Exhibit 10.3

The Stanley Works 2006 Management Incentive Compensation Plan

  1.   Purpose. The purpose of The Stanley Works 2006 Management Incentive Plan
is to reinforce corporate, organizational and business-development goals, to
promote the achievement of year-to-year financial and other business objectives
and to reward the performance of eligible employees in fulfilling their personal
responsibilities.

  2.   Definitions. The following terms, as used herein, shall have the
following meanings:

  (a)   “Affiliate” shall mean, with respect to the Company or any of its
subsidiaries, any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company.

  (b)   “Award” shall mean an incentive compensation award, granted pursuant to
the Plan, that is contingent upon the attainment of Performance Goals with
respect to a Performance Period.

  (c)   “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under
the Exchange Act.

  (d)   “Board” shall mean the Board of Directors of the Company.

  (e)   A “Change in Control” shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:

  (1)   any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company (not including in the securities beneficially owned
by such Person any securities acquired directly from the Company or its
Affiliates) representing 25% or more of the combined voting power of the
Company’s then outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause (i) of
paragraph (3) below; or

  (2)   the following individuals cease for any reason to constitute a majority
of the number of directors then serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by the Board
or nomination for election by the Company’s shareowners was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or recommended;
or;

  (3)   there is consummated a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other corporation or other
entity, other than (i) a merger or consolidation which results in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) at least 50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (ii) a merger or consolidation effected
to implement a recapitalization of the Company (or similar transaction) in which
no Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities Beneficially Owned by
such Person any securities acquired directly from the Company or its Affiliates)
representing 25% or more of the combined voting power of the Company’s then
outstanding securities; or

  (4)   the shareowners of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, at least 50% of the combined voting power of
the voting securities of which are owned by shareowners of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale.

  (f)   “Code” shall mean the Internal Revenue Code of 1986, as amended.

  (g)   “Committee” shall mean the Compensation and Organization Committee of
the Board of Directors, the composition of which shall at all times consist
solely of two or more “outside directors” within the meaning of section 162(m)
of the Code.

  (h)   “Company” shall mean The Stanley Works and its and successors.

  (i)   “Covered Employee” shall have the meaning set forth in Section 162(m)(3)
of the Code.

  (j)   “Disability” shall have the meaning set forth in Section 22(e)(3) of the
Code, or any successor provision.

  (k)   “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.

  (l)   “Participant” shall mean any employee of the Company or an Affiliate who
is, pursuant to Section 4 of the Plan, selected to participate in the Plan.

  (m)   “Performance Goals” shall mean performance goals based on one or more of
the following criteria, determined in accordance with generally accepted
accounting principles, where applicable: (i) pre-tax income or after-tax income;
(ii) earnings including operating income, earnings before or after taxes,
earnings before or after interest, depreciation, amortization, or extraordinary
or special items; (iii) net income excluding amortization of intangible assets,
depreciation and impairment of goodwill and intangible assets; (iv) operating
income; (v) earnings or book value per share (basic or diluted); (vi) return on
assets (gross or net), return on investment, return on capital, or return on
equity; (vii) return on revenues; (viii) net tangible assets (working capital
plus property, plants and equipment) or return on net tangible assets (operating
income divided by average net tangible assets) or working capital;
(ix) operating cash flow (operating income plus or minus changes in working
capital less capital expenditures); (x) cash flow, free cash flow, cash flow
return on investment (discounted or otherwise), net cash provided by operations,
or cash flow in excess of cost of capital; (xi) sales or sales growth;
(xii) operating margin or profit margin; (xiii) share price or total shareholder
return; (xiv) earnings from continuing operations; (xv) cost targets, reductions
or savings, productivity or efficiencies; (xvi) economic value added; and
(xvii) strategic business criteria, consisting of one or more objectives based
on meeting specified market penetration or market share, geographic business
expansion, customer satisfaction, employee satisfaction, human resources
management, financial management, project management, supervision of litigation,
information technology, or goals relating to divestitures, joint ventures or
similar transactions. Where applicable, the Performance Goals may be expressed
in terms of attaining a specified level of the particular criterion or the
attainment of a percentage increase or decrease in the particular criterion, and
may be applied to one or more of the Company or a parent or subsidiary of the
Company, or a division or strategic business unit of the Company, all as
determined by the Committee. The Performance Goals may include a threshold level
of performance below which no payment will be made (or no vesting will occur),
levels of performance at which specified payments will be paid (or specified
vesting will occur) and a maximum level of performance above which no additional
payment will be made (or at which full vesting will occur).

Each of the foregoing Performance Goals shall be evaluated in accordance with
generally accepted accounting principles, where applicable, and shall be subject
to certification by the Committee.

  (n)   “Performance Period” shall mean, unless the Committee determines
otherwise, a period of no longer than 12 months.

  (o)   “Person” shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the shareowners of the Company in
substantially the same proportions as their ownership of shares of the Company.

  (p)   “Plan” shall mean The Stanley Works 2006 Management Incentive Plan, as
amended from time to time.

  (q)   “Retirement” shall mean a Participant’s termination of employment with
the Company or an Affiliate thereof at or after attaining age 55 and completing
ten years of service.

  3.   Administration. The Plan shall be administered by the Compensation and
Organization Committee of the Board. The Committee shall have the authority in
its sole discretion, subject to and not inconsistent with the express provisions
of the Plan, to administer the Plan and to exercise all the powers and
authorities either specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including, without limitation, the
authority to grant Awards; to determine the persons to whom and the time or
times at which Awards shall be granted; to determine the terms, conditions,
restrictions and performance criteria, including Performance Goals, relating to
any Award; to determine whether, to what extent, and under what circumstances an
Award may be settled, cancelled, forfeited, or surrendered; to construe and
interpret the Plan and any Award; to prescribe, amend and rescind rules and
regulations relating to the Plan; to determine the terms and provisions of
Awards; and to make all other determinations deemed necessary or advisable for
the administration of the Plan. The Committee shall have the authority to make
equitable adjustments to the Performance Goals in recognition of unusual or
non-recurring events affecting the Company or any parent or subsidiary of the
Company or the financial statements of the Company or any parent or subsidiary
of the Company, in response to changes in applicable laws or regulations or to
account for items of gain, loss or expense determined to be extraordinary or
unusual in nature or infrequent in occurrence or related to the disposal of a
segment of a business or related to a change in accounting principles.

All decisions, determinations and interpretations of the Committee shall be
final and binding on all persons, including the Company and the Participant (or
any person claiming any rights under the Plan from or through any Participant).

Subject to Section 162(m) of the Code or as otherwise required for compliance
with other applicable law, the Committee may delegate all or any part of its
authority under the Plan to any officer or officers of the Company.

  4.   Eligibility. Awards may be granted to Participants in the sole discretion
of the Committee. In determining the persons to whom Awards shall be granted and
the Performance Goals relating to each Award, the Committee shall take into
account such factors as the Committee shall deem relevant in connection with
accomplishing the purposes of the Plan.

  5.   Terms of Awards. Awards granted pursuant to the Plan shall be
communicated to Participants in such form as the Committee shall from time to
time approve and the terms and conditions of such Awards shall be set forth
therein.

  (a)   In General. On or prior to the earlier of the 90th day after the
commencement of a Performance Period or the date on which 25% of a Performance
Period has elapsed, the Committee shall specify in writing, by resolution of the
Committee or other appropriate action, the Participants for such Performance
Period and the Performance Goals applicable to each Award for each Participant
with respect to such Performance Period. Unless otherwise provided by the
Committee in connection with specified terminations of employment, payment in
respect of Awards shall be made only if and to the extent the Performance Goals
with respect to such Performance Period are attained.

  (b)   Special Provisions Regarding Awards. Notwithstanding anything to the
contrary contained in this Section 5, in no event shall payment in respect of an
Award granted for a Performance Period be made to a Participant who is or is
reasonably expected to be a Covered Employee exceed the lesser of 300% of the
Participant’s annual base salary on the date the Performance Period commences
for any twelve month period or $5,000,000. The Committee may, in its sole
discretion, increase (subject to the maximum amount set forth in this
Section 5(b)) or decrease the amounts otherwise payable to Participants upon the
achievement of Performance Goals under an Award; provided, however, that in no
event may the Committee so increase the amount otherwise payable to a Covered
Employee pursuant to an Award.

  (c)   Time and Form of Payment. Unless otherwise determined by the Committee,
all payments in respect of Awards granted under this Plan shall be made in cash
within 2 1/2 months after the end of the Performance Period.

  6.   Term. Subject to the approval of the Plan by the holders of a majority of
the Common Stock represented and voting on the proposal at the annual meeting of
Company’s shareholders to be held in 2006 (or any adjournment thereof), the Plan
shall be effective as of January [1], 2006 and shall continue in effect until
the tenth anniversary of the date of such shareholder approval, unless earlier
terminated as provided below.

  7.   General Provisions.

  (a)   Compliance with Legal Requirements. The Plan and the granting and
payment of Awards, and the other obligations of the Company under the Plan shall
be subject to all applicable federal and state laws, rules and regulations, and
to such approvals by any regulatory or governmental agency as may be required.

  (b)   Nontransferability. Awards shall not be transferable by a Participant
except upon the Participant’s death following the end of the Performance Period
but prior to the date payment is made, in which case the Award shall be
transferable in accordance with any beneficiary designation made by the
Participant in accordance with Section 7(l) below or, in the absence thereof, by
will or the laws of descent and distribution.

  (c)   No Right To Continued Employment. Nothing in the Plan or in any Award
granted pursuant hereto shall confer upon any Participant the right to continue
in the employ of the Company or to be entitled to any remuneration or benefits
not set forth in the Plan or to interfere with or limit in any way whatever
rights otherwise exist of the Company to terminate such Participant’s employment
or change such Participant’s remuneration.

  (d)   Withholding Taxes. Where a Participant or other person is entitled to
receive a payment pursuant to an Award hereunder, the Company shall have the
right either to deduct from the payment, or to require the Participant or such
other person to pay to the Company prior to delivery of such payment, an amount
sufficient to satisfy any federal, state, local or other withholding tax
requirements related thereto.

  (e)   Amendment, Termination and Duration of the Plan. The Board or the
Committee may at any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part; provided that, no amendment that
requires shareholder approval in order for the Plan to continue to comply with
Section 162(m) of the Code shall be effective unless the same shall be approved
by the requisite vote of the shareholders of the Company. Notwithstanding the
foregoing, no amendment shall affect adversely any of the rights of any
Participant under any Award following the end of the Performance Period to which
such Award relates, provided that the exercise of the Committee’s discretion
pursuant to Section 5(b) to reduce the amount of an Award shall not be deemed an
amendment of the Plan.

  (f)   Participant Rights. No Participant shall have any claim to be granted
any Award under the Plan, and there is no obligation for uniformity of treatment
for Participants.

  (g)   Termination of Employment.

  (i)   Unless otherwise provided by the Committee, and except as set forth in
subparagraph (ii) of this Section 7(g), a Participant must be actively employed
by the Company or one of its Affiliates at the end of the Performance Period in
order to be eligible to receive payment in respect of such Award.

  (ii)   Unless otherwise provided by the Committee, if a Participant’s
employment is terminated as result of death, Disability or Retirement prior to
the end of the Performance Period, the Participant’s Award shall be cancelled
and in respect of his or her cancelled Award the Participant shall receive a pro
rata portion of the Award as determined by the Committee.

  (h)   Change in Control. Notwithstanding any provision in the Plan to the
contrary, upon a Change in Control, unless otherwise determined by the Committee
with respect to an Award at the time of its grant, each outstanding Award shall
be cancelled and in respect of his or her cancelled Award a Participant shall
receive a pro rata portion of the Award. Such portion shall be calculated by
extrapolating the achievement of the applicable Performance Goal or Performance
Goals during the Performance Period prior to the Change in Control to the end of
the Performance Period and then multiplying this amount by a fraction, the
numerator of which is the number of days completed in the Performance Period
prior to the Change in Control and the denominator of which is the total number
of days in the Performance Period. The pro rata portion of the Award shall be
paid in cash as soon as practicable following the Change in Control. In
addition, if any Award which a Participant earned under the Plan during any
Performance Period which ended prior to the Change in Control has neither been
paid to the Participant nor credited to such Participant under a deferred
compensation plan maintained or sponsored by the Company or an Affiliate prior
to the Change in Control, such Award shall be paid to the Participant as soon as
practicable and in no event later than the later of (i) March 1st following the
year in respect of which the Award was earned or (ii) the fifteenth day
following the Change in Control. After a Change in Control, the Committee may
not exercise the discretion referred to in Section 5(b) to decrease the amount
payable in respect of any Award which is outstanding immediately prior to the
occurrence of the Change in Control.

  (i)   Unfunded Status of Awards. The Plan is intended to constitute an
“unfunded” plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award shall give any such Participant any rights that are
greater than those of a general creditor of the Company.

  (j)   Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Connecticut
without giving effect to the conflict of laws principles thereof.

  (k)   Effective Date. The Plan shall take effect upon its adoption by the
Board; provided, however, that the Plan shall be subject to the requisite
approval of the shareholders of the Company in order to comply with Section
162(m) of the Code. In the absence of such approval, the Plan (and any Awards
made pursuant to the Plan prior to the date of such approval) shall be null and
void.

  (l)   Beneficiary. A Participant may file with the Committee a written
designation of a beneficiary on such form as may be prescribed by the Committee
and may, from time to time, amend or revoke such designation. If no designated
beneficiary survives the Participant and an Award is payable to the
Participant’s beneficiary pursuant to Section 7(b), the Participant’s estate
shall be deemed to be the grantee’s beneficiary.

  (m)   Interpretation. The Plan is designed and intended to comply, to the
extent applicable, with Section 162(m) of the Code, and all provisions hereof
shall be construed in a manner to so comply.