EXECUTIVE LEADERSHIP COMPENSATION PLAN

EXHIBIT 10.29.2

EXECUTIVE LEADERSHIP COMPENSATION PLAN

The purposes of the Executive Leadership Compensation Plan, as amended and restated, (“ELCP” or the “Plan”) for Avery Dennison Corporation (the “Company”) are as follows:

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3. PARTICIPATION

Participation in the Plan is limited to key executives of the Company who have been designated as Participants by the Chief Executive Officer, Vice President, Human Resources and the Vice President, Compensation and Benefits. Participants may include, but are not limited to: Corporate, Staff and Division Officers of the Company; non-officer General Managers of businesses with greater than $60 million in revenues; and key functional Managers.

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Participants will have the opportunity to earn an annual variable bonus.

The Target Bonus is established for each Participant and may be up to 80% of Base Salary.

i. A Participant’s annual bonus payout is based on the Company’s (and where appropriate, group’s, division’s or subsidiary’s) performance versus pre-established Performance Objectives (may be adjusted).

ii. Within the first 90 days of the beginning of each Plan Year, Performance Objectives for each Participant will be established. Specific Performance Objectives will vary based on the specific business strategy of the Company and the Business Unit, and may include such measures as:

iii. Bonus payouts will be determined based upon a schedule as approved by the Committee, or as determined by the Chief Executive Officer for the groups, divisions and subsidiaries of the Company.

iv. Bonus payouts will be determined based on the formula used to measure the Company’s or the respective business unit(s) (as applicable) results for each Participant, and calculated in accordance with the Performance Objectives. The maximum annual business unit bonus payout is 175% of the Participant’s base salary in effect at the end of the year (150% for Participants measured by corporate Performance Objectives).

v. Individual MBOs are used to modify the bonus payout. This modifier is multiplied by the bonus payout calculated in section (iv) above to determine the Participant’s total bonus payout. The MBO modifier ranges from 0-110%.

v. The Committee may, in its sole discretion, increase or decrease bonus amounts that would otherwise be payable under the Plan.

vi. No bonus payment will exceed the Bonus Maximum for any Plan Year.

Participants who are eligible to receive a bonus under the MMBP during part of the Plan Year and are later designated as Participants under the Plan may receive a bonus under the Plan on a prorated basis.

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If a Participant is on an approved leave of absence (including, without limitation, leaves caused by short-term disability) for more than one month during the Plan Year, then the employee will continue to participate for that Plan Year; provided that the Committee may, in its sole discretion, decrease the bonus that would otherwise be payable under the Plan on a prorated basis.

Participants who terminate prior to payment of the annual bonus for any reason other than death, disability, or retirement are not eligible to receive awards under this Plan, unless approved by the Chief Executive Officer or the Senior Vice President, Human Resources.

No Participant may participate in any other annual Company bonus plan, except as provided for herein.

The bonus awarded by the Committee for each Participant will be paid in cash and in full as soon as conveniently possible after such award by the Committee and calculation of the Company’s (or the group’s, division’s or subsidiary’s) achievement of the Performance Objectives, but in any event not later than three months from the last day of the Plan Year to which such bonus relates; provided that participants may have elected to defer the receipt of all or part of such bonus in accordance with established deferred compensation plans offered by the Company.

The Committee will administer and interpret the provisions of the Plan, which interpretations will be conclusive and binding. The Committee’s authority will include, but is not limited to:

i. Approving the Designation of Participants;

ii. Establishing and adjusting Performance Objectives (including the definitions therefor) for the Company; provided that the Chief Executive Officer will establish and adjust the Performance Objectives (including the definitions therefor) for groups, divisions and subsidiaries of the Company;

iii. Approving performance results and bonus payments; and

iv. Making exceptions to the provisions of the Plan made in good faith and for the benefit of the Company

If an event occurs during a Plan Year that materially influences the performance measures of the Company and is deemed by the Committee to be extraordinary and out of the

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control of management, the Committee may, in its sole discretion, increase or decrease the Performance Objectives used to determine the annual bonus payout. Events warranting such action may include, but are not limited to, changes in accounting, tax or regulatory rulings and significant changes in economic conditions resulting in windfall gains or losses.

The Committee may amend, suspend or terminate the Plan, in whole or in part, at any time, if, in the sole judgment of the Committee, such action is in the best interests of the Company. Notwithstanding the above, any such amendment, suspension or termination must be prospective in that it may not deprive Participants of that which they otherwise would have received under the Plan for the current Plan Year had the Plan not been amended, suspended or terminated.

The effective date of the Plan is January 1, 2004.

Section and Article titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.

Nothing contained in the Plan nor any action taken in the administration of the Plan will be construed as a contract of employment or as giving a Participant any right to be retained in the service of the Company.

In the event that any provision of the Plan is held to be invalid, void or unenforceable, the same will not effect, in any respect whatsoever, the validity of any other provision of the Plan.

The Company will withhold from all payments to be made under the Plan an amount sufficient to satisfy all federal, state and local tax withholding requirements.

The Plan will be governed in accordance with the laws of the State of California.

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