<PAGE>
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 Section 240.14a-11(c) or Section 240.14a-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)(4) 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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
<PAGE>
[LOGO OF STANLEY]
The Stanley Works
March 14, 2000
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 19, 2000, at the New Britain
High School, 110 Mill Street, New Britain, Connecticut (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 2000.
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 TELEPHONE 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
March 14, 2000
To the Shareowners:
The Annual Meeting of Shareowners of The Stanley Works will be held at the New
Britain High School, 110 Mill Street, New Britain, Connecticut on Wednesday,
April 19, 2000, at 9:30 a.m. for the following purposes:
(1) To elect two directors.
(2) To approve Ernst & Young LLP as independent auditors of the
Corporation for the year 2000.
(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 10, 2000 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 TELEPHONE
OR THE INTERNET.
<PAGE>
THE STANLEY WORKS
1000 Stanley Drive
New Britain, Connecticut 06053
Telephone (860) 225-5111
March 14, 2000
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREOWNERS
APRIL 19, 2000
Stanley is sending you the accompanying proxy and this proxy statement on or
about March 14, 2000.
Please sign, date, and mail the enclosed proxy in the envelope provided at your
earliest convenience, or register your vote by telephone or the internet.
ELECTION OF DIRECTORS
At the 2000 annual meeting the shareowners will elect two directors. Stanley's
Bylaws require all shareowner nominations to be made by proper notice given to
the Corporation's Secretary not later than March 20, 2000. 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. Both 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.
INFORMATION CONCERNING NOMINEES FOR ELECTION AS DIRECTORS
TERM EXPIRING AT 2003 ANNUAL MEETING
[PHOTO OF EILEEN S. KRAUS]
EILEEN S.KRAUS, Chairman, Connecticut, Fleet National Bank, a subsidiary of
Fleet Boston Financial, 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, ConnectiCare Holding Company, Inc.,
ConnectiCare, Inc., Kaman Corporation, and Yankee Energy System, Inc.
Mrs. Kraus was elected a director in 1993 and is a member of the Executive,
Compensation and Organization, and Finance and Pension Committees. She is 61
years old and owns 16,540 shares.
1
<PAGE>
INFORMATION CONCERNING NOMINEES FOR ELECTION AS DIRECTORS
TERM EXPIRING AT 2003 ANNUAL MEETING
[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 55 years old and owns
1,616,215 shares.
INFORMATION CONCERNING DIRECTORS CONTINUING IN OFFICE
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
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 57 years old and owns
24,401 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 68 years old and owns 26,799 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 Audit, Board
Affairs and Public Policy, and the Compensation and Organization Committees. He
is 65 years old and owns 22,004 shares.
2
<PAGE>
INFORMATION CONCERNING DIRECTORS CONTINUING IN OFFICE
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 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 66 years old and owns 40,000 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 in 1995 as Senior Vice
President Corporate Marketing and Corporate Administration of Honeywell Inc.
after a 27 year career. He is a director of Ashland Inc., Jostens, Inc., and
Reebok International Ltd.
Mr. Jackson, a director since 1995, is a member of the Finance and Pension
Committee and the Compensation and Organization Committee. He is 60 years old
and owns 15,571 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 Snyder Corporation, American Arbitration Association, and HomePlace
of America, Inc.
Mrs. Wriston, a director since 1996, is Chair of the Audit Committee and a
member of the Board Affairs and Public Policy Committee and the Executive
Committee. She is 61 years old and owns 17,000 shares.
3
<PAGE>
BOARD INFORMATION
Meetings. The Board of Directors met ten times during 1999. The various Board
committees met the number of times shown in parentheses: Executive (0), Audit
(8), Board Affairs and Public Policy (2), Finance and Pension (3), and
Compensation and Organization (3). The members of the Board serve on the
committees described in their biographical material on pages 1, 2, and 3. 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 94%.
Executive. 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.
Audit. 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 to attend.
Board Affairs and Public Policy. 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, and reviews and approves policy guidelines on charitable contributions.
Finance and Pension. 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.
Compensation and Organization. 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.
Compensation. 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 five-year 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 2,500 of the
Corporation's shares at an exercise price equal to the fair market value of such
shares at the date of grant.
4
<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, 1999, Citibank, N.A. owned of record 18.4% 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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
(1) Title of (2) Name and address of (3) Amount and nature of (4) Percent
class beneficial owner beneficial ownership of class
- ------------ ----------------------- ------------------------ ------------
<S> <C> <C> <C>
Common Stock Capital Research & Mgmt. Co. 7,975,000 shares 8.9%
$2.50 par value 333 South Hope Street (power to dispose)
Los Angeles, CA 90071
Common Stock FMR Corp. 4,998,766 shares 5.6%
$2.50 par value 82 Devonshire Street (3,021,318 power to vote)
Boston, MA 02109 (4,998,766 power to dispose)
Common Stock Pacific Financial Research, Inc. 4,716,800 shares 5.3%
$2.50 par value 9601 Wilshire Boulevard (power to dispose)
Beverly Hills, CA 90210
Common Stock T. Rowe Price Associates, Inc. 5,066,777 shares 5.6%
$2.50 par value 100 E. Pratt Street (1,058,236 power to vote)
Baltimore, MD 21202 (5,066,777 power to dispose)
- -----------------------------------------------------------------------------------------------------
</TABLE>
With the exception of Mr. Trani, who owns beneficially 1.8% 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 2.8% of the outstanding common shares, and
Stanley estimates present and former employees (including executive officers)
own approximately 30% of the outstanding common shares. The following table sets
forth information as of March 10, 2000 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):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Common Percent
Shares of Class
Name Owned Owned
- -----------------------------------------------------------------------------------
<S> <C> <C>
Stillman B. Brown ......................... 40,000 (1) *
Edgar R. Fiedler .......................... 67,717 (1) (2) *
Mannie L. Jackson ......................... 15,571 (1) (2) *
James G. Kaiser ........................... 24,401 (1) (2) *
Stef G. H. Kranendijk ..................... 92,000 (1) *
Eileen S. Kraus ........................... 16,540 (1) (2) *
Kenneth O. Lewis .......................... 30,943 (1) (3) *
James M. Loree ............................ 80,108 (3) (4) *
John M. Trani ............................. 1,616,215 (1) (3) (4) 1.8
Hugo E. Uyterhoeven ....................... 26,799 (1) (2) *
Stephen S. Weddle ......................... 140,460 (1) (3) *
Walter W. Williams ........................ 22,004 (1) (2) *
Kathryn D. Wriston ........................ 17,000 (1) *
Directors and executive officers as a group 2,531,990 (1) (2) (3) (4) (5) 2.8
- -----------------------------------------------------------------------------------
</TABLE>
* Less than 1%
5
<PAGE>
(1) Includes shares which may be acquired by the exercise of stock options, as
follows: Mr. Trani, 1,400,000; Mr. Kranendijk, 90,000; Mr. Lewis, 30,000;
Mr. Uyterhoeven, 7,000; Mr. Weddle, 94,700; Mrs. Wriston, 6,000; each other
non-employee director, 8,000; and all directors and executive officers as a
group, 1,941,542. The options held by non-employee directors are out of the
money except for options covering an aggregate of 5,000 shares at $20.16
held by five directors.
(2) Includes the share accounts maintained by Stanley for those of its
directors who have deferred their director fees, as follows: Mr. Fiedler,
48,317; Mr. Jackson, 5,371; Mr. Kaiser, 10,757; Mrs. Kraus, 8,320; Mr.
Uyterhoeven, 17,899; and Mr. Williams, 3,404; and all directors and
executive officers as a group, 94,068.
(3) Includes shares held as of December 31, 1999 under Stanley's savings plans,
as follows: Mr. Trani, 13,770; Mr. Loree, 108; Mr. Lewis, 200; Mr. Weddle,
32,660; and all directors and executive officers as a group, 79,448.
(4) Includes the share unit accounts maintained by Stanley, as follows: Mr.
Trani, 200,000; Mr. Loree, 80,000; and all directors and executive officers
as a group, 286,000.
(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, 8,406.
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 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 other than
salary 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.
6
<PAGE>
Salaries
Each year Stanley participates in a survey of salaries and overall compensation
conducted by Hewitt Associates. Hewitt's 1999 survey covers 50 manufacturing
corporations including 5 of those included in the Peer Group reflected in the
line graph on page 13. 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 1999 salaries of the other
U.S. based executives named in the table on page 8 ranged from about the median
to about 30% below the median for their respective positions.
Annual Incentive
In 1999 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 131
selected key executives for 1999.
Long-Term Incentive
The 30-month goals established in 1997 under the 1997 Long-Term Incentive Plan
provided goals of return on capital employed, core earnings per share over the
period, and cash flow over the period.
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. 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; two times for the others appearing in the table on
page 8, the other executive officers, and certain heads of product groups; and
one time for all other participants in the 1997 Long-Term Incentive Plan.
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
Eileen S. Kraus
Hugo E. Uyterhoeven
Walter W. Williams
7
<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 and its next four most-highly compensated
executive officers.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
ANNUAL
COMPENSATION AWARDS PAYOUTS
-------------------------------------------------------------------
(a) (b) (c) (d) (f) (g) (h) (i)
Restricted Shares LTIP All Other
Name and Stock Underlying Payouts Compensation
Principal Position Year Salary ($) Bonus ($) Award(s) ($) Options (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John M. Trani 1999 925,000 1,400,000 0 200,000 1,684,375 86,436
Chairman 1998 850,000 900,000 0 200,000 0 111,251
and CEO 1997 800,000 900,000 0 1,200,000 0 1,768,172
Stef G. H. Kranendijk 1999 402,083 200,000 0 35,000 164,965 59,558
President, 1998 133,333 200,000 0 215,000 0 120,519
Europe 1997 -- -- -- -- -- --
Kenneth O. Lewis 1999 245,000 115,000 0 30,000 218,750 10,953
Vice President, 1998 235,833 115,000 0 20,000 0 31,212
Marketing and 1997 39,167 0 0 10,000 -- 449
Brand Development
James M. Loree 1999 148,958 687,796 2,372,504 150,000 0 25,599
VP Finance 1998 -- -- -- -- -- --
and CFO 1997 -- -- -- -- -- --
Stephen S. Weddle 1999 261,250 145,000 0 15,000 316,993 209,471
VP, General Counsel 1998 253,333 145,000 0 15,000 92,390 159,890
and Secretary 1997 244,500 135,000 0 15,000 177,934 136,483
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Mr. Kranendijk became President, Europe September 1, 1998. Mr. Lewis was
elected Vice President Marketing and Brand Development November 3, 1997.
Mr. Loree was elected VP Finance and CFO July 19, 1999.
(d) Mr. Trani's guaranteed minimum bonus is 90% of his salary. Mr. Kranendijk's
guaranteed minimum bonus is $200,000. Mr. Loree's MICP was $225,000; the
balance resulted from sign-on and make-whole payments in connection with
his being hired.
(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,
with a value, based on the year-end closing price of $30.125, of
$6,025,000. At the end of the year, Mr. Loree's aggregate restricted share
units totaled 80,000 shares, 34,000 of which are vested, 17,670 vest in
2000, 17,670 vest in 2001, and 10,660 vest in 2002, and on which dividend
equivalents are paid; they have a value, based on the year-end closing
price of $30.125, of $2,410,000.
8
<PAGE>
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,
Loree, and Weddle) contributions to the "cornerstone account" defined
contribution plan, which will offset pension benefits described in the tables at
the bottom of page 11 and on page 12; and life insurance premiums.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Above- Defined
Market Relocation Contribution Column (i)
Name Year Interest Expenses Plans Insurance Total
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John M. Trani 1999 0 0 63,875 22,561 86,436
1998 0 32,350 61,250 17,651 111,251
1997 0 1,614,636 25,774 127,762 1,768,172
Stef G. H. Kranendijk 1999 0 0 59,558 0 59,558
1998 0 109,183 11,336 0 120,519
1997 -- -- -- -- --
Kenneth O. Lewis 1999 0 0 5,717 5,236 10,953
1998 0 26,338 0 4,874 31,212
1997 0 449 0 0 449
James M. Loree 1999 0 17,311 2,833 5,455 25,599
1998 -- -- -- -- --
1997 -- -- -- -- --
Stephen S. Weddle 1999 179,364 0 14,175 15,932 209,471
1998 131,028 0 13,592 15,270 159,890
1997 111,989 0 13,744 10,750 136,483
</TABLE>
9
<PAGE>
Option Grants in 1999
The stock options granted in 1999 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. Loree received options covering 150,000
shares on July 19, one-third exercisable on each of the first, second, and third
anniversaries of grant.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants Price Appreciation
for Option Term
- ------------------------------------------------------------------------------------------------------------------
Number of % of Total
Shares Options
Underlying Granted to
Options Employees Exercise Expiration
Name Granted (#) in Fiscal ($/Share) Date 5% 10%
Year
(a) (b) (c) (d) (e) (f) (g)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. M. Trani 200,000 10.4% $24.91 10/20/09 $ 3,133,153 $ 7,940,024
S. G. H. Kranendijk 35,000 1.8% 24.91 10/20/09 548,301 1,389,504
K. O. Lewis 30,000 1.6% 24.91 10/20/09 469,972 1,191,003
J. M. Loree 150,000 7.8% 29.66 7/18/09 2,797,603 7,089,675
S. S. Weddle 15,000 .8% 24.91 10/20/09 234,986 595,501
All Shareowners -- -- -- -- 1,400,136,721 3,548,221,351
(based on market price
on October 21, 1999)
Named executive
officers' percentage
of realizable value
gained by all
shareowners -- -- -- -- .5% .5%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Aggregated Option Exercises in 1999 and 1999 Year-End Option Values
<TABLE>
<CAPTION>
Number of Value of
Shares Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares Fiscal Year-End (#) Fiscal Year-End ($)
Acquired on Value
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
(a) (b) (c) (d) (e)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J.M. Trani 0 $ 0 1,400,000/200,000 $2,894,000/1,043,740
S. G. H. Kranendijk 0 0 90,000/160,000 41,405/182,655
K. O. Lewis 0 0 30,000/30,000 33,100/156,450
J. M. Loree 0 0 0/150,000 0/70,305
S.S. Weddle 3,200 53,500 79,700/15,000 432,872/78,225
- ---------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
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 and Weddle who have credited years of service of 11
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 and Weddle are the amounts shown in columns (c) and (d) of the
summary compensation table on page 8.
<TABLE>
<CAPTION>
Average Annual
Compensation for Approximate Annual Pension
the Highest 5 Upon Retirement at Age 65
Consecutive of the --------------------------------------------------------------------
Last 10 Years 15 Years of 20 Years of 25 Years of 30 Years of 35 Years of
of Employment Service Service Service Service Service
- ------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 400,000 . . . . . $ 75,887 $101,183 $126,478 $ 151,774 $ 177,070
800,000 . . . . . 155,297 207,063 258,828 310,594 362,360
1,200,000 . . . . . 234,707 312,943 391,178 469,414 547,650
1,600,000 . . . . . 314,117 418,823 523,528 628,234 732,940
2,000,000 . . . . . 393,527 524,703 655,878 787,054 918,230
2,400,000 . . . . . 472,937 630,583 788,228 945,874 1,103,520
2,800,000 . . . . . 552,347 736,463 920,578 1,104,694 1,288,810
- ---------------------------------------------------------------------------------------------
</TABLE>
The following table shows the approximate annual pension provided to a number of
executives including Messrs. Trani, Lewis, Loree, and Weddle (who have credited
years of service of 13 years, 2 years, 0 years, and 21 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, and Weddle are the
amounts shown in columns (c) and (d) of the summary compensation table on page 8
and in the case of Mr. Loree equal $373,958.
<TABLE>
<CAPTION>
Average Annual Approximate Annual Pension
Compensation for Upon Retirement at Age 60
the Highest 36 --------------------------------------------------------------------
Consecutive 15 Years of 20 Years of 25 Years of 30 Years of 35 Years of
Months Service Service Service Service Service
- ---------------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
$ 400,000 . . . . . $140,000 $ 180,000 $ 200,000 $ 200,000 $ 200,000
800,000 . . . . . 280,000 360,000 400,000 400,000 400,000
1,200,000 . . . . . 420,000 540,000 600,000 600,000 600,000
1,600,000 . . . . . 560,000 720,000 800,000 800,000 800,000
2,000,000 . . . . . 700,000 900,000 1,000,000 1,000,000 1,000,000
2,400,000 . . . . . 840,000 1,080,000 1,200,000 1,200,000 1,200,000
2,800,000 . . . . . 980,000 1,260,000 1,400,000 1,400,000 1,400,000
- ---------------------------------------------------------------------------------------------
</TABLE>
11
<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 21 credited years of service)
under an enhanced retirement program provided to him which at age 60 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 he 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.
<TABLE>
<CAPTION>
Average Annual Approximate Annual Pension
Compensation for Upon Retirement at Age 60
the Highest 36 --------------------------------------------------------------------
Consecutive 15 Years of 20 Years of 25 Years of 30 Years of 35 Years of
Months Service Service Service Service Service
- ---------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 400,000 . . . . . $ 105,000 $ 140,000 $ 175,000 $ 210,000 $ 245,000
800,000 . . . . . 210,000 280,000 350,000 420,000 490,000
1,200,000 . . . . . 315,000 420,000 525,000 630,000 735,000
1,600,000 . . . . . 420,000 560,000 700,000 840,000 980,000
2,000,000 . . . . . 525,000 700,000 875,000 1,050,000 1,225,000
2,400,000 . . . . . 630,000 840,000 1,050,000 1,260,000 1,470,000
2,800,000 . . . . . 735,000 980,000 1,225,000 1,470,000 1,715,000
- ---------------------------------------------------------------------------------------------
</TABLE>
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 in each of those three years 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 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. Messrs. Lewis, Loree, and Weddle
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.
12
<PAGE>
Comparison of 5 Years' Cumulative Total Return Among The Stanley Works, S&P 500
Index, Peer Group, 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 Peer Group. The Peer Group is a group of 13
companies, including Stanley, that serve the same markets Stanley serves and
many of which compete with one or more product lines of Stanley. Stanley has
compared itself for some time with the Peer Group companies. These companies are
a more relevant comparison than the Dow Jones Industrial Diversified Group Index
(which includes many companies that bear little relationship to Stanley except
that they are manufacturers) that has been included in this line graph in past
proxy statements. To show the effect of this change from the DJ Industrial
Diversified Group Index to the Peer Group, the total return of both is included
in the line graph for reference. Total return assumes reinvestment of dividends.
The Stanley Works
Comparison of 5 Year Cumulative Total Return
[GRAPH]
The points in the above table are as follows:
end end end end end end
1994 1995 1996 1997 1998 1999
Stanley $100 $148.84 $160.04 $284.93 $171.12 $191.51
S&P 500 100 137.58 169.17 225.60 290.08 351.11
Peer Group 100 130.72 156.28 204.24 223.76 201.78
DJ Ind'l Dvsf'd 100 130.95 169.43 222.09 255.49 277.63
Assumes $100 invested on December 31, 1994 in Stanley's common stock, S&P 500
Index, the Peer Group and Dow Jones Industrial Diversified Group Index. The Peer
Group consists of the following 13 corporations: Armstrong World Industries,
Inc., The Black & Decker Corporation, Cooper Industries, Inc., Danaher
Corporation, Illinois Tool Works Inc., Ingersoll-Rand Company, Masco
Corporation, Newell Rubbermaid Inc., Pentair, Inc., Shaw Industries, Inc.,
Snap-On Incorporated, The Sherwin-Williams Company, and The Stanley Works.
13
<PAGE>
APPROVAL OF INDEPENDENT AUDITORS
The second item of business to be considered is the approval of independent
auditors for the Corporation for the 2000 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 56 years. Total Ernst & Young fees for 1999 were $5,648,000.
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 2000.
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 29, 2000 and before February 28, 2000; 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 2001
Shareowner proposals intended to be presented to Stanley's 2001 Annual Meeting
must be received by the Secretary not later than November 14, 2000 for inclusion
in the proxy statement and form of proxy relating to such meeting, and must be
received after January 19, 2001 and before February 18, 2001 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 10, 2000. As of
February 10, 2000, 89,020,362 common shares of $2.50 par value were outstanding
(exclusive of shares held in treasury).
14
<PAGE>
Vote Required for Approval
Each outstanding share is entitled to one vote. The two 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 two 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). 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.
For the Board of Directors
STEPHEN S. WEDDLE
Secretary
15
<PAGE>
Directions to Stanley's Annual Meeting of Shareowner
NEW BRITAIN HIGH SCHOOL
110 Mill Street, New Britain, CT
[MAP]
FROM NEW YORK STATE, DANBURY,
WATERBURY VIA I-84 EAST:
Exit #35 (New Britain) Route 72 (left-hand exit).
Route 72 to Route 9 South.
Exit #25, Ellis Street.
Turn left, two blocks to first traffic light (South Main Street).
Turn left, 5th right onto Mill Street. High School a quarter mile on left.
FROM MASSACHUSETTS,
HARTFORD VIA I-91 TO I-84 WEST:
Exit #39A, Route 9 South.
Exit #25, Ellis Street.
Turn left, two blocks to first traffic light (South Main Street).
Turn left, 5th right onto Mill Street. High School a quarter mile on left.
FROM NEW HAVEN, MERIDEN VIA I-91 NORTH
(OR I-91 SOUTH):
Exit #22 (New Britain), Route 9 North.
Take exit #24 (Kensington, left-hand exit) Route 372.
First exit off Route 372 (1/10 mile), South Main Street.
Turn right, 1/4 mile to Mill Street, turn left High School is a quarter mile on
left
[MAP]
16
<PAGE>
[LOGO OF STANLEY]
Notice of
Annual Meeting
of Shareowners
and Proxy
Statement
=================================================
Meeting Date: April 19, 2000
<PAGE>
THE STANLEY WORKS
PROXY FOR ANNUAL MEETING
APRIL 19, 2000
The undersigned appoints, Stillman B. Brown, 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 telephone or the 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
[STANLEY LOGO]
CONTROL NUMBER:
ITEM 1. To elect two Directors.
Nominees:
FOR All WITH- FOR ALL
NOMINEES HOLD EXCEPT
(01)Eileen S. Kraus / / / / / /
(02)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. Your
shares will be voted for the remaining nominee.
FOR AGAINST ABSTAIN
ITEM 2. Approve Ernst & Young LLP
as independent auditors / / / / / /
for the year 2000.
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. / /
Date
- ----------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.
DETACH CARD DETACH CARD
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 Statement and 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.
3. Enter your Control Number 3. Enter your Control Number
located on your Proxy Card. located on your 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 Go to
http://www.eproxyvote.com/swk
Do not return your Proxy Card if you are voting by Telephone or
Internet
