Exhibit 10(a) to the quarterly report
on Form 10-Q of W.W. Grainger, Inc.
for the quarter ended March 31, 2003

SUMMARY DESCRIPTION OF THE
2003 COMPANY MANAGEMENT INCENTIVE PROGRAM

I.

Introduction

  

The 2003 Company Management Incentive Program (MIP) was designed to focus on two
key factors that drive improvements in shareholder value: return on invested
capital (ROIC) and sales growth.

   II.

Objectives

  

The Company MIP is designed to:

  
 * Encourage decision-making focused on producing a constantly improving rate of
   ROIC and on growing the business rapidly, thus leading to improvements in
   shareholder value.
 * Influence participants to make decisions consistent with shareholders’
   interests.
 * Align management with Company objectives.
 * Attract and retain the talent required to achieve the Company’s objectives.

  III.

Eligibility

  

Positions that participate in this program are those that have significant
impact on the Company. Eligibility for participation in this program is based on
the determination of management. Criteria for inclusion are market practice,
impact of the role on overall Company results, and internal practice.
Participation in this program is subject to the Terms and Conditions.

   IV.

Performance Measures

  

Shareholder value will improve most dramatically if the Company can achieve two
goals simultaneously:

  1. Produce a constantly improving rate of ROIC, and 2. Grow the business
rapidly.  

The 2003 MIP will be based on two measures: ROIC and sales growth.

  

ROIC is defined as operating earnings divided by net working assets:

 

ROIC   =

Operating Earnings
Net Working Assets

 

ROIC will account for 50% of a participant’s total Target Incentive.

 

--------------------------------------------------------------------------------

Sales growth will be defined as year-over-year performance:

  

Sales growth =

Total Company Sales, Current Year

 - 1

Total Company Sales, Prior Year

  

Sales growth will account for 50% of a participant’s total Target Incentive.

  

If the 2003 Plan ROIC objective is met, 3% of each officer’s base salary will be
added to and be a part of the 2003 MIP payout. The incremental 3% is for
computational purposes only, and does not represent an actual increase in base
salary.

   V.    

Target Award Opportunity

Target awards are established for each position based on the competitive market
practice and internal considerations and are stated as a percentage of the
employee’s base salary.   VI.     Determination Of Payment Amounts The following
process is used to determine the payment amount for each participant.   Step 1:
Determine the performance results for each Company measure and the resultant
performance to goal.   Step 2: Compute the appropriate percentage of target
award earned for each measure. Determine the Total Percentage Payout using the
following formula:  

Total % Payout = (ROIC % of Target Earned X 50%)
                         + (Sales Growth % of Target Earned X 50%)

 

Step 3: Calculate each participant’s incentive amount earned as follows:

   Incentive Amount Earned =
(Annualized Base Salary (as of 12/31) X Target Award %) X Total % Payout     
Those employees who are eligible to participate for only part of the year will
have their incentive amount adjusted accordingly, based on the eligibility
provisions of the Terms and Conditions.      Step 4: The Compensation Committee
of Management and the Compensation Committee of the Board must approve final
incentive amounts.      Step 5: Once approved, final incentive amounts are
forwarded to the Employee Systems Manager for payment.

--------------------------------------------------------------------------------