Exhibit 10.2
ESCO TECHNOLOGIES INC.
PERFORMANCE COMPENSATION PLAN
FOR CORPORATE, SUBSIDIARY AND
DIVISION OFFICERS AND KEY MANAGERS
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Adopted August 2, 1993
Amended and Restated Effective
As of October 1, 1995
Fifth Sentence of Section V Amended on November 9, 2000
Restated on November 28, 2000 to Reflect Name Change
Restated on November 25, 2002 to reflect changes to Sections VII,
IX and XI-E
I. PURPOSE
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The purpose of this ESCO Technologies Inc. Performance Compensation
Plan for Corporate, Subsidiary and Division Officers and Key Managers is to
provide an annual incentive plan for selected corporate, subsidiary and
division officers and key managers which is based upon their performance
and the performance of the Company and its Subsidiaries and Divisions
during a Fiscal Year. In particular, this plan is designed to (a) pay such
employees a portion of their total compensation on the basis of their
performance during a given Fiscal Year, (b) tie Subsidiary and Division
management into Corporate performance objectives for a given fiscal year,
and (c) stay competitive with general industry trends in executive
compensation.
II. DEFINITIONS
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The following words shall have the following meanings unless the
context clearly requires otherwise:
A. "Board of Directors" means the Board of Directors of ESCO
Technologies Inc.
B. "Executive Compensation Executive" means the Executive
Compensation Executive of ESCO Technologies Inc. C. "Chief Executive
Officer" means the Chief Executive Officer of ESCO Technologies Inc.
D. "Committee" means the Human Resources and Ethics Committee of
the Board of Directors of ESCO Technologies Inc. which is comprised of
members who are not eligible to participate in the Plan.
E. "Company" means ESCO Technologies Inc., a Missouri
Corporation.
F. "Division" means a division of the Company or of a Subsidiary.
G. "Fiscal Year" means the fiscal year of the Company which is
currently the twelve-month period ending September 30.
H. "Participant" means an employee of the Company, a Subsidiary
or a Division eligible to receive a Performance Compensation Award.
I. "Performance Compensation Award" means the amount payable to a
Participant under the Plan.
J. "Plan" means this ESCO Technologies Inc. Performance
Compensation Plan for Corporate, Subsidiary and Division Officers and
Key Managers.
K. "Subsidiary" means any corporation or partnership more than
50% of which is owned directly or indirectly by the Company.
III. ELIGIBILITY
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Participation in the Plan shall be limited to those employees of
the Company, Subsidiaries and Divisions as the Committee shall
determine upon recommendation by the Chief Executive Officer.
Additions or deletions to the Plan during a Fiscal Year shall be made
only in the event of an unusual circumstance, such as a promotion or
new hire.
IV. DETERMINATION OF MINIMUM AMOUNT PAYABLE
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The Committee, after consultation with the Executive Compensation
Executive, shall make a recommendation to the Board of Directors of
the Company and to the Board of Directors of each Subsidiary of a
minimum aggregate payment under the Plan to be made by each such
employer for each Fiscal Year. The final determination of the minimum
aggregate payment under the Plan for each Fiscal Year to be made by
the Company and each Subsidiary shall be made by its respective Board
of Directors prior to the end of such Fiscal Year.
V. DETERMINATION OF PERFORMANCE COMPENSATION AWARDS
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As soon as practicable after the end of each Fiscal Year,
Performance Compensation Awards for each Participant for such Fiscal
Year shall be determined. The Chief Executive Officer shall submit
proposed Performance Compensation Awards for each Participant to the
Committee based upon that Participant's performance during the Fiscal
Year; provided, that the Committee may, following such submission,
consider the further recommendations of the Chief Executive Officer.
Final determination of the amount of each Participant's Performance
Compensation Award (if any) as well as the total payment under the
Plan for each Fiscal Year shall be the responsibility of the
Committee. Recommended Performance Compensation Awards to Participants
may be denied, or adjusted upward or downward by the Committee, as, in
the Committee's sole judgment, is prudent based upon its assessment of
the Participant's performance and Corporate, Subsidiary or Division
performance during the Fiscal Year. Performance Compensation Awards
for some Participants may be based upon predetermined Subsidiary,
Division or individual performance targets whereas Performance
Compensation Awards for other Participants may be totally
discretionary as determined by the Committee. However, total
Performance Compensation Awards under the Plan shall be no less than
the minimum determined by the Board of Directors of the Company and
each Subsidiary in accordance with Section IV.
Upon approval by the Committee, the Executive Compensation
Executive shall make arrangements to ensure that each Participant is
notified of the amount of his or her Performance Compensation Award.
VI. MANNER OF AND TIME FOR PAYMENTS.
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Performance Compensation Awards will normally be paid in cash by
November 30th following the end of each Fiscal Year. However, each
Participant shall have the right to elect to defer all or part of his
or her payment under the Award until the following January. Such
election must be made no later than the December 31st of the Fiscal
Year with respect to which the Performance Compensation Award is
granted by filing with the Executive Compensation Executive an
executed form supplied by the Company. Except in the case of hardship
described below, such election may only be revoked prior to the
December 31st of the Fiscal Year with respect to which the Performance
Compensation Award is granted. All elections (or revocations)
hereunder must be made by filing with the Executive Compensation
Executive an executed form supplied by the Company.
An election to defer a Performance Compensation Award may impact
the calculation of a Participant's pension benefit because the
calculation of such benefit is based on the average compensation
received during the period used to calculate pension benefits (e.g.,
highest five years of earnings).
The Committee may direct, upon a showing of an emergency beyond
the Participant's control which results in severe financial hardship,
that a Participant who has elected to defer payment until the
following January receive so much of his or her payment prior to such
time as will enable the Participant to meet such emergency.
VII. DESIGNATION OF BENEFICIARY
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If a Participant dies prior to receiving the entire amounts due
under the Plan, the unpaid amounts will be paid in a lump sum to his
or her beneficiary within 90 days after the end of the Fiscal Year in
which his death occurs.
Each Participant shall have the right to designate a beneficiary,
and to change such beneficiary from time to time, by filing a request
in writing with the Executive Compensation Executive. In the event the
Participant shall not have so designated a beneficiary, or in the
event a beneficiary so designated shall predecease the Participant,
the amounts otherwise payable to such beneficiary shall be paid to the
person in, or divided equally among, the first of the following
classes of successive preference beneficiaries in which there shall be
any person surviving such Participant:
(a) the Participant's spouse
(b) the Participant's children
(c) the Participant's executors or administrators.
The share payable to any minor pursuant to the provisions hereof
may be paid to such adult or adults as, in the opinion of the
Executive Compensation Executive, have assumed the custody and
principal support of such minor.
VIII. ADMINISTRATION OF THE PLAN
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The overall administration and control of the Plan, including
final determination of Performance Compensation Awards to each
Participant is the responsibility of the Committee. The Executive
Compensation Executive shall be responsible for implementing the
actions required under the Plan.
IX. VESTING
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A Participant must be in the employ of the Company, Subsidiary or
Division through the last day of the Fiscal Year with respect to which
a Performance Compensation Award is granted in order to be considered
for the grant of such an Award by the Committee. Such Participant must
also (subject to specific Committee action to the contrary as
hereinafter set forth in this Section IX) be an employee of the
Company, Subsidiary or Division on the date the award is payable
pursuant to Section VI hereof. The final determination as to Awards to
be granted, and if so, the amount of such Awards, shall be made by the
Committee. Notwithstanding any other provision hereof, and in
accordance with this Section IX, in the event a Participant terminates
or is terminated by the Company, Subsidiary or Division, before or
after the end of the Fiscal Year for any reason, including, but not
limited to, retirement, disability, or death, the Committee shall have
the sole discretion as to whether any such Award shall be granted,
and, if so, the amount of such Award and the time such Award shall be
paid.
X. AMENDMENT OR TERMINATION
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The Plan may be amended or terminated at any time by action of
the Committee.
XI. MISCELLANEOUS
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A. All payments under the Plan shall be made from the general
assets of the Company, Subsidiary or Division. To the extent any
person acquires a right to receive payments under the Plan, such right
shall be no greater than that of an unsecured general creditor of the
Company, Subsidiary or Division.
B. Nothing contained in the Plan and no action taken pursuant
thereto shall create or be construed to create a trust of any kind, or
a fiduciary relationship between the Company, a Subsidiary or Division
and any other person.
C. No amount payable under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, either voluntary or involuntary, and
any attempt to so alienate, anticipate, sell, transfer, assign,
pledge, encumber or charge the same shall be null and void. No such
amount shall be liable for or subject to the debts, contracts,
liabilities, engagements, or torts of any person to whom such benefits
or funds are or may be payable.
D. Nothing contained in the Plan shall be construed as conferring
upon any Participant the right to continue in the employ of the
Company, Subsidiary or Division nor to limit the right of his or her
employer to discharge the Participant at any time, with or without
cause.
E. The Plan shall be construed and administered in accordance
with the laws of the State of Missouri, without regard to the
principles of conflicts of law which might otherwise apply.