8-KLeadership ChangesMaterial AgreementsCorporate Changes+1

W.W. GRAINGER, INC. 8-K Report, Material Agreement (Feb 22, 2006)

Filed February 22, 2006For Securities:GWW

Summary

W.W. Grainger, Inc. filed an 8-K on February 22, 2006, detailing the adoption of its 2006 Performance Share Program. This program, designed to incentivize executive decision-making and align management with shareholder value growth, will grant performance shares to approximately 30 elected officers. The payout of these shares is contingent on achieving specific targets related to total net sales growth for the 2006 fiscal year and a minimum average Return on Invested Capital (ROIC) over fiscal years 2006-2008. In addition to the compensation program, the filing also announced a change in the Board of Directors, with the appointment of Michael J. Roberts as a new director. The Board also amended the company bylaws to adjust the minimum and maximum number of directors, increasing the maximum from twelve to thirteen. These changes are intended to support the company's strategic objectives and governance structure.

Key Highlights

  • 1W.W. Grainger adopted the 2006 Performance Share Program to incentivize executive officers.
  • 2The program aims to improve shareholder value and retain key talent.
  • 3Awards are in the form of Performance Shares, to be settled in company common stock.
  • 4Performance Shares are earned based on 2006 net sales growth and ROIC targets for fiscal years 2006-2008.
  • 5Vesting of Performance Shares is all-or-nothing: if the average ROIC target is not met, no shares vest.
  • 6Michael J. Roberts was appointed as a new director to the Board, increasing the total number of directors to twelve.
  • 7The company's bylaws were amended to allow for a board size ranging from a minimum of eight to a maximum of thirteen directors.

Frequently Asked Questions

The primary purpose of the 2006 Performance Share Program is to encourage decision-making that enhances shareholder value, align executive management with the company's growth objectives, and attract and retain key executive talent.

Performance Shares are earned based on the company's performance against a growth target for total net sales during the 2006 fiscal year. The vesting of these shares, however, is strictly dependent on achieving a target average Return on Invested Capital (ROIC) over the fiscal years 2006, 2007, and 2008. If the average ROIC target is not met, none of the Performance Shares will vest; if it is met or exceeded, 100% of the Performance Shares will vest.

The participants in the 2006 Performance Share Program are the company's elected officers, which includes approximately 30 individuals.

Besides the Performance Share Program, the filing reports the appointment of Michael J. Roberts as a new director to the Board of Directors, increasing the board size to twelve. Additionally, the company's bylaws were amended to set a new range for the board size, from a minimum of eight to a maximum of thirteen directors.