BARNES GROUP INC.
LONG TERM INCENTIVE PLAN
SECTION l. PURPOSE
The Long Term Incentive Plan ("LTIP") is designed to provide incentive compensation to key executives of
Barnes Group Inc. (the "Company") and its subsidiaries in a form which relates the financial reward to an increase
in the value of the Company to its shareholders. The plan shall be administered by the Compensation Committee
of the Board of Directors (the "Committee").
SECTION 2. DEFINITIONS
2.1 Cost of Equity. Cost of Equity equals Average Stockholder's Equity, except for the cycles prior to the 1995-
1997 cycle such equity shall be determined without regard for the effects of the Statements of Financial
Accounting Standards No. 106 ("FAS 106") and No. 112 ("FAS 112"), and the one- time effect of the initial
adoption of FAS 109 and the one- time FAS 109 adjustment in 1993 of $800,000 resulting from a change in the
U.S. federal tax rate, multiplied by the sum of
(i) a risk-free rate of return equal to the average of the interest rates for Treasury Bills of 90-day maturity on the
first business day of each month, or such other standard as may be designated by the Committee; plus
(ii) a risk adjustment factor computed by multiplying the general stock market risk premium over a risk-free
Long Term Incentive Plan
investment times the average Beta for the Company's stock for each calendar year as published by Value Line or
some other source designated by the Committee.
Average Stockholder's Equity shall be computed by adding stockholder's equity on December 31st of the prior
year to stockholder's equity at the end of each month of the applicable year and dividing the result by 13.
2.2 Economic Return. Economic Return for any year equals Cash Flow From Operations less the Cost of Equity
divided by the average number of common shares outstanding for the year. In computing Economic Return, the
Committee may make adjust- ments for any extraordinary changes which occur during an Incentive Award