Exhibit
10(xviii)
W.W. GRAINGER,
INC.
PERFORMANCE
SHARE AWARD AGREEMENT
This
Performance Share Award Agreement (this “Agreement”) is
entered into as of [date] between W.W. Grainger, Inc., an Illinois
corporation (the “Company”) and the undersigned Company
executive (the “Executive”).
Pursuant to the
W.W. Grainger, Inc. 2005 Incentive Plan (the “Plan”),
the Company desires to award to the Executive as hereinafter
provided certain performance shares (the “Performance
Shares”), entitling the Executive to receive shares of the
Company’s common stock (“Common Stock”) based
upon the Company’s attainment of certain long-term
performance goals. This award of Performance
Shares is in consideration of the Executive’s agreement to
enter into an Unfair Competition Agreement (the “Unfair
Competition Agreement”) between the Company and the Executive
concurrently with this Agreement. In turn, the Executive desires to
enter into the Unfair Competition Agreement and accept the award of
Performance Shares, on the terms and conditions set forth in this
Agreement, the Plan and the Unfair Competition
Agreement. Capitalized terms used but not defined in
this Agreement have the meanings specified in the Plan.
NOW, THEREFORE,
in consideration of the mutual promises set forth below and in the
Unfair Competition Agreement, the parties hereto agree as
follows:
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General.
This
award is governed by and subject to the terms and conditions of
this Agreement, the Plan and the Unfair Competition Agreement (the
terms of which are hereby incorporated herein by
reference). In general, the Executive will be
entitled to receive a number of Performance Shares determined by
the Company’s performance against its sales growth target (as
described in Section 2 below), with the vesting of those
Performance Shares being subject to the Company’s achievement
of its return on invested capital target (as described in Section 3
below).
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Grant of
Performance Shares; [Next Fiscal Year] Sales
Target. The Company
hereby awards to the Executive a total of _______ Performance
Shares (the “Target Number”), such number being subject
to possible adjustment as follows. The actual number of
Performance Shares which the Executive will receive will depend on
the Company’s total net sales during its [next fiscal
year]. Such number will be calculated in accordance with
the following table:
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If, the
Company’s [Next Fiscal Year]
sales are
at:
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Then the number
of Performance
Shares will
be:
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Less
than
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$_________
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Zero
(0)
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$_________
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Fifty percent
(50%) of the Target Number
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$_________
$_________ or
more
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One
hundred percent (100%) of the Target Number
Two
hundred percent (200%) of the Target Number
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Amounts between
the foregoing numbers will be interpolated as
necessary. For example, if [next fiscal year] net sales
are $_____, then the Executive would receive ______________ percent
(__%) of the Target Number of Performance Shares.
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3.
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Vesting; ROIC
Target. The
vesting of the Performance Shares will depend upon the
Company’s average return on invested capital
(“ROIC”) during the period of three fiscal years
beginning with the [current] fiscal year, i.e., the Company’s
[current], [next], [2 years out] fiscal years (the “Measuring
Period”). For this purpose, ROIC means the
Company’s operating earnings divided by its net working
assets. Vesting will be determined in accordance with
the following table:
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If the
Company’s average ROIC
during the
Measuring Period is:
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Then the
following percentage of
Performance
Shares will vest:
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Less than ___
percent (__%)
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Zero
(0)
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____ percent
(__%) or more
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One
hundred percent (100%)
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Amounts between
the foregoing numbers will not be
interpolated. In other words, the Performance Shares
will either vest at one hundred percent (100%) or they will not
vest at all. If the Performance Shares vest, then in
settlement of the Performance Shares, the Executive will receive a
number of shares of Common Stock equal to the number of Performance
Shares determined under Section 2 above, subject, however, to the
withholding provisions below. If the Performance Shares
do not vest, then they will be forfeited in full and t
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