Exhibit 10.22
ESCO TECHNOLOGIES INC.
COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
ADOPTED MAY 10, 2001
1. Purpose. The purpose of the Plan is to enable ESCO Technologies
Inc. (the "Company") to compensate each non-employee member of the board of
directors of the Company (such board of directors hereinafter referred to as the
"Board" and each such non-employee member of the Board hereinafter referred to
as the "Director") who contributes to the Company's success by his or her
ability, ingenuity and knowledge, and to better ensure that the interests of
such Director are more closely aligned with the interests of the Company's
shareholders by paying a significant portion of his or her compensation in
shares of the Company's common stock ("Common Stock").
2. Payment of Annual Retainer in Common Stock. Each Director shall be
paid an annual retainer fee (the "Retainer Fee") payable partially in cash ( the
"Cash Portion of the Retainer Fee") and partially in shares of Common Stock (the
"Stock Portion of the Retainer Fee"). From time to time, the Human Resources and
Ethics Committee of the Board ("HREC") shall determine the total amount of the
Retainer Fee, the Cash Portion of the Retainer Fee and the Stock Portion of the
Retainer Fee. The Cash Portion of the Retainer Fee and the Stock Portion of the
Retainer Fee shall be payable or distributable, as applicable, in quarterly
installments no later than the 15th business day of each quarter of the
Company's fiscal year and shall represent consideration for services to be
performed for the quarter then beginning; provided, that the HREC reserves the
right to change the frequency of payment of the Retainer Fee.
3. Other Compensation. In addition to payment of the Retainer Fee
provided for in Section 2, each Director shall be paid such additional cash fees
for attendance at Board and Board Committee meetings as approved by the HREC
from time to time.
4. Deferral of Compensation. Directors may elect to defer the receipt
of all (but not less than all) of the quarterly installment of the Cash Portion
of the Retainer Fee in stock equivalents and/or to defer the receipt of all (but
not less than all) of the quarterly installment of the Stock Portion of the
Retainer Fee in stock equivalents by executing and delivering an election form
to the Company at such time and subject to such other conditions as the Company
shall determine; provided, that any such election shall be applicable only to
future Retainer Fees with respect to which the Director, at the time of
election, has no current right to receive. Any newly elected Director may elect
to defer Retainer Fees prior to the effective date of his or her election to the
Board. Except as otherwise provided herein, the election to defer Retainer Fees
shall be irrevocable as to amounts earned following such election and shall
remain in effect until a new election form is delivered to the Company. Any such
new election form shall apply only to future Retainer Fees.
(a) Deferred Compensation Account.
(i) The Company shall establish a deferred compensation
bookkeeping
account (the "Account") for each Director electing to
defer Retainer Fees. As of the date a Retainer Fee would otherwise be paid to
the Director (absent the deferral election), the Company shall credit to the
Account the amount of Retainer Fees which the Director has elected to defer. The
credit shall be in stock equivalents ("Stock Equivalents") only, determined as
follows:
(a) For each share of Common Stock otherwise payable
as the quarterly installment of the Stock Portion of the Retainer Fee which the
Director elects to defer, the Company shall credit the Account with one Stock
Equivalent.
(b) For the portion of the quarterly installment of
the Cash Portion of the Retainer Fee which the Director elects to defer, the
Company shall credit the Account with that number of Stock Equivalents equal to
the dollar amount of such portion, divided by the Fair Market Value per share of
the Common Stock (as hereinafter defined) on the first day of the corresponding
quarter.
"Fair Market Value" as of any date shall mean the average of
the high and low prices of the Common Stock on the New York Stock Exchange on
such date (or on the most recent date on which Common Stock is traded).
(ii) The Account shall be credited, as of the payment date of
any cash dividends paid on Common Stock, with additional Stock Equivalents equal
to the product of the per share dividend and the number of Stock Equivalents
credited to the Account and dividing such product by the Fair Market Value per
share of the Common Stock as of the dividend payment date. The Account shall be
credited, as of the payment date of any stock dividends paid on Common Stock
with additional Stock Equivalents equal to the product of the per share dividend
and the number of Stock Equivalents credited to the Account
(b) Distribution.
(i) Except as otherwise provided in the Plan, the balance in
the Account shall be distributed to the Director commencing on the date which
the Director has specified on the election form; provided, however, that such
distribution must begin no later than the Director's 65th birthday or upon
termination of the Director's service as a Director, whichever is later
("Commencement Date"). Distribution shall be made in cash (the "Cash
Distribution") or in shares of Common Stock (the "Common Stock Distribution") as
the Director shall elect in the election form; provided, that the portion of the
Account representing the Stock Portion of the Retainer Fee which has been
deferred may only be distributed in the form of a Common Stock Distribution. The
Cash Distribution shall equal the number of Stock Equivalents then credited to
the Account as of the Commencement Date multiplied by the Fair Market Value per
share of Common Stock as of such date. If Cash Distribution is to be made in
installments, the amount of such distribution shall be based upon the number of
Stock Equivalents credited to the Account as of the date each installment is to
be made, multiplied by the Fair Market Value per share of Common Stock as of
each such date. The Common Stock Distribution shall equal the number of shares
of Common Stock equal to the number of Stock Equivalents credited to the Account
as of the Commencement Date; provided that Distribution of Common Stock shall be
rounded down to the nearest whole share of Common Stock and any fractional share
shall be paid in cash in an amount equal to the fractional share multiplied by
the Fair Market Value per share as of the
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Commencement Date.
(ii) Distribution shall be made either in a lump sum or, as
specified on the Director's election form, in quarterly or annual installments,
over a period not to exceed 5 years from the Commencement Date; provided, that
Common Stock Distributions may not be made more frequently than semi-annually.
An election to change the method (cash or stock) and/or frequency
(semi-annually, annually, etc.) of distribution with respect to the Account must
be received by the Company prior to January 1 of the calendar year in which
distributions are to be made pursuant to such election and must be approved in
advance by the HREC. The lump sum or first periodic installment shall be made by
the Company as promptly as practicable, but not more than 60 days following the
initial date of distribution as determined above.
(iii) Notwithstanding any other provisions hereof, in the
event the Director is removed from the Board or terminates service on the Board
on account of death, the balance in the Account shall be distributed in a lump
sum within 60 days after January 1 of the following calendar year or at such
earlier time as may be determined by the HREC (the "Distribution Date").
Otherwise, such distribution shall be made in accordance with the Director's
election form in effect at his death or at the time of removal from the Board. A
Cash Distribution shall equal the number of Stock Equivalents then credited to
the Account as of the Distribution Date multiplied by the Fair Market Value per
share of Common Stock as of the Distribution Date. A Common Stock Distribution
shall equal the number of shares of Common Stock equal to the number of Stock
Equivalents credited to the Account as of the Distribution Date.
(iv) In the event the Director becomes disabled (as determined
by the HREC), the Commencement Date and/or payment schedule with respect to the
balance in the Account may be accelerated by the HREC in its sole discretion.
(v) The Company shall deduct from all distributions hereunder
any taxes required to be withheld by the federal or any state or local
government.
5. Change in Control.
(a) Notwithstanding any other provision of the Plan, if a Change in
Control occurs and within one year subsequent to such Change in Control the
Director ceases to serve as a member of the Board for any reason, the balance in
the Account shall be paid in a lump sum to the Director, in the manner
determined in paragraph 5(b) below, within 60 days after January 1 of the
calendar year following the year in which such termination occurs, unless such
Director has completed a new election form after the Change in Control but prior
to his or her termination of service, in which case the provisions of paragraph
(b) below will not apply.
(b) The payment determined under this paragraph 5(b) shall be a Cash
Distribution in an amount equal to the greater of the following:
(i) the number of Stock Equivalents then credited to the
Account multiplied by the Fair Market Value per share of Common Stock as of
either (i) the date of termination of the Director's service on the Board (if
such Common Stock is still in existence), or
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(ii) the date of the Change in Control, whichever is greater; or
(ii) the number of Stock Equivalents then credited to the
Account multiplied by the fair market value per share of the consideration
received by holders of Common Stock in the Change in Control as of either (i)
the date of termination of the Director's service on the Board, or (ii) the date
of the Change in Control, whichever is greater.
A "Change in Control" shall be defined to mean (i) a merger,
consolidation or reorganization of the Company in which, as a consequence of the
transaction, the incumbent Directors immediately prior to such transaction do
not constitute a majority of the directors of the continuing or surviving
corporation; (ii) the acquisition, directly or indirectly, of the power to vote
50% or more of the outstanding Common Stock of the Company by any person, entity
or "group" (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934); or (iii) any sale or other transfer, in one or a series
of transactions, of all or substantially all of the assets of the Company;
unless, in any case, a majority of then-current Directors determines prior to
such transaction or event that it shall not, for purposes of the Plan, be deemed
a Change in Control.
(c) The Company shall promptly reimburse the Director for all
legal fees and expenses reasonably incurred in successfully obtaining or
enforcing any right or benefit provided under this Section.
6. Distribution of Common Stock. The maximum number of shares of Common
Stock available for distribution pursuant to the Plan shall be 200,000 shares,
subject to adjustment as set forth in Section 7. The shares of Common Stock
issuable to Directors under the Plan shall be issued from shares held in the
Company's treasury or other source as may be determined by the Company.
7. Adjustment to Shares of Stock Issuable Pursuant to Plan. In the
event of any change in the outstanding shares of Common Stock of the Company by
reason of any stock split, stock dividend or recapitalization of the Company, an
equitable adjustment shall be made to the number of shares of Common Stock
issuable under the Plan, the amount of the Stock Portion of the Retainer Fee set
forth in Section 2 and the number of Stock Equivalents credited to the Account
for any Director, as the HREC determines is necessary or appropriate, in its
discretion, to give proper effect to such corporate action. Any such adjustment
determined in good faith by the HREC shall be conclusive and binding for all
purposes of the Plan.
8. Amendments. Section 5 of the Plan may not be amended or modified or
terminated after the occurrence of a Change in Control with respect to benefits
accrued as of such occurrence. The Plan may otherwise be amended, modified or
terminated by the HREC at any time, provided that no such action shall reduce
the amounts credited to the Account of any Director immediately prior to such
action or change the time, method or manner of distribution of such Account.
9. Miscellaneous.
(a) The provisions of the Plan shall be binding upon and enforceable
against
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the Company and/or the continuing or surviving corporation in a Change of
Control.
(b) Neither the Director nor any other person shall have any interest
in any fund or in any specific asset of the Company by reason of amounts
credited to the Account of a Director hereunder, or the right to exercise any of
the rights or privileges of a shareholder (including the right to vote) with
respect to any Stock Equivalents credited to the Account or to receive any
distribution under the Plan except as expressly provided for in the Plan.
Distributions hereunder shall be made from the general assets of the Company,
and the rights of the Director shall be those of an unsecured general creditor
of the Company.
(c) The Company may require that the Directors shall agree to acquire
shares of Common Stock under the Plan for investment and not for resale or
distribution except pursuant to a registration statement under the Securities
Act of 1933 or an exemption from such registration, and may require that
certificates representing such shares shall bear a customary restrictive legend
to this effect.
(d) The interest of the Director under the Plan shall not be assignable
by the Director or the Director's beneficiary or legal representative, either by
voluntary assignment or by operation of law, and any such attempted assignment
shall be ineffective to transfer the Director's interest; provided, however,
that (i) the Director may designate beneficiaries to receive any benefit payable
under the Plan upon death, and (ii) the legal representative of the Director's
estate may assign his or her interest under the Plan to the persons entitled to
any such benefit.
(e) Nothing contained herein shall impose any obligation on the Company
to continue the tenure of the Director beyond the term for which such Director
has been elected or prevent his or her removal.
(f) The Plan shall be interpreted by and all questions arising in
connection therewith shall be determined by the HREC, whose interpretation or
determination shall be conclusive and binding.
(g) If any amounts deferred pursuant to the Plan are found in a final
judgment or other order to have been includible in gross income by a Director
prior to payment of such amounts from his or her Account, such amounts shall be
immediately paid to such Director, notwithstanding any election pursuant to
Section 4.
(h) The provisions of the Plan shall be governed by and construed in
accordance with the laws of the State of Missouri, without regard to the
principles of conflicts of law which might otherwise apply.
10. Effective Date. The Plan shall become effective July 1, 2001.
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ESCO TECHNOLOGIES INC.
COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
ELECTION FORM
Pursuant to the ESCO Technologies Inc. Compensation Plan For Non-Employee
Directors:
1. COMPENSATION TO BE DEFERRED:
/ / I hereby elect to defer payment of my Cash Portion of the
Retainer Fee.
/ / I hereby elect to defer distribution of my Stock Portion of the
Retainer Fee.
I understand that all deferrals will be credited as Stock Equivalents
to my Deferred Compensation Account.
2. TYPE OF DISTRIBUTION:
Stock Portion of the Retainer Fee:
/ / Lump Sum - in shares
/ / Installments over ____years (may not exceed 5 years) in
shares
/ / Semi-Annually in shares
/ / Annually in shares
Cash Portion of the Retainer Fee:
/ / Lump Sum - in cash
/ / Lump Sum - in shares
/ / Installments over ____years (may not exceed 5 years)
/ / Semi-Annually ______% in cash; ____% in shares
/ / Annually ______% in cash; ____% in shares
/ / Quarterly in cash
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3. TIME OF DISTRIBUTION:
/ / Lump sum distribution to be made
on __________________________.
/ / Installment distributions to commence
on _______________________.
/ / Distribution to be made or commence on the effective
date of my retirement as a Director of the Company.
4. DESIGNATION OF BENEFICIARY: In the absence of such designation, payment
will be paid to your estate. (Please include social security number and
address.)
Name Address Social Security Number
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5. This deferment will remain in effect with respect to each such
subsequent quarter until such time as I may revoke the deferment or
elect by later filings of this election form to extend the dates or
alter the manner of payment that was specified in my most recent
election. Such later filings shall apply only to Retainer Fees to be
earned in the future.
Director: ________________________________ Date: ___________________________
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