Exhibit 10.1
Stock Holding Policy for
Executive Officers of the Company *
The Company’s Board of Directors has adopted the following stock holding policy
reflecting guidelines to align the interests of all of its executive officers
with the interests of shareholders:
Except as set forth below, all of the Company’s executive officers (except for
the Chief Executive Officer who continues to be subject to a previously adopted
stock holding requirement policy) (the “Executive Officers”) are required to
retain, until the effective date of retirement or other termination of
employment, an amount equal to 50% of the outstanding “Net Shares” delivered to
the Executive Officer pursuant to awards granted under the Company’s equity
programs (the “50% Stock Holding Requirement”). “Net Shares” are those shares
that remain after shares are sold or withheld by the Company to pay the exercise
price of stock options, withholding taxes and other transaction costs. Net
Shares shall include, but not be limited to, shares acquired through:

  (a)   stock option exercises;   (b)   restricted stock, restricted stock unit
or performance share awards;   (c)   participation in the Graco Employee Stock
Purchase Plan;   (d)   dividend reinvestment programs including dividend
reinvestments related to shares acquired outside of Company incentive plans; and
  (e)   stock splits with respect to shares acquired through any of the
foregoing.

Upon owning shares of the Company having a fair market value equal to three
(3) times the current base salary for Executive Officers reporting directly to
the President and Chief Executive Officer and two (2) times the current base
salary for Executive Officers reporting to someone other than the President and
Chief Executive Officer (the “Ownership Threshold”), and so long as the
Executive Officer remains at or above this Ownership Threshold, transactions
related to equity awards to which this Policy applies shall be exempt from the
50% Stock Holding Requirement. Shares used to calculate whether the Ownership
Threshold has been met include:

  (a)   Net Shares retained upon option exercise;   (b)   restricted stock,
whether vested or unvested;   (c)   Employee Stock Purchase Plan and Employee
Stock Ownership Plan shares;   (d)   shares acquired by open market purchase;  
(e)   shares owned by family members or entities if the Executive Officer would
be deemed to beneficially own the shares;   (f)   shares obtained through
dividend reinvestment or stock split.

To mitigate the effects of stock price volatility, compliance with these
guidelines shall be evaluated once each year using the average daily closing
price of the Company’s common stock during the previous one-year period
commencing April 1 through March 31.
This Policy shall apply only to those equity awards made or granted to an
Executive Officer after the effective date of this Policy.
The foregoing Policy requirement shall be waived by the Company with regard to
an individual Executive Officer upon the effective date of (a) that Executive
Officer’s “Disability”, (b) the death of the Executive Officer, or (c) a “Change
of Control”, as those terms are defined in that certain Key Employee Agreement
between the Company and the Executive Officer, as amended from time to time.

 

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Exhibit 10.1
The Board of Directors has delegated authority to the Company’s Chief Executive
Officer to determine whether and to what extent (a) special circumstances may
warrant the grant by the Company of an exception, hardship or otherwise, to the
foregoing holding guidelines, or (b) the extent to which a failure by an
individual Executive Officer to comply with the stock holding guidelines set
forth in this Policy may warrant further reasonable action to effectuate its
intent.
This Policy may be amended, modified, restated, suspended, eliminated,
terminated or otherwise changed at any time by the Board of Directors without
prior notice to, or consultation with, any Executive Officer.
The effective date of this Policy shall be April 23, 2010.
 

* The Board previously adopted a stock holding requirement policy for the
Company’s Chief Executive Officer on February 13, 2009, which policy does not
contain an ownership threshold. It is intended that the terms of the previously
adopted policy shall continue to apply to the Chief Executive Officer.