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.
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(STANLEY WORKS LOGO) THE STANLEY WORKS
April 1, 1999
Dear Fellow Shareowner:
You are cordially invited to attend Stanley's Annual Meeting of
Shareowners to be held at 9:30 a.m. on Wednesday, April 28, 1999,
at the Crowne Plaza Hotel, 33 Nationwide Boulevard, Columbus,
Ohio (see directions, inside back cover).
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
1999.
In the accompanying Proxy Statement your Board of Directors
recommends that you vote "FOR" the proposals.
The Board appreciates and encourages shareowner 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, OR REGISTER YOUR VOTE BY PHONE OR
THE INTERNET.
Thank you for your cooperation.
Very truly yours,
JOHN M. TRANI
Chairman and Chief Executive Officer
<PAGE>
THE STANLEY WORKS
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
April 1, 1999
To the Shareowners:
The Annual Meeting of Shareowners of The Stanley Works will be
held at the Crowne Plaza Hotel, 33 Nationwide Boulevard,
Columbus, Ohio on Wednesday, April 28, 1999, at 9:30 a.m., for
the following purposes:
(1) To elect three directors.
(2) To approve Ernst & Young LLP as independent auditors of the
Corporation for the year 1999.
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareowners of record at the close of business on February 18,
1999 are entitled to vote at the meeting.
STEPHEN S. WEDDLE
Secretary
IMPORTANT
WHETHER YOU OWN ONE SHARE OR MANY, PLEASE SIGN AND RETURN
PROMPTLY THE ENCLOSED PROXY IN THE POSTAGE PAID ENVELOPE
PROVIDED, OR REGISTER YOUR VOTE BY PHONE OR THE INTERNET.
<PAGE>
THE STANLEY WORKS
1000 STANLEY DRIVE
NEW BRITAIN, CONNECTICUT 06053
TELEPHONE (860) 225-5111
April 1, 1999
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREOWNERS
APRIL 28, 1999
Stanley is sending you the accompanying proxy and this proxy
statement on or about April 1, 1999.
Please sign, date, and mail the enclosed proxy in the
envelope provided at your earliest convenience, or register your
vote by phone or the internet.
ELECTION OF DIRECTORS
At the 1999 annual meeting the shareowners will elect three
directors. Stanley's Bylaws require all shareowner nominations
to be made by proper notice given to the Corporation's Secretary
not later than March 29, 1999. The nominations of the Board of
Directors are set forth below. Those elected as directors will
serve until the Annual Meeting of Shareowners indicated, and
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
shareowners as directors. 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.
Under Stanley's rules for retirement of directors, a
director is to retire as of the date of the Annual Meeting of
Shareowners next following his or her seventieth birthday. The
Board has asked Mr. Fiedler to serve one additional year as an
exception to this rule. Mr. Fiedler will be 70 in April 1999 and
his retirement as a director will commence immediately following
the 2000 Annual Meeting.
INFORMATION CONCERNING NOMINEES FOR ELECTION AS DIRECTORS
TERMS EXPIRING AT 2002 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 life member of the Board of Regents
of the University of Hartford and a regent of the University of
California - Berkeley Foundation.
Mr. Brown has been a director since 1985. He is Chair of the
Compensation and Organization Committee and a member of the
Executive and Finance and Pension Committees. He is 65 years old
and owns 36,000 shares.
<PAGE>
(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., and
Reebok International Ltd. Mr. Jackson, a director since May
1995, is a member of the Finance and Pension Committee and the
Compensation and Organization Committee. He is 59 years old and
owns 10,368 shares.
(PHOTO OF KATHRYN D. WRISTON)
KATHRYN D. WRISTON, trustee of the John A. Hartford Foundation,
Practicing Law Institute, and The Northwestern Mutual Life
Insurance Company. She is a director of Santa Fe Energy
Resources Inc., Waccamaw Corporation, and American Arbitration
Association. Mrs. Wriston, a director since April 1996, is Chair
of the Audit Committee and a member of the Board Affairs and
Public Policy, and Executive Committees. She is 60 years old and
owns 15,000 shares.
INFORMATION CONCERNING DIRECTORS CONTINUING IN OFFICE
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
through 1996. He is a director of The Brazil Fund, Scudder Fund,
Inc., Scudder Institutional Fund, Inc., Scudder Pathway Series,
Farmers Investment Trust, Harris Insight Funds, Emerging Mexico
Fund, and PEG Capital Management, Inc., and is 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 Audit Committee. He is 69
years old and owns 62,909 shares.
(PHOTO OF EILEEN S. KRAUS)
EILEEN S. KRAUS, Chairman, Connecticut, Fleet National Bank, a
subsidiary of Fleet Financial Group, 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 BestFoods, Kaman Corporation,
and Yankee Energy System, Inc.
Mrs. Kraus was elected a director in 1993 and is a member of the
Audit, Executive, and Finance and Pension Committees. She is 60
years old and owns 13,196 shares.
<PAGE>
(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 Chair of the Executive Committee. He is 54 years
old and owns 1,408,114 shares.
TERMS EXPIRING AT 2001 ANNUAL MEETING
(PHOTO OF JAMES G. KAISER)
JAMES G. KAISER, majority owner and Chairman of Avenir Partners,
Inc.; retired as President and Chief Executive Officer and a
director of Quanterra Incorporated, a subsidiary jointly owned by
Corning Incorporated and International Technology Inc., where he
served 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 Sunoco, Inc.
Mr. Kaiser has been a director since 1992 and is a member of the
Audit Committee and the Board Affairs and Public Policy
Committee. He is 56 years old and owns 20,780 shares.
(PHOTO OF HUGO E. UYTERHOEVEN)
HUGO E. UYTERHOEVEN, Timken Professor of Business Administration
Emeritus, 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., Degussa - Huls AG. Ecolab,
Inc., and Harcourt General, Inc.
Professor Uyterhoeven has been a director since 1975 and is a
member of the Compensation and Organization Committee and Chair
of the Board Affairs and Public Policy Committee. He is 67 years
old and owns 22,955 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 of
General Electric Company. He is a director of Corrpro Companies
Inc., Paxar Corporation, and Enamelon, Inc.
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. He is 64 years old and
owns 18,593 shares.
<PAGE>
The Board of Directors met eleven times during 1998. The
various Board committees met the number of times shown in
parentheses: Executive (0), Audit (8), Board Affairs and Public
Policy (3), Finance and Pension (5), and Compensation and
Organization (3). 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; attendance for all directors averaged 91%.
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 shareowners. The Committee
recommends directors for board committee membership and as
committee chairs, and recommends director compensation. The
Committee has taken the lead in articulating Stanley's corporate
governance guidelines, preparing a director job description,
establishing a procedure for evaluation of incumbent directors,
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 oversees the
Corporation's administration of Stanley's pension plans.
The Compensation and Organization Committee determines the
compensation of executive officers and of non-officer senior
executives. The Committee also administers the Corporation's
executive compensation plans.
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 $2,000. Non-employee directors may
defer any or all of their fees in the form of Stanley shares or
as cash accruing interest at the treasury bill rate; a director
is required to so defer in the form of Stanley shares so long as
he or she owns fewer than 5,000 shares. It is anticipated that
each non-employee director will annually receive a ten-year
option to purchase 2,000 of the Corporation's shares at an
exercise price equal to the fair market value of such shares at
the date of grant.
<PAGE>
SECURITY OWNERSHIP
No person or group, to the knowledge of the Corporation, owns
beneficially more than five percent of the outstanding common
shares, except as shown in this table. As of December 31, 1998,
Citibank, N.A. owned of record 19.9% of the outstanding common
shares as Trustee under the Corporation's ESOP for the benefit of
the plan participants. The 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 Capital Research and 5,275,000 5.9%
Stock Management Company shares
$2.50 333 South Hope Street (investment
par Los Angeles, CA 90071 advisor to
value various invest-
ment companies)
- -----------------------------------------------------------------
With the exception of Mr. Trani, who owns beneficially 1.6% of
the outstanding common shares, no director, nominee or executive
officer owns more than 1% of the outstanding common shares. The
executive officers and directors as a group own beneficially
approximately 2.5% of the outstanding common shares, and Stanley
estimates present and former employees (including executive
officers) own approximately 32% of the outstanding common shares.
The following table sets forth information as of March 10, 1999
with respect to the shareholdings of the directors, nominees,
each of the executive officers named in the table on page 8, 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 Percent of
Owned Class Owned
- -------------------------------------------------------------
Stillman B. Brown 36,000 (1) *
John A. Cosentino 102,500 (1) *
Edgar R. Fiedler 62,909 (1)(2) *
Mannie L. Jackson 10,368 (1)(2) *
James G. Kaiser 20,780 (1)(2) *
Stef G.H. Kranendijk 2,000 *
Eileen S. Kraus 13,196 (1)(2) *
Kenneth O. Lewis 10,230 (1) *
Paul W. Russo 57,274 (1)(3) *
John M. Trani 1,408,114 (1)(3)(4) 1.6
Hugo E. Uyterhoeven 22,955 (1)(2) *
Stephen S. Weddle 125,050 (1)(3) *
Walter W. Williams 18,593 (1)(2) *
Kathryn D. Wriston 15,000 (1) *
- -------------------------------------------------------------
Directors and 2,189,586 (1)(2)(3)(4)(5) 2.5
executive officers as
a group
- -------------------------------------------------------------
*Less than 1%.
<PAGE>
(1) Includes shares which may be acquired by the exercise of
stock options, as follows: Mr. Trani, 1,200,000; Mr. Cosentino,
100,000; Mr. Lewis, 10,000; Mr. Russo, 49,600; Mr. Uyterhoeven,
5,000; Mr. Weddle, 82,900; Mrs. Wriston, 4,000; each other
non-employee director, 6,000; and all directors and executive
officers as a group, 1,689,168.
(2) Includes the share accounts maintained by Stanley for those
of its directors who have deferred their director fees, as
follows: Mr. Fiedler, 45,509; Mr. Jackson, 4,168; Mr. Kaiser,
9,136; Mrs. Kraus, 6,983; Mr. Uyterhoeven, 16,055; and Mr.
Williams, 1,993; and all directors and executive officers as a
group, 83,844.
(3) Includes shares held as of December 31, 1998 under Stanley's
savings plans, as follows: Mr. Trani, 6,266; Mr. Russo, 2,876;
Mr. Weddle, 30,273; and all directors and executive officers as a
group, 80,899.
(4) Includes the share unit accounts maintained by Stanley, as
follows: Mr. Trani, 200,000; and all directors and executive
officers as a group, 210,000.
(5) Includes the share accounts maintained by Stanley for those
who have deferred their award payments under its long-term stock
incentive plans as follows: all directors and executive officers
as a group, 5,662.
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 four non-employee directors. The
Committee determines the performance and award under the
Management Incentive Compensation Plan ("MICP") for the chief
executive officer and makes recommendations to the Board as to
his salary (the Board then determines such salary). The
Committee, itself, determines the salaries and MICP performance
and awards for executive officers other than the CEO. The
Committee also administers the long-term incentive plans and
makes stock option grants.
OVERVIEW
In addition to providing the benefits under the
Corporation's pension and savings plans generally provided to all
salaried employees in the United States, Stanley has used a
number of elements in compensating its executives: salary;
annual incentives; long-term incentives; ten-year stock options;
and 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 shareowner 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
shareowner approval) and is therefore deductible for federal
income tax purposes by Stanley under Section 162(m) of the
Internal Revenue Code.
<PAGE>
SALARIES
Each year Stanley participates in a survey of salaries and
overall compensation conducted by Hewitt Associates. Hewitt's
1998 survey covers 256 manufacturing corporations including 12 of
those included in the Dow Jones Industrial Diversified Group
Index reflected in the line graph on page 14. From these survey
data, salary ranges are established each year for all U.S. based
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
salary of Mr. Trani is somewhat above the median for these market
survey data. The 1998 salaries of the other U.S. based
executives named in the table on page 8 ranged from about the
median to about 20% above the median for their respective
positions.
ANNUAL INCENTIVE
In 1998 the Committee used the MICP to compensate executives
based on the Corporation's core net earnings, core net earnings
per share, and core return on adjusted capital employed. The
MICP provided for annual incentive awards to 112 selected key
executives for 1998.
LONG-TERM INCENTIVE
The 30-month goals established in 1997 under the 1997 Long-
Term Incentive Plan provide goals of return on capital employed,
core earnings per share over the period, and cash flow over the
period. The Committee believes that if these goals can be
achieved, the returns to shareowners as measured on the graph on
page 14 will be significant.
The Committee has determined to make no further awards under
the 1988 Long-Term Stock Incentive Plan. Accordingly, there will
be no further payments under this plan after the 1994-98 award
cycle.
MARKET APPRECIATION OF THE CORPORATION'S SHARES
The Committee uses stock options to compensate executives
based on market appreciation of Stanley's shares, creating for
executives an identity of interest with the Corporation's
shareowners. The Committee plans to make annual stock option
grants to its executive officers and certain other key employees,
and to make occasional grants to 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 recipients of annual stock option grants. 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 8, two
times for others with corporate titles of vice president or who
are the heads of product groups, and one time for all other
recipients.
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 shareowners,
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
Stillman B. Brown (Chair)
Mannie L. Jackson
Hugo E. Uyterhoeven
Walter W. Williams
<PAGE>
SUMMARY COMPENSATION TABLE
This table shows the compensation earned for service in all
capacities (including director fees for Mr. Trani) during the
last three fiscal years for Stanley's chief executive officer,
its next four most-highly compensated executive officers, and for
John A. Cosentino who would have been included but for the fact
that he was not serving as an executive officer at the end of
1998.
Annual -----Long-Term Compensation------
Compensation -------Awards---------------Payouts
(a) (b) (c) (d) (f) (g) (h) (i)
Name and Year Salary Bonus Restricted Shares LTIP All Other
principal ($) ($) Stock Underlying Payouts compensation
position Award(s)($) Options(#) ($) ($)
- ----------------------------------------------------------------------------
John M. 1998 850,000 900,000 0 200,000 0 111,251
Trani 1997 800,000 900,000 0 1,200,000 0 1,768,172
Chairman 1996 -- -- 5,550,000 -- - --
and CEO
- ----------------------------------------------------------------------------
John A. 1998 314,925 150,000 0 0 0 11,521
Cosentino 1997 50,000 100,000 0 100,000 0 0
VP, 1996 -- -- - -- - --
Ops.
- ----------------------------------------------------------------------------
Stef G.H. 1998 133,333 200,000 0 215,000 0 120,519
Kranendijk1997 -- -- - -- - --
President 1996 -- -- - -- - --
Europe
- ----------------------------------------------------------------------------
Kenneth O.1998 235,833 115,000 0 20,000 0 31,212
Lewis 1997 39,167 0 0 10,000 - 449
VP, Mktg. 1996 -- -- - -- - --
and Brand
Development
- ----------------------------------------------------------------------------
Paul W. 1998 237,500 100,000 0 12,000 0 17,164
Russo 1997 227,500 100,000 0 12,000 0 15,332
VP, 1996 210,000 133,560 0 17,500 0 64,974
Strategy
and Devel-
opment
- ----------------------------------------------------------------------------
Stephen 1998 253,333 145,000 0 15,000 92,390 159,890
S. Weddle 1997 244,500 135,000 0 15,000 177,934 136,483
VP, Gen. 1996 233,000 148,188 0 18,900 0 117,590
Counsel
and
Secretary
- -------------------------------------------------------------------------
(a) Mr. Trani was elected Chairman and Chief Executive Officer
and director December 31, 1996. Mr. Cosentino was elected Vice
President, Operations October 29, 1997; his employment terminated
October 14, 1998. Mr. Kranendijk became President, Europe September
1, 1998. Mr. Lewis was elected Vice President Marketing and Brand
Development November 3, 1997.
(d) Mr. Trani's guaranteed minimum bonus is 90% of his salary.
Mr. Kranendijk's guaranteed minimum bonus is $200,000.
(f) At the end of the year, Mr. Trani's aggregate restricted
share units totaled 200,000 fully vested units on which dividend
equivalents are paid. They had a value, based on the year-end closing
price of $27.75, of $5,550,000.
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; relocation expenses including
gross up for taxes; company contributions to defined contribution
plans (excluding in the case of Messrs. Trani, Lewis, Russo, and
Weddle contributions to the "cornerstone account" defined contribution
plan, which will offset pension benefits described in the tables on
page 12); and life insurance premiums.
<PAGE>
- ------------------------------------------------------------------------
Name Year Above Defined
-market Relocation Contribution Column (i)
interest Expenses Plans Insurance Total
- ------------------------------------------------------------------------
John M. 1998 0 32,350 61,250 17,651 111,251
Trani 1997 0 1,614,636 25,774 127,762 1,768,172
1996 - - - - -
- ------------------------------------------------------------------------
John A. 1998 0 0 4,000 7,521 11,521
Cosentino 1997 0 0 0 0 0
1996 - - - - -
- ------------------------------------------------------------------------
Stef G.H. 1998 0 109,183 11,336 0 120,519
Kranendijk1997 - - - - -
1996 - - - - -
- ------------------------------------------------------------------------
Kenneth O.1998 0 26,338 0 4,874 31,212
Lewis 1997 0 449 0 0 449
1996 - - - - -
- ------------------------------------------------------------------------
Paul W. 1998 0 0 12,443 4,721 17,164
Russo 1997 0 0 12,637 2,695 15,332
1996 0 57,529 4,750 2,695 64,974
- ------------------------------------------------------------------------
Stephen S.1998 131,028 0 13,592 15,270 159,890
Weddle 1997 111,989 0 13,744 10,750 136,483
1996 95,717 0 11,123 10,750 117,590
<PAGE>
OPTION GRANTS IN 1998
The stock options granted in 1998 were granted on October 21 and are
not exercisable until the first anniversary of the date of grant. In
addition, in connection with his joining Stanley Mr. Kranendijk
received options covering 65,000 and 125,000 shares on July 15,
exercisable in 12 months and 60 months, respectively.
<TABLE>
<CAPTION>
Potential realizable value at
assumed annual rates of stock
price appreciation for option
Individual Grants term
- ------------------------------------------------------------------------
Number of
shares % of total
underlying options
options granted to Expira-
granted employees Exercise tion
Name (#) in fiscal ($/share) date 5% 10%
(a) (b) year (c) (d) (e) (f) (g)
<S> <C> <C> <C> <C> <C> <C>
J.M. Trani 200,000 16.1% $28.47 10/20/08 3,580,926 9,074,770
- ------------------------------------------------------------------------
S.G.H. 190,000 15.3% 42.88 7/14/08 5,123,730 12,984,539
Kranendijk 25,000 2.0% 28.47 10/20/08 447,616 1,134,346
- ------------------------------------------------------------------------
K. O. Lewis 20,000 1.6% 28.47 10/20/08 358,093 907,477
- ------------------------------------------------------------------------
P.W. Russo 12,000 1.0% 28.47 10/20/08 214,856 544,486
- ------------------------------------------------------------------------
S.S. Weddle 15,000 1.2% 28.47 10/20/08 268,569 680,608
- ------------------------------------------------------------------------
All
Shareowners ---- ---- ---- ---- 1,590,029,568 4,029,447,108
(based on market
price on October
21, 1998)
Named executive
officers'
percentage of
realizable value
gained by
all shareowners ---- ---- ---- ---- .6% .6%
</TABLE>
AGGREGATED OPTION EXERCISES IN 1998 AND 1998 YEAR-END OPTION VALUES
- -----------------------------------------------------------------
Name Shares Value Number of shares Value of
(a) acquired realized underlying unexercised
on exercise ($) unexercised in-the-money
(#) (c) options at options at
(b) fiscal year-end fiscal year end
(#) ($)
exercisable/ exercisable/
unexercisable unexercisable
(d) (e)
- -------------------------------------------------------------------
J.M.
Trani 0 $ 0 1,200,000/200,000 $188,000/0
- -------------------------------------------------------------------
J. A.
Cosentino 0 0 100,000/0 0/0
- -------------------------------------------------------------------
S. G.H.
Kranendijk 0 0 0/215,000 0/0
- -------------------------------------------------------------------
K. O.
Lewis 0 0 10,000/20,000 0/0
- -------------------------------------------------------------------
P.W.
Russo 0 0 49,600/12,000 95,475/0
- -------------------------------------------------------------------
S.S.
Weddle 3,200 41,102 82,900/15,000 323,400/0
- -------------------------------------------------------------------
<PAGE>
Long-Term Incentive Plan - Awards in Last Fiscal Year
In 1998, the Compensation and Organization Committee of the Board
approved a contingent long-term financial performance incentive
award to Stef G.H. Kranendijk based on the attainment of specific
consolidated financial performance measurements (core earnings
per share, core return on capital employed, and cash flow, all
measured on a cumulative basis from second-half 1997 through 1999
and adjusted to remove the effect of unusual events). This award
will be subject to forfeiture if Mr. Kranendijk's employment
terminates before December 31, 1999 for any reason other than
disability, death, or retirement.
The following table shows the percentage of Mr. Kranendijk's
average annual salary and bonus for January 1, 1997 through
December 31, 1999 that would be payable in the year 2000 under
this award if the Company precisely attained the threshold,
target, or maximum goals set by the Committee for all of the
applicable performance measurements.
- ------------------------------------------------------------------------
Potential Payments In Year 2000 as a Percentage
of Aggregate Salary and Annual Bonuses for 1997-1999
----------------------------------------------------
(a) (c) (d) (e) (f)
Compensation
Name of Measurement Threshold Target Maximum
Executive Period Payment (%) Payment (%) Payment
(%)
- ------------------------------------------------------------------------
Stef G.H.Kranendijk 1/97-12/99 25% 50% 100%
- ------------------------------------------------------------------------
RETIREMENT BENEFITS
Employees in the United States are generally eligible to retire
with unreduced pension benefits at age 65. The following table
shows the approximate annual pension generally provided to U.S.
employees employed prior to July 1, 1997 including Messrs. Trani,
Russo, and Weddle who have credited years of service of 11 years,
2 years, and 19 years, respectively. Stanley has determined no
service accruals will be made under this pension plan after
January 31, 1998; instead, the company makes contributions to a
"cornerstone account" defined contribution plan. Pensions are
paid monthly for life or as a lump sum (pension payments are
guaranteed to total at least as much as the lump sum would have
been). The amounts shown are in addition to any benefits the
employee may be entitled to under Social Security and include
amounts restored by Stanley's supplemental retirement plan.
Covered compensation is salary and bonus, which in the case of
Messrs. Trani, Russo, and Weddle are the amounts shown in columns
(c) and (d) of the summary compensation table on page 8.
- -----------------------------------------------------------------
Average
annual
compensation Approximate annual pension upon retirement
of the at age 65
highest 5 --------------------------------------------------
consecutive 15 20 25 30 35
of the last
10 years of
employment
- -----------------------------------------------------------------
years years years years years
of of of of of
service service service service service
- -----------------------------------------------------------------
$ 200,000 $36,386 $48,515 $60,643 $72,772 $84,900
500,000 95,943 127,925 159,906 191,887 223,868
800,000 155,501 207,335 259,168 311,002 362,835
1,100,000 215,058 286,745 358,431 430,117 501,803
1,400,000 274,616 366,155 457,693 549,232 640,770
1,700,000 334,173 445,565 556,956 668,347 779,738
2,000,000 393,731 524,975 656,218 787,462 918,705
- -----------------------------------------------------------------
The following table shows the approximate annual pension provided
to a number of executives including Messrs. Trani, Lewis, Russo,
and Weddle (who have credited years of service of 12 years, 1
year, 3 years, and 20 years, respectively) under Stanley's
executive retirement program (inclusive of the pension shown in
the table above and inclusive of the "cornerstone account"
defined contribution plan account balance) which provides
unreduced benefits at age 60. Pensions are paid monthly for life
or as a lump sum. The amounts shown include any benefits the
employee may be entitled to under Social Security. Covered
compensation is salary and bonus, which in the case of Messrs.
Trani, Lewis, Russo, and Weddle are the amounts shown in columns
(c) and (d) of the summary compensation table on page 8.
- -----------------------------------------------------------------
Average
annual
compensation Approximate annual pension upon retirement
of the at age 60
highest 36 --------------------------------------------------
consecutive 15 20 25 30 35
months
- -----------------------------------------------------------------
years years years years years
of of of of of
service service service service service
- -----------------------------------------------------------------
$ 200,000 $ 70,000 $ 90,000 $100,000 $ 100,000 $ 100,000
500,000 175,000 225,000 250,000 250,000 250,000
800,000 280,000 360,000 400,000 400,000 400,000
1,100,000 385,000 495,000 550,000 550,000 550,000
1,400,000 490,000 630,000 700,000 700,000 700,000
1,700,000 595,000 765,000 850,000 850,000 850,000
2,000,000 700,000 900,000 1,000,000 1,000,000 1,000,000
- -----------------------------------------------------------------
<PAGE>
The following table shows the approximate minimum annual pension
provided to Mr. Trani (who for these purposes is credited with 18
years of service as of his start at Stanley and therefore is
deemed to have 20 credited years of service) under an enhanced
retirement program provided to him which provides benefits of
1.75% times years of service times average pay, with a maximum
benefit at age 60 (March 15, 2005 after 26 and one-half years of
deemed service)of 46.375% of average pay, less $83,280. The
amounts shown are inclusive of the pension he would receive under
the immediately preceding table (inclusive of the "cornerstone
account" defined contribution plan account balance and will only
be paid if they yield a larger pension than the benefits shown in
the immediately preceding table. The amounts shown are in
addition to any benefits Mr. Trani may be entitled to under
Social Security. Covered compensation is salary and bonus, i.e.,
the amounts shown in columns (c) and (d) of the summary
compensation table on page 8.
- -----------------------------------------------------------------
Average
annual
compensation Approximate annual pension upon retirement
of the at age 60
highest 36 --------------------------------------------------
consecutive 15 20 25 30 35
months
- -----------------------------------------------------------------
years years years years years
of of of of of
service service service service service
- -----------------------------------------------------------------
$ 200,000 $ 9,470 $ 9,470 $ 9,470 $ 9,470 $ 9,470
500,000 148,595 148,595 148,595 148,595 148,595
800,000 287,720 287,720 287,720 287,720 287,720
1,100,000 426,845 426,845 426,845 426,845 426,845
1,400,000 565,970 565,970 565,970 565,970 565,970
1,700,000 705,095 705,095 705,095 705,095 705,095
2,000,000 844,220 844,220 844,220 844,220 844,220
- -----------------------------------------------------------------
<PAGE>
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
On December 31, 1996 Mr. Trani and Stanley entered into
a three-year contract (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 90% of his salary; for him to
receive a stock option grant covering one million shares 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. In
connection with the termination of his employment on October 14,
1998, Mr. Cosentino and Stanley entered into an agreement
providing for him to be paid 1998 salary and bonus as reflected
in the table on page 8 and for his salary to continue for the
twelve-and-one-half-month period beginning January 1999. In
connection with his joining Stanley on September 1, 1998, Mr.
Kranendijk and Stanley entered into an agreement, terminable at
any time by either party, providing for Mr. Kranendijk to receive
a stock option each October covering a minimum of 25,000 shares,
to receive a cash compensation gross up for taxes in certain
circumstances, and to receive a minimum annual bonus of $200,000.
Stanley's executive officers other than Mr. Trani have agreements
with Stanley, which become effective only in the event of a
change in control of the Corporation, providing for payments of
up to two years' compensation in certain cases in the event of
the officer's resignation or involuntary termination. 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.
<PAGE>
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
shareowner 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 18 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
1993 1994 1995 1996 1997 1998
- -----------------------------------------------------------------
Stanley $100 $ 83.18 $123.81 $133.11 $237.01 $142.35
- -----------------------------------------------------------------
S&P 500 100 101.32 139.40 171.40 228.59 293.92
- -----------------------------------------------------------------
DJ Ind'l Dvsf'd 100 91.72 120.11 155.40 203.69 234.33
- -----------------------------------------------------------------
Assumes $100 invested on December 31, 1993 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 18 corporations: Allied Signal Inc.,
Cooper Industries, Inc., Crane Co., Danaher Corporation, Dover
Corporation, FMC Corporation, Harsco Corporation, Illinois Tool
Works Inc., Ingersoll-Rand Company, ITT Industries, Inc.,
National Service Industries, Inc., Parker-Hannifin Corporation,
PPG Industries, Inc., Raychem Corporation, The Stanley Works,
Tenneco Inc., The Timken Company, and Tyco International Ltd.
<PAGE>
APPROVAL OF INDEPENDENT AUDITORS
The second item of business to be considered is the approval
of independent auditors for the Corporation for the 1999 fiscal
year. Subject to the action of the shareowners at the Annual
Meeting, the Board of Directors of the Corporation, on
recommendation of the Audit Committee, has appointed 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 shareowners.
Ernst & Young and predecessor firms have been the
Corporation's auditors for the last 55 years. Total Ernst &
Young fees for 1998 were $4,382,300. 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 1999.
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 shareowner who has given notice to Stanley's Secretary received
after January 14, 1999 and before February 15, 1999; 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.
Shareowner proposals for 2000
Shareowner proposals intended to be presented to Stanley's
2000 Annual Meeting must be received by the Secretary not later
than December 3, 1999 for inclusion in the proxy statement and
form of proxy relating to such meeting, and must be received
after January 28, 2000 and before February 29, 2000 to otherwise
be properly presented to the meeting.
Voting
Stanley has only one class of shares outstanding. The
record date for determining the shareowners who are entitled to
receive the meeting notice and to vote at the meeting is the
close of business on February 18, 1999. As of February 18, 1999,
88,985,400 common shares of $2.50 par value were outstanding
(exclusive of shares held in treasury).
<PAGE>
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 approval of Ernst & Young LLP. 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 prior to the meeting by filing a
proxy with a later date. 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 election of the three nominees for director and for
approval of Ernst & Young LLP as the independent auditors of the
Corporation.
Telephone and Internet Voting
To vote by telephone, call toll-free on a touch-tone phone
1-877-PRX-VOTE (1-877-779-8683 (there is no charge for this
call)). For shareowners residing outside the United States, call
collect on a touch-tone phone 1-201-536-8073; enter the control
number located on your proxy card and follow the recorded
instructions.
To vote by internet, go to the site
http://www.eproxyvote/com/swk; enter the control number located
on your proxy card and follow the instructions provided.
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 $6,500. 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
Through inadvertence the purchase by John A. Cosentino of 2,500
shares in late June was reported on a Form 4 approximately 30
days late in early August. Through inadvertence a Form 3 was not
filed in late December reflecting Stef G.H. Kranendijk's becoming
an executive officer; upon discovery in February this Form 3 was
promptly filed.
For the Board of Directors
STEPHEN S. WEDDLE
Secretary
<PAGE>
Directions to Stanley's Annual Meeting of Shareowners
[Map]
Directions
Traveling on I-71 NORTH
Exit Fourth Street
Turn Left on Fourth Street
Turn Left on Chestnut Street
Turn Right on High Street
Turn Right on Nationwide Blvd.
South To I-670 WEST
Third Street Exit
Turn Right on Chestnut Street
Turn Right on High Street
Turn Right on Nationwide Blvd.
TRAVELING ON I-70 WEST
Exit Fourth Street (Exit 100B)
Turn Right on Fourth Street
Turn Left on Chestnut Street
Turn Right on High Street
Turn Right on Nationwide Blvd.
EAST
Exit Fourth Street
Turn Right on Fourth Street
Turn Left on Chestnut Street
Turn Right on High Street
Turn Right on Nationwide Blvd.
FROM PORT COLUMBUS AIRPORT TO DOWNTOWN
I-670 West to Third Street Exit
Turn Right on Chestnut Street
Turn Right on High Street
Turn Right on Nationwide Blvd.
TO PORT COLUMBUS AIRPORT
Turn Right on Nationwide Blvd.
Left on Fourth Street
I-670-East to Columbus Airport
<PAGE>
STANLEY(R) LOGO)
NOTICE OF ANNUAL MEETING OF SHAREOWNERS AND PROXY STATEMENT
MEETING DATE: APRIL 28, 1999
<PAGE>
THE STANLEY WORKS
PROXY FOR ANNUAL MEETING
APRIL 28, 1999
The undersigned appoints Edgar R. Fiedler, John M. Trani, 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
Shareowners 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
THE SIGNER. IF SIGNED AND RETURNED WITH NO DIRECTION, THIS PROXY
WILL BE VOTED FOR ITEMS 1 and 2.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE, OR REGISTER YOUR VOTE IMMEDIATELY VIA PHONE OR
INTERNET.
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.
[STANLEY LOGO]
Dear Fellow Shareowner:
The Board of Directors appreciates and encourages shareowner
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 that you sign, date, and
mail the enclosed proxy in the envelope provided at your earliest
convenience or register your vote by phone or by Internet.
Thank you for your cooperation.
Very truly yours,
John M. Trani
Chairman and Chief Executive Officer
<PAGE>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
ITEM 1. To elect three Directors.
Nominees:
FOR All WITH- FOR ALL
NOMINEES HOLD EXCEPT
(01)Stillman B. Brown
(02)Mannie L. Jackson / / / / / /
(03)Kathryn D. Wriston
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. Your shares will be voted for the remaining
nominee(s).
FOR AGAINST ABSTAIN
ITEM 2. Approve Ernst & Young LLP
as independent auditors / / / / / /
for the year 1999.
Please sign exactly as indicated CONFIDENTIAL VOTING:
hereon. When signing as attorney MARK BOX AT RIGHT IF YOU WISH
executor, trustee, etc., please THIS VOTE TO REMAIN
give full title as such. CONFIDENTIAL. / /
- ----------Shareowner sign here Mark box at right if an
- ----------Co-owner sign here address change or comment has
been noted on the reverse side
of this card. / /
The Board of Directors
recommends a vote FOR Items 1
and 2.
Vote by Telephone Vote by Internet
It's fast, convenient, and It's fast, convenient, and your
immediate! vote is immediately confirmed and
Call Toll-Free on a Touch- posted.
Tone Phone
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying 1. Read the accompanying Proxy
Proxy Statement and this Statement and this Proxy Card.
Proxy Card.
2. Call the toll-free number 2. Go the Website
1-877-PRX-VOTE(1-877-779-8683). http://www.eproxyvote.com/swk.
There is NO CHARGE for this
call. For shareowners residing
outside the United States, call
collect on a touch-tone phone
1-201-536-8073.
3. Enter your Control Number 3. Enter your Control Number
located on this Proxy Card. located on this Proxy Card.
4. Follow the recorded 4. Follow the instructions
instructions. provided.
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to
http://www.eproxyvote.com/swk
anytime!
Do not return your Proxy Card if you are voting by Telephone or
Internet
