
|
|
0
|
Vesting of stock
options
|
|
0
|
|
0
|
|
0
|
|
841,813
|
|
841,813
|
|
841,813
|
|
0
|
Vesting of restricted
stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
units
|
|
0
|
|
0
|
|
14,412,000
|
|
18,146,794
|
|
17,414,542
|
|
17,414,542
|
|
0
|
Vesting of performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
|
|
0
|
|
0
|
|
0
|
|
5,347,939
|
|
5,830,903
|
|
5,830,903
|
|
0
|
Total
|
|
4,938,285
|
|
4,938,285
|
|
23,390,047
|
|
45,945,542
|
|
29,805,543
|
|
29,805,543
|
|
0
|
Footnotes to Termination Provision
Summary Tables
The Companys 2012 MICP, which applied to
the awards that were outstanding at fiscal year end, provided that, upon an
occurrence of a change in control, payments will be made on a pro rata basis,
assuming performance at target, as discussed above. The Companys MICP provides
that in the case of termination that is involuntary without cause or voluntary
for good reason and termination in the event of disability, death or retirement,
payments will be made on a pro rata basis based on actual performance. Mr.
Lundgrens and Mr. Lorees employment agreements provide that in the case of
termination that is involuntary without cause or voluntary for good reason and
termination in the event of disability or death, bonus payments will be made on
a pro rata basis assuming performance at target.
The amount of benefits payable under the
SERP/Retirement Plan for Messrs. Lundgren and Loree is the net amount payable
after giving effect to the offset of certain amounts payable pursuant to the
Supplemental Retirement Account Plan.
Benefits that Messrs. Lundgren, Loree and
Archibald would be entitled to receive if their employment were terminated by
the Company without cause or if they were to terminate their employment as a
result of a constructive termination of employment are described on pages 33-37
under the heading
Executive Officer
Agreements.
Under the terms of his
employment agreement, the Merger RSUs granted to Mr. Lundgren will become
immediately and fully vested in the event of his retirement which was defined,
for this purpose, as Mr. Lundgrens termination of his employment for any reason
following completion of the Merger. The standard terms of the Companys stock
option and restricted unit awards provide that those awards will become fully
vested upon retirement, as defined in the terms of grant. Retirement for these
purposes is defined as achievement of age 55 and 10 years of service with the
Company or any affiliate; accordingly, Mr. Archibalds annual bonus would have
been paid and the stock option and restricted stock unit awards he received in
December 2010, December 2011 and December 2012 would have become fully vested
had he retired on December 29, 2012. Under the terms of the Black & Decker
plans pursuant to which they were granted, Mr. Archibald also would vest, pro
rata, in the Restricted Stock Awards that were granted to him prior to the
Merger. Unvested stock options granted prior to the Merger would be
cancelled.
Under the terms of the Change in Control
Severance Agreements between the Company and Messrs. Lundgren, Allan, Ansell and
Loree, these executives would be entitled to life, disability, health and
accident insurance coverage for a period of 3 years (for Messrs. Lundgren and
Loree) or 2.5 years (for Messrs. Allan and Ansell) upon a termination without
cause following a Change in Control. The estimated value of these benefits
includes the product of the annual premiums for fully-insured plans and the
equivalent costs for self-insured plans paid by the Company for life, health and
accident insurance coverage for these executives during 2012 multiplied by the
appropriate period of time.
Executive Benefits and Perquisites include
the current maximum annual allowance for each executive for financial planning
services, the cost incurred by the Company for use of the car the executive is
currently using, subject to the limits established by the Company as to the
amount it will pay in any year, and an estimate of $5,000 per year as the cost
of annual physicals.
The value attributable to the vesting of
performance shares has been determined assuming performance at target for
terminations following a change in control, consistent with the award terms. For
termination upon retirement, death or disability, the award provisions specify
that distributions would be made, pro rata, at the time awards are otherwise
distributed based on the Companys actual performance for the performance
period. The value included in the calculations for performance awards for the
2010-2012 performance awards equals the amount distributed pursuant to these
awards in February 2013. It is not possible to project with any accuracy the
distributions that would be made for the Working Capital Incentive Program;
accordingly, the calculations with respect to distributions upon retirement,
death or disability include amounts based on performance at threshold for this
Program. Performance in 2011 achieved maximum EPS goal and was between target
and maximum ROCE goal established
42
for 2011 under the 2011-2013 performance
program. Performance in 2012 was between threshold and target EPS and ROCE goals
established for 2012 for the 2011-2013 performance program and was between
threshold and target EPS goal and achieved threshold ROCE goal established for
2012 under the 2012-2014 performance program. The calculations with respect to
distributions upon retirement, death or disability for the 2011-2013 and
2012-2014 performance periods include the amounts that would have been
distributed based on achievement of these goals when distributions are made for
these programs had retirement, death or disability occurred on December 29,
2012, as well as a pro-rata bonus based on performance at target for the TSR
component of the 2011-2013 and 2012-2014 programs.
ITEM 2APPROVAL OF THE STANLEY BLACK
& DECKER 2013 LONG-TERM INCENTIVE PLAN
The Company is seeking shareholder
approval of the Stanley Black & Decker 2013 Long-Term Incentive Plan (the
2013 LTIP). The Company grants awards under our long-term incentive plan to
approximately 200 of our employees annually. In 2012, the Company granted 1.8
million shares under the Companys 2009 Long-Term Incentive Plan (as amended,
the 2009 LTIP) which contains a limit of 13,200,000 shares; of which only
505,851 remain available. Of the 2012 awards under the 2009 LTIP, 32% were
awarded to the Companys named executive officers; and 68% were awarded to other
participants, including other executive officers. On March 1, 2013, the closing
market price of the Companys common stock as reported on the New York Stock
Exchange was $77.59 per share.
The annual dilution as a result of awards
made since the Merger was approximately 0.84 % in each of 2011 and 2012.
Dilution is generally defined as the total equity awards granted less
cancellations, divided by total common shares outstanding at the beginning of
the year. The Company manages its long-term dilution by limiting the number of
equity awards that are granted annually, commonly referred to as burn rate. Burn
rate differs from dilution, as it does not account for equity awards that have
been cancelled. The Companys annual burn rate since the Merger was
approximately 1.0% in each of 2011 and 2012.
An additional metric that the Company uses
to measure the cumulative impact of our equity program is overhang (equity
awards outstanding but not exercised, plus equity awards available to be
granted, divided by total common shares outstanding at the end of the year).
Since the Merger, the Companys overhang was 8.74% in 2011 and 8.18% in 2012.
The Board has authorized the issuance of 16,000,000 shares of the Companys
common stock in connection with awards pursuant to the 2013 LTIP. In authorizing
the number of shares available for issuance under the 2013 LTIP, the Board
considered the Companys historical grant practices as well as the potential
dilution and potential cost of the plan (sometimes referred to as shareholder
value transfer). The Company estimates that, based on its historical grant
practices since the Merger, the number of shares authorized under the 2013 LTIP
would last approximately 4 years.
The Board adopted the 2013 LTIP on
February 19, 2013, to be effective as of January 1, 2013, and is recommending
that the shareholders approve the 2013 LTIP at the Annual Meeting. The 2013 LTIP
is substantially similar to the 2009 LTIP, other than (i) an increase in the
number of shares available under the plan from 13,200,000 to 16,000,000 and (ii)
adjustment of the full value award ratio such that each share underlying a full
value award counts as 3.19 shares under the 2013 LTIP instead of 2.25 shares
under the 2009 LTIP. The 2013 LTIP also includes various shareholder-friendly
provisions, such as:
-
a so-called double-trigger vesting provision,
which generally provides that awards will not be accelerated upon a Change in
Control (as defined in the 2013 LTIP) of the Company if (1) an acquiror
replaces or substitutes outstanding awards in accordance with the requirements
of the 2013 LTIP and (2) a participant holding the replacement or substitute
award does not incur an involuntary termination of employment within two years
following the Change in Control, as further discussed below;
-
a full value award conversion ratio of 3.19, which
limits the number of awards under the 2013 LTIP available to be granted as
full value awards;
-
prohibitions against (1) repricing options or
stock appreciation rights and (2) buyout or replacement of options or stock
appreciation rights with an exercise or strike price that is less than the
original exercise or strike price of the award;
-
settlement of dividend equivalents with respect to
an award only to the extent that the underlying award vests (including
performance awards); and
-
a rolling three-year limit on (1) the number of
shares with respect to which options and stock appreciation rights may be
granted to any individual participant and (2) the maximum fair market value of
payments to any executive officer made in connection with any full value
performance awards.
The 2013 LTIP is designed to comply with
the requirements of applicable federal and state securities laws, and the
Internal Revenue Code of 1986, as amended (the Code). The 2013 LTIP provides
the Company with the ability to grant awards that qualify under the
performance-based exclusion from the deduction limitations under Section 162(m)
of the Code. The summary that follows is qualified in its entirety by reference
to the full text of the 2013 LTIP, a copy of which is attached hereto as Exhibit
A.
The 2013 LTIP permits the granting of (i)
stock options, including incentive stock options (ISOs) entitling the optionee
to favorable tax treatment under Section 422 of the Code, (ii) Stock
Appreciation Rights (SARs), (iii) restricted stock and restricted stock units
(RSUs), (iv) performance awards, (v) dividend equivalents, and (vi) other
awards valued in whole or
45
in part by reference to or otherwise based
on the Companys common stock (Other Stock-Based Awards). Under the 2013 LTIP,
awards may be granted until December 31, 2022. Each of the awards will be
evidenced by an award document setting forth the terms and conditions applicable
thereto.
The Board has authorized the issuance of
16,000,000 shares of the Companys common stock (approximately 10% of the total
shares outstanding on February 19, 2013) in connection with awards pursuant to
the 2013 LTIP. No more than one million of those shares are available for the
exercise of ISOs. The number of shares with respect to options and SARs that may
be granted under the 2013 LTIP to any individual participant in any consecutive
three-year period during the term of the 2013 LTIP may not exceed four million
shares. The maximum fair market value of payments to any executive officer made
in connection with any long-term performance awards, other than SARs and stock
options, shall not exceed, during any three-year period, four percent of the
Companys shareholders equity as of the end of the year immediately preceding
the commencement of such three-year period.
Each share with respect to which an option
or stock-settled SAR is granted under the 2013 LTIP will reduce the aggregate
number of shares that may be delivered under the 2013 LTIP by one share, and
each share with respect to which any other award denominated in shares is
granted under the 2013 LTIP will reduce the aggregate number of shares that may
be delivered under the 2013 LTIP by 3.19 shares.
All shares available for granting awards
in any year that are not used will be available for use in subsequent years. If
the 2013 LTIP is approved by shareholders, no future awards will be made under
the 2009 LTIP. However, if any shares subject to any award under the 2013 LTIP,
under the 2009 LTIP or the Companys 2001 Long-Term Incentive Plan (the 2001
LTIP) are forfeited or cancelled, or if any such award terminates without the
delivery of shares or other consideration, the shares previously used or
reserved for such awards will be available for future awards under the 2013
LTIP. If another company is acquired by the Company or an affiliate of the
Company, any awards made and any of the Companys shares delivered upon
assumption of or in substitution for outstanding grants made by the acquired
company may be deemed to have been granted under the 2013 LTIP, except for
grants to persons who become executive officers of the Company, and would not
decrease the number of shares available for grants under the 2013
LTIP.
Purpose
The purpose of the 2013 LTIP is to provide
appropriate incentives and rewards to key employees and certain other
individuals who are contributing to the Companys future success and prosperity,
thus enhancing the value of the Company for its shareholders and enabling the
Company to attract and retain exceptionally qualified individuals upon whom, in
large measure, the continued progress, growth and profitability of the Company
depend.
Plan Administration
The 2013 LTIP is administered by the
Compensation and Organization Committee of the Board (the Compensation
Committee), which is constituted in compliance with applicable rules and
regulations issued under the federal securities laws and the Code (see the
description of the Compensation Committee on page 7). The Compensation Committee
may select eligible employees to whom awards are granted, determine the types of
awards to be granted and the number of shares covered by awards and set the
terms and conditions of awards. The Compensation Committees determinations and
interpretations under the 2013 LTIP will be binding on all interested parties.
The Compensation Committee may delegate to officers or managers of the Company
certain authority with respect to the granting, cancellation and modification of
awards other than awards to executive officers of the Company.
Amendment; Termination
The Board may amend, suspend or terminate
the 2013 LTIP or any award under the 2013 LTIP, including amendments that might
increase the cost of the 2013 LTIP to the Company, provided that shareholder
approval must generally be obtained for any amendment that would increase the
number of shares available for awards or permit the granting of options, SARs or
Other Stock-Based Awards including rights to purchase shares at prices below
fair market value at the date of the grant of the award. Further, except as
otherwise contemplated by the 2013 LTIP, no amendment or similar action may
impair the rights of any participant in the 2013 LTIP if the action is taken in
connection with or following a Change in Control of the Company.
Eligibility
Awards may be made by the Compensation
Committee to any salaried employee of the Company or of any affiliate or any
non-employee director of an affiliate; provided that ISOs may only be granted to
employees of the Company. Currently, there are approximately 200 individuals
whom the Company believes would be eligible to participate in the 2013 LTIP
subject to any necessary approvals by the Compensation Committee.
46
Terms and Conditions of
Options
An award of stock options entitles a
participant to purchase a specified number of shares during a specified term
(not longer than ten years from the date of grant) at a fixed price, affording
the participant an opportunity to benefit from appreciation in the market price
of the Companys common stock from the date of grant. Stock options will vest
and become exercisable over the exercise period established by the Compensation
Committee in the award document. The Compensation Committee may accelerate the
exercisability of outstanding stock options at such times and under such
circumstances as it deems appropriate. Stock options are exercisable during a
grantees lifetime only by the grantee. In addition, ISOs awarded under the 2013
LTIP must comply with the requirements of Section 422 of the Code.
The stock option exercise price will be as
determined by the Compensation Committee, provided that the exercise price may
not be less than the fair market value of the Companys common stock on the date
of grant. The exercise price may be fully paid in cash or, as the Compensation
Committee may determine, by delivery of the Companys common stock previously
owned by the grantee equal in value to the exercise price or by having shares of
the Companys common stock with a value (on the date of exercise) equal to the
exercise price, withheld by the Company (or in any combination of the
foregoing). A grantee of a stock option (and any tandem SAR) will not have the
rights of a stockholder until certificates for the shares underlying the stock
options are recorded in the grantees name.
Stock Appreciation
Rights
Unless the Compensation Committee
determines otherwise, a participant granted a SAR is entitled to receive the
excess of the fair market value (calculated as of the exercise date or, if the
Compensation Committee so determines in the case of a SAR granted in tandem with
another award, as of the grant date of the other award), of a share of the
Companys common stock over the grant price of the SAR. Subject to the
provisions of the 2013 LTIP, the Compensation Committee has the right to
determine the grant price, term, methods of exercise, methods of settlement, and
any other terms and conditions of SARs, except that no SARs may be exercisable
more than ten years from the date of grant.
Restricted Stock, RSUs and Performance
Awards
An award of restricted stock is an award
of the Companys common stock that may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of for a restricted period of time
determined by the Compensation Committee. The Compensation Committee may also
impose such other restrictions and conditions on the award as it deems
appropriate, including on the right to vote shares of restricted stock and to
receive dividends. The Compensation Committee may provide that the restrictions
will lapse separately or in combination, in installments or otherwise, as it
deems appropriate. An award of RSUs creates a right in the grantee to receive
the Companys common stock at the end of a specified period. Performance awards
may provide that upon vesting the grantee will receive cash, stock, other
securities, other awards, other property, or any combination thereof, as the
Compensation Committee shall determine, and shall be payable (or exercisable)
based upon the achievement of such performance goals during such performance
periods as the Compensation Committee shall establish. Shares granted as
performance awards are shares of the Companys common stock that are subject to
restrictions based upon the attainment of performance objectives established by
the Compensation Committee. Such performance objectives may be based on various
financial measures of the Companys (or its applicable subsidiarys,
affiliates, divisions, departments, or units) performance, upon cost
targets, reductions or savings, upon strategic business criteria, or upon a
grantees attainment of specific objectives set by the Company for that
grantees performance. Restricted stock, RSUs and shares granted as performance
awards are all subject to a risk of forfeiture upon certain kinds of employment
terminations, as determined by the Compensation Committee.
Upon the award of restricted stock or
shares granted as performance awards, the grantee will have the rights of a
stockholder with respect to the shares, including voting and dividend rights,
subject to the conditions and restrictions generally applicable to restricted
stock or specifically set forth in the grantees award document. An award of
RSUs does not confer stockholder rights on the grantee, other than dividend
rights, during the specified restricted period.
Dividend Equivalents
Dividend equivalents represent rights to
receive payments equivalent to dividends or interest with respect to a specified
number of shares. Dividend equivalents credited in respect of restricted stock,
RSUs, or a performance award will vest (or be forfeited) and will settle at the
same time as the underlying award to which they relate. Under the 2013 LTIP,
dividend equivalents are prohibited for awards in connection with stock options
or SARs.
47
Other Stock-Based Awards
Other Stock-Based Awards are other awards
denominated or payable in, valued by reference to, or otherwise based on or
related to shares of the Companys common stock.
Change in Control
Generally, unless a Replacement Award
(as defined in the 2013 LTIP) is provided to the applicable participant, in the
event of a Change in Control, unless otherwise provided in an applicable
individual agreement, each then-outstanding option and SAR will become fully
vested and exercisable and the restrictions applicable to each outstanding award
of restricted stock and each RSU, performance award, dividend equivalent and
Other Stock-Based Award will lapse and the awards will be fully vested (with any
applicable performance goals deemed to have been achieved at a target level as
of the date of such vesting).
Upon the termination of the employment of
a participant who holds Replacement Awards (i) by the participant for Good
Reason (as defined in the 2013 LTIP), (ii) by the Company without Cause (as
defined in the 2013 LTIP), or (iii) due to the participants death, Disability
(as defined in the 2013 LTIP) or Retirement (as defined in the 2013 LTIP), in
any case during the period of two years after a Change in Control, (1) all
Replacement Awards held by the participant will become fully vested and, if
applicable, exercisable and free of restrictions (with any applicable
performance goals deemed to have been achieved at a target level as of the date
of such vesting), and (2) all options and SARs held by the participant
immediately before such termination of employment that the participant also held
as of the date of the Change in Control or that constitute Replacement Awards
will remain exercisable for a period of three years following such termination
of employment or until the expiration of the stated term of such option or SAR,
whichever period is shorter (subject to any longer period of exercisability that
may be provided in the applicable award agreement).
Restrictions on Transfer
Awards are generally not transferable
other than by will or by the laws of descent and distribution or pursuant to a
domestic relations order. The Compensation Committee may, however, grant
non-qualified stock options that are transferable to the grantees immediate
family members or to trusts or partnerships for such family members.
Adjustment
The Compensation Committee may adjust the
number and type of shares that may be made the subject of new awards or are then
subject to outstanding awards and other award terms, and in the event of a stock
split, stock dividend or other extraordinary corporate event may provide for a
cash payment to a participant relating to an outstanding award, or may adjust
the number and type of shares which may be subject to ISOs and which are subject
to the three year, per-participant limitations on options and SARs, in the event
of a stock split, stock dividend, or other extraordinary corporate event. The
Compensation Committee is also authorized, for similar purposes, to make
adjustments in performance award criteria or in the terms and conditions of
other awards in recognition of unusual or nonrecurring events affecting the
Company or its financial statements or of changes in applicable laws,
regulations or accounting principles. Other than in connection with the
foregoing extraordinary corporate events, however, outstanding awards may not be
amended to reduce the purchase price per share purchasable under a stock option
or the grant price of SARs, or to cancel outstanding stock options or SARs in
exchange for cash, other awards or stock options or SARs with a purchase price
per share or grant price, as applicable, that is less than the purchase price
per share or grant price of the original stock options or SARs, as applicable,
without shareholder approval.
Certain Federal Income Tax
Considerations
THE FOLLOWING DISCUSSION OF CERTAIN
RELEVANT FEDERAL INCOME TAX EFFECTS APPLICABLE TO AWARDS GRANTED UNDER THE 2013
LTIP IS A SUMMARY ONLY, AND REFERENCE IS MADE TO THE INTERNAL REVENUE CODE AND
REGULATIONS PROMULGATED THEREUNDER FOR A COMPLETE STATEMENT OF ALL RELEVANT
FEDERAL TAX PROVISIONS. HOLDERS OF AWARDS SHOULD CONSULT THEIR TAX ADVISORS
BEFORE REALIZATION OF ANY SUCH AWARDS, AND HOLDERS OF THE COMPANYS COMMON STOCK
PURSUANT TO AWARDS SHOULD CONSULT THEIR TAX ADVISORS BEFORE DISPOSING OF ANY
SUCH SHARES. SECTION 16 INDIVIDUALS SHOULD NOTE THAT SOMEWHAT DIFFERENT RULES
THAN
48
THOSE DESCRIBED BELOW MAY APPLY TO THEM.
THIS SUMMARY IS NOT INTENDED TO BE EXHAUSTIVE AND DOES NOT DESCRIBE STATE, LOCAL
OR FOREIGN TAX CONSEQUENCES. Under current federal income tax laws, awards under
the 2013 LTIP will generally have the following tax consequences:
The grant of a stock option or SAR under
the 2013 LTIP will create no tax consequences for the participant or the
Company. A participant will have no taxable income upon exercise of an ISO,
except that the alternative minimum tax may apply. Upon exercise of an option
other than an ISO, a participant generally must recognize ordinary income equal
to the fair market value of the shares acquired minus the exercise price. Upon a
disposition of shares acquired by exercise of an ISO before the end of the
applicable ISO holding periods, the participant generally must recognize
ordinary income equal to the lesser of (i) the fair market value of the shares
at the date of exercise minus the exercise price or (ii) the amount realized
upon the disposition of the ISO shares minus the exercise price. Otherwise, a
participants disposition of shares acquired upon the exercise of an option
(including an ISO for which the ISO holding periods are met) generally will
result in only capital gain or loss. Other awards under the 2013 LTIP, including
non-qualified options and SARs, generally will result in ordinary income to the
participant at the later of the time of delivery of cash, shares, or other
property, or the time that either the risk of forfeiture or restriction on
transferability lapses on previously delivered cash, shares, or other property.
Except as discussed below, the Company generally will be entitled to a tax
deduction equal to the amount recognized as ordinary income by the participant
in connection with an option, SAR, or other award, but will be entitled to no
tax deduction relating to amounts that represent a capital gain to a
participant. Thus, the Company will not be entitled to any tax deduction with
respect to an ISO if the participant holds the shares for the ISO holding
periods.
The foregoing general tax discussion is
intended for the information of stockholders considering how to vote with
respect to this proposal and not as tax guidance to participants in the 2013
LTIP. Different tax rules may apply to specific participants and transactions
under the 2013 LTIP.
2013 LTIP Benefits
As discussed on pages 16-18, above, the
Companys long-term incentive programs generally include time-vesting stock
options and RSUs, most of which are granted in December of each year, and
performance awards that are typically granted during the first quarter of each
year with a three year measurement period. Performance awards that have been
approved for issuance under the 2013 LTIP, subject to shareholder approval,
relate to the 2013-2015 measurement period. The threshold, target and maximum
number of shares that have been approved for issuance to each of the officers
identified in the Summary Compensation Table, all current executive officers as
a group, all current non-employee directors as a group and all employees (not
including executive officers) as a group are as follows:
Performance Award Grants
Name and Principal Position
|
|
Threshold
|
|
Target
|
|
Maximum
|
John F.
Lundgren
|
|
24,631
|
|
49,261
|
|
82,102
|
Donald Allan, Jr.
|
|
3,947
|
|
7,894
|
|
15,789
|
Jeffery D.
Ansell
|
|
3,631
|
|
7,263
|
|
14,526
|
Nolan D. Archibald
|
|
0
|
|
0
|
|
0
|
James M.
Loree
|
|
12,789
|
|
25,578
|
|
40,925
|
All current executive officers as a
group
|
|
68,513
|
|
137,019
|
|
247,388
|
All current
non-employee directors as a group
|
|
0
|
|
0
|
|
0
|
All employees (not including executive
officers) as a group
|
|
14,892
|
|
29,784
|
|
59,567
|
The number of stock options and time
vesting RSUs that will be granted under the 2013 LTIP during 2013 are not yet
determinable. Grants of stock options and time vesting RSUs issued to the
individuals named in the Summary Compensation Table under our 2009 LTIP during
2012 are set forth in the Grant of Plan Based Awards Table on page 25. The
awards issued under the 2009 LTIP to all current executive officers as a group,
all current non-employee directors as a group and all employees (not including
executive officers) as a group during 2012 are as follows:
Stock Option and RSU
Grants
|
|
Options
|
|
RSUs
|
All current executive
officers as a group
|
|
531,075
|
|
174,088
|
All current non-employee directors as a
group
|
|
0
|
|
0
|
All employees (not
including executive officers) as a group
|
|
575, 000
|
|
271,870
|
49
Equity Compensation Plan
Information
Compensation plans under which the
Companys equity securities are authorized for issuance at December 29, 2012
follow:
|
|
(A)
|
|
(B)
|
|
(C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
remaining available for
|
|
|
Number of securities to be
|
|
|
|
|
|
|
|
future issuance under equity
|
|
|
issued upon exercise of
|
|
|
|
|
|
|
|
compensation plans
|
|
|
outstanding options and
|
|
Weighted-average exercise
|
|
(excluding securities
|
Plan Category
|
|
stock awards
|
|
price of
outstanding options
|
|
refle
cted in colum
n (A))
|
Equity compensation plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
approved by security holders
|
|
|
12,568,500
|
(1)
|
|
|
|
$
|
56.90
|
(2)
|
|
|
|
3,092,619
|
(3)
|
|
Equity compensation plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
not approved by security holders
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
12,568,500
|
|
|
|
|
$
|
56.90
|
|
|
|
|
3,092,619
|
(3)
|
|
|
(1)
|
|
Consists of 9,056,493
shares underlying outstanding stock options (whether vested or unvested)
with a weighted average exercise price of $56.90 and a weighted average
term of 5.69 years; 3,311,857 shares underlying time-vesting RSUs that
have not yet vested and the maximum number of shares that will be issued
pursuant to outstanding long term performance awards if all established
goals are met; and 191,235 of shares earned but related to which
participants elected deferral of delivery. All stock-based compensation
plans are discussed in Note J, Capital Stock, of the Notes to the
Consolidated Financial Statements in Item 8 to the Consolidated Financial
Statements of the Companys Annual Report on Form 10-K for the fiscal year
ended December 29, 2012.
|
|
(2)
|
|
There is no cost to
the recipient for shares issued pursuant to time-vesting RSUs or long term
performance awards. Because there is no strike price applicable to these
stock awards they are excluded from the weighted-average exercise price
which pertains solely to outstanding stock options.
|
|
(3)
|
|
Consists of 2,586,768
of shares available for purchase under the employee stock purchase plan
(ESPP) at the election of employees and 505,851 securities available for
future grants by the board of directors under stock-based compensation
plans.
|
|
(4)
|
|
There is a
non-qualified deferred tax savings plan for highly compensated salaried
employees which mirrors the qualified plan provisions, but was not
specifically approved by security holders. U.S. employees are eligible to
contribute from 1% to 15% of their salary to a tax deferred savings plan
as described in the ESOP section of Item 8 Note L, Employee Benefit Plans,
to the Consolidated Financial Statements of the Companys Annual Report on
Form 10-K for the fiscal year ended December 29, 2012. Prior to 2010 and
in 2011 and 2012, the Company contributed an amount equal to one half of
the employee contribution up to the first 7% of salary. In 2009, an
employer match benefit was provided under the plan equal to one-quarter of
each employees tax-deferred contribution up to the first 7% of their
compensation. The investment of the employees contribution and the
Companys contribution was controlled by the employee participating in the
plan and may include an election to invest in Company stock. The same
matching arrangement was provided for highly compensated salaried
employees in the non-qualified plan, except that the arrangement for
these employees is outside of the ESOP, and is not funded in advance of
distributions. Shares of the Companys common stock may be issued at the
time of a distribution from the plan. The number of securities remaining
available for issuance under the plan at December 29, 2012 is not
determinable, since the plan does not authorize a maximum number of
securities.
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Vote
As long as holders representing at least a
majority of the shares of the Companys common stock outstanding as of February
25, 2013 are present at the Annual Meeting in person or by proxy, the proposal
to adopt the 2013 LTIP will be approved if the number of votes cast in favor of
each proposal exceeds the number of votes cast against that proposal.
The Board of Directors Recommends a
Vote FOR Approval of the Adoption of the 2013 LTIP.
50
ITEM
3APPROVAL OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM
Independent Registered Public
Accounting Firm
Subject to the action of the shareholders at the Annual Meeting, the
Board of Directors, on recommendation of the Audit Committee, has appointed
Ernst & Young LLP, (Ernst & Young), as the registered independent
public accounting firm to audit the financial statements of the Company for the
current fiscal year. In the event the shareholders fail to ratify the
appointment, the Audit Committee will consider it a direction to consider other
auditors for the subsequent year. Because it is difficult and not cost effective
to make any change in independent registered public accounting firms so far into
the year, the appointment of Ernst & Young would probably be continued for
2013 unless the Audit Committee or the Board of Directors finds additional good
reason for making an immediate change. Ernst & Young and predecessor firms
have been the Companys auditors for the last 69 years. Representatives of Ernst
& Young will be present at the Annual Meeting with the opportunity to make a
statement if they desire to do so and to respond to appropriate
questions.
The Board of Directors recommends a vote FOR approval of the
selection of Ernst & Young LLP as registered independent public accounting
firm for the 2013 fiscal year.
Fees of Independent
Auditors
General.
In addition to retaining
Ernst & Young to audit the Companys consolidated financial statements for
2012, the Company retained Ernst & Young and other accounting and consulting
firms to provide advisory, auditing and consulting services in 2012. The Audit
Committee has adopted policies and procedures for pre-approving all audit and
non-audit services provided by Ernst & Young. These services may include
audit services, audit-related services, tax services and other services.
Pre-approval is generally subject to a specific budget. The Audit Committee may
delegate pre-approval authority to one or more of its members. Ernst & Young
and management are required to periodically report to the full Audit Committee
regarding the extent of services provided by Ernst & Young in accordance
with the Audit Committees policies. All of the fees paid to Ernst & Young
under the categories audit-related, tax services, and other services were
pre-approved by the Audit Committee. The aggregate fees billed to the Company by
Ernst & Young for professional services in 2011 and 2012 were as follows:
Audit Fees
.
The aggregate fees billed by Ernst & Young to the Company for professional
services rendered for the audit of the Companys annual financial statements,
reviews of the financial statements included in the Companys Forms 10-Q, and
services rendered in connection with statutory audits for 2011 and 2012 were
$10,410,170 and approximately $10,435,200, respectively.
Audit Related Fees
. The aggregate
fees billed by Ernst & Young to the Company in 2011 and 2012 for
professional services rendered for assurance and related services that are
reasonably related to the performance of the audit of the Companys annual
financial statements were $397,000 and approximately $2,968,180 respectively.
Audit related services generally include fees for audits of companies acquired
and sold (such as the Companys divestiture of its HHI business in 2012),
pension audits, accounting related consultations, and filings with the
Securities and Exchange Commission.
Tax Fees
. The aggregate fees
billed by Ernst & Young to the Company in 2011 and 2012 for professional
services rendered for tax compliance, tax advice and tax planning were
$5,889,130 and approximately $5,381,942, respectively. Tax services include
domestic and foreign tax compliance and consulting.
All Other Fees
. Ernst & Young
did not bill the Company for any fees for services other than audit services,
audit related services and tax services in 2011 or 2012.
51
ITEM
4ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE
OFFICERS
As required pursuant to Section 14A of the
Securities Exchange Act, and in accordance with the results of the 2011
shareholder advisory vote regarding the frequency of the advisory vote on
compensation of our named executive officers, we are asking you to vote on an
advisory (non-binding) basis on the following resolution at the 2013 Annual
Meeting:
RESOLVED, that the Companys
shareholders approve, on an advisory basis, the compensation of the Companys
named executive officers as disclosed in the Compensation Discussion and
Analysis, the Summary Compensation Table and the other executive compensation
tables and related narratives and descriptions appearing on pages 11 to 43 of
the Companys Proxy Statement for the 2013 Annual Meeting of
Shareholders.
This advisory vote, commonly known as a
Say on Pay vote, gives you the opportunity to express your views about the
compensation we pay to our named executive officers, as described in this Proxy
Statement. You may vote FOR or AGAINST the resolution or abstain from voting
on the resolution.
Before you vote, please review the
Executive Summary on pages 11 and 12, as well as the rest of our Compensation
Discussion and Analysis and the tabular and narrative disclosure that follows
it. These sections describe our named executive officer pay programs and the
rationale behind the decisions made by our Compensation Committee.
We believe you should vote FOR our named
executive officer compensation program, which we have designed to (1) promote
our post-Merger vision, (2) strengthen the alignment among executive pay,
performance and strategy, and (3) encourage our executives to deliver investment
returns in line with our shareholders expectations. Here are the highlights of
our 2012 named executive officer pay programs:
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We Achieved Strong Company Performance in
2012:
We delivered strong Company
performance in 2012. For example, as discussed in more detail in our January
24, 2013 earnings release:
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revenues were $10.2 billion, up 8% over
2011;
-
full year diluted earnings per share, excluding
merger and acquisition and other charges, totaled approximately $4.67 per
share;
-
working capital turns reached 7.5, an increase
from 2011 working capital turns of 7.2;
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free cash flow, excluding merger and acquisition
related charges and payments, totaled $1.06 billion, an increase over 2011
free cash flow of $1 billion.
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We Delivered Strong Shareholder Return in
2012:
We attained double-digit total
shareholder return of 12.3% in 2012 and recorded three-year annualized total
shareholder return of more than 15.6% which exceeded the S&P 500 (+10.9%)
over the same period.
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Since the Merger was announced, the value of
a share of Company common stock has increased by more than 99% for those who
held Black & Decker common stock and 64% for those who held The Stanley
Works common stock, as discussed on page 11.
This increase in stock price, which is more than double the increase
in value realized by an investor in the S&P 500 over the same period of
time, reflects the benefits the Company has realized through the efforts of
the executive team and the employees they supervise.
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The Boards Responsiveness to Shareholders
Resulted in a 93.7% Approval in Last Years Say on Pay Vote:
The Board has reviewed current views on
corporate governance best practices and considered the strong shareholder
support for our programs as evidenced by last years Say on Pay vote and
determined that our executive compensation programs are designed to reward pay
for performance.
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Long-Term Performance Targets are
Aggressive:
Our record over the last
five years shows that performance targets for our long-term performance award
programs are not easily achievable. Three of the last five performance periods
paid out below target including two performance periods where there were no
distributions. For the 2010-2012 performance period, we exceeded target
performance for EPS and ROCE goals, and achieved performance in the
25
th
percentile for TSR for the 2010-2012 performance period. As a
result, awards equaled 154.5% of overall target goal
achievement.
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Pay for Performance Alignment is
Strong:
When measured against our
peers, our executive compensation programs demonstrate strong alignment
between executive pay and Company performance. Nearly 80% of the compensation
is at risk, on average, for our named executive officers. This strengthens the
alignment of executive and shareholder interests and provides a compelling
incentive for executives to optimize business results.
52
To minimize
incentives to achieve short term goals at long-term cost, our incentive programs
for our named executive officers, and others, place a greater emphasis on, and
provide greater rewards for, achievement of long-term goals.
-
Aggregate Compensation Expenditures are
Targeted at the Market Median:
We
adjusted target compensation for our named executive officers in connection
with the Merger to reflect the increased complexity and responsibilities
associated with leading a company of our combined size. On average, target
total compensation for our named executive officers was positioned very close
to the median compensation for executives at a peer group of similarly-sized
companies.
For these reasons, the Board of
Directors recommends that shareholders vote FOR the approval of the compensation
of our named executive officers as disclosed in the Compensation Discussion and
Analysis, the compensation tables, and the related narratives and descriptions
in this Proxy Statement.
The result of the Say on Pay vote will not
be binding on the Company or our Board. However, the Compensation Committee will
take into account the outcome of the Say on Pay vote when considering named
executive compensation arrangements for future years.
53
VOTING INFORMATION
Only shareholders of record as of
February 25, 2013 are entitled to vote
The Company has
only one class of shares outstanding. Only shareholders of record at the close
of business on February 25, 2013, as shown in our records, will be entitled to
vote, or to grant proxies to vote, at the Annual Meeting. On the record date,
161,316,271 shares of common stock, $2.50 par value, were outstanding and
entitled to vote. On all matters voted upon at the Annual Meeting and any
adjournment or postponement thereof, the holders of the common stock vote
together as a single class, with each record holder of common stock entitled to
one vote per share.
A majority of the votes entitled to be
cast on a matter must be represented for a vote to be taken
In order to have a quorum, a majority of the votes entitled to be cast on
a matter must be represented in person or by proxy at the Annual Meeting. If a
quorum is not present, a majority of shares that are represented may postpone
the meeting. Abstentions and broker non-votes will be counted in determining
whether a quorum is present.
Vote required for
approval
As long as holders representing at least a majority of the shares of
Company common stock outstanding as of February 25, 2013 are present at the
Annual Meeting in person or by proxy, the proposal to appoint Ernst & Young
LLP as the registered independent public accounting firm for the 2013 fiscal
year will be approved, the compensation of the Companys named executive
officers will be approved on an advisory basis and the proposal to approve the
Companys 2013 Long-Term Incentive Plan will be approved, if the number of votes
cast in favor of each such proposal exceeds the number of votes cast against
that proposal. Directors will be elected by a plurality of votes cast at the
Annual Meeting, provided that a quorum is present. However, if a nominee in an
uncontested election receives more votes against than for election, the term
of that director will end on the earlier of (1) ninety (90) days or (2) the date
the Board selects a successor; provided that the Board (excluding such nominee)
will have the right to select any qualified individual to fill the vacancy
(including, subject to the Boards fiduciary duties to the Company, such
nominee).
Voting your shares registered in your
name or held in street name
The Board of Directors of the Company is soliciting proxies from the
shareholders of the Company. This will give you the opportunity to vote at the
Annual Meeting. When you deliver a valid proxy, the shares represented by that
proxy will be voted in accordance with your instructions.
Shareholders of record may vote by any one of the following
methods:
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(1)
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CALL 1-800-652-8683
from the US or Canada (this call is toll free) to vote by telephone
anytime up to 7:00 a.m. EDT on April 16, 2013, and follow the instructions
provided in the recorded message.
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(2)
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GO TO THE WEBSITE:
www.investorvote.com
to vote over the Internet anytime up to 7:00 a.m. EDT on
April 16, 2013, and follow the instructions provided on that
site.
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(3)
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COMPLETE, SIGN, DATE
AND MAIL your proxy card in the enclosed postage-prepaid envelope. Your
proxy card must be received by Computershare Investor Services, LLC, the
Companys transfer agent, prior to the commencement of the Annual Meeting
at 9:30 a.m. EDT, on April 16, 2013, unless you attend the meeting, in
which event you may deliver your proxy card, or vote by ballot, at the
meeting. If you are voting by telephone or by the Internet, please do not
return your proxy card.
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If you hold your
shares in the name of a bank, broker or other nominee, you should follow the
instructions provided by your bank, broker or nominee when voting your
shares.
Voting your shares held in the Stanley
Black & Decker Retirement Account Plan (formerly the Stanley Account Value
Plan)
If you hold shares in the Company through the Stanley Black & Decker
Retirement Account Plan (the 401(k) Plan), you can instruct the trustee, Wells
Fargo Bank, N.A., in a confidential manner, how to vote the shares allocated to
you in the 401(k) Plan by one of the following three methods:
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(1)
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CALL 1-800-652-8683
from the US or Canada (this call is toll free) to vote by telephone
anytime up to 7:00 a.m. EDT on April 12, 2013, and follow the instructions
provided in the recorded message.
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(2)
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GO TO THE WEBSITE:
www.investorvote.com
to vote over the Internet anytime up to 7:00 a.m. EDT on April 12, 2013, and follow the instructions provided on that
site.
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(3)
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COMPLETE, SIGN, DATE
AND MAIL your instruction card in the enclosed postage-prepaid envelope.
Your instruction card must be received by Computershare Investor Services,
LLC, the Companys transfer agent, no later than 7:00 a.m. EDT on April
12, 2013, to ensure that the trustee of the 401(k) Plan is able to vote
the shares allocated to you in accordance with your wishes at the Annual
Meeting.
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In addition,
because only the trustee of the 401(k) Plan can vote the shares allocated to
you, you will not be able to vote your 401(k) shares personally at the Annual
Meeting. Please note that the trust agreement governing the 401(k) Plan provides
that if the trustee does not receive your voting instructions, the trustee will
vote your allocated shares in the same proportion as it votes the allocated
shares for which instructions are received from participants and beneficiaries
of deceased participants. The trust agreement also provides that unallocated
shares are to be voted by the trustee in the same proportion as it votes
allocated shares for which instructions are received from participants and
beneficiaries of deceased participants. Therefore, by providing voting
instructions with respect to your allocated shares, you will in effect be
providing instructions with respect to a portion of the unallocated shares and a
portion of the allocated shares for which instructions were not provided as
well. Voting of the 401(k) Plan shares by the trustee is subject to federal
pension laws, which require the trustee to act as a fiduciary for 401(k) Plan
participants and beneficiaries in deciding how to vote the shares. Therefore,
irrespective of these voting provisions, it is possible that the trustee may
decide to vote allocated shares for which it does not receive instructions (as
well as unallocated shares) in a manner other than on a proportionate basis if
it believes that proportionate voting would violate applicable law. The only way
to ensure that the trustee votes shares allocated to you in the 401(k) Plan in
accordance with your wishes is to provide instructions to the trustee in the
manner set forth above.
If you are a participant (or beneficiary of a deceased participant) in
the 401(k) Plan and you also own other shares of common stock outside of your
401(k) Plan account, you should receive a voting card for shares credited to
your account in the 401(k) Plan, a separate proxy card if you are a record
holder of additional shares of Company common stock, and a voting instruction
card if you hold additional shares of Company common stock through a broker,
bank or other nominee. You must vote shares that you hold as a shareholder of
record, shares that you hold through a broker, bank or other nominee, and shares
that are allocated to your 401(k) Plan account separately in accordance with
each of the proxy cards and voting instruction cards you receive with respect to
your shares of Company common stock in order to ensure that all of your shares
are voted in accordance with your wishes.
Changing your vote by revoking your
proxy
If you have shares
registered in your own name:
If you are a
registered holder, there are three ways in which you may revoke your proxy and
change your vote:
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First, you may send a written notice to the
Companys transfer agent, Computershare Investor Services, LLC at 7600 Grant
Street, Burr Ridge, IL 60527-7275, stating that you would like to revoke your
proxy. This notice must be received prior to commencement of the Annual
Meeting at 9:30 a.m. on April 16, 2013.
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Second, you may complete and submit a new
later-dated proxy by any of the three methods described above under Voting
your shares registered in your name or held in street name. The latest dated
proxy actually received by the Company in accordance with the instructions for
voting set forth in this Proxy Statement prior to the Annual Meeting will be
the one that is counted, and all earlier proxies will be
revoked.
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Third, you may attend the Annual Meeting and vote
in person. Simply attending the meeting, however, will not revoke your proxy.
You must vote in person at the meeting to revoke your proxy.
If a broker holds your
shares in street name:
If you have instructed a broker to vote your shares, you must follow the
directions you receive from your broker to change or revoke your proxy with
respect to those shares.
55
If you are a 401(k) Plan
holder:
There are two
ways in which you may revoke your instructions to the trustee and change your
vote with respect to voting the shares allocated to you in the 401(k)
Plan:
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First, you may send a written notice to the
Company’s transfer agent, Computershare Investor Services, LLC at
7600 Grant Street, Burr Ridge, IL 60527-7275,
stating that you would like to revoke your instructions to Wells Fargo Bank,
N.A., the trustee for the 401(k) Plan. This written notice must be received no
later than 7:00 a.m. EDT on April 12, 2013, in order to revoke your prior
instructions.
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Second, you may submit new voting instructions
under any one of the three methods described above under
Voting your shares held in the Stanley Black & Decker
Retirement Account Plan. The latest dated instructions actually received by
Wells Fargo Bank, N.A., the trustee for the 401(k) Plan, in accordance with
the instructions for voting set forth in this Proxy Statement, will be the
ones that are counted, and all earlier instructions will be
revoked.
How proxies are
counted
Shares of
the common stock represented by proxies received by the Company (whether through
the return of the enclosed proxy card, telephone or over the Internet), where
the shareholder has specified his or her choice with respect to the proposals
described in this Proxy Statement (including the election of directors), will be
voted in accordance with the specification(s) so made. If your proxy is properly
executed but does not contain voting instructions, or if you vote via telephone
or the Internet without indicating how you want to vote with respect to any
item, your shares will be voted FOR the election of all nominees for the Board
of Directors, FOR the Stanley Black & Decker 2013 Long-Term Incentive
Plan, FOR the ratification of the appointment of Ernst & Young LLP as the
registered independent public accounting firm for the 2013 fiscal year, and
FOR the approval, on an advisory basis, of the compensation of named executive
officers.
A valid proxy also gives the individuals named as proxies authority to
vote in their discretion when voting the shares on any other matters that are
properly presented for action at the Annual Meeting.
A properly executed proxy marked ABSTAIN will not be voted. However, it
may be counted to determine whether there is a quorum present at the Annual
Meeting.
If the shares you own are held in street name by a broker or other
nominee entity, and you provide instructions to the broker or nominee as to how
to vote your shares, your broker or other nominee entity, as the record holder
of your shares, is required to vote your shares according to your instructions.
Under the New York Stock Exchange rules, certain proposals, such as the
ratification of the appointment of the Companys independent auditors, are
considered routine matters and brokers and other nominee entities generally
may vote on such matters on behalf of beneficial owners who have not furnished
voting instructions. For non-routine matters, such as the election of
directors, the approval of the Stanley Black & Decker 2013 Long-Term
Incentive Plan, and the Say on Pay advisory vote, brokers and other nominee
entities may not vote unless they have received voting instructions from the
beneficial owner. A broker non-vote occurs when a broker or other nominee
entity does not vote on a particular proposal because it does not have authority
under the New York Stock Exchange rules to vote on that particular proposal
without receiving voting instructions from the beneficial owner.
Broker non-votes will not be counted with respect to the matters to be
acted upon but will be counted for purposes of determining whether a quorum is
present at the Annual Meeting.
If you hold shares in the Company through the 401(k) Plan, please note
that the trust agreement governing the 401(k) Plan provides that if the trustee
does not receive your voting instructions, the trustee will vote your allocated
shares in the same proportion as it votes the allocated shares for which
instructions are received from participants and beneficiaries of deceased
participants. The trust agreement also provides that unallocated shares are to
be voted by the trustee in the same proportion as it votes allocated shares for
which instructions are received from participants and beneficiaries of deceased
participants. Therefore, by providing voting instructions with respect to your
allocated shares, you will in effect be providing instructions with respect to a
portion of the unallocated shares and a portion of the allocated shares for
which instructions were not provided as well. Voting of the 401(k) Plan shares
by the trustee is subject to federal pension laws, which require the trustee to
act as a fiduciary for 401(k) Plan participants and beneficiaries in deciding
how to vote the shares. Therefore, irrespective of these voting provisions, it
is possible that the trustee may decide to vote allocated shares for which it
does not receive instructions (as well as unallocated shares) in a manner other
than on a proportionate basis if it believes that proportionate voting would
violate applicable law. The only way to ensure that the trustee votes shares
allocated to you in the 401(k) Plan in accordance with your wishes is to provide
instructions to the trustee in the manner set forth above.
56
Confidential Voting
All proxies,
ballots and tabulations of shareholders will be kept confidential, except where
mandated by law and other limited circumstances.
For participants in the 401(k) Plan, your instructions to the trustee on
how to vote the shares allocated to you under the 401(k) Plan will be kept
confidential.
Solicitation of Proxies
Your proxy is solicited on behalf of the Board of Directors. The Company
will pay all of the expenses of the solicitation. In addition to the mailing of
the proxy material, such solicitation may be made in person or by telephone by
directors, officers and employees of the Company, who will receive no additional
compensation therefor. The Company has retained D.F. King & Co. to aid in
the solicitation of proxies. The Company expects the additional expense of D.F.
Kings assistance to be approximately $13,000. The Company also will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxy materials to beneficial owners. The Company will, upon
request, reimburse these institutions for their reasonable expenses in sending
proxies and proxy material to beneficial owners. A copy of the Annual Report on
Form 10-K filed by the Company with the Securities and Exchange Commission for
its latest fiscal year is available without charge to shareholders at the
Companys website at
www.stanleyblackanddecker.com
or upon
written request to Stanley Black & Decker, Inc., 1000 Stanley Drive, New
Britain, Connecticut 06053, Attention: Investor Relations.
Householding
In order to reduce printing and mailing costs and associated fees, the
Company may deliver a single copy of this Proxy Statement and the Annual Report
to multiple shareholders who share the same address in accordance with the
Securities and Exchange Commissions householding procedures. Shareholders who
participate in householding will continue to be able to access and receive
separate proxy cards. Upon request, the Company will promptly deliver a copy of
this Proxy Statement and the Annual Report to any shareholder at a shared
address to which the Company delivered a single copy of these documents. To
obtain a copy, shareholders may call the Companys proxy solicitor, D.F. King
& Co., Inc. at tel. (800) 735-3107, write to them at 48 Wall Street, New
York, New York, 10005, or write to us at Stanley Black & Decker, Inc., 1000
Stanley Drive, New Britain, Connecticut 06053, Attn: Investor
Relations.