Exhibit 10(ix)

THE STANLEY WORKS

Deferred Compensation Plan for Participants

in Stanley’s Management Incentive Plans

1.

Purpose of the Plan.

 

 

a.

To offer to certain participants in Stanley’s management incentive plans an
opportunity to defer the receipt of incentive earnings for tax or other reasons
suited to the participant’s own financial plans.

 

 

b.

To provide an opportunity to participants to reinvest their incentive earnings
in The Stanley Works (“Company” or “Stanley”) under terms which will provide a
return related to the future earnings performance of the Company.

 

 

c.

To provide an incentive to participants, supplementing that of the management
incentive plans, for the achievement of superior earnings performance by the
Company.

2.

Eligibility.

 

 

a.

All participants in Stanley’s management incentive plans who are “highly
compensated employees” are eligible to participate in this Plan. A “highly
compensated employee” is an employee who, for the year for which an election is
made under this Plan, is a highly compensated employee, as defined in Section
414(q) of the Internal Revenue Code of 1986, as amended (the “Code”). Such
definition is based on W-2 income (including amounts deferred under Section 125
or 401(k) of the Code) during the calendar year immediately preceding the year
for which an election is made exceeding the indexed amount $100,000 for 2007
described in Section 414(q)(1)(B) of the Internal Revenue Code for such
preceding calendar year.

 

 

b.

This Plan is applicable only to incentive earnings earned under the management
incentive plans.

3.

Election by Participant.

 

 

a.

The election (the “original election”) by the participant must be made prior to
December 31 (or such later date determined by the administrator of the Plan, but
not later than the March 31 following such December, provided that the incentive
earnings are not yet “readily ascertainable” within the meaning of Section 409A
as defined in paragraph 9 of this Plan) of each year with respect to deferral of
incentive earnings earned the following year, except that a new participant in
the Plan may make an original election within 30 days of first becoming eligible
to participate in the Plan with respect to incentive earnings paid for services
to be performed after the election. All or any portion, or none, of the
incentive earnings may be deferred.

 

 

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b.

The original election must specify when or under what circumstances payment is
to be made in the future and whether by lump sum or in a series of payments (and
each payment shall be considered a “separate payment” for purposes of Section
409A); the circumstances that may be specified are limited to death, retirement,
or termination of employment.

 

 

c.

Once made, an election (either an original election or a subsequent election)
may not be changed to delay the receipt of incentive earnings or to change the
form of payment unless such change (i) will not take effect until at least
twelve months after the date on which the change is submitted; (ii) defers the
receipt of the applicable incentive earnings (other than an election made on
account of “disability,” “death” or an “unforeseeable emergency,” each within
the meaning of Section 409A) for a period of not less than five years from the
date such incentive earnings would otherwise have been paid; and (iii) is made
not less than twelve months before the date the applicable incentive earnings is
scheduled to be paid.

 

 

d.

Once made, an election may not be changed either in amount or method of payment
to accelerate the receipt of incentive earnings, except as authorized by the
Compensation and Organization Committee of Stanley’s Board of Directors in
accordance with paragraphs (j)(4)(ii) through (xiv) of Treasury Regulation
§1.409A-3.

 

 

e.

Notwithstanding any provision in the Plan to the contrary, if the participant is
a “specified employee” at the time the participant incurs a “separation from
service” (each within the meaning of Section 409A), incentive earnings (and
credited interest thereon) that would otherwise become payable during the
six-month period immediately following the participant’s separation from service
shall instead be paid on the earlier of (i) the first business day of the
seventh month following the date of the participant’s separation from service or
(ii) participant’s death.

4.

Interest Payment Schedule.

 

 

a(i).

Interest will be credited annually on deferred amounts of incentive earnings
earned prior to 1992 based on the following schedule:

 

If “Pretax Earnings” on opening
Stockholders’ equity are:

 

Interest Credited on
Deferred Funds will be:

Less than 10%

 

-0-

10 to 12

 

5%

12 to 14

 

6-1/2

14 to 16

 

8-1/4

16 to 18

 

10-1/2

18 to 20

 

13-1/2

20% and over

 

17a

 

______________

a

For 1981 and thereafter: the higher of 17%, or the U.S. Treasury Bill rate,
compounded quarterly, all as provided in footnote c.

 

 

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“Pretax earnings” will be Earnings Before Income Taxes as shown in the Annual
Report to Stockholders except that such Earnings Before Income Taxes will be
increased by an amount equal to aggregate management incentive compensation.

 

 

a(ii).

Interest will be credited annually on deferred amounts of incentive earned based
on performance in the years 1992-1994 based on the following schedule.

 

If “Net Earnings” on
“Stockholders’ Equity” are:

 

Interest Credited on
Deferred Funds will be:

Less than 9%

 

8%

9 to 18

 

12

Over 18

 

16b

“Net Earnings” will be consolidated full year’s net earnings and “Stockholders’
Equity” is the average of the opening and closing consolidated stockholders’
equity, in each case as shown in the Annual Report to stockholders.

 

 

a(iii).

Interest will be credited annually on deferred amounts of incentive earned based
on performance in 1995 or thereafter with interest compounded quarterly at a
rate equal to 1 percentage point greater than the yield of 10 year Treasury
Notes as reported for the last business day of the preceding calendar quarter.

 

 

b.

Deferred incentive earnings earned in a given year will be credited to the
participant’s deferred account in February of the following year. Each February
thereafter interest will be credited on the total deferred balance in the
account, as of the beginning of the year, based on the Company’s earnings
performance for the prior year, per the schedule above.

5.

Removal of Funds from the Plan.

 

 

a.

Deferred funds credited to a participant will be removed from this Plan in the
event of:

- death,

- retirement, or

- termination of employment,

______________

 

b

The higher of 16% or the U.S. Treasury Bill rate, compounded quarterly, all as
provided in footnote c.

 

 

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provided that in the event of death or retirement, interest earned under the
Plan will be credited to the participant’s deferred account on a pro rata basis
from the beginning of the year to the date of death or retirement.

 

 

b.

For periods after December 31, 1987, such deferred funds removed from the Plan
will be credited by the Company with interest compounded quarterly at a rate
equal to the yield of 5 year Treasury Notesc as reported for the last business
day of the preceding calendar quarter.

6.

General.

Interest credited on deferred funds under the Plan will not constitute earnings
for pension plan purposes.

7.

Definition of Change in Control.

For purposes of this Plan, a “Change in Control of the Company” shall mean a
“change in the ownership” or the “effective control” of the Company or a “change
in the ownership of a substantial portion of the Company’s assets” (each within
the meaning of Section 409A).

8.

Accelerated Payment Following a Change in Control.

Notwithstanding any of the preceding provisions of this Plan, as soon as
possible following any Change in Control of the Company, but in no event later
than 30 days following such Change in Control, payment shall be made, in cash,
of the entire account of each participant hereunder, including participants who
have commenced distribution under the Plan. For purposes of calculating the
amount of such payment, with respect to any period for which no interest on the
deferred balance has yet been credited to any such participant’s account under
section 4 or section 5 hereof, pro rated interest based on the rate of interest
credited for the immediately preceding year (in the case of section 4 interest)
or the immediately preceding quarter (in the case of section 5 interest) shall
be credited to such account.

9.

Section 409.

Reference to “Section 409” is to section 409 of the Code, and any proposed,
temporary or final regulations, or any other guidance, promulgated with respect
to section 409 by the U.S. Department of Treasury or the Internal Revenue
Service. The Plan is intended to provide for the deferral of compensation in
full compliance with Section 409A. The Plan shall be construed in a manner to
give effect to such intention.

______________

c

The “U.S. Treasury Bill rate” referred to elsewhere shall be that interest rate
equal to the yield for 3-month U.S. Treasury Bills as reported for the last
business day of the preceding calendar quarter.

 

 

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10.

Limited Transition Relief through December 31, 2008.

Notwithstanding anything herein to the contrary, pursuant to the transition
relief provided under Q&A 19(c) of IRS Notice 2005-1, as amplified by the
proposed regulations under Section 409A, and as further amended by IRS Notice
2006-79 and IRS Notice 2007-86, a participant (i) may designate the time and
form of distribution to the extent not previously so elected and/or (ii) may
make a new election to change the time and form of distribution in a previously
filed election, in each case, no later than December 31, 2008. A participant who
chooses not to file a new election as provided in clause (ii) shall continue to
participate in the Plan pursuant to his or her prior distribution elections,
which shall be administered in accordance with Section 409A. Any changes to
elections made after December 31, 2008 will be subject to paragraph 3(c) of the
Plan.

 

 

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