Governance

Management Compensation

Our compensation programs are designed to incentivize our employees to achieve or exceed pre-established objective financial goals established for the company and deliver superior returns to our shareholders.

The philosophy underlying our executive compensation program is to provide a competitive, performance-based compensation package that allows us to attract, motivate and retain high caliber executives who drive our success. The primary tenets of our executive compensation philosophy are:

Pay for Performance


Pay is strongly aligned with financial performance, including TSR relative to our compensation peer group


Rewards long-term growth and value creation and limits pay in case of underperformance


Annual incentives based on performance against EPS, cash flow multiple, gross margin expansion and organic sales growth


Long-term incentive based on pre-established performance goals on cash flow return on investment (CFROI), EPS and relative TSR

Align Pay with Shareholder Interests


Alignment through stock-based compensation, stock ownership requirements and performance metrics


Robust stock ownership guidelines for all executive officers


“Hold Until Met Ownership Policy” requires post-vesting share retention


Executive compensation opportunity is benchmarked at the 50th percentile of compensation peer group

Manage Risk


Compensation committee conducts annual risk assessment


Independent compensation consultant, Pay Governance


Prohibits hedging and discourages pledging of stock


Prohibits option repricing and cash buy-outs of “Out of the Money” options without shareholder approval


Forfeiture of incentive awards in the event of a financial restatement under certain conditions

Delivering Value For Our Shareholders

REVENUE (In Billions)

chart of stanley black & decker revenue in billions 2018 $14.0 2019 $14.4 2020 $14.5

EPS (GAAP Diluted)

chart of stanley black & decker eps* (gaap diluted) 2018 $3.99
 2019 $6.35 2020 $7.77

EPS* (Adjusted Diluted)

chart of stanley black & decker eps* (adjusted diluted) 2018 $8.15 2019 $8.40 2020 $9.04

TOTAL SHAREHOLDER RETURN Annualized

chart of stanley black & decker total shareholder return annualized 3-Year 5-Year 12.4% 10-Year 11.6% 3.2%

*Excludes M&A related and other charges

Significant Long-Term Pay At Risk

President & CEO

chart of stanley black & decker significant long-term pay at risk: president & ceo 73% 16% 11% Long-Term Equity Incentives Bonus Salary

Other NEOs

chart of stanley black & decker significant long-term pay at risk: other neos 63% 18% 19% Long-Term Equity Incentives Bonus Salary

Stock options and restricted stock units vest ratably over four years (25% on each anniversary of grant date)


Long-term performance units (three-year plan) tied to pre-established financial goals linking pay with our strategic initiatives


Robust stock retention guidelines


CEO long-term incentive at least 50% performance units