Exhibit 10(e)


The
Toro Company

Performance Share Plan


1.                 Purpose.   The purpose of The Toro
Company Performance Share Plan (the “Plan”) is to enhance long-term stockholder
value of The Toro Company (the “Company”), by reinforcing the incentives of key
executives to achieve long-term performance goals of the Company; to link a
significant portion of a participant’s compensation to the achievement by the
Company of performance goals and to the value of the Company’s Common Stock,
par value $1.00 per share, and related Preferred Share Purchase Rights (“Common
Stock”); and to attract and motivate executives and to encourage their
continued employment on a competitive basis. The purposes of the Plan are to be
achieved by the grant of Performance Share Awards.


2.                 Eligibility
and Participation.   Key employees of the Company, who, through their
position or performance, can have a significant, positive impact on the Company’s
financial results, shall be eligible to participate in the Plan. The
Compensation Committee (the “Committee”) shall select recipients of Performance
Shares (“Plan Participants”). Newly-hired and newly-promoted executives may be
selected as Plan Participants subject to the provisions of paragraph 3.c.(ii),
if applicable.


3.                 Performance Share
Awards.


a.                 Performance
Share Defined.   A Performance Share is a right to receive shares of
Common Stock or Common Stock units, contingent on the achievement of
performance goals of the Company during a three-year period, except that a
shorter period may be established for new participants (the “Award Term”). A
Performance Share Award shall be subject to such conditions, restrictions and
contingencies as the Committee shall determine.


b.                Vesting.   Performance Shares
shall be subject to forfeiture until they vest and shall vest only after the
conclusion of the Award Term, and only if the Committee makes the certification
required by paragraph 3.c.(iv), except as may otherwise be provided in
paragraphs 3.e.(i), 3.e.(ii) and 3.e.(iv).


c.                 Section 162(m) Conditions.   Performance Share
Awards may be designated as “performance-based compensation” as that term
is used in Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”).


(i)                Performance
Goals.   The performance goal criteria (“Performance Goals”) that may be
used by the Committee for Performance Shares shall include one or more of the
following, as selected by the Committee: cumulative earnings, cumulative
earnings per share, profit after tax, net income, return on invested capital,
invested capital dollars, earnings per share, average net assets, after-tax
interest expense, return on average net assets, average net asset turns,
cumulative average net asset turns, return on equity, return on beginning
equity, revenue growth, earnings growth, economic value added, fill rate,
customer care and customer satisfaction scores.











(ii)             Establishment
of Performance Goals.   Performance Share Awards designated “performance-based
compensation” shall be granted, and Performance Goals shall be established, by
the Committee in writing not later than 90 days after the commencement of the
period of service to which the Performance Goal relates, or such other period
required under Section 162(m) of the Code, provided that the outcome
is substantially uncertain at the time the Committee establishes the Performance
Goal; and provided further that in no event will a Performance Goal be
considered to be preestablished if it is established after 25% of the
period of service (as scheduled in good faith at the time the Performance Goal
is established) has elapsed.


(iii)          Section 162(m) Maximum
Award Payment.   With respect to a Performance Share Award that is designated “performance-based
compensation” for purposes of Section 162(m), the maximum number of shares
that may be issued under the award shall be set at the time the Committee
grants the award and establishes Performance Goals under the award.
Notwithstanding any other provision of this Plan, the maximum number of
Performance Shares that may be granted to a Plan Participant with respect to
any Award Term is 100,000, subject to adjustment as provided in paragraph 4.


(iv)         Certification
of Payment.   Before any payment or delivery of shares of Common Stock is made
under the Plan to any Participant who is a person referred to in
Section 162(m), the Committee must certify in writing, as reflected in the
minutes, that the Performance Goals established with respect to a Performance
Share Award have been achieved. To the extent necessary with respect to any
fiscal year or Award Term, in order to avoid any undue windfall or hardship due
to external causes, the Committee may make the determination as to whether a
Performance Goal has been achieved without regard to the effect on the
Performance Goal measure, as it may otherwise be presented in the financial
statements, of any change in accounting standards, any acquisition by the
Company not planned for at the time the Performance Goals are established or
any Board-approved extraordinary or non-recurring event or item. With
respect to any Plan Participant who is a person referred to in
Section 162(m), the Committee shall have the discretion to decrease an
award payment under a Performance Share Award, but may not under any
circumstances increase such amount.


d.                Delivery.   Certificates for shares
of Common Stock in the number of Performance Shares that vest under an award
will be delivered as soon as possible after the applicable vesting requirements
(including accelerated vesting under paragraph 3.e.(iv)) have been fulfilled,
except that if a Plan Participant has properly elected to defer income that may
be attributable to an award under a Company deferred compensation plan, Common
Stock units will be credited to the Plan Participant’s account thereunder. In
the event vesting requirements are not fulfilled or in the event Performance
Shares are canceled under the provisions of paragraph 3.e.(v), Performance
Shares shall be canceled and have no value.











e.                 Vesting and Cancellation Under Special
Circumstances.


(i)                Retirement, Death or Disability.   If a Plan Participant retires, dies or becomes permanently
disabled and unable to work prior to the end of an Award Term, but after the
conclusion of not less than 33% of the Award Term, the Committee may, in its
sole discretion, cause shares of Common Stock to be delivered with respect to
the participant’s Performance Share Award, but only if otherwise earned and
only with respect to the portion of the applicable Award Term completed at the
date of such event, with proration based on full fiscal years only and no
shares to be delivered for partial fiscal years. “Retirement” means termination
of employment with the Company at age 55 or older and with a number of years of
service to the Company that, when added together with the participant’s age,
equals at least 65. The Committee shall consider the requirements of paragraph
(A) under this paragraph 3.e.(i) and shall have the discretion to consider
any other fact or circumstance in making its decision as to whether to deliver
shares, including whether the participant again becomes employed. Shares shall
be delivered only after the conclusion of the applicable Award Term in
accordance with paragraphs 3.b., 3.c. and 3.d. of the Plan.


(A)   Non-compete.   Notwithstanding the foregoing, if a Plan
Participant retires prior to age 65, and within one year after the later
of the date of that retirement or the date shares are delivered pursuant to
paragraph 3.e.(i), the Plan Participant (a) is employed or retained by or
renders service to any organization that, directly or indirectly, competes with
or becomes competitive with the Company, or if the rendering of such services
is prejudicial or in conflict with the interests of the Company; or (b) violates
any confidentiality agreement or agreement governing the ownership or
assignment of intellectual property rights with the Company, or
(c) engages in any other conduct or act determined to be injurious,
detrimental or prejudicial to any interest of the Company, the Company may
rescind or restrict the special vesting under this paragraph 3.e.(i) or
withhold or have the right to the return of the economic value of the
Performance Shares that vested under this paragraph; provided, however, that
this provision shall not be applicable in the event of a Change of Control.


(ii)             Reassignment.   If
prior to the end of an Award Term, a Plan Participant is reassigned to a
position with the Company (including a subsidiary or parent of the Company),
and that position is not eligible to participate in the Plan, but the Plan
Participant does not terminate employment with the Company, the Committee may,
in its sole discretion, cause shares of Common Stock to be delivered with
respect to the participant’s Performance Share Award, but only if otherwise
earned and only with respect to the portion of the applicable Award Term
completed at the date of such reassignment, based on full fiscal years only,
with no shares to be delivered for partial fiscal years.


(iii)          Other Termination.   In
the event that a Plan Participant terminates employment with the Company other
than by reason of retirement, death or disability as











provided in paragraph 3.e.(i), Performance Shares in such
participant’s name that have not yet vested shall not vest and shall be
canceled.


(iv)         Change
of Control.   Notwithstanding the provisions of paragraphs 3.b. and 3.c., all
Performance Shares that have not yet vested shall vest and become immediately
payable if there is a change of control of the Company.


Change of Control means:


(A)               The acquisition by any
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of 15% or more of either (a) the then-outstanding shares of
Common Stock of the Company (the “Outstanding Company Common
Stock”) or (b) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that for purposes of this paragraph (A), the following acquisitions shall not
constitute a Change of Control: (a) any acquisition directly from the
Company, (b) any acquisition by the Company, (c) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (d) any
acquisition by any corporation pursuant to a transaction that complies with clauses
(a), (b) and (c) of paragraph (C) of this
paragraph 3.e.(iv); or


(B)                 Individuals who, as of
the date hereof, constitute the Board of Directors of the Company (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or


(C)                 Consummation of a
reorganization, merger or consolidation of the Company or sale or other
disposition of all or substantially all of the assets of the Company or the
acquisition by the Company of assets or stock of another entity (a “Business
Combination”), in each case, unless, following such Business Combination,
(a) all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of, respectively,
the then-outstanding shares of common stock and the combined voting power of
the then-outstanding voting securities











entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (b) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 15% or more
of, respectively, the then-outstanding shares of common stock of the
corporation resulting from such Business Combination, or the combined voting
power of the then-outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and
(c) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or


(D)                Approval by the
stockholders of the Company of a complete liquidation or dissolution of the
Company.


(v)            Committee
Discretion to Scale Back Awards.   At any time during an Award Term of more
than one fiscal year, the Committee may, in its discretion, cancel a portion of
the Performance Shares in any Performance Share Award prior to the conclusion
of the Award Term (a “Scale Back”), provided that:


(A)               the Performance Share
Award has not yet vested;


(B)                 based on financial
information contained in the Company’s financial statements or similar internal
reports, the Committee determines that the Performance Goals for the Award Term
cannot be achieved at the maximum levels established at the time of grant;


(C)                 Performance Share
Awards shall be Scaled Back in proportion to the estimated short fall in
achievement of Performance Goals from maximum levels;


(D)                all Performance Share
Awards for the same Award Term are Scaled Back by the same percentage;


(E)                  once an award is Scaled
Back, it may not again be increased to add or recover Performance Shares that
were canceled; and


(F)                  Performance Shares
canceled in a Scale Back shall again be available to the Committee for grant of
new Performance Share Awards for any future Award Term. This provision shall
not be used in any manner that could have the effect of repricing a previous
Performance Share Award grant.











f.                   Dividends
and Voting.   A Plan Participant shall have no rights as a stockholder with
respect to Performance Shares unless and until Common Stock or Common Stock
units are issued in settlement of the award.


g.                Non-transferability.   Neither
Performance Shares nor Performance Share Awards nor any interest in any one of
such awards or shares may be anticipated, alienated, encumbered, sold, pledged,
assigned, transferred or subjected to any charge or legal process, other than
by will or the laws of descent and distribution, so long as the Performance
Shares have not vested and shares of Common Stock have not been distributed in
accordance with the Plan, and any sale, pledge, assignment or other attempted
transfer shall be null and void. A Plan Participant may receive payment under a
Performance Share Award only while an employee of the Company and only if
continuously employed from the date the award was granted, except as may otherwise
be provided in paragraphs 3.e.(i) and 3.e.(ii).


4.                 Maximum
Shares Subject to Performance Share Awards.   Subject to the provisions of
paragraph 4.a., the total number of shares of Common Stock that may be
issued pursuant to Performance Share Awards under the Plan is 3,000,000. Shares
of Common Stock that may be issued hereunder may be authorized but unissued
shares, reacquired or treasury shares or outstanding shares acquired in the
market or from private sources or a combination thereof.


a.                 Adjustments.   In the event of
a corporate transaction involving the Company, the Common Stock or the Company’s
corporate or capital structure, including but not limited to any stock
dividend, stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, reclassification, split-up, spin-off,
combination or exchange of shares, or a sale of the Company or of all or part
of its assets or any distribution to stockholders other than a normal cash
dividend, the Committee shall make such proportional adjustments as are
necessary to preserve the benefits or potential benefits of the Performance
Share Awards. Action by the Committee may include all or any of adjustment in
(i) the maximum number and kind of securities subject to the Plan as set forth
in this paragraph; (ii) the maximum number and kind of securities that may
be made subject to Performance Share Awards for any individual as set forth in
paragraph 3.c. (iii); (iii) the number and kind of securities subject to
any outstanding Award; and (iv) any other adjustments that the Committee
determines to be equitable.


5.                 Administration.   The Plan shall
be administered by the Committee. The Committee shall have the authority to
administer the Plan; establish policies under the Plan; amend the Plan, subject
to the provisions of paragraph 8; interpret provisions of the Plan; select Plan
Participants; establish Performance Goals; make Performance Share Awards; or
terminate the Plan, in its sole discretion. The Committee may delegate
administrative duties and all decisions not required to be exercised by it
under Section 162(m) or Section 16 of the Exchange Act, as it
solely determines, including to Company officers. All decisions of the
Committee shall be final and binding upon all parties including the Company,
its stockholders and Plan Participants.


6.                 Tax
Withholding.   The Company shall have the right to deduct from any settlement
made under the Plan or to require the Participant to pay the amount of any
federal, state or local











taxes of any kind required by law to be withheld
with respect to the grant, vesting, payment or settlement of an award under
this Plan, or to take such other action as may be necessary in the opinion of
the Company to satisfy all obligations for the payment of such taxes. If Common
Stock is withheld or surrendered to satisfy tax withholding, such stock shall
be valued at its fair market value as of the date it is withheld or
surrendered. The Company may also deduct from any award settlement any other
amounts due the Company by the Plan Participant.


7.                 Governing
Law.   The
Plan, awards granted under the Plan, agreements entered into under the Plan and
Performance Shares shall be construed, administered and governed in all
respects under and by the applicable laws of the State of Delaware, excluding
any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of the Plan or an award or agreement or
Performance Shares to the substantive law of another jurisdiction.


8.                 Plan
Amendment and Termination.   The Committee may, in its sole discretion, amend,
suspend or terminate the Plan at any time, with or without advance notice to
Plan Participants, provided that no amendment to the Plan shall be effective
that would increase the maximum number of Performance Shares that may be granted
under paragraph 3.c.(iii) to a participant who is a person referred to in
Section 162(m); that would change the Performance Goal criteria applicable
to a participant who is a person referred to in Section 162(m) for
payment of awards as set forth in paragraph 3.c.(i); or that would modify the
requirements as to eligibility for participation under paragraph 2, unless the
stockholders of the Company shall have approved such change in accordance with
the requirements of Section 162(m). No amendment, modification or
termination of the Plan may adversely affect in a material manner any right of
any Plan Participant with respect to any Performance Share Award theretofore
granted without such participant’s written consent.


9.                 Effective
Date of the Plan and Amendments.   The Plan first became effective on
November 18, 1998. Any amendment to the Plan shall be effective on the
date established by the Committee, subject to stockholder approval, if required
under the provisions of paragraph 8.