EATON CORP
EXHIBIT 10E
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<DESCRIPTION>EXHIBIT 10E
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                                Eaton Corporation
                         2002 Annual Report on Form 10-K
                                   Item 15 (c)
                                 Exhibit 10 (e)

                              EATON 1995 STOCK PLAN

1.  Purpose

The Plan enables non-employee directors and professional and management
employees who contribute significantly to the success of Eaton Corporation (the
"Company") to participate in its future prosperity and growth and to identify
their interests with those of the shareholders. The purpose of the Plan is to
provide long-term incentive through outstanding service to the Company and its
shareholders and to assist in recruiting and retaining people of outstanding
ability and initiative in non-employee director, professional and management
positions.

2.  Administration

(A)  Employee Awards

With respect to employee awards, the Plan shall be administered by the
Compensation Committee of the Board of Directors (the "Committee"), which shall
consist of at least three non-employee directors selected by the Board. All
other non-employee directors also may serve as alternate members of the
Committee, who may take the place of any absent member or members at any meeting
of the Committee.

(B)  Non-employee Director Options

With respect to non-employee director options, the Plan shall be administered by
the Non-employee Director Options Committee, which shall be comprised of the
members of the Board who are employees of the Company.

(C)  Authority of Committees

With respect only to those awards for which it has administrative
responsibility, the Committee and the Non-employee Director Options Committee
shall each have complete authority to interpret all provisions of the Plan
consistent with law, to determine the type and terms of awards consistent with
the provisions of the Plan, to prescribe the form of instruments evidencing
awards, to adopt, amend and rescind general and special rules and regulations
for its administration, and to make all other determinations necessary or
advisable for its administration of the Plan. The determinations of each
committee shall be final and conclusive. The committees may act by resolution or
in any other manner permitted by law.

3.  Shares Available

The aggregate of (a) the number of Eaton common shares delivered by the Company
in payment and upon exercise of awards to employees and non-employee directors
and (b) the number of shares subject to outstanding awards to employees and
non-employee directors shall not exceed 5,000,000 at any one time, subject to
adjustments as authorized herein. Shares related to awards that are forfeited,
terminated, unexercised upon expiration, settled in cash in lieu of shares or in
such manner that all or some of the shares covered by an award are not issued,
or exchanged for awards that do not involve shares, shall immediately become
available for other awards. Shares available for awards may consist, in whole or
in part, of authorized and unissued shares or treasury shares.

The maximum aggregate number of shares or share units underlying options or
related to other awards that may be granted to any employee during any three
consecutive calendar year period is 500,000.

Awards may be made under the Plan on or after January 1, 1995, subject to
approval of the Plan by shareholders at the 1995 annual meeting.


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4.  Eligibility for Employee Awards

Any salaried employee (including officers) of the Company or any of its
subsidiaries occupying a professional or management position may be granted an
award. The Committee (a) will designate employees to whom grants are to be made,
(b) will specify the number of options, stock appreciation rights, performance
shares, restricted shares or other stock-based awards subject to each grant, and
(c) subject to Section 5(C), will specify the price of the award.

5. Stock Options

(A) Employee Stock Options

Grants. The Committee may grant to eligible employees (i) options which are
intended to qualify as incentive stock options ("Incentive Stock Options") under
the Internal Revenue Code, or (ii) options which are not intended to qualify as
Incentive Stock Options. Each option will give the employee the right to
purchase a designated number of the Company's common shares with a par value of
50(cent) each ("shares"). The aggregate fair market value (at the time of grant)
of shares for Incentive Stock Options under all plans of the Company which
become initially exercisable by an employee during any calendar year shall not
exceed $100,000 (or such other amount as may be provided by the Internal Revenue
Code or regulations thereunder).

Exercise. Each option shall be exercisable on such date or dates, during such
period and for such number of shares, as shall be determined by the Committee as
of the date of grant, although grants to employees subject to Section 16(b) of
the Securities Exchange Act of 1934 ("16b") shall not be exercisable for at
least six months after those options are granted. The Committee may, in its sole
discretion, accelerate the times when an option may be exercised and the
Management Compensation Committee (comprised of Company officers) may do
likewise for employees who are not subject to 16b.

(B) Non-employee Director Stock Options

Grants. Subject to approval by shareholders at the 1995 annual meeting, each
person serving as a non-employee director on January 24, 1995 and who continues
serving in that capacity after the annual meeting of shareholders on April 26,
1995, has been granted an option for 5,000 shares at an exercise price of
$48.56. Each person who becomes a non-employee director after January 24, 1995
automatically shall be granted an option for 5,000 shares upon the date of his
or her election. Each non-employee director shall automatically be granted an
option for 1,000 shares on each granting date that he or she continues to serve
in that capacity, beginning in the year after that director receives his or her
initial grant. The granting date is the Tuesday immediately before the fourth
Wednesday of each January.

Term. The term of each option shall be ten years from the date of grant.

Exercise. An option shall be fully exercisable six months following the later of
the date of grant or shareholder approval of the Plan.

(C) Price

Each employee and non-employee director option shall state the number of shares
to which it pertains and the option price. The option price shall be the fair
market value of the shares subject to the option on the date of grant. The fair
market value shall be the mean between the high and low prices as quoted on the
New York Stock Exchange Composite Transactions.

(D)  Payment

The price at which shares may be purchased upon exercise of an employee or
non-employee director option shall be paid in full at the time of exercise in
cash, or, if permitted by the applicable committee, by means of tendering shares
or other consideration valued at fair market value on the date of exercise, or
any combination thereof. The applicable committee shall determine acceptable
methods of tendering shares or other consideration.

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6.  Stock Appreciation Rights

The Committee may grant stock appreciation rights to eligible employees in
connection with any option granted under the Plan, or separate and apart from
any option.

Stock appreciation rights granted in conjunction with an option entitle the
holder of an option, upon exercise of the stock appreciation rights, to
surrender the option, or any applicable portion thereof, to the extent
unexercised, and to receive a number of shares, or cash and shares, as the
Committee may determine. The cash or number of shares that the holder shall be
entitled to receive shall equal in aggregate fair market value the amount by
which the fair market value per share on the date of such exercise (as
determined by the Committee in its sole discretion) shall exceed the option
price per share of the related option, multiplied by the number of shares in
respect of which the stock appreciation rights have been exercised. Stock
appreciation rights granted separate and apart from any option entitle the
holder, upon exercise of such rights, to receive a payment measured by the
increase in the fair market value of a number of shares designated by such
rights from the date of grant to the date of exercise.

The number of shares subject to a stock appreciation right shall be counted
against the individual limit on the maximum number of shares that may be awarded
to any employee during any three consecutive calendar year period, and against
the maximum number of shares which may be delivered under the Plan. The number
of shares subject to a stock appreciation right granted in conjunction with an
option shall be deemed to be the number of shares subject to the option. The
number of shares subject to a freestanding stock appreciation right shall be the
number of shares to which the right applies.

7.  Performance Shares

The Committee may grant performance shares to any eligible employee for no cash
consideration, if permitted by applicable law, or for such consideration as may
be determined by the Committee and specified in the grant. The Committee shall
establish award periods and shall establish the number of performance shares to
be earned if Company performance objectives are met. The performance objectives
shall be stated in terms of cash flow return on gross capital employed in the
Company's business ("CRC"). CRC equals the total of net income plus
depreciation, goodwill amortization and after-tax net interest divided by the
total of capital plus accumulated depreciation minus goodwill and short-term
investments. After performance shares have been awarded and performance
objectives have been established, the Committee may not increase the number of
performance shares that may be earned by any employee upon attainment of those
performance objectives within a performance period. The actual levels of CRC to
be achieved, and the length of the performance period and other terms and
conditions of the performance shares, shall be determined by the Committee.

To the extent performance shares are forfeited or the grant of performance
shares has expired or is surrendered, canceled or terminated, the shares subject
to the grant shall be available for future grants if within other plan
limitations.

8.  Other Awards

The Committee may grant other share-based awards to any eligible employee for no
cash consideration, if permitted by applicable law, or for such consideration as
may be determined by the Committee and specified in the grant. Such grants may
include restricted shares. The Committee may specify such criteria or periods
for payment as it shall determine and the extent to which such criteria or
periods have been met shall be conclusively determined by the Committee. Other
share-based grants may be paid in shares or other consideration related to
shares, as specified by the grant, and shall have such terms and conditions as
shall be determined by the Committee.

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9.  Assignability

Awards intended to be exempt from 16b are transferable only by will or the laws
of descent and distribution or to such greater extent as permitted by applicable
16b regulations. Such awards are exercisable during the grantee's lifetime only
by him or by his guardian or legal representative or by such others as permitted
by applicable 16b regulations. The appropriate committee shall have
discretionary authority to grant awards not intended to be exempt from 16b which
are transferable to members of an award holder's immediate family, including
trusts for the benefit of such family members and partnerships in which such
family members are the only partners. A transferred award may be exercised or
transferred by the transferee only to the extent that the grantee would have
been entitled had the award not been transferred. Notwithstanding anything
herein to the contrary, the exercise of incentive stock options shall be limited
as required by the Internal Revenue Code and applicable regulations.

10.  Adjustments

In the event of a reorganization, merger, consolidation, reclassification,
recapitalization, combination or exchange of shares, stock split, stock
dividend, rights offering or similar event affecting shares of the Company, the
appropriate committee shall equitably adjust (a) the number and class of shares
(i) reserved under he Plan, (ii) for which awards may be granted to an
individual, and (iii) covered by outstanding awards denominated in shares or
share units, (b) the prices relating to outstanding awards, and (c) the
appropriate fair market value and other price determinations for such awards.

11.  General Provisions

The Company shall have the right to deduct from any cash payment made under the
Plan any taxes required by law to be withheld. It shall be a condition to the
obligation of the Company to deliver shares that the participant pay the Company
such amount as it may request for the purpose of satisfying any such tax
liability. Any award under the Plan may provide that the participant may elect,
in accordance with any applicable committee regulations, to pay the amount of
such withholding taxes in shares.

No person, estate or other entity shall have any of the rights of a shareholder
with reference to shares subject to an award until a certificate or certificates
for the shares have been delivered to that person, estate or other entity. The
Plan shall not confer upon any non-employee director or employee any right to
continue in that capacity. The Plan and all determinations made and actions
taken pursuant hereto, to the extent not governed by the laws of the United
States, shall be governed by the laws of Ohio.

12.  Amendment

The Board of Directors of the Company may alter, amend or terminate the Plan
from time to time, except that the Plan may not be amended without shareholder
approval to (i) materially increase the aggregate number of shares which may be
issued, (ii) increase the maximum number of shares which may be granted to any
employee, (iii) grant options or stock appreciation rights at a purchase price
below fair market value on date of grant, or (iv) materially modify the
requirements as to eligibility for participation in the Plan. The provisions of
the Plan pertaining to the awards to non-employee directors may not be amended
more than once every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.

13.  Effective and Termination Dates

The Plan will become effective as of January 1, 1995, if and when approved by
shareholders holding a majority of the Company's outstanding common shares
entitled to vote at the 1995 annual meeting of shareholders.

No awards shall be granted under the Plan after December 31, 2004. Awards
granted before that date shall remain valid thereafter in accordance with their
terms.

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