SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
The Stanley Works (Name of Registrant as Specified in Its
Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(1)and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
(STANLEY WORKS LOGO) THE STANLEY WORKS
March 10, 1997
Dear Fellow Shareholder:
You are cordially invited to attend Stanley's Annual Meeting of
Shareholders to be held at 9:30 a.m. on Wednesday, April 23,
1997, at the Stanley Center, 1255 Corbin Avenue, New Britain,
Connecticut.
At the meeting, management will report on Stanley's affairs and a
discussion period will be provided for questions and comments.
You will be asked at the meeting to elect directors and to
approve Ernst & Young LLP as Stanley's independent auditors for
1997. You will also be asked to approve an amendment to the 1990
Stock Option Plan.
In the accompanying Proxy Statement, which you are urged to read,
your Board of Directors recommends that you vote "FOR" the
proposals.
The Board appreciates and encourages shareholder participation in
Stanley's affairs. Whether or not you plan to attend the
meeting, it is important that your shares be represented. PLEASE
SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED
AT YOUR EARLIEST CONVENIENCE.
Thank you for your cooperation.
Very truly yours,
JOHN M. TRANI
Chairman and Chief Executive Officer
THE STANLEY WORKS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 10, 1997
To the Shareholders:
The Annual Meeting of Shareholders of The Stanley Works will be
held at the Stanley Center, 1255 Corbin Avenue, New Britain,
Connecticut on Wednesday, April 23, 1997, at 9:30 a.m., for the
following purposes:
(1) To elect three directors.
(2) To approve an amendment to the 1990 Stock Option Plan.
(3) To approve Ernst & Young LLP as independent auditors of the
Corporation for the year 1997.
(4) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on February 14,
1997 are entitled to vote at the meeting.
STEPHEN S. WEDDLE
Secretary
WHETHER YOU OWN ONE SHARE OR MANY, WE URGE YOU TO SIGN AND RETURN
PROMPTLY THE ENCLOSED PROXY IN THE POSTAGE PAID ENVELOPE
PROVIDED.
IMPORTANT
-2-
THE STANLEY WORKS
NEW BRITAIN, CONNECTICUT 06053
TELEPHONE (860) 225-5111
March 10, 1997
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1997
Stanley is first sending the accompanying proxy and this
proxy statement to shareholders on or about March 10, 1997.
Please sign, date, and mail the enclosed proxy in the envelope
provided at your earliest convenience. You may revoke
your proxy by filing a proxy with a later date at any time prior
to the meeting. If you attend the meeting, you may revoke your
proxy at that time and vote in person.
ELECTION OF DIRECTORS
At the 1997 Annual Meeting the shareholders will elect three
directors. Stanley's By-Laws require all shareholder nominations
to be made by proper notice given to the Corporation's Secretary
not later than March 24, 1997. The nominations of the Board of
Directors are set forth on page 4. Those elected as directors
will serve until the Annual Meeting of Shareholders indicated,
and in each case until the particular director's successor has
been elected and qualified.
The Board recommends a vote FOR the nominees. All of the
nominees are directors who were previously elected by the
shareholders as directors except for John M. Trani. If for any
reason any nominee should not be a candidate for election at the
time of the meeting, the proxies may be voted, in the discretion
of those named as proxies, for a substitute nominee.
In order to equalize the number of directors in each class,
Mr. Fiedler, who is currently a member of the class of 1999, is
resigning as director effective with the 1997 Annual Meeting and
then is standing for re-election at the 1997 Annual Meeting as a
member of the class of 2000.
-3-
INFORMATION CONCERNING NOMINEES FOR ELECTION AS DIRECTORS
TERMS EXPIRING AT 2000 ANNUAL MEETING
(PHOTO OF EDGAR R. FIEDLER)
EDGAR R. FIEDLER, retired as Vice President and Economic
Counsellor, The Conference Board, a position he held from 1975
until August 1996. He is a director of Zurich American Insurance
Company, Brazil Fund, Scudder Fund, Inc., Scudder Institutional
Fund, Inc., Scudder Pathway Series, Harris Insight Funds, and
Emerging Mexico Fund, and a trustee of the AARP Investment
Program from Scudder.
Mr. Fiedler, a director since 1976, is Chair of the Finance and
Pension Committee and a member of the Board Affairs and Public
Policy Committee. He is 67 years old and owns 54,017 shares.
(PHOTO OF EILEEN S. KRAUS)
EILEEN S. KRAUS, Chairman, Connecticut, Fleet National Bank,
since December 1995. She had been President, Shawmut Bank
Connecticut, N.A. and Vice Chairman of Shawmut National
Corporation since August 1992; Vice Chairman, Connecticut
National Bank and Shawmut Bank, N.A. since June 1990 and
Executive Vice President of those institutions since 1987. She
is a director of CPC International Inc., Kaman Corporation, and
Yankee Energy Systems, Inc.
Mrs. Kraus was elected a director in 1993 and is a member of the
Audit, Executive, and Finance and Pension Committees. She is 58
years old and owns 6,043 shares.
(PHOTO OF JOHN M. TRANI)
JOHN M. TRANI, Chairman and Chief Executive Officer of Stanley.
Mr. Trani joined the Corporation December 31, 1996 after an 18
year career with General Electric Company, the last 10 years as
President and Chief Executive Officer of GE Medical Systems.
Mr. Trani is chairman of the Executive Committee. He is 51 years
old and owns 200,100 shares.
-4-
INFORMATION CONCERNING DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING AT 1998 ANNUAL MEETING
(PHOTO OF JAMES G. KAISER)
JAMES G. KAISER, retired; served as President and Chief Executive
Officer and a director of Quanterra Incorporated, a subsidiary
jointly owned by Corning Incorporated and International
Technology Inc., from June 1994 to January 1996; from June 1992
he had been President and Chief Executive Officer of Enseco, an
operating unit of Corning Lab Services, Inc., a subsidiary of
Corning Incorporated; he had been Senior Vice President of
Corning Incorporated since 1986. He is a director of The Mead
Corporation and The Sun Company, Inc. He also serves on the
board of The Keystone Center, and on the advisory board of
Wharton Spencer Stuart Directors Institute.
Mr. Kaiser has been a director since 1992 and is a member of the
Audit Committee and the Compensation and Organization Committee.
He is 54 years old and owns 9,385 shares.
(PHOTO OF HUGO E. UYTERHOEVEN)
HUGO E. UYTERHOEVEN, Timken Professor of Business Administration,
Graduate School of Business Administration, Harvard University,
where he has been a member of the faculty since 1960. He is a
director of Bombardier, Inc., Ecolab, Inc., and Harcourt General,
Inc.
Professor Uyterhoeven has been a director since 1975 and is a
member of the Finance and Pension Committee and Co-chair of the
Board Affairs and Public Policy Committee. He is 65 years old
and owns 16,252 shares.
(PHOTO OF WALTER W. WILLIAMS)
WALTER W. WILLIAMS, retired; served as Chairman of the Board and
Chief Executive Officer and director of Rubbermaid Incorporated
from 1991 to 1992; he had been President and Chief Operating
Officer and a director of Rubbermaid since 1987. Previously, he
was Senior Vice President, Corporate Marketing and Sales with
General Electric Company. He is a director of Corpro Companies
Inc. and Paxar Corporation.
Mr. Williams has been a director since 1991 and is a member of
the Board Affairs and Public Policy Committee and the
Compensation and Organization Committee. During 1996 he was a
member of the Search Committee. He is 62 years old and owns
1,600 shares.
-5-
TERMS EXPIRING AT 1999 ANNUAL MEETING
(PHOTO OF STILLMAN B. BROWN)
STILLMAN B. BROWN, Managing General Partner, Harcott Associates,
since 1987. Formerly, he was Executive Vice President, Corporate
Development of United Technologies Corporation, where he was
chief financial officer from 1979 until 1986. He is a director
of Fleet Financial Group, and a member of the Board of Regents of
the University of Hartford.
Mr. Brown has been a director since 1985. He is Chair of the
Audit Committee and during 1996 was Chair of the Search
Committee. He is a member of the Executive and Finance and
Pension Committees. He is 63 years old and owns 26,000 shares.
(PHOTO OF MANNIE L. JACKSON)
MANNIE L. JACKSON, majority owner and Chairman of Harlem
Globetrotters International, Inc., a division of MJA, Inc. He
retired as Senior Vice President Corporate Marketing and
Corporate Administration of Honeywell Inc. after a 27 year career
in 1995. He is a Director of Ashland Inc., Jostens, Inc., Reebok
International Ltd., and Martech Controls, a South African
subsidiary of Honeywell Inc. Mr. Jackson, a director since May
1995, is a member of the Audit Committee and the Finance and
Pension Committee. He is 57 years old and owns 3,337 shares.
(PHOTO OF KATHRYN D. WRISTON)
KATHRYN D. WRISTON, trustee of the Financial Accounting
Foundation, John A. Hartford Foundation, Practicing Law
Institute, and The Northwestern Mutual Life Insurance Company.
She is also a director of Santa Fe Energy Resources Inc.,
Waccamaw Corporation, and American Arbitration Association. Mrs.
Wriston, a director since April 1996, is a member of the Board
Affairs and Public Policy, Executive, and the Finance and Pension
Committees. She is 58 years old and owns 7,000 shares.
The Board of Directors met eight times during 1996. The
various Board committees met the number of times shown in
parentheses: Executive (0), Audit (3), Board Affairs and Public
Policy (4), Finance and Pension (3), Compensation and
Organization (4), and Search (13). The members of the Board
serve on the committees described in their biographical material
above. Each incumbent director had an attendance record of 75%
or greater at meetings, including meetings of committees, on
which he or she served except for Walter J. McNerney who became
ill in June 1996 and had an overall attendance record of
50%; attendance for all directors averaged 92%.
-6-
The Executive Committee exercises all the powers of the
Board of Directors during intervals between meetings of the
Board; however, the Committee does not have the power to declare
dividends or to do other things reserved by law to the Board.
The Audit Committee nominates the Corporation's independent
auditing firm, reviews the scope of the audit and approves in
advance management consulting services, and reviews with the
independent auditors and the internal auditors their activities
and recommendations including their recommendations regarding
internal controls. The Committee meets with the independent
auditors, the internal auditors, and management, each of whom has
direct and open access to the Committee. Directors who are not
Committee members may attend any of the Committee's meetings they
wish.
The Board Affairs and Public Policy Committee makes
recommendations to the Board as to board membership and considers
names submitted to it in writing by shareholders. The Committee
recommends directors for board committee membership and as
committee chairs, and recommends director compensation. The
Committee has taken the lead in preparing a director job
description, establishing a procedure for evaluation of incumbent
directors, articulating Stanley's corporate governance
guidelines, and establishing a procedure for evaluating Board
performance. The Committee also provides guidance on major
issues in areas of corporate social responsibility and public
affairs, reviews and approves policy guidelines on charitable
contributions, and reviews all charitable contributions made.
The Finance and Pension Committee advises in major areas
concerning the finances of the Corporation and administers
Stanley's pension plans.
The Compensation and Organization Committee determines the
compensation of officers other than the chief executive officer
and chief operating officer (as to whom the Committee makes
recommendations to the Board of Directors which then determines
their compensation) and of non-officer senior executives. The
Committee also administers the Corporation's executive
compensation plans.
The Search Committee took the lead in reviewing candidates
and recommending to the Board a candidate to replace the retiring
Richard H. Ayers as chief executive officer.
Stanley pays its directors a $21,000 annual retainer and a
$1,000 fee for each Board or Committee meeting attended ($200 if
attendance is by conference telephone). Committee chairs receive
an additional annual fee of $1,000; in addition, the Board
awarded 100 shares to Stillman B. Brown to recognize his special
service as Chair of the Search Committee. Non-employee directors
-7-
may defer any or all of their fees in the form of Stanley shares
or as cash accruing interest at the treasury bill rate.
From time to time non-employee directors also receive ten-year
options to purchase 1,000 of the Corporation's shares at an
exercise price equal to the fair market value of such shares at
the date of grant.
SECURITY OWNERSHIP
No person or group, to the knowledge of the Corporation, owns
five percent or more of the outstanding common shares, except as
shown in this table. As of December 31, 1996, State Street Bank
and Trust Company, in various trustee capacities, owned of record
23.98% of the outstanding common shares. Included in
these shares are 22.8% of the outstanding shares owned as Trustee
under the Corporation's 401(k) Savings Plan for the benefit of
the plan participants. The plan participants make the voting and
disposition decisions for these shares.
- -----------------------------------------------------------------
(1)Title (2) Name and address of (3) Amount (4)
of beneficial owner and nature of Percent
class beneficial of
ownership class
- -----------------------------------------------------------------
Common State Street Bank and 21,324,146 23.98%
Stock Trust Company shares, in
$2.50 225 Franklin Street various
par Boston, Massachusetts trustee
value 02110 capacities
- -----------------------------------------------------------------
Common FMR Corp 7,874,928 8.85%
Stock 82 Devonshire Street shares
$2.50 Boston, Massachusetts (power to
par 02109 dispose)
value including
989,934
(sole
power to vote)
- -----------------------------------------------------------------
-8-
No director, nominee or executive officer owns more than .3% of
the outstanding common shares. The executive officers and
directors as a group own beneficially approximately 1.5% of the
outstanding common shares, and Stanley estimates present and
former employees (including executive officers) own approximately
38% of the outstanding common shares. The following table sets
forth information as of February 20, 1997 with respect to the
shareholdings of the directors, nominees, each of the executive
officers named in the table on page 14, and all directors,
nominees, and executive officers as a group (the beneficial owner
of the shares shown for the most part has sole voting and sole
investment power):
- --------------------------------------------------
Name Common
Shares
Directly
Owned
- --------------------------------------------------
Richard H. Ayers 289,348 (1)(2)(3)(5)
Stillman B. Brown 26,000 (2)
Edgar R. Fiedler 54,017 (2)(4)
Richard Huck 105,079 (1)(2)
R. Alan Hunter 164,572 (1)(2)(3)
Mannie L. Jackson 3,337 (2)(4)
James G. Kaiser 9,385 (2)(4)
Eileen S. Kraus 6,043 (2)(4)
George A. Lorch 1,400 (2)
Walter J. McNerney 35,219 (2)(4)
Gertrude G. Michelson 32,439 (2)(4)
Paul W. Russo 21,687 (1)(2)
John S. Scott 15,498 (2)(4)
John M. Trani 200,100 (6)
Hugo E. Uyterhoeven 16,252 (2)(4)
Stephen S. Weddle 117,896 (1)(2)
Walter W. Williams 1,600 (2)
Kathryn D. Wriston 7,000 (2)
- ---------------------------------------------------
Directors and 1,309,453 (1)(2)(3)(4)
executive officers as (5)(6)
a group
- ----------------------------------------------------
(1) Includes shares held as of December 31, 1996 under Stanley's
savings plan, as follows: Mr. Ayers, 60,454; Mr. Huck, 14,594;
Mr. Hunter, 23,952; Mr. Russo, 399; Mr. Weddle, 27,096; and all
directors and executive officers as a group,
165,154.
(2) Includes shares which may be acquired by the exercise of
stock options, as follows: Mr. Ayers, 111,612; Mr. Huck, 77,300;
Mr. Hunter, 122,300; Mr. Russo, 20,100; Mr. Weddle, 90,800; 1,000
in the case of each non-employee director; and all directors and
executive officers as a group, 570,176.
-9-
(3) Includes the share accounts maintained by Stanley for those
who have deferred their award payments under its Long-Term Stock
Incentive Plans, as follows: Mr. Ayers, 56,781; Mr. Hunter,
2,730; and all directors and executive officers as a group,
64,087.
(4) Includes the share accounts maintained by Stanley for those
of its directors who have deferred their director fees, as
follows: Mr. Fiedler, 41,617; Mr. Jackson, 2,137; Mr. Kaiser,
6,741; Mrs. Kraus, 4,838; Mr. McNerney, 30,610; Mrs. Michelson,
30,239; Mr. Scott, 5,866; Mr. Uyterhoeven, 14,352; and all
directors and executive officers as a group, 136,400.
(5) Includes 1,000 shares owned by Mr. Ayers's children as to
which he disclaims beneficial ownership.
(6) Includes the 200,000 share unit account maintained by Stanley
and established in connection with the execution of the
employment agreement between Mr. Trani and the Corporation on
December 31, 1996; does not include the 1,000,000 share option
issued to Mr. Trani inasmuch as such option is not exercisable
within the next 60 days.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE OF THE
BOARD OF DIRECTORS
The Compensation and Organization Committee of the Board of
Directors is composed of five non-employee directors. The
Committee makes recommendations to the Board as to the salaries
and as to the performance targets under the Management Incentive
Compensation Plan ("MICP") for the chief executive officer and
for the chief operating officer; the Board then determines the
salaries and targets under the MICP for these two officers. The
Committee, itself, determines the salaries and MICP targets for
officers other than these two officers and for the five most
highly compensated non-officer senior executives. The Committee
also administers the Long-Term Stock Incentive Plan ("LTSIP") and
the 1990 Stock Option Plan. The Committee determined in October
1994 to cease making awards under the LTSIP (the last award under
the LTSIP was made in November 1993 for the 1994-1998 award
cycle); and to commence making annual grants of stock options
under the 1990 Stock Option Plan.
1996 AND 1997 CHANGES
In 1996 Richard H. Ayers announced his decision to retire as
chief executive officer. After an extensive search, in late
1996 the Board elected John M. Trani, a seasoned and
-10-
successful executive of General Electric Company, as chief
executive officer. In connection with the Board's selection,
Stanley entered into a three-year contract with Mr. Trani
(subject to one-year renewals) providing for him to be paid an
annual salary of not less than $800,000 and an annual bonus of
not less than $720,000; for him to receive (subject to
shareholder approval of certain amendments to Stanley's 1990
Stock Option Plan) a stock option grant covering one million
shares with an exercise price equal to the fair market value on
the date of grant, and three annual stock option grants each
covering 200,000 shares; and for him to receive 200,000 common
stock equivalent share units and other immediately vested
retirement benefits. The Board believes that, under
Mr. Trani's leadership, Stanley will provide significant value
to its shareholders.
OVERVIEW
In addition to providing the benefits under the
Corporation's pension and savings plans generally provided to all
United States salaried employees, Stanley has used a number of
elements in compensating its executives: salary; annual
incentives; ten-year stock options; and, in the case of Mr. Trani
in connection with the execution of his employment agreement,
share units. The Committee believes that this combination of
elements results in a substantial portion of total compensation
being at risk and appropriately relates to the achievement of
increased shareholder value through profitable growth. With the
exception of certain compensation payable to Mr. Trani under the
terms of the employment agreement between him and Stanley, the
Committee's general intent is to take appropriate steps so that
the compensation paid to executive officers meets the
requirements for "performance-based compensation" (including
shareholder approval) and is therefore deductible for federal
income tax purposes by Stanley under Section 162(m) of the
Internal Revenue Code.
SALARIES
Each year Stanley participates in a survey of
salaries and overall compensation conducted by Hewitt Associates.
Hewitt's 1996 survey covers 271 manufacturing corporations
including 12 of those included in the Dow Jones Industrial
Diversified Group Index reflected in the line graph on page
19. From these survey data, salary ranges are established each year
for all executive positions. Actual base salary determinations
are made on the basis of (a) these salary ranges, (b) individual
performance (as evaluated by the Committee in its discretion),
and (c) other factors that the Committee deems relevant. The 1996
salary of Mr. Ayers was about 20% below the median for these market
survey data; this is in keeping with the Committee's philosophy
of emphasizing at-risk corporate-performance-related compensation.
-11-
The 1996 salaries of each of the others named in the table on page 14
ranged from about 25% below the median to about the median for their
respective positions.
ANNUAL INCENTIVE
In 1996 the Committee used the MICP to compensate executives
based on the Corporation's earnings per share (before
restructuring charges, restructuring related transition costs,
and compensation and search related expenses of Stanley's new
chief executive officer). The MICP provided for annual incentive
awards to 150 selected key executives for 1996. For 1996, Mr.
Ayers's target incentive rate was 90% of base salary.
The others named in the table on page 14 had target incentive
rates between 60% and 80% of salary. For 1996, earnings
per share equaled $1.83 resulting in a payout for those listed
in the table on page 14 equal to 106% of target.
LONG-TERM INCENTIVE BASED ON EARNINGS GROWTH
The Committee has determined to make no further awards under
the LTSIP. Accordingly, there will be no further payments under
this plan after the 1992-96, 1993-97, and 1994-98 award cycles
are completed. Awards were not paid in 1996 in respect of
performance for the five-year award cycle 1991-95 (as reflected
in column (h) of the summary compensation table on page
14).
MARKET APPRECIATION OF THE CORPORATION'S SHARES
The Committee uses the Stock Option Plan to compensate
executives based on market appreciation of Stanley's shares,
creating for executives an identity of interest with the
Corporation's shareholders. The Committee plans to make annual
stock option grants to those included in the table on page
14 and other key employees. It is anticipated that the grants will be
non-qualified stock options with a term of up to ten years and an
exercise price equal to at least the fair market value of
Stanley's common shares at the time of grant.
The Committee has established guidelines for minimum stock
ownership for participants in the Stock Option Plan. These
guidelines provide that over a five-year period stock ownership
will reach the following minimum levels, expressed as a multiple
of base salary: five times for the chief executive officer, three
times for the others appearing in the table on page 14, two times
for others with corporate titles of vice president or who are the
heads of business units, and one time for all other participants
in the Plan.
-12-
CONCLUSION
Through the programs described above, a very significant
portion of the Corporation's executive compensation is linked
directly to corporate performance and stock price appreciation.
The Committee intends to continue the policy of linking executive
compensation to corporate performance and returns to
shareholders, recognizing that the ups and downs of the business
cycle from time to time may result in an imbalance for a
particular period.
COMPENSATION AND ORGANIZATION COMMITTEE
John S. Scott (Chair)
James G. Kaiser
George A. Lorch
Gertrude G. Michelson
Walter W. Williams
-13-
SUMMARY COMPENSATION TABLE
This table shows the compensation earned for service in all
capacities (including director fees for Mr. Ayers) during the
last three fiscal years for Stanley's chief executive officer and
its next four most-highly compensated executive officers. The
last fiscal year ended on December 28, 1996.
- -----------------------------------------------------------------
Annual Long-Term
Compensation Compensation
- -----------------------------------------------------------------
Awards Payouts
- -----------------------------------------------------------------
(a) (b) (c) (d) (g) (h) (i)
Name and Year Salary Bonus Shares LTIP All other
principal ($) ($) Underlying Payouts compensation
position Options(#) ($) ($)
- -----------------------------------------------------------------
Richard 1996 527,500 503,235 41,200 0 361,909
H. Ayers 1995 502,500 287,947 49,400 0 311,809
Chairman 1994 480,000 470,674 50,500 0 301,810
and CEO
- -----------------------------------------------------------------
Richard 1996 236,500 175,483 19,550 0 37,744
Huck 1995 214,500 95,600 22,400 0 36,763
VP, 1994 198,000 145,615 21,900 0 51,124
Finance
and CFO
- -----------------------------------------------------------------
R. Alan 1996 335,500 284,504 26,600 0 48,265
Hunter 1995 319,000 162,485 32,000 0 38,039
President 1994 300,000 257,400 32,500 0 51,442
and COO
- -----------------------------------------------------------------
Paul W. 1996 210,000 133,560 17,500 0 7,445
Russo 1995 58,333 22,284 --- 0 2,095
VP 1994 --- --- --- - ---
Strategy
and
Development
- -----------------------------------------------------------------
Stephen 1996 233,000 148,188 18,900 0 117,590
S. Weddle 1995 222,000 84,808 22,600 0 103,572
VP, Gen. 1994 212,000 142,918 23,200 0 99,799
Counsel
and
Secretary
- -----------------------------------------------------------------
(a) Effective December 31, 1996, Mr. Ayers resigned as
Chairman and Chief Executive Officer and director and John M.
Trani was elected Chairman and Chief Executive Officer and
director. Mr. Russo first joined Stanley as an employee and
executive officer September 18, 1995.
-14-
FOOTNOTE TO COLUMN (i) OF SUMMARY COMPENSATION TABLE
Consists of above-market interest (i.e., interest in excess of
6.88% in the case of amounts deferred prior to 1992 and interest
in excess of 9.5% in the case of amounts deferred in 1992, 1993
and 1994) on deferred management incentive awards; contributions
to defined contribution pension plan of 2% of salary and bonus
for each of the first 10 years of employment, 4% for each of the
next 10 years of employment, and 6% for each of the years
thereafter (as of January 1, 1995, this plan was merged into the
Corporation's defined benefit plan with the effect that
contributions will not be made for 1995 and later years); company
match (one-for-two up to 7% of base salary) to savings plan; and
insurance premiums paid for life insurance in addition to the
life insurance generally available to salaried employees (this
insurance fully vests at age 62 in an amount equal to 1.5 times
salary).
- -----------------------------------------------------------------
Name Year Above Defined Savings Insurance Column
-market 2%,4%,6% match (i) Total
interest
- -----------------------------------------------------------------
Richard 1996 325,407 0 23,502 13,000 361,909
H. Ayers 1995 267,248 0 34,061 10,500 311,809
1994 228,696 42,581 20,820 9,713 301,810
- -----------------------------------------------------------------
Richard 1996 20,986 0 10,903 5,855 37,744
Huck 1995 24,755 0 7,508 4,500 36,763
1994 24,581 15,313 6,930 4,300 51,124
- -----------------------------------------------------------------
R. Alan 1996 25,285 0 17,430 5,550 48,265
Hunter 1995 16,820 0 15,669 5,550 38,039
1994 11,631 20,368 14,257 5,186 51,442
- -----------------------------------------------------------------
Paul W. 1996 0 0 4,750 2,695 7,445
Russo 1995 0 0 0 2,095 2,095
1994 - - - ----- -----
- -----------------------------------------------------------------
Stephen 1996 95,717 0 11,123 10,750 117,590
S. Weddle 1995 81,810 0 12,772 8,990 103,572
1994 69,923 11,261 9,625 8,990 99,799
- -----------------------------------------------------------------
-15-
OPTION GRANTS IN 1996
The stock options granted in 1996 were granted on October 22 at market value
that day of $27.94 per share. These grants are not exercisable until the first
anniversary of the date of grant.
Potential Realizable
Value at Assumed Annual
Individual Grants Rates of Stock Price
Appreciation for
Option Term
- -------------------------------------------------------------------------------
Number of % of Total
Shares Options
Underlying Granted to
Options Employees Expira-
Granted in Fiscal Exercise tion on
Name (#) Year ($/Share) Date 5% 10%
(a) (b) (c) (d) (e) (f) (g)
- --------------------------------------------------------------------------------
R.H. Ayers 41,200 4.3% $27.94 10/21/06 $723,938 $1,834,602
- --------------------------------------------------------------------------------
R. Huck 19,550 2.0% $27.94 10/21/06 343,519 870,545
- --------------------------------------------------------------------------------
R.A. Hunter 26,600 2.8% $27.94 10/21/06 467,397 1,184,476
- --------------------------------------------------------------------------------
P.W. Russo 17,500 1.8% $27.94 10/21/06 307,498 779,260
- --------------------------------------------------------------------------------
S.S. Weddle 18,900 2.0% $27.94 10/21/06 332,098 841,601
- --------------------------------------------------------------------------------
All
Shareholders ---- ---- ---- ---- 1,562,705,978 3,960,203,769
Named Executive
Officers'
Percentage of
Realizable Value
Gained by All
Shareholders ---- ---- ---- ---- 0.14% 0.14%
-16-
AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUES
- -----------------------------------------------------------------
Name Shares Value Number of shares Value of
(a) acquired realized underlying unexercised
on exercise ($) unexercised in-the-money
(#) (c) options at options at
(b) fiscal year-end fiscal year end
(#) ($)
exercisable/ exercisable/
unexercisable unexercisable
(d) (e)
- -----------------------------------------------------------------
R.H. 112,288 $1,500,033 111,612/41,200 $ 765,152/0
Ayers
- -----------------------------------------------------------------
R. Huck 0 0 77,300/19,550 690,706/0
- -----------------------------------------------------------------
R.A. 3,200 40,000 122,300/26,600 1,131,119/0
Hunter
- -----------------------------------------------------------------
P.W. Russo 0 0 21,000/17,500 99,750/0
- -----------------------------------------------------------------
S.S.
Weddle 7,000 87,564 90,800/18,900 853,738/0
- -----------------------------------------------------------------
DEFINED BENEFIT RETIREMENT PLAN
Upon termination of employment, a participant receives the
value of the benefit under Stanley's defined benefit
formula. Under this defined benefit formula, the normal
age for retirement is 65 when the formula yields the full defined
benefit of 1% of average compensation (salary and bonus--in the
case of the named executive officers, the amounts shown in
columns (c) and (d) of the summary compensation table on page 14)
for the five years of highest compensation, plus 0.3235% of the
five-year average compensation in excess of the Social Security
Maximum Earnings Base. This sum is then multiplied by years of
credited service to calculate the value of the annual benefit.
-17-
The following table illustrates the approximate annual
pension under this formula for different levels of compensation
and years of service for retirements which occur during 1997.
The amounts shown include amounts restored by Stanley's
supplemental retirement plan for salaried employees which would
have been provided by the retirement plan except for the benefit
limitations of the Internal Revenue Code on "qualified"
plans (see below). The amounts shown are in addition to any benefits
the employee may be entitled to under Social Security. The
credited years of service for those identified in the table on
page 14 are Mr. Ayers, 24 years; Mr. Huck, 26 years; Mr. Hunter,
22 years; Mr. Russo, 1 year; and Mr. Weddle, 18 years.
- -----------------------------------------------------------------
Average
annual
compensation Approximate annual pension upon retirement
of the at age 65
highest 5 --------------------------------------------------
consecutive 15 20 25 30 35
of the last years years years years years
10 years of of of of of of
employment service service service service service
- -----------------------------------------------------------------
$ 200,000 $ 36,531 $ 48,709 $ 60,886 $ 73,063 $ 85,240
400,000 76,236 101,649 127,061 152,473 177,885
600,000 115,941 154,589 193,236 231,883 270,530
800,000 155,646 207,529 259,411 311,293 363,175
1,000,000 195,351 260,469 325,586 390,703 455,820
1,200,000 235,056 313,409 391,761 470,113 548,465
- -----------------------------------------------------------------
SUPPLEMENTAL PENSION PLAN
Stanley's defined benefit retirement plan and savings plan
are "qualified" plans under the Internal Revenue Code and,
accordingly, are subject to certain limitations of benefits which
apply to "qualified" plans in general. Stanley's supplemental
retirement and savings plan for salaried employees restores these
benefits on a non-qualified basis.
EXECUTIVE OFFICER AGREEMENTS
Stanley's executive officers have agreements with Stanley
which become effective only in the event of a change in control
of the Corporation and which provide for payments of up to two
years compensation in certain cases in the event of the
-18-
officer's resignation or involuntary termination. Simultaneously
with the resignation of Mr. Ayers as an officer and director, he
and Stanley entered into an agreement providing that he would
continue as an employee until October 31, 1997 with no reduction
in salary. In addition, Mr. Russo and Stanley have agreed that
in the event of his termination under certain circumstances prior
to April 17, 2001 Stanley will continue his compensation for 12
months.
COMPARISON OF 5 YEARS' CUMULATIVE TOTAL RETURN AMONG THE STANLEY
WORKS, S&P 500 INDEX, AND DOW JONES INDUSTRIAL DIVERSIFIED GROUP
INDEX
Set forth below is a line graph comparing the yearly
percentage change in the Corporation's cumulative total
shareholder return for the last five years to that of the
Standard & Poor's 500 Stock Index (an index made up of 500
corporations including Stanley) and the Dow Jones
Industrial Diversified Group Index (an index made up of
19 corporations including Stanley). Total return assumes
reinvestment of dividends.
(GRAPH)
The points in the above table are as follows:
- -----------------------------------------------------------------
end end end end end end
1991 1992 1993 1994 1995 1996
- -----------------------------------------------------------------
Stanley $100 $107.94 $116.63 $ 97.05 $144.42 $159.61
- -----------------------------------------------------------------
S&P 500 100 107.62 118.47 120.03 165.14 203.06
- -----------------------------------------------------------------
DJ Ind'l Dvsf'd 100 122.01 149.08 136.73 179.06 235.46
- -----------------------------------------------------------------
Assumes $100 invested on December 31, 1991 in Stanley's
common stock, S&P 500 Index, and Dow Jones Industrial Diversified
Group Index. The Dow Jones Industrial Diversified Group Index
consists of the following 19 corporations: Allied Signal Inc.,
Cooper Industries, Inc., Crane Co., Danaher Corporation, The
Dexter Corporation, Dover Corporation, FMC Corporation,
Global Industrial Technologies, Inc., Harsco Corporation, Illinois Tool
Works Inc., Ingersoll-Rand Company, National Service Industries,
Inc., Parker-Hannifin Corporation, PPG Industries, Inc., Raychem
Corporation, The Stanley Works, Tenneco Inc., Trinova
Corporation, and Tyco International Ltd.
-19-
APPROVAL OF AMENDMENT TO THE STANLEY WORKS 1990 STOCK OPTION PLAN
SUMMARY OF PROPOSED AMENDMENT AND GRANT OF OPTIONS. At the
Annual Meeting of Shareholders in 1991, shareholders approved the
adoption of Stanley's 1990 Stock Option Plan (the "Plan"), and
then at their Annual Meeting in 1995 the shareholders approved
certain amendments to the Plan including increasing to 13,350,000
the number of shares with respect to which options could be granted
(15% of the total shares outstanding on February 14, 1997).
As discussed on pages 10 and 11 in the report of the
Compensation and Organization Committee, the Board has elected
John M. Trani, a seasoned and successful executive of General
Electric Company, as chairman and chief executive officer. In
connection with the selection of Mr. Trani, Stanley and he
entered into a three-year contract providing for him to receive
(subject to shareholder approval of an amendment to the Plan)
a 10-year stock option for one million shares on December 31,
1996, and a 10-year stock option for 200,000 shares in October
of each of 1997, 1998, and 1999. The Board is asking you to
consider and approve an amendment to the Plan to permit these
four options to be granted to Mr. Trani.
The one-million share option granted to Mr. Trani has an
exercise price of $27.562, the fair market value per share on
December 31, 1996, the date of grant, and will become exercisable
on June 30, 1997. The 200,000-share options will have exercise
prices equal to the fair market value of the shares covered
thereby on the respective dates of grant.
The Plan currently sets a limit of 100,000 shares
as the maximum number that can be covered by an option or options
granted to any particular grantee in any calendar year. The
amendment does not change this general limit of 100,000 shares.
However, it creates an exception for the four specific option
grants to Mr. Trani.
Stanley will account for the one-million-share option in its
financial statements by recording a non-cash, non-recurring
charge for compensation expense equal to the difference between
the fair market value of the shares covered by the option on the
day the shareholders approve the Plan amendment, and the exercise
price of such option of $27.562. If such fair market value were
to equal the closing price of Stanley's shares on February 14, 1997
of $37.375, this charge would be approximately $8 million. Stanley
will record no other expense in respect of this option, and will
record no expense in respect of the three 200,000-share options.
-20-
Upon exercise of each of these four options, Stanley will deduct
for income tax purposes the spread between the exercise price and
the fair market value of the shares acquired upon exercise.
The Board believes it is unlikely that Mr. Trani would have
joined Stanley as chief executive officer if the Board had not
agreed (subject to shareholder approval) to make these option
grants. If the shareholders do not approve this amendment, the
December 31, 1996 grant will have no effect, and the grants
promised by the Board to be made in 1997, 1998, and 1999 will not
be made.
The following table sets forth the number of shares of
Common Stock, $2.50 par value, covered by options granted during
fiscal year 1996 (which ended December 28, 1996) under the Plan
to persons listed below. These 10-year options were granted on
October 22, 1996 at an exercise price of $27.94 per share (the
fair market value that day) and will become exercisable on
October 22, 1997. The closing price of Stanley's shares on
February 14, 1997 was $37.375 per share and the current annual
dividend rate is $.74 per share. Also set forth under "All
Current Executive Officers as a Group" are the option grants made
to John M. Trani on December 31, 1996 and to be made to him in
October in each of 1997, 1998, and 1999.
NUMBER OF SHARES
NAME AND POSITION UNDERLYING OPTIONS
Richard H. Ayers
Chairman and CEO
(resigned as officer December 31, 1996) 41,200
Richard Huck
V.P., Finance and CFO 19,550
R. Alan Hunter
President and COO 26,600
Paul W. Russo
V.P., Strategy and
Corporate Development 17,500
Stephen S. Weddle
V.P., Gen. Counsel & Secretary 18,900
All Current Executive Officers as a Group 1,731,550
All Employees as a Group
(excluding executive officers) 786,650
-21-
A summary of the principal features of the Plan follows and
is qualified in its entirety by reference to the specific
provisions contained in the text of the Plan set forth as
Appendix A to this Proxy Statement.
SUMMARY OF THE PLAN AS AMENDED. Stanley adopted the Plan in
order to use stock options to attract and retain key employees in
the belief that employee stock ownership and stock-related
compensation devices encourage a community of interest between
employees and shareholders. Stanley believes that increased
share ownership by key employees more closely aligns shareholder
and employee interests by encouraging greater focus on the
long-term growth and profitability of the Corporation and on its
common stock.
Only key employees of Stanley and its subsidiaries will be
eligible to receive options and currently approximately 250
employees are eligible to participate in the Plan. Non-employee
directors will not be eligible to receive grants under the Plan.
Up to 13,350,000 shares of common stock may be issued under the
Plan, which shares may be made available from authorized but
unissued common stock of Stanley or from shares of common stock
held in treasury. Grants may be made under the Plan until
December 18, 2000. To the extent options granted under the Plan
are canceled or expire prior to exercise, the shares covered
thereby again become available for option grants. In the event
of any stock split, stock dividend, merger, consolidation,
reorganization, recapitalization or other change in corporate
structure or capitalization affecting Stanley's common stock, the
number of shares subject to the Plan, the number of shares then
subject to options and the price per share payable upon the
exercise of options may be appropriately adjusted by the
Committee.
ADMINISTRATION. The Plan is administered by the Committee
appointed from time to time by the Board of Directors which will
be composed of members of the Board who do not receive grants
under the Plan or any other plan of the Company other than the
Stock Option Plan for Non-Employee Directors (see the description
of the Compensation and Organization Committee on page 7). The
Committee may prescribe, amend and rescind rules and regulations
relating to the Plan, select the key employees to whom option
grants will be made, determine the number of shares to be
optioned and other terms of such grants and exercise
discretion to determine the waiver or acceleration of terms of
option grants or to accelerate the exercisability or vesting of
options or extend the period during which options are exercisable
within the overall limitations contained in the Plan. No
participant in the Plan may be awarded options aggregating more
than 100,000 shares during any calendar year, except for the four
options for John M. Trani described on pages 20 and 21.
-22-
The Board of Directors may amend, alter or discontinue the
Plan but no amendment or alteration will be made without the
consent of shareholders that would (a) increase the aggregate
number of shares which may be issued under the Plan, (b) change
the option exercise price, (c) increase the maximum period during
which options may be exercised, (d) extend the effective period
of the Plan, or (e) materially modify the requirements as to
eligibility for participation in the Plan.
TERMS OF OPTIONS. The purchase price of an option will be
not less than 100% of the fair market value of the common stock
on the date of the grant. Options granted under the Plan become
exercisable during the term of the option as determined by the
Committee. Options must be exercised within 10 years of
the date of grant or such shorter period as the Committee
may determine. Options are generally not transferable
other than by will and the laws of descent and distribution
and are exercisable only by the optionee during his or her
lifetime or, after death, by his or her legal representative.
The Plan permits the Committee to grant or amend non-qualified
stock options to permit their transfer, without consideration,
to immediate family members, or a trust or partnership for
the benefit of such persons.
Options will terminate two months after the termination of
employment except in the event of the grantee's death, disability
or retirement or as otherwise determined by the Committee and set
forth in the Agreement evidencing such Option. If a grantee
retires, the grantee may exercise an option thereafter in the
case of incentive stock options for up to three months following
retirement and in the case of non-qualified stock options during
the period specified by the Committee in the option agreement,
subject to the original term of the option. If a grantee dies or
is disabled, the grantee or the grantee's estate may exercise an
option for up to one year in the case of an incentive stock
option and during the period specified by the Committee in the
option agreement following death or disability in the case of a
non-qualified stock option.
An option may only be exercised upon full payment to the
Corporation of the exercise price in such form as the Committee
may approve. Payment can be made (i) in cash (including check,
draft, money order or wire transfer made payable to the order of
the Corporation); (ii) through the delivery of shares of common
stock owned by the grantee; (iii) by a combination of cash and
common stock; or (iv) if authorized by the Committee, through
-23-
delivery of irrevocable instructions to a broker to deliver to
the Corporation sale or loan proceeds sufficient to pay the
exercise price. The common stock so delivered must have been
held by the grantee for at least six months, may be so delivered
notwithstanding its being subject to transfer restrictions, and
will have a value for determining payment equal to the average of
the high and low price of the common stock on the date
immediately preceding the date of exercise.
CHANGE IN CONTROL. Any outstanding options will become
immediately exercisable and any transfer restrictions applicable
thereto will lapse automatically upon a "change in control" of
the Corporation (as defined in the Plan). In the event of a
"change in control," grantees shall also have the right for a
period of thirty (30) days following a "change in control" to
require the Corporation to purchase such options for cash in lieu
of the issuance of common stock at the Acceleration Price (as
defined in the Plan).
The Board of Directors believes the Plan's "change in
control" provisions will benefit the Corporation and its
shareholders by encouraging continued employment with the
Corporation despite takeover threats that potentially could
deprive Plan participants of their benefits thereunder. These
"change in control" provisions, however, may deter certain
mergers, tender offers, proxy contests or other takeover
attempts.
FEDERAL INCOME TAX CONSEQUENCES. Options granted under the
Plan may be non-qualified stock options or incentive stock
options within the meaning of Section 422 of the Code. The
Committee is authorized to determine whether all or a portion of
options granted under the Plan will be non-qualified or incentive
stock options.
NON-QUALIFIED STOCK OPTIONS. A non-qualified stock option
generally will not result in any taxable income to the grantee at
the time it is granted. In general, the holder of a
non-qualified stock option will realize ordinary income, at the
time of exercise of the option, in an amount measured by the
excess of the fair market value of the optioned shares (at the
time of exercise) over the option price. The Corporation will be
entitled to a tax deduction at that time in the amount of the
ordinary income which the grantee recognizes.
INCENTIVE STOCK OPTIONS. An incentive stock option ("ISO")
will not result in any taxable income to the grantee when it is
granted or exercised. However, the excess of the fair market
value of the shares of common stock acquired on the date of
exercise over the exercise price will be an item of adjustment
-24-
for alternative minimum tax purposes. To obtain the special tax
treatment applicable to an ISO, the option must be exercised
within three months after the grantee ceases to be an employee
(one year if the grantee is disabled) unless the grantee has
died. If the optioned stock is held more than two years from the
grant of the option and more than one year after the transfer of
the stock to the grantee upon exercise of the option, the grantee
will be taxed on any gain on the sale of such stock at long-term
capital gains rates (presently a maximum of 28%).
If common stock acquired upon the exercise of an ISO is not
held for the required holding periods, a "disqualifying
disposition" results, at which time the participant is deemed to
have received an amount of ordinary income equal to the lesser of
(a) the excess of the fair market value of the common stock on
the date of exercise over the exercise price, or (b) the excess
of the amount realized on the disposition of the shares over the
exercise price. If the amount realized on the "disqualifying
disposition" of the common stock exceeds the fair market value on
the date of exercise, the gain in excess of the ordinary income
portion will be treated as capital gain. Any loss on the
disposition of common stock acquired through the exercise of an
ISO is a capital loss.
No income tax deduction will be allowed to the Corporation
with respect to shares of common stock purchased by a grantee
through the exercise of an ISO, provided there is no
"disqualifying disposition" as described above. In the event of
a "disqualifying disposition," Stanley is entitled to a tax
deduction equal to the amount of ordinary income recognized by
the grantee.
Withholding of federal taxes at applicable rates will be
required in connection with ordinary income realized by a grantee
upon exercise of non-qualified stock options under the Plan.
Grantees may pay withholding taxes by means of contributing
shares of Stanley's common stock previously acquired or by
deducting shares of common stock from the amount to be received
upon the exercise of an option in accordance with procedures
adopted by the Committee.
To the extent that acceleration of the exercisability of an
option or payment of the Acceleration Price upon the occurrence
of a "change in control" as defined in the Plan is not deemed to
be reasonable compensation for services rendered prior to the
"change in control" or to be rendered on or after the "change in
control," Stanley may not be allowed a deduction for such
exercise or payment under the provisions of the Code that deny an
income tax deduction to a company for payments that are
contingent upon a change in control if those payments have a
present value equal to or greater than three hundred percent
(300%) of the employees' average taxable compensation for the
-25-
last five (5) years. In such case, the employee may be subject
to the imposition of a twenty percent (20%) excise tax.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends approval of the amendment
to the Plan. The Plan, as amended, is set forth in its entirety
as Appendix A hereto. The approval of the amendment to the Plan
requires the affirmative vote of a majority of the votes cast.
APPROVAL OF INDEPENDENT AUDITORS
The third item of business to be considered is the approval
of independent auditors for the Corporation for the 1997 fiscal
year. Subject to the action of the shareholders at the Annual
Meeting, the Board of Directors of the Corporation, on
recommendation of the Audit Committee, has appointed the
firm of Ernst & Young LLP, certified public accountants,
as the independent auditors to audit the financial
statements of the Corporation for the current fiscal year. The
Board may appoint a new accounting firm at any time if it
believes that such a change would be in the best interest of the
Corporation and its shareholders.
Ernst & Young and predecessor firms have been the Corporation's
auditors for the last 53 years. Total Ernst & Young fees for
1996 were $1,782,000. 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 Audit Committee of the Board of Directors approves all
audit and non-audit services provided by Ernst & Young. The
Audit Committee believes that non-audit services have had no
effect on auditor independence.
The Board of Directors recommends a vote FOR approving Ernst
& Young LLP as independent auditors of the Corporation for the
year 1997.
OTHER MATTERS
Other Business
No business may be transacted at the meeting other than the
business specified in the notice of the meeting, business
properly brought before the meeting at the direction of the Board
of Directors, and business properly brought before the meeting by
a shareholder who has given notice to Stanley's Secretary
-26-
received after January 16, 1997 and before February 17, 1997; no
such notice has been received. Management does not know of any
matters to be presented at the meeting other than the matters
described in this Proxy Statement. If, however, other business
is properly presented to the meeting, the proxy holders named in
the accompanying Proxy will vote the Proxy in accordance with
their best judgment.
Shareholder proposals for 1998
Shareholder proposals intended to be presented to Stanley's
1998 Annual Meeting must be received by the Secretary not
later than November 10, 1997 for inclusion in the proxy
statement and form of proxy relating to such meeting,
and must be received after January 23, 1998 and before
February 22, 1998 to otherwise be properly presented to the
meeting.
Voting
Stanley has only one class of shares outstanding. The
record date for determining the shareholders who are entitled to
receive the meeting notice and to vote at the meeting is the
close of business on February 14, 1997. As of February 14, 1997,
88,935,057 common shares of $2.50 par value were outstanding
(exclusive of shares held in treasury).
Vote Required for Approval
Each outstanding share is entitled to one vote. The three
nominees receiving the most votes cast will be elected directors;
the favorable vote of a majority of the votes cast is required
for the approval of the 1990 Stock Option Plan amendments,
and for the approval of Ernst & Young. Under Connecticut law,
broker non-votes and proxies marked as abstentions will not be
counted as votes cast; accordingly, they will have no effect
on the outcome of the matters voted on at the meeting.
Manner for Voting Proxies
You may revoke your proxy by filing a proxy with a later
date at any time prior to the meeting. If you attend the
meeting, you may revoke your proxy at that time and vote in
person. Your proxy will be voted as you direct, and, if you
check the box on the proxy, your vote will be kept confidential
under Stanley's policy on confidential voting.
If you sign your proxy but do not mark it, your proxy will
be voted for the election of the three nominees for director, for
the approval of the amendment to the 1990 Stock Option Plan, and
for the approval of Ernst & Young as the independent auditors
of the Corporation.
-27-
Solicitation of Proxies
Your proxy is solicited on behalf of the Board of Directors.
Stanley will solicit proxies by mail, telephone, other electronic
means, and in person, and will pay all the expenses of the
solicitation. Morrow & Co., Inc. may also solicit personally and
by telephone; Stanley believes that the additional expense of
Morrow's assistance will not exceed $7,500. Stanley will reimburse
brokerage houses and other custodians for their reasonable expenses
in sending proxies and proxy material to beneficial owners.
Section 16(a) Beneficial Ownership Reporting Compliance
From 1992 until May 1996 Barbara Bennett, Vice President,
Human Resources, and Walter J. McNerney, a director, acquired 258
and 402 shares, respectively, through the reinvestment of
dividends as participants in Stanley's dividend reinvestment
plan. Through inadvertence, these acquisitions were not reported
on Forms 4 or 5 until they were discovered in mid-1996.
Similarly, the 2,000-share exercise of a stock option by Ms.
Bennett in November 1996 was inadvertently not reported on a Form
4 until February 1997.
For the Board of Directors
STEPHEN S. WEDDLE
Secretary
-28-
APPENDIX A
THE STANLEY WORKS
1990 STOCK OPTION PLAN
ARTICLE I.
PURPOSE AND SCOPE OF THE PLAN
1.01 PURPOSE. The purpose of The Stanley Works 1990 Stock
Option Plan (the "Plan") is to promote the long-term success of
The Stanley Works and its subsidiaries by providing financial
incentives to key employees who are in a position to make
significant contributions toward such success. The Plan is
designed to attract and retain key employees and to encourage
them to acquire a proprietary interest in the Company and thereby
to increase their personal interest in the long-term success of
the Company.
1.02 DEFINITIONS. Unless the context clearly indicates
otherwise, the following terms have the meanings set forth below:
"Board of Directors" or "Board" means the Board of
Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Committee" means the Compensation and Organization
Committee of the Board, no member of which shall be an
Employee.
"Common Stock" means the common stock of the Company,
par value $2.50 per share.
"Company" means The Stanley Works, a Connecticut
corporation.
"Disability", as applied to a Grantee, means permanent
and total disability as defined in Section 22(e)(3) of
the Code.
"Employee" means any full-time employee of the Company
or any of its subsidiaries, as defined in Section
424(f) of the Code.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Fair Market Value" means the mean average of the high
and the low price of a share of the Common Stock as
quoted on the New York Stock Exchange Composite Tape on
the date as of which fair market value is to be
-29-
determined or, if there is no trading of Common Stock
on such date, such mean average of the high and the low
price on the next preceding date on which there was
such trading.
"Grant Date", as used with respect to a particular
Option, means the date on which such Option is granted
by the Committee (or in certain cases, the Committee's
delegate) pursuant to the Plan.
"Grantee" means an individual to whom an Option has
been granted by the Committee (or in certain cases, the
Committee's delegate) pursuant to the Plan.
"Immediate family members" of a Grantee means the
Grantee's children, grandchildren and spouse.
"Key Employee" means any Employee who, in the judgment
of the Committee, is in a position to contribute
significantly to the growth and prosperity of the
Company.
"Option" means an option, granted by the Committee (or
in certain cases, the Committee's delegate) pursuant to
Article II, to purchase shares of Common Stock.
"Incentive Stock Option" means an Option that qualifies
as an Incentive Stock Option as described in Section
422 of the Code.
"Non-Qualified Stock Option" means any Option other
than an Incentive Stock Option.
"Option Period" means the period beginning on the Grant
Date and ending the day prior to the tenth anniversary
of the Grant Date.
"Plan" means The Stanley Works 1990 Stock Option Plan
as amended from time to time.
"Retirement", as applied to an Employee, shall have the
meaning provided under the qualified pension plan
applicable to such Employee.
1.03 AGGREGATE LIMITATION.
(a) The aggregate number of shares of Common Stock with
respect to which Options may be granted shall not exceed
13,350,000 shares, subject to adjustment in accordance with
Section 3.04. No participant may receive, under the Plan, for
any Calendar Year Options the aggregate of which shall exceed
-30-
100,000 shares, which is .7% of the shares authorized for
issuance hereunder, except that John M. Trani, Chairman and Chief
Executive Officer of Stanley, may receive the following Options:
an Option covering 1,000,000 shares granted as of December 31,
1996; and three Options, each covering 200,000 shares, to be
granted on or about October in each of 1997, 1998, and 1999.
(b) Any shares of Common Stock to be delivered by the
Company upon the exercise of Options shall be issued from the
Company's authorized but unissued shares of Common Stock or from
shares of Common Stock held in the treasury, at the discretion of
the Board.
(c) In the event that any Option expires, lapses or
otherwise terminates prior to being fully exercised, any share of
Common Stock allocable to the unexercised portion of such Option
may again be made subject to an Option.
1.04 ADMINISTRATION OF THE PLAN. The Plan shall be
administered by the Committee, which shall determine Key
Employees of the Company to whom, and the times at which, Options
shall be granted and the number of shares of Common Stock to be
subject to each such Option and the terms of such awards, and the
waiver or acceleration thereof, taking into account the nature of
the services rendered by the Employee, the Employee's potential
contribution to the long-term success of the Company and such
other factors as the Committee in its discretion shall deem
relevant. The Committee shall have the power to interpret the
Plan and establish rules and regulations relating to it, to
prescribe the terms and provisions of agreements for the grant of
Options, to accelerate the exercisability or vesting of all or
any portion of any Option or to extend the period during which an
Option is exercisable and to make all other determinations
necessary or advisable in order to administer the Plan. The
Committee shall also have the power to delegate to the Chief
Executive Officer, the Chief Operating Officer, or the Secretary
the power of the Committee hereunder, provided that such
delegation does not include the power to grant to any Grantee an
Incentive Stock Option nor the power to grant an Option to a
Grantee who is an officer of the Company.
1.05 EFFECTIVE DATE AND DURATION OF PLAN. The Plan became
effective upon its adoption by the Board and was approved by the
shareholders of the Company on April 17, 1991. Unless previously
terminated by the Board, the Plan shall terminate, as to any
shares as to which Options have not theretofore been granted, on
the tenth anniversary of its adoption by the Board. The
amendments to the Plan contained in Sections 1.02, 1.03, 1.04,
2.02(f), 2.02(g) and 2.02(h) are effective upon adoption by the
Board only to grants of Options occurring on or after October 26,
1994, provided that such amendments to the Plan and any grant of
Options after that date are subject to the approval of such
amendments to the Plan by the Shareholders of the Company.
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ARTICLE II.
STOCK OPTIONS
2.01 GRANT OF OPTIONS. Key Employees shall be eligible to
receive Options under the Plan. Directors who are not Employees
shall not be eligible to receive Options.
Each Option shall be exercisable from time to time
during such periods and in such manner and number of shares as
determined by the Committee (or in certain cases, the Committee's
delegate) and set forth in the Agreement evidencing such Option.
The date of exercise shall be the date on which notice of exercise
is received by the Company so long as payment is received by the
Company at the same time or promptly thereafter. The term of
each Option shall be determined by the Committee (or in certain
cases, the Committee's delegate), but in no event shall the term
of an Option exceed ten (10) years.
2.02 OPTION REQUIREMENTS.
(a) Each Option shall be designated as an Incentive
Stock Option or a Non-Qualified Stock Option and shall be
evidenced by a written instrument specifying the number of shares
of Common Stock that may be purchased by its exercise and
containing such terms and conditions consistent with the Plan as
the Committee (or in certain cases, the Committee's delegate) may
determine.
(b) An Option shall not be granted on or after the
tenth anniversary of the date upon which the Plan is adopted by
the Board or, if earlier, the tenth anniversary of the date upon
which the Plan is approved by the shareholders of the Company.
(c) An Option shall not be exercisable after the
expiration of the Option Period.
(d) The Committee (or in certain cases, the Committee's
delegate) may provide, in the instrument evidencing an Option,
for the lapse of the Option, prior to the expiration of the
Option Period, upon the occurrence of any event specified by the
Committee.
(e) The option price per share of Common Stock shall
not be less than the Fair Market Value of a share of Common Stock
on the Grant Date.
(f) An Option shall not be transferable other than by
will or the laws of descent and distribution or pursuant to a
qualified domestic relations order, as defined in the Code, and,
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during the Grantee's lifetime, shall be exercisable only by the
Grantee, except that the Committee (or in certain cases, the
Committee's delegate) may:
(i) permit exercise, during the Grantee's lifetime,
by the Grantee's guardian or legal representative;
(ii) permit transfer, upon the Grantee's death, to
beneficiaries designated by the Grantee in a manner authorized by
the Committee (or in certain cases, the Committee's delegate),
provided that the Committee determines that such exercise and
such transfer are consonant with requirements for exemption from
Section 16(b) of the Exchange Act and, with respect to an
Incentive Stock Option, the requirements of Section 422(b)(5) of
the Code; and
(iii) grant Non-Qualified Stock Options that are
transferable, or amend outstanding Non-Qualified Stock Options to
make them so transferable, without payment of consideration, to
immediate family members of the Grantee or to trusts or
partnerships for such family members.
(g) Upon the termination of a Grantee's employment by
the Company or any of its subsidiaries for any reason other than
death, the Grantee may exercise an Option until the earlier of
the expiration of its original term or:
(i) If such termination is due to Retirement, three
(3) months after such termination in the case of the exercise of
an Incentive Stock Option, and such period of time as determined
by the Committee (or in certain cases, the Committee's delegate)
and set forth in the Agreement evidencing such Option in the case
of the exercise of a Non-Qualified Stock Option;
(ii) If such termination is due to Disability, one
(1) year after such termination in the case of the exercise of an
Incentive Stock Option and such period of time as determined by
the Committee (or in certain cases, the Committee's delegate) and
set forth in the Agreement evidencing such Option in the case of
the exercise of a Non-Qualified Stock Option;
(iii) If such termination is for any other reason,
two (2) months after such termination, or for such other period
of time as determined by the Committee and set forth in the
Agreement evidencing such Option; and
(iv) An Incentive Stock Option not exercised within
three months (twelve months in the case of Disability or death)
after the date of termination due to Disability, Retirement or
death may be exercised within such period of time as determined
by the Committee and set forth in the Agreement evidencing such
Option (as the permitted period of exercise in such circumstances
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of a Non-qualified Stock Option) after the date of such
termination but no longer will be eligible for the treatment
afforded Incentive Stock Options under Section 422 of the Code.
Leaves of absence for such periods and purposes conforming to the
personnel policy of the Company as may be approved by the
Committee shall not be deemed terminations or interruptions of
employment.
(h) If a Grantee should die while employed by the
Company or any subsidiary of the Company or after Disability or
Retirement, any Option previously granted to the Grantee under
this Plan may be exercised by the person designated in such
Grantee's last will and testament or, in the absence of such
designation, by the Grantee's estate, to the full extent that
such Option could have been exercised by such Grantee immediately
prior to the Grantee's death, but not later than the anniversary
of the Grantee's death in the case of the exercise of an
Incentive Stock Option and such period of time as determined by
the Committee and set forth in the Agreement evidencing such
Option in the case of the exercise of a Non-qualified Stock
Option.
(i) A person electing to exercise an Option shall give
written notice, in such form as the Committee may require, of
such election to the Company and shall tender to the Company at
the time of such notice or promptly thereafter the full purchase
price of the shares of Common Stock for which the election is
made. Payment of the purchase price shall be made in cash or in
such other form as the Committee may approve, including shares of
Common Stock valued as provided in Section 3.02 hereof or a
combination of cash and/or such other form of property.
2.03 INCENTIVE STOCK OPTION REQUIREMENTS.
(a) An Option designated by the Committee as an
"Incentive Stock Option" is intended to qualify as an "incentive
stock option" within the meaning of Subsection (b) of Section 422
of the Code and shall satisfy, in addition to the conditions of
Section 2.02, the conditions set forth in this Section 2.03.
(b) An Incentive Stock Option shall not be granted to
an individual who, on the date of grant, owns stock possessing
more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or of its parent or any
subsidiary corporation.
(c) The aggregate Fair Market Value, determined on the
Grant Date, of the shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by a
Grantee during any calendar year (under all such plans of the
Grantee's employer corporation and its parent and subsidiary
corporations) shall not exceed $100,000.
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ARTICLE III.
GENERAL PROVISIONS
3.01 EXERCISE OF OPTIONS.
(a) No Option may be exercised prior to the approval of
the Plan by the Company's shareholders.
(b) No Option may at any time be exercised with respect
to a fractional share or exercised in part with respect to the
lesser of 100 shares or the balance of the shares then covered by
the Option. No fractional shares shall be issued and the
Committee shall determine whether cash shall be paid in lieu of
such fractional shares or such fractional shares shall be
eliminated.
(c) No shares shall be delivered pursuant to the
exercise of any Option, in whole or in part, until qualified for
delivery under such securities laws and regulations as the
Committee may deem to be applicable thereto and until payment in
full of the option price is received by the Company in cash, by
check or in stock as provided in Section 3.02 hereof or, if
authorized by the Committee's regulations and accomplished in
accordance therewith, by delivery of a properly executed exercise
notice together with irrevocable instructions to a broker to
deliver promptly to the Company sale or loan proceeds sufficient
to pay the option price. Neither a Grantee nor such Grantee's
legal representative, legatee or distributee shall be or be
deemed to be a holder of any shares subject to such Option unless
and until a certificate or certificates therefor is issued in his
or her name or in the name of a person designated by him or her.
3.02 STOCK AS FORM OF EXERCISE PAYMENT. A Grantee may elect
to use Common Stock valued at the Fair Market Value on the last
business day preceding the exercise date to pay all or part of
the exercise price of an Option, subject to such conditions as
the Committee may impose through the adoption of rules or
regulations or otherwise, provided; however, that such form of
payment shall not be permitted unless at least one hundred (100)
shares of Common Stock are delivered for such purpose and the
shares delivered have been held by the Grantee for at least six
months.
3.03 WITHHOLDING TAXES FOR AWARDS. Each Grantee exercising
an Option as a condition to such exercise shall pay to the
Company the amount, if any, required to be withheld from
distributions resulting from such exercise under applicable
Federal and State income tax laws ("Withholding Taxes"). Such
Withholding Taxes shall be payable as of the date income from
such exercise is includable in the Grantee's gross income for
Federal income tax purposes (the "Tax Date"). The Committee may
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establish such procedures as it deems appropriate for the
settling of withholding obligations with shares of Common Stock,
including, without limitation, the establishment of such
procedures as may be necessary to comply with Rule 16b-3.
3.04 CHANGES IN COMMON STOCK. In the event of a merger,
consolidation, reorganization, recapitalization, stock dividend,
stock split or other change in corporate structure or
capitalization affecting the Common Stock, such appropriate
adjustment shall be made in the number, kind, option price, etc.
of shares subject to Options, including appropriate adjustment in
the maximum number of shares referred to in Section 1.03 of the
Plan, as may be determined by the Committee.
3.05 CHANGE IN CONTROL.
(a) Upon the occurrence of a Change in Control (as
hereinafter defined), all Options shall become immediately
exercisable in full for the remainder of their terms and Grantees
shall have the right to have the Company purchase their Options
for cash for a period of thirty (30) days following a Change in
Control at the Acceleration Price (as hereinafter defined).
(b) (i) The "Acceleration Price" is the excess over the
exercise price of the highest of the following on the date of a
Change in Control:
(A) the highest reported sales price of a share of
the Common Stock within the sixty (60) days preceding the date of
a Change in Control, as reported on any securities exchange upon
which the Common Stock is listed,
(B) the highest price of a share of the Common
Stock reported in a Schedule 13D or an amendment thereto as paid
within the sixty (60) days preceding the date of the Change in
Control,
(C) the highest tender offer price paid for a
share of the Common Stock, and
(D) any cash merger or similar price paid for a
share of the Common Stock.
(ii) For Incentive Stock Options, the Acceleration
Price is limited to the spread between the Fair Market Value on
the date of exercise and the option price.
(c) A "Change in Control" is the occurrence of any one
of the following events:
(i) any "person," as such term is defined in
Section 3(a)(9) and modified and used in Sections 13(d) and 14(d)
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of the Exchange Act (other than a Grantee, the Company, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company (or of any subsidiary of the
Company), or any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of
the Company's then outstanding securities;
(ii) during any period of two consecutive years
individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to
effect a transaction described in clause (i), (iii), (iv) or (v)
of this definition) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(iii) the shareholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 75% of the combined
voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no "person" (with the exceptions specified
in clause (i) of this definition) acquires 25% or more of the
combined voting power of the Company's then outstanding
securities;
(iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all of the Company's assets; or
(v) the Company consummates a merger,
consolidation, stock dividend, stock split or combination,
extraordinary cash dividend, exchange offer, issuer tender offer
or other transaction effecting a recapitalization of the Company
(or similar transaction) (the "Transaction") and, in connection
with the Transaction, a Designated Downgrading occurs with
respect to the unsecured general obligations of the Company (the
"Securities"), as described below:
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(A) If the rating of the Securities by both
Rating Agencies (defined hereinafter) on the date 60 days prior
to the public announcement of the Transaction (a "Base Date") is
equal to or higher than BBB Minus (as hereinafter defined), then
a "Designated Downgrading" means that the rating of the
Securities by either Rating Agency on the effective date of the
Transaction (or, if later, the earliest date on which the rating
shall reflect the effect of the Transaction) (as applicable, the
"Transaction Date") is equal to or lower than BB Plus (as
hereinafter defined); if the rating of the Securities by either
Rating Agency on a Base Date is lower than BBB Minus, then a
"Designated Downgrading" means that the rating of the Securities
by either Rating Agency on the Transaction Date has decreased
from the rating by such Rating Agency on the Base Date. In
determining whether the rating of the Securities has decreased, a
decrease of one gradation (+ and - for S&P and 1, 2 and 3 for
Moody's, or the equivalent thereof by any substitute rating
agency referred to below) shall be taken into account;
(B) "Rating Agency" means either Standard &
Poor's Corporation or its successor ("S&P") or Moody's Investor
Service, Inc. or its successor ("Moody's");
(C) "BBB Minus" means, with respect to
ratings by S&P, a rating of BBB- and, with respect to ratings by
Moody's, a rating of Baa3, or the equivalent thereof by any
substitute agency referred to below;
(D) "BB Plus" means, with respect to ratings
by S&P, a rating of BB+ and, with respect to ratings by Moody's,
a rating of BBB3, or the equivalent thereof by any substitute
agency referred to below;
(E) The Company shall take all reasonable
action necessary to enable each of the Rating Agencies to provide
a rating for the Securities, but, if either or both of the Rating
Agencies shall not make such a rating available, a
nationally-recognized investment banking firm shall select a
nationally-recognized securities rating agency or two
nationally-recognized securities rating agencies to act as
substitute rating agency or substitute rating agencies, as the
case may be.
3.06 ADDITIONAL CONDITIONS. Any shares of Common Stock
issued or transferred under any provision of the Plan may be
issued or transferred subject to such conditions (including,
without limitation, restrictions on transferability), in addition
to those specifically provided in the Plan, as the Committee may
impose.
3.07 NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any
instrument executed pursuant hereto shall confer upon any
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Employee any right to continue in the employ of the Company or
any of its subsidiaries nor shall anything in the Plan affect the
right of the Company or any of its subsidiaries to terminate the
employment of any Employee, with or without cause.
3.08 LEGAL RESTRICTIONS. The Company will not be obligated
to issue shares of Common Stock or make any payment if counsel to
the Company determines that such issuance or payment would
violate any law or regulation of any governmental authority or
any agreement between the Company and any national securities
exchange upon which the Common Stock is listed. In connection
with any stock issuance or transfer, the person acquiring the
shares shall, if requested by the Company, give assurances
satisfactory to counsel to the Company regarding such matters as
the Company may deem desirable to assure compliance with all
legal requirements. The Company shall in no event be obliged to
take any action in order to permit the exercise of any Option.
3.09 NO RIGHTS AS SHAREHOLDERS. No Grantee, and no
beneficiary or other person claiming through a Grantee, shall
have any interest in any shares of Common Stock allocated for the
purposes of the Plan or subject to any Option until such shares
of Common Stock shall have been transferred to the Grantee or
such person. Furthermore, the existence of the Options shall not
affect: the right or power of the Company or its shareholders to
make adjustments, recapitalization, reorganizations or other
changes in the Company's capital structure; the dissolution or
liquidation of the Company, or sale or transfer of any part of
its assets or business; or any other corporate act, whether of a
similar character or otherwise.
3.10 CHOICE OF LAW. The validity, interpretation and
administration of the Plan and of any rules, regulations,
determinations or decisions made thereunder, and the rights of
any and all persons having or claiming to have any interest
therein or thereunder, shall be determined exclusively in
accordance with the laws of the State of Connecticut (regardless
of the laws that might be applicable under principles of
conflicts of laws). Without limiting the generality of the
foregoing, the period within which any action in connection with
the Plan must be commenced shall be governed by the laws of the
State of Connecticut (regardless of the laws that might be
applicable under principles of conflicts of laws), without regard
to the place where the act or omission complained of took place,
the residence of any party to such action or the place where the
action may be brought.
3.11 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The
Board may at any time terminate, suspend or amend the Plan;
however, no such amendment shall, without the approval of the
shareholders of the Company:
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(a) increase the aggregate number of shares which may
be issued in connection with Options;
(b) change the Option exercise price;
(c) increase the maximum period during which Options
may be exercised;
(d) extend the effective period of the Plan; or
(e) materially modify the requirements as to
eligibility for participation in the Plan.
-40-
(STANLEY(R) LOGO)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
MEETING DATE: APRIL 23, 1997
-41-
THE STANLEY WORKS
PROXY FOR ANNUAL MEETING
APRIL 23, 1997
The undersigned appoints Stillman B. Brown, Edgar R. Fiedler, and
Hugo E. Uyterhoeven, with full power of substitution, as proxies
to act and vote on the signer's behalf at the Annual Meeting of
Shareholders of THE STANLEY WORKS, and at any adjournments
thereof, upon such business as may come before the meeting.
WHEN SIGNED AND RETURNED, THIS PROXY WILL BE VOTED AS DIRECTED BY
YOU. IF SIGNED AND RETURNED WITH NO DIRECTION, THIS PROXY WILL BE
VOTED FOR ITEMS 1, 2 AND 3.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
HAS YOUR ADDRESS CHANGED?
- ------------------------------- -------------------------------
- ------------------------------- DO YOU HAVE ANY COMMENTS?
- ------------------------------- -------------------------------
- ------------------------------- IF YOU HAVE NOTED EITHER AN
ADDRESS CHANGE OR COMMENTS ABOVE, PLEASE BE SURE TO MARK THE
APPROPRIATE BOX ON THE REVERSE SIDE OF THIS CARD.
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
ITEM 1.) Election of Directors.
FOR WITHHOLD FOR ALL EXCEPT
/ / / / / /
Nominees: Edgar R. Fiedler, Eileen S. Kraus, and John M. Trani.
INSTRUCTIONS: To withhold authority to vote for any individual
nominee(s), mark the For All Except box and strike a line
through the nominee's name.
ITEM 2.) Approve amendment to Stock Option Plan.
FOR AGAINST ABSTAIN
/ / / / / /
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ITEM 3.) Approve Ernst & Young as independent auditors for 1997.
FOR AGAINST ABSTAIN
/ / / / / /
The Board of Directors recommends a vote FOR Items 1, 2 and 3.
RECORD DATE SHARES:
CONFIDENTIAL VOTING
DO YOU WISH THIS VOTE TO REMAIN CONFIDENTIAL? IF SO, MARK THIS
BOX. / /
Mark box at right if comments or address change have been noted
on the reverse side of this card. / /
Please be sure to sign and date this Proxy.
Date ___________________
________________________ Shareholder sign here
________________________ Co-owner sign here
Please sign exactly as indicated hereon. When signing as
attorney, executor, trustee, etc., please give full title.
DETACH CARD
Dear Fellow Shareholder:
The Board of Directors appreciates and encourages shareholder
participation in Stanley's affairs. Whether or not you plan to
attend the meeting, it is important that your shares be
represented. Accordingly, we request you to sign, date, and mail
the enclosed proxy in the envelope provided at your earliest
convenience.
Thank you for your
cooperation.
Very truly yours,
John M. Trani
Chairman and Chief Executive officer
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