Exhibit 10 (c)(vii) to the Annual Report on Form 10-K of W.W.Grainger, Inc. for the year ended December 31,
SUMMARY DESCRIPTION OF THE
1995 MANAGEMENT INCENTIVE PROGRAM (MIP)
BASED ON IMPROVED ECONOMIC EARNINGS
The Company Management Incentive Program (MIP) was initiated January 1, 1993 with the first payout in
March 1994. For eligible participants, this program replaced former participation in both the discontinued Team
Achievement Bonus (TAB) and the Long-Term Incentive Program (LTIP).
The Company has adopted Economic Earnings (EE) as a key financial measurement. EE incorporates the
attributes of growth, asset management, and earnings to evaluate financial performance. Conceptually, long-term
improvements in EE should correspond to long-term improvements in shareholder value.
The MIP is designed to encourage decision making that results in improvement in EE and to compensate
executives appropriately for positive or negative performance resulting from business decisions. By linking EE to
incentive compensation, the MIP should influence managers to make business decisions consistent with long-term
ELIGIBILITY FOR PARTICIPATION
Members of the Office of the Chairman (OOC) and all employees in Salary Grades 13-18 (officers and non-
officer key managers) who are on the payroll on 1/1/96 are eligible to participate in this program, subject to the
eligibility provisions below. These employees are most responsible for decisions affecting EE and/or major policy
Note: Target bonus for the president of Lab Safety Supply (LSS) is based 75% on the EE of LSS, 25% on
Company-wide EE; target bonus for the president of Parts Company of America (PCA) is based 50% on
Company-wide EE and 50% on the EE of PCA. Other eligible MIP participants at either LSS or PCA are on
programs unique to those business units.
ADMINISTRATION OF PROGRAM
The administration of the MIP is the responsibility of the Compensation Committee of Manag