SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.      )

Filed by the Registrant    [X]

Filed by a Party other than the Registrant    [_]

Check the appropriate box:

The  Valspar  Corporation

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

The Valspar Corporation

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

February 17, 2011

The annual meeting of stockholders of The Valspar Corporation will be held at the Guthrie Theater, 818 South 2nd Street, Minneapolis, Minnesota 55415 on Thursday, February 17, 2011 at 11:00 A.M., for the following purposes:

To transact such other business as may properly come before the meeting or any adjournments thereof.

Stockholders of record at the close of business on December 27, 2010 are entitled to notice of and to vote at the meeting.

Your attention is directed to the Proxy Statement accompanying this Notice for a more complete statement of the matters to be considered at the meeting.  A copy of the Annual Report for the year ended October 29, 2010 also accompanies this Notice.

Approximate Date of Mailing of Proxy Materials:
January 14, 2011

Please refer to the enclosed proxy card and the attached proxy statement
 for information on voting options: Internet – Telephone – Mail

The Valspar Corporation

901 – 3rd Avenue South
P.O. Box 1461
Minneapolis, Minnesota 55440

PROXY STATEMENT
Annual Meeting of Stockholders
February 17, 2011

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of proxies in the accompanying form.  Shares will be voted in the manner directed by the stockholders; provided, however, that if a stockholder delivers a proxy without giving any direction, the shares will be voted as recommended by the Corporation’s Board of Directors.  A stockholder delivering a proxy may revoke it at any time before it is exercised by (i) giving written notice of revocation to the Office of the Secretary of the Corporation, (ii) delivering a duly executed proxy bearing a later date, or (iii) voting in person at the Annual Meeting.

Registered stockholders may vote in one of three ways:  By completing and returning the enclosed proxy card via regular mail or by voting via the Internet or telephone, as permitted by Delaware law.  Specific instructions for using these methods are set forth on the enclosed proxy card.  The Internet and telephone procedures are designed to authenticate the stockholder’s identity and to allow stockholders to vote their shares and confirm that their instructions have been properly recorded.

Proxies are being solicited by mail.  In addition, directors, officers and employees of the Corporation may solicit proxies personally, by telephone or letter at no additional compensation to them.  The Corporation will pay the expense of soliciting proxies and will reimburse brokerage firms and others for their expenses in forwarding proxy materials to beneficial owners of our common stock.  In addition, the Corporation has retained Morrow & Co., LLC (“Morrow”) as a proxy consultant and to act as a proxy solicitor in conjunction with the Annual Meeting.  Under the terms of an agreement dated December 1, 2010, the Corporation has agreed to pay $25,000, plus reasonable out-of-pocket expenses, to Morrow for its consulting and proxy solicitation services.

If a stockholder delivers a proxy and abstains from voting on any matter, the abstention will be counted for purposes of determining whether a quorum is present at the Annual Meeting of Stockholders for the transaction of business as well as shares entitled to vote on that matter.  Under Section 216 of the Delaware General Corporation Law, on matters other than the election of directors, an action of the stockholders generally requires the affirmative vote of a majority of shares present in person or represented by proxy at the meeting and entitled to vote on the matter.  Accordingly, an abstention on any matter other than the election of directors or the Frequency vote, both of which use a plurality standard, will have the same effect as a vote against that matter.

A “street name” holder is the beneficial owner of shares held in a stock brokerage account or by a bank, trust or other nominee.  Street name holders generally cannot vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares using the voting instruction form provided by it.  If a street name holder does not provide timely instructions, the broker or other nominee may have the authority to vote on some proposals but not others.  If the broker or other nominee votes on one proposal, but does not vote on another proposal because the nominee does not have discretionary voting power and has not received instructions from the beneficial owner, this results in a broker non-vote.  Broker non-votes on a matter are counted as present for purposes of establishing a quorum for the meeting, but are not considered entitled to vote on that particular matter.  Consequently, non-votes generally do not have the same effect as a negative vote on the matter.

Street name holders of shares held in broker accounts should be aware of changes in voting rules that will affect whether their shares will be voted in the election of directors, executive compensation and frequency voting on executive compensation.  Under applicable New York Stock Exchange Rules relating to the discretionary voting of proxies by brokers, brokers will no longer be permitted to vote shares with respect to the election of directors, executive compensation and frequency voting on executive compensation without instructions from the beneficial owner.  However, brokers will still be able to vote shares held in brokerage accounts with respect to the approval of the independent registered public accounting firm, even if they do not receive instructions from the beneficial owner.  Therefore, street name holders of shares held in broker accounts are advised that, if they do not timely provide instructions to their broker, their shares will not be voted in connection with Proposals 1, 2 and 3.

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PROPOSAL 1

Election of Directors

In accordance with the Corporation’s By-Laws, we may have up to twelve directors, divided into three classes.  Each class consists of four seats, with each director serving a term of three years.  There are currently eleven directors serving on the Board of Directors.  The terms of Class I directors will expire at the Annual Meeting.

The Board of Directors has nominated Ian R. Friendly, Janel S. Haugarth and William L. Mansfield for re-election as Class I directors.  Charles W. Gaillard, presently a Class III director, will retire from the Board following 11 years of service immediately prior to the 2011 Annual Meeting of Stockholders.  William M. Cook, a Class III director, was appointed to the Board of Directors on April 23, 2010.  Unless otherwise directed by the stockholders, it is intended that shares represented by proxy will be voted in favor of the election of the three nominees listed in Class I below, to hold office until the annual meeting in 2014 and until their successors are elected and qualify.  If any of the nominees is unable or unwilling to stand for election, it is intended that shares represented by proxy will be voted for a substitute nominee recommended by the Board of Directors, unless the stockholder otherwise directs.  The Board is not aware that any of the nominees is unable or unwilling to stand for election.

Names, Principal Occupations for the Past Five Years and Selected
Other Information Concerning Nominees and Directors

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CORPORATE GOVERNANCE

General

We are committed to good corporate governance practices.  These practices provide a framework in which our Board of Directors and management can pursue the strategic objectives of Valspar and ensure the long-term success of the Corporation for the benefit of our stockholders.

The cornerstone of our corporate governance practices is an independent and qualified Board of Directors.  All standing Board committees are composed entirely of independent directors.  Each of the Nominating and Governance, Audit and Compensation Committees operate under a charter in order to focus the work of the committee and to ensure that the Board of Directors as a whole is addressing key functions.  Each committee reviews its charter on an annual basis.

Structure of Board

In accordance with our By-Laws, the Corporation may have up to twelve directors, divided into three classes of four directors each.  There are currently eleven directors serving on the Board of Directors.  Each director serves a term of three years under our staggered board structure.  The directors believe that the staggered structure of the Board facilitates long-term strategic planning and succession, allowing directors to oversee risks and opportunities for the long-term success of the Corporation and the benefit of our stockholders.

Board Standards and Objectives

The Board of Directors carefully evaluates each incoming director candidate based on selection criteria and overall priorities for Board composition that are re-examined periodically by the Nominating and Governance Committee with input from the rest of the directors.  As our directors’ commitments or responsibilities change, the Board re-evaluates their situations to ensure they can continue to serve in the best interests of the Corporation and its stockholders.  We also require high standards of ethics from our directors and management as described in our Code of Ethics and Business Conduct.  In carrying out their duties and responsibilities, directors are guided by the following performance objectives, which are stated in the Corporation’s Principles of Corporate Governance:

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Public Availability of Governance Documents and Public Reports

Our Principles of Corporate Governance, and the charters of the Nominating and Governance, Audit and Compensation Committees are available on the “Investors – Corporate Governance” section of the Corporation’s website at www.valsparglobal.com.

The Corporation’s Code of Ethics and Business Conduct is available on the “Investors – Corporate Governance” section of our website at www.valsparglobal.com.  Our Code of Ethics and Business Conduct applies to all of our employees, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, and to our directors. If our Board of Directors grants any waivers of or amendments to, the Code of Ethics and Business Conduct to any of our directors or executive officers, we will disclose the matter through our website.

The Corporation’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments thereto, are available on the “Investors – Financial Information” section of the Corporation’s website at www.valsparglobal.com the same day the reports are filed with the Securities and Exchange Commission (“SEC”).

Director Independence

The Board believes that a majority of its members, and all members of each standing committee, should be independent, non-employee directors.  Currently, only two of our eleven Board members are employees of the Corporation.  The Board has established standards consistent with the current listing standards of the New York Stock Exchange for determining director independence.

The Board annually reviews all relationships that directors have with the Corporation to determine whether the directors are independent.  Directors are considered “independent” as long as they do not accept any consulting, advisory or other compensatory fee (other than director fees) from the Corporation, are not an affiliated person of the Corporation or its subsidiaries and are independent within the meaning of applicable laws, regulations and the NYSE listing requirements.  The independent members of the Board meet regularly without any members of management present.  In accordance with our Corporate Governance Guidelines, Mr. Curler, as Governance Chair and Lead Director, presides at executive sessions.  Only independent directors serve on our Audit, Compensation and Nominating and Governance (“Governance”) Committees.

The Board has determined that a majority of the members of the Board are considered “independent” under applicable NYSE listing standards.  The members of the Board deemed independent are John S. Bode, William M. Cook, Jeffrey H. Curler, Ian R. Friendly, Charles W. Gaillard, Janel S. Haugarth, Mae C. Jemison, Stephen D. Newlin and Gregory R. Palen.  Mr. Newlin is the Chairman, President and Chief Executive Officer of PolyOne Corporation, and Mr. Cook is the Chairman, Chief Executive Officer and President of Donaldson Company, Inc., each of which supplies certain products to the Corporation.  See “Certain Relationships and Related Transactions” below.  The Board considered these relationships in determining that Mr. Newlin and Mr. Cook are each independent.

Certain Relationships and Related Transactions

The Board has adopted a written Related Person Transaction Policy.  This policy is intended to supplement, and not to replace or supersede, the provisions of any other corporate policy, including but not limited to the Corporation’s Principles of Corporate Governance and Code of Ethics and Business Conduct.  The Related Person Transaction Policy is available on the “Investors – Corporate Governance” section of our website at www.valsparglobal.com, as Exhibit 11 to the Principles of Corporate Governance.  The Audit Committee is responsible for reviewing and approving all related person transactions and has also adopted standing pre-approvals for certain categories of transactions with related persons:

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Stephen D. Newlin, a member of the Board of Directors of the Corporation, is the Chairman, President and Chief Executive Officer of PolyOne Corporation (“PolyOne”), which supplies certain products to the Corporation.  In fiscal 2010, PolyOne sold products to the Corporation with an aggregate purchase price of approximately $5.9 million.  The Board of Directors reviewed these transactions, which were entered into in the ordinary course of business, and determined that they did not affect Mr. Newlin’s independence.

William M. Cook, a member of the Board of Directors of the Corporation, is the Chairman, Chief Executive Officer and President of Donaldson Company, Inc. (“Donaldson”), which supplies certain products to the Corporation.  In fiscal 2010, Donaldson sold products to the Corporation with an aggregate purchase price of approximately $131,000.  The Board of Directors reviewed these transactions, which were entered into in the ordinary course of business, and determined that they did not affect Mr. Cook’s independence.

Director Nomination Process

The Corporation’s Board of Directors has adopted a formal process by which individuals are reviewed for possible nomination to the Corporation’s Board of Directors.  Under this process, the Governance Committee will consider nominees for Board membership submitted by stockholders.  Any stockholder recommendation should be submitted in writing to the Corporation in care of the Corporate Secretary at P.O. Box 1461, Minneapolis, Minnesota 55440, along with the written consent of such nominee to serve as a director if so elected.  Any such recommendation by a stockholder shall be referred to the Governance Committee, and the Governance Committee, in consultation with the Corporation’s General Counsel, will review the nomination in accordance with the Corporation’s Board Candidate Review and Nomination Process, certificate of incorporation, by-laws and applicable laws and regulations.  The Governance Committee considers general business experience, industry experience, track record as a director of other companies, probable tenure if elected and other factors as relevant in evaluating Board nominees.  The Governance Committee (or a subcommittee designated by the Governance Committee) will normally consider all of the following:  (a) the candidate’s skills, experience and other relevant biographical information, (b) the candidate’s general interest in serving a public corporation, (c) the candidate’s ability to attend Board and committee meetings, and (d) any potential concerns regarding independence or conflicts of interest.

Following the initial screening, if the Governance Committee approves a candidate for further review, the Governance Committee will establish an interview process for the candidate.  It is expected that at least a majority of the members of the Governance Committee, along with the Corporation’s Chief Executive Officer, would interview each candidate.  At the same time, the Governance Committee, assisted by the Corporation’s General Counsel, will conduct a comprehensive conflict-of-interest assessment for the candidate.  The Governance Committee will then consider reports of the interviews and the conflicts-of-interest assessment and determine whether to recommend the candidate to the full Board of Directors.  A subcommittee of the Governance Committee, management representatives designated by the Governance Committee and a search firm selected by the Governance Committee may assist with the process.  Any nominee recommended by a stockholder would be subject to the same process.

When the full Board considers an individual for possible nomination to the Board, the Governance Committee, in consultation with the Corporation’s Chief Executive Officer, will prepare a profile of a candidate expected to provide the most meaningful contribution to the Board as a whole.  The Board of Directors has not adopted a specific policy with regard to diversity, but the Board views and seeks diversity in its broadest sense, which includes independence, integrity, judgment, experience, financial acumen, education, gender, ethnicity and leadership qualities.

Upon recommendation to the full Board by the Governance Committee, Mr. Cook was elected in April 2010 after following the process described above.  He was originally identified through a search conducted by the Governance Committee.

Board Leadership

The Chairman of the Board leads the Board and oversees Board meetings and the delivery of information necessary for the Board’s informed decision-making.  The Chairman also serves as the principal liaison between the Board and our management.

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The Board does not have a policy as to whether the Chairman should be an independent director or a member of management.  Instead, the Board selects the Corporation’s Chairman based on what it determines to be in the best interests of the Corporation’s stockholders.  At this time, William L. Mansfield serves as both the Chairman and Chief Executive Officer of the Corporation.  The Board believes that Mr. Mansfield’s long service, experience and background serve the best interests of the Corporation and its stockholders and that he is well qualified to lead the Corporation and its Board of Directors.  When the Chairman is a member of management (as is currently the case), the Chair of the Governance Committee, an independent director, also serves as Lead Director.  Jeffrey H. Curler currently serves as Lead Director.  As the Chair of the Governance Committee, he is responsible for performing the duties specified in the Corporation’s Principles of Corporate Governance, including facilitating communications between the Board and the Chief Executive Officer, and such other duties as are determined by the independent directors.

Board Role in Risk Management

The Board believes that effective enterprise risk management must be an integral part of Board and committee deliberations and activities throughout the year.

Through these processes, the Board oversees a system to identify, assess and address material risks to the Corporation on a timely basis.

Board Committees and Functions

The standing committees of the Board of Directors for 2010 were as follows:

The Board of Directors met six times during fiscal 2010.

The Executive Committee, in accordance with the Principles of Corporate Governance, generally meets or acts only in emergencies or when requested by the full Board.  The Executive Committee did not meet or act during the fiscal year.

The Audit Committee held four meetings during the fiscal year.  The Audit Committee Chair also held four meetings with management and the Independent Auditors prior to quarterly earnings releases.  The duties and activities of the Audit Committee are described in the Audit Committee Report beginning on page 33.  All members of the Audit Committee are “independent” under the applicable listing standards of the New York Stock Exchange (“NYSE”) and the requirements for audit committee independence under Rule 10A-3 under the Securities Exchange Act of 1934.  The Board has determined that each Audit Committee member is financially literate and has determined that at least one member of the Audit Committee, John S. Bode, is an “audit committee financial expert” who is independent of management as defined in Item 401(h)(2) of Regulation S-K.

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The Compensation Committee is responsible for all matters relating to compensation of senior management and directors and for adoption and administration of employee compensation and benefit plans.  All members of the Compensation Committee are independent under the applicable listing standards of the NYSE.  The Compensation Committee held three meetings during the fiscal year at which it reviewed and approved the compensation plans and arrangements or granted options for officers, employees and directors.

The Compensation Committee may not delegate its responsibility of overseeing executive officer and director compensation, but may, and has, delegated to management certain administrative aspects of the Corporation’s compensation plans which do not involve setting compensation levels for executive officers and directors.  Additional information on the role of management and compensation consultants in our compensation process is contained in the Compensation Discussion and Analysis beginning on page 10.

The Governance Committee held four meetings during the fiscal year at which it conducted Chief Executive Officer performance evaluations, reviewed succession plans, considered nominations for Board membership and considered other matters related to corporate governance.  All members of the Governance Committee are independent under the applicable listing standards of the NYSE.

During fiscal 2010, each director attended 75% or more of the meetings of the Board and of the committees on which the director served, with the exception of Mr. Newlin, who attended 9 of 13 such meetings.

Communications with Certain Directors

The Chair of the Governance Committee, currently Mr. Curler, presides at regularly scheduled executive sessions of the non-management directors.  Stockholders and other interested parties wishing to contact the presiding director or the non-management directors as a group may do so by writing to the Chairman of the Governance Committee in care of the Corporate Secretary at the Corporation’s headquarters address.

Compensation Risk Analysis

The design of our compensation policies and practices, including those applicable to our executive officers, does not encourage taking unnecessary or excessive risks that could harm the Corporation’s long-term value.  Features of our compensation policies and practices include, among other things:

In addition, Meridian Compensation Partners, LLC, an outside compensation consulting firm retained by the Compensation Committee, periodically benchmarks our executive compensation program and award opportunities against those of peer group companies.  Meridian has concluded that our compensation program and award opportunities, and our historical payouts, have been and remain competitive, but not excessive.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed the following Compensation Discussion and Analysis section with management.  Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for 2010 and this Proxy Statement.

SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE CORPORATION’S BOARD OF DIRECTORS

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EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

Overview

In fiscal 2010, we achieved net income of $224.5 million, a 29.8% increase over fiscal 2009, and pre-tax return on capital of 14.8%, a 280 basis point increase over fiscal 2009.  Sales increased in fiscal 2010 to $3.22 billion, a 11.8% increase over fiscal 2009.  These results exclude restructuring charges and benefits or charges related to 2010 asset sales and acquisitions.  We exceeded our fiscal 2010 financial performance goals for net income, net sales and pre-tax return on capital.

We believe the Corporation’s executive compensation philosophy, policies and practices promote the long-term success of the Corporation and its stockholders.  Under Proposal 2 in this Proxy Statement, we are recommending that stockholders cast their advisory vote in favor of approving the Corporation’s compensation for its named executive officers as disclosed in the Proxy Statement (“Say-on-Pay” vote).  Under Proposal 3 in this Proxy Statement, we are recommending that stockholders cast their advisory vote in favor of conducting an advisory Say-on-Pay vote every three years (“Frequency” vote), as we believe this frequency will allow the Board of Directors and the stockholders sufficient time to evaluate the long-term effectiveness of the Corporation’s executive compensation philosophy, policies and practices.  In addition, a triennial vote will allow the stockholders to provide regular input to the Corporation and its directors about executive compensation on a timetable consistent with the Corporation’s long-term incentive program.

This discussion and analysis describes our compensation objectives and the elements of our compensation program for executive officers for the year ended October 29, 2010 (“fiscal 2010”).  The broad objectives of our executive compensation program are to:

We seek to achieve these objectives by providing an executive compensation program with short and long term compensation elements, including a competitive base salary, stock option grants, a performance-based annual cash bonus and performance-based restricted stock.

Compensation Program Objectives

Pay for Performance.  A significant portion of the compensation for each executive is based on performance against financial objectives established by the Committee.  Key elements of compensation that depend on performance include:

Alignment with Stockholder Interests.  We want our executives to have a significant personal financial stake in the value of the common stock of the Corporation.  The stock options and restricted stock we grant align directly the interests of our executives and stockholders, as these grants to executives increase in value as our stock price increases.

Other types of awards increase this alignment indirectly.  Annual incentive bonuses and restricted stock awards to named executives are earned based on achievement of financial performance measures (such as growth in net sales, net income and pre-tax return on capital).  We believe that superior performance on these measures increases stockholder value over the long term.

We have agreements with the five executives identified in the 2010 Summary Compensation Table beginning on page 17 (referred to as our “named executives”) that would provide for their continued employment for, or compensation in the event their employment is terminated, during the two-year period after a change in control, such as an acquisition or merger in which Valspar is not the surviving company.  These agreements reduce the likelihood of an executive leaving the company due to uncertainty surrounding an acquisition, which could serve to reduce management disruption and increase the value of the company to a potential acquirer.  These agreements also help the named executives stay focused on maximizing stockholder value, without the distraction caused by the prospect of losing their compensation upon a change in control.  In addition, outstanding stock options and restricted stock awards vest immediately upon a change in control.

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Attract and Retain Management.  Our compensation program is intended to attract qualified executives and to promote retention of our experienced management team.  The named executives have a combined total of more than 80 years of service with Valspar, during which they have held different positions and have been promoted to increasing levels of responsibility.

The Committee performs periodic assessments of the competitive nature of the different elements of our compensation program.  We use benchmark studies to help determine whether the total compensation of our executive officers is competitive with compensation offered by comparable companies.  In addition to compensation opportunities, we believe that our severance pay policies and change in control agreements help us hire and retain qualified executives.

The vesting features of our long-term incentives promote retention by encouraging executives to remain employed by the Corporation.  Generally, stock options and restricted stock fully vest over three or more years.

Mr. Mansfield, our CEO, has a supplemental executive retirement plan (SERP) that will provide him with benefits upon his retirement that increase in value with each year that he remains actively employed by us through age 65.

The chart below indicates how each element of our fiscal 2010 executive compensation program was intended to achieve our stated compensation objectives of paying for objective financial performance, aligning the interests of executives and stockholders and attracting and retaining qualified, experienced executives.

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Compensation Program Elements Awarded in Fiscal 2010

Consistent with our overall compensation objectives, we seek to provide a market-competitive mix of annual bonus and long-term incentive opportunities and to ensure that program participants, including our executives, understand the drivers of incentive opportunities available to them.  The elements of this program are set forth in the Key Employee Annual Bonus Plan (the “Key Employee Plan”).  The program places a significant portion of compensation at risk each fiscal year and rewards strong performance and long-term value creation.

Base Salary.  Salary adjustments for executive officers are generally considered annually.  As described on page 15 under “Competitive Assessments,” in setting each named executive’s base salary, the Committee reviews compensation studies periodically provided by an independent compensation consultant to help determine whether the compensation of our executive officers is competitive with compensation offered by comparable companies to individuals in comparable positions.  The Committee also considers each executive’s experience, responsibilities relative to peers, internal pay equity and the financial performance of the Corporation.  In June 2010, the Committee considered the results of a compensation study conducted by an independent compensation consultant and approved an increase in the base salaries of the named executives.  The base salary of the named executives increased by an average of 4.6% from fiscal 2008 to fiscal 2010 (base salaries were not increased in fiscal 2009 as the Committee considered current salaries of officers along with business conditions and decided not to adjust officer salaries).

Bonus.  The Committee establishes annual incentive bonus targets for each officer, expressed as a percentage of his or her respective base salary.  In establishing the incentive bonus targets, the Committee considers annual bonus targets compiled periodically for corresponding positions at peer group companies, last evaluated in 2010, and internal pay equity among Valspar executives.  The annual incentive bonus for each of the executive officers for 2010 was based upon (1) an incentive bonus target for the executive, equal to a predetermined percentage of actual base salary earned during the fiscal year, and (2) our actual corporate performance with respect to financial performance goals established by the Committee.

In the first quarter of fiscal 2010, the Committee established each executive’s incentive bonus target as a percentage of base salary based on position, ranging from 60.0% to 110.0% of base salary for the named executives.  In establishing the target percentages, the Committee considers several factors including the scope and responsibilities of each position, bonus target percentages for similar roles at peer group companies as established through recent benchmark studies and relative internal equity.

In the first quarter, the Committee also established specific performance goals for the named executives.  The performance goals for executives are based on financial measures (such as gross or net sales, expenses as a percentage of net sales, inventory turns, profits, return on average equity and cash flow), either on an absolute basis or a comparative basis with other fiscal years.  Payouts for fiscal 2010 were based on corporate financial performance relative to the following financial measures – growth in net income, pre-tax return on capital and net sales.  At the end of the fiscal year, if the executive remained employed by us, the executive was entitled to receive a cash bonus based on achievement of each of the performance goals.  Potential payouts range from zero for performance less than or equal to the previous year’s results, adjusted for the cost of restructuring and non-recurring gains or charges from acquisitions and divestitures, to 200% of the incentive bonus target for exceptional performance.

The Committee established fiscal 2010 performance goals for the named executives in two tiers:

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In the first quarter of fiscal 2010, the Committee established the following performance goals for each of the financial performance measures:

Basic Performance Goals — 100% Potential Maximum Payout

The basic performance goals were established so that achievement of the 100% payout would represent strong performance in each of the financial measures, based on prior year performance and general economic conditions, and be difficult, but achievable.  The additional incentive performance goals were established to incent and reward exceptional performance in net income and pre-tax return on capital.  As an indication of the difficulty of achieving our performance goals, the average payout for achievement of corporate performance goals (including payouts for achievement of the additional incentive performance goals where applicable) for the past five years has ranged from 10.1% to 195.8% of the total targeted incentive bonus levels.

In fiscal 2010, we achieved net income of $224.5 million, pre-tax return on capital (a variation of return on equity) of 14.8% and net sales of $3.22 billion (excluding restructuring charges and benefits or charges related to 2010 asset sales and acquisitions, as noted below).  The Committee excluded after-tax restructuring charges of $7.7 million from the performance goals.  These charges were incurred in 2010 and were excluded from the performance goals so as not to penalize employees for taking restructuring actions in the long-term best interests of Valspar and its stockholders.  The Committee also excluded an after-tax gain of $8.5 million from the sale of assets to DIC, an after-tax charge of $3.2 million for Wattyl acquisition fees and the 2010 operating results of Wattyl (net sales of $9.4M).  Based on our 2010 financial performance, the Corporation achieved the basic goals and achieved the additional incentive goals for net income and pre-tax return on capital (both exclude the above restructuring charges, gain from sale of assets and acquisition impacts).  Therefore, the incentive bonus payouts represented 195.2% to 195.8% of the incentive bonus target, with the resulting bonuses representing a range of 117.1% to 215.4% of base salary for the named executives.

Stock Options and Restricted Stock (Long-Term Incentives).  Long-term incentive opportunities are provided in the form of stock options and performance-based restricted stock.

Under our executive compensation program, the Committee establishes a Long-Term Incentive Target Value (“LTI Target”) for each participant annually.  In setting the individual LTI Targets, the Committee considers the long-term incentive levels for like positions at peer group companies, as well as relative internal pay equity and the potential long-term incentive opportunities that had been provided to executives under our former executive compensation program.  Half of the LTI Target for each year is granted in the form of a stock option.  The other half of the LTI Target represents a targeted level of restricted stock that can be earned, contingent on achievement of financial performance goals for the fiscal year.

The actual value of the restricted stock award will range from zero to 125% of the target level, depending on performance during the fiscal year against the goals set by the Committee.  The performance goals for restricted stock are the same as the basic performance goals established for the basic component of the annual incentive bonus, as described above.

Restricted stock awards are made after the end of the fiscal year based on achievement of the performance goals established in the first quarter of the year.  Restricted stock awards are subject to forfeiture for three years from the date of grant if the participant’s employment with Valspar terminates for any reason other than death, disability, retirement or a change in control of Valspar.

The future value of these stock options and restricted stock awards depends on the value of Valspar’s common stock, thus aligning the interests of the named executives with stockholder interests.  By linking the amounts of these incentives to the amounts of long-term incentives granted to executives at competitive companies, the program assists Valspar to attract and retain talented executives.  Further, the amount of

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restricted stock awards is designed to reward performance based on objective financial measures, which are considered by the Committee to enhance stockholder value.

No Employment Agreements.  We do not have employment agreements with any of the named executives.  Our named executives serve at the will of the Board of Directors, which enables us to terminate their employment at any time.  However, we have entered into change in control agreements as described below.  Also, the Committee has adopted a policy of making severance payments equal to one year’s salary, and certain other benefits, to executive officers whose employment is terminated without cause as described in more detail under “Severance Policy for Officers” on page 23.  This policy is intended to assist in establishing standardized benefits for termination without cause and to induce all terminated officers to enter into three-year non-compete agreements with Valspar.

No Pension.  None of the named executives is eligible for a Valspar pension, but we have established an unfunded executive retirement plan for Mr. Mansfield as described below under “SERP for Chief Executive Officer.”

Change in Control Agreements.  We have entered into agreements with certain key employees, including the named executives, providing for the continued employment or compensation of the employees, and for the payment of other benefits, after a change in control of Valspar.  The Key Employee Plan, the 1991 Stock Option Plan, the 2001 Stock Incentive Plan and the 2009 Omnibus Equity Plan all provide that stock options and restricted stock granted under such plans all vest immediately upon a change in control of Valspar.  The change in control agreements for the named executives provide for a two-year employment term with the Corporation after the change in control, and a lump sum payment equal to three times an executive’s annual base salary and target annual bonus (plus three years of continued benefits) if such employment is terminated by the Corporation without cause or by the executive for good reason during the two-year employment term.  Further, the Corporation is required to reimburse the executive for excise taxes that might be payable by the executive with respect to these payments, as well as any excise or income taxes that may be payable with respect to the reimbursement.

Retirement.  Under Valspar’s Prior Plans, stock options and restricted stock granted to the named executives vest immediately upon retirement after age 60, or early retirement after age 55 with an executed non-compete agreement.  Effective for fiscal year 2009, stock options and fiscal year 2010 restricted stock granted to executives under the 2009 Omnibus Equity Plan will vest upon retirement after age 55 with an executed non-compete agreement.

SERP for Chief Executive Officer.  We established an unfunded supplemental executive retirement plan (a “SERP”) for Mr. Mansfield in connection with his promotion to Chief Executive Officer in 2005, at age 56.  We adopted a restated SERP for Mr. Mansfield in December 2008 to comply with Section 409A of the Internal Revenue Code and changes to Minnesota income tax laws.  The restated SERP benefits will consist of a lump sum payment following termination of employment, equal to the actuarial equivalent of a monthly annuity for Mr. Mansfield’s life expectancy based on percentages of the average of Mr. Mansfield’s highest five years of compensation over the ten years prior to termination, with such percentages ranging from 25% of the average compensation upon normal retirement at age 60 to 40% of the average compensation upon retirement at age 65.  This plan is a valuable retention tool because, although Mr. Mansfield first became eligible for benefits under the SERP during fiscal 2008 (when he reached the age of 60), his benefits under the SERP increase each year he remains with Valspar through age 65.

Other Compensation.  We provide perquisites and other benefits, as reflected in the table titled “2010 Components of All Other Compensation,” on page 18, to our named executives.  The perquisites may include physical examinations, a car allowance, financial counseling and tax preparation services, club dues, premium equivalent value for life insurance or other items.  We believe these benefits help the Corporation attract and retain qualified executives and are reasonable in amount.  Other benefits include dividends paid on restricted stock grants that are subject to a risk of forfeiture, an annual contribution by the Corporation to The Valspar Savings and Retirement Plan and a cash payment in lieu of retirement contributions that the named executives do not receive due to plan limitations.

Tying Fiscal 2010 Compensation Programs and Elements to Compensation Objectives

We rely on common sense and good judgment in making compensation decisions, based on our overall performance and the performance and responsibilities of the named executives.  We try to achieve a balance among our objectives of pay for performance, alignment with stockholders and management attraction and retention by offering a variety of compensation elements, each with specific goals or emphasis.  We work to

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achieve an appropriate mix of short and long-term compensation, as well as equity and cash compensation, to meet our objectives.  We establish performance goals for objective financial measures at the beginning of each year as a basis for the annual incentive bonus, and those performance goals are also used for restricted stock awards.  We maintain sufficient flexibility to allow us to retain and motivate our named executives to deliver long-term performance and value to stockholders and to align their interests with stockholder interests.

2010 Performance.  Our reported net income was $222.1 million.  Excluding after-tax restructuring charges of $7.7 million, an after-tax gain from the sale of assets of $8.5 million and an after-tax charge for Wattyl acquisition fees of $3.2 million, net income was 25.4% higher than the entry point for fiscal 2010 performance goals.  Our 2010 pre-tax return on capital, a variation of return on equity, was 14.8% (excluding the adjustments above), which was 280 basis points higher than the entry point for fiscal 2010 performance goals.  Our reported net sales were $3.23 billion.  Excluding the 2010 net sales of the Wattyl acquisition of $9.4 million, sales of $3.22 billion in fiscal 2010 were 11.7% higher than the entry point for fiscal 2010 performance goals.  The base salaries of the named executives were increased in 2010, and the bonus earned for corporate performance averaged 156.3% of salary (ranging from 117.1% to 215.4% of base salary for the named executives).  As a result of our fiscal 2010 performance with respect to net income, net sales and pre-tax return on capital (excluding the above restructuring charges, gain from sale of assets and acquisition impacts) against the 2010 performance goals, the annual incentive bonus and restricted stock awards for each of the named executives were higher for 2010 than for 2009.

Competitive Assessments.  The Committee engages outside compensation consultants from time to time.  In 2010, the Committee engaged Meridian Compensation Partners, LLC (“Meridian”), to provide executive compensation advisory services, which included reviewing the effectiveness and competitiveness of our executive and director compensation programs and policies.  Other than services requested by the Committee, Meridian does not provide any services to Valspar.  We use compensation studies provided by Meridian as a benchmark to help determine whether the compensation of our named executives is competitive with compensation offered to executive officers at comparable companies.  To attract and retain experienced, qualified executives, we target compensation at the 50th percentile of our peer group for base salary and the 50th to 75th percentile for total compensation, contingent on achievement of our financial performance goals.

In June 2010, Meridian compared the compensation of our executives to those of a peer group consisting of 42 manufacturing, specialty chemical and consumer product companies with sales generally in the range of $1 billion to $8 billion.  For comparative purposes, pay data for peer group companies used to estimate the competitive market values for our executives was size adjusted by Meridian to ensure correlation to their individual revenue responsibilities.

The companies included in the peer group are listed below.

Eighteen executive positions at Valspar were included in this benchmark study comparing base salary, annual incentives and long-term incentives with the peer group.  This study concluded that in aggregate our total compensation opportunities were within a competitive range of total compensation at peer group companies.  In addition to comparing compensation levels of our executives with compensation levels of executives in comparable positions at peer group companies, the Committee also considers internal pay equity among Valspar executives.

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Roles of Compensation Committee and CEO

The Compensation Committee of our Board of Directors is responsible for all matters relating to compensation of senior management, including the named executives, adoption and administration of compensation and benefit plans and programs and determination and approval of compensation for the named executives, including the CEO.

The Committee has the authority to retain, manage and dismiss compensation consultants or other professionals, as it deems necessary or appropriate.  The Committee directs the work of such consultants and professionals, and decisions regarding compensation of our named executives are ultimately made by the Committee and, in the case of our Chairman and Chief Executive Officer, by the Board of Directors.  The Committee retained Meridian Compensation Partners, LLC during fiscal 2010 as a compensation consultant to assist the Committee with its evaluation and assessment of executive compensation.  Meridian did not provide any services to the Corporation, other than for the Committee, during fiscal 2010.  The Committee has not adopted a policy regarding any other services to be provided by Meridian.  If Meridian, or any other compensation consultant or professional that provides services to the Committee, would provide any other services to the Corporation, the Committee would establish a policy to limit such other services so as to avoid potential conflicts of interest on the part of such compensation consultant or professional.

To assist the Committee, the CEO and Senior Vice President, Human Resources, provide information and recommendations about compensation, programs and policies when requested by the Committee or its Chair.  The other named executives have no related involvement with the Committee.

As requested by the Committee or its Chair, the CEO and other management personnel attend Committee meetings, but are excused at such times as the Committee deems appropriate.

Stock Ownership Guidelines

To more closely align their interests with those of shareholders, our stock ownership guidelines for our officers, including the named executives, are as follows: for the CEO, the guidelines specify stock ownership representing five times his base salary within five years after becoming CEO; for the other named executives, the guidelines specify stock ownership representing three times their base salary within five years after becoming an executive officer.

Stock Option Grant Practices

Valspar’s annual stock option awards are granted in October of each year.  The Corporation does not time its annual grants to coordinate with the release of material non-public information and does not coordinate or time the release of corporate information with grant dates.  On occasion, the Corporation grants options outside of the annual grant cycle for new hires and promotions.  Grants to executive officers are approved by the Committee with an effective date of grant on the date of approval or, if later, the effective date of the new hire or promotion.

Deductibility of Compensation

Section 162(m) of the Internal Revenue Code generally limits to $1 million the tax deductibility of compensation paid by a public company to its chief executive and four other most highly compensated executive officers.  Certain performance-based compensation is not subject to the limitation.  The Compensation Committee considers the deductibility of compensation arrangements as one factor in executive compensation decisions for the named executives.  However, deductibility is not the sole factor used to determine appropriate levels or types of compensation.  The provisions of our equity and annual incentive bonus plans are intended to permit tax deductibility of compensation income of the named executives received under those plans.  Since corporate objectives may not always be consistent with the requirements for full deductibility, it is conceivable that we may enter into compensation arrangements under which compensation in excess of $1 million is not deductible under Section 162(m).

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2010 Summary Compensation Table

The following table presents information concerning compensation paid to or earned by our “named executives” for the fiscal years ended October 29, 2010, October 30, 2009 and October 31, 2008.

____________________

* as of October 29, 2010

The following table presents information concerning components of All Other Compensation referenced in the Summary Compensation Table paid to or earned by our named executives for the fiscal year ended October 29, 2010.  This table is not required, however, we believe it may be helpful to readers in understanding certain components of other compensation paid to our named executives.

2010 Components of All Other Compensation

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The following table presents information regarding the grants of annual incentive bonus compensation, stock options and restricted stock during fiscal 2010 to our executive officers named in the Summary Compensation Table.

2010 Grants of Plan-Based Awards

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Additional information about the elements of compensation paid to the named executives can be found in “Compensation Program Elements Awarded in Fiscal 2010,” beginning on page 12.

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The following table presents information regarding the number of shares of unexercised stock options and the number of shares and value of unvested restricted stock outstanding on October 29, 2010 for our executive officers named in the Summary Compensation Table.

Outstanding Equity Awards at Fiscal Year-End