PALL CORPORATION 2004 EXECUTIVE INCENTIVE BONUS PLAN

 

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                                                                    EXHIBIT 10.2

 

 

                                PALL CORPORATION

 

                       2004 EXECUTIVE INCENTIVE BONUS PLAN

 

                                      _____

 

 

1.       PURPOSE

 

         This document sets forth the Pall Corporation 2004 Executive Incentive

Bonus Plan as adopted by the Compensation Committee of the Board of Directors on

October 16, 2003 effective for the fiscal year beginning August 3, 2003 and

subsequent fiscal years, approved by shareholders at the Annual Meeting on

November 19, 2003 and amended by the Board of Directors, acting by its

Compensation Committee, on July 19, 2005.

 

         The purpose of the Plan is to encourage greater focus on performance

among the key executives of the Corporation by relating a significant portion of

their total compensation to the achievement of annual financial objectives.

 

2.       CERTAIN DEFINITIONS

 

         As used herein with initial capital letters, the following terms shall

have the following meanings:

 

         "AVERAGE EQUITY" shall mean, for any Fiscal Year, the average of

stockholders' equity as shown on the fiscal year-end consolidated balance sheet

of the Corporation and its subsidiaries as of the end of such Fiscal Year and as

of the end of the immediately preceding Fiscal Year except that the amounts

shown on said balance sheets as "Accumulated other comprehensive" income or

loss, as the case may be, shall be disregarded.

 

         "BASE SALARY" shall mean, with respect to any Executive and for any

Fiscal Year, the annual rate of base salary in effect for the Executive as of

the first day of such year or, if later, as of the first day of the Executive's

Term of Employment, as determined under the Executive's Employment Agreement.

 

         "BOARD OF DIRECTORS" shall mean the Board of Directors of the

Corporation.

 

         "BONUS" shall mean the bonus payable to an Executive under this Plan

for any Fiscal Year.

 

         "CEO" shall mean the Chief Executive Officer of the Corporation.

 

 

 

 

 

 

 

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         "CHANGE IN CONTROL" means the occurrence of any of the following:

 

         (a)      the "Distribution Date" as defined in Section 3 of the Rights

                  Agreement dated as of November 17, 1989 between the

                  Corporation and United States Trust Company of New York as

                  Rights Agent, as amended by Amendment No. 1 thereto dated

                  April 20, 1999, and as the same may have been further amended

                  or extended to the time in question or in any successor

                  agreement (the "Rights Agreement"); or

 

         (b)      any event described in Section 11(a)(ii)(B) of the Rights

                  Agreement; or

 

         (c)      any event described in Section 13 of the Rights Agreement; or

 

         (d)      the date on which the number of duly elected and qualified

                  directors of the Corporation who were not either elected by

                  the Board of Directors or nominated by the Board of Directors

                  or its Nominating Committee for election by the shareholders

                  shall equal or exceed one-third of the total number of

                  directors of the Corporation as fixed by its by-laws;

 

provided, however, that no Change in Control shall be deemed to have occurred,

and no rights arising upon a Change in Control as provided in Section 6 shall

exist, to the extent that the Board of Directors so determines by resolution

adopted prior to the Change in Control.

 

         "CODE" shall mean the Internal Revenue Code of 1986, as amended.

 

         "COMMITTEE" shall mean the Compensation Committee of the Board of

Directors.

 

         "CORPORATION" shall mean Pall Corporation.

 

         "COVERED EXECUTIVE" shall mean, with respect to any Fiscal Year, each

individual who is a "Covered Employee" of the Corporation for such year for the

purpose of section 162(m) of the Code.

 

         "EMPLOYMENT AGREEMENT" shall mean, with respect to any executive

employee of the Corporation, an employment agreement between the Corporation and

such employee which provides that the employee shall be eligible to receive

annual bonuses under this Plan.

 

         "EXECUTIVE" shall mean an executive employee of the Corporation with

whom the Corporation has entered into an Employment Agreement.

 

         "FISCAL YEAR" shall mean the fiscal year of the Corporation ending on

July 31, 2004, and each subsequent fiscal year of the Corporation.

 

         "MAXIMUM R.O.E. TARGET" shall mean, for any Fiscal Year, the Return on

Equity that must be achieved or exceeded in order for the Performance Percentage

for the year to equal 100%, as determined by the Committee prior to the first

day of such year or within such period of time thereafter as may be permitted

under the regulations issued under ss.162(m) of the Code.

 

 

 

 

 

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         "MINIMUM R.O.E. TARGET" shall mean, for any Fiscal Year, the Return on

Equity that must be exceeded in order for any Bonus to be paid to any Executive

for the year, as determined by the Committee prior to the first day of such year

or within such period of time thereafter as may be permitted under the

regulations issued under ss.162(m) of the Code.

 

         "NET EARNINGS" shall mean, for any Fiscal Year, the after-tax

consolidated net earnings of the Corporation and its subsidiaries as certified

by the Corporation's independent accountants for inclusion in the annual report

to shareholders ("Annual Report"), adjusted so as to eliminate the effects of

any decreases in or charges to earnings for (a) the effect of foreign currency

exchange rates, (b) any acquisitions, divestitures, discontinuance of business

operations, restructuring or any other special charges, (c) the cumulative

effect of any accounting changes, and (d) any "extraordinary items" as

determined under generally accepted accounting principles, to the extent such

decreases or charges referred to in clauses (a) through (d) are separately

disclosed in the Corporation's Annual Report for the year.

 

         "PLAN" shall mean the Pall Corporation Executive Incentive Bonus Plan,

as set forth herein and as amended from time to time.

 

         "RETURN ON EQUITY" shall mean, for any Fiscal Year, the percentage

determined by dividing the Net Earnings for the year by the Average Equity for

the year.

 

         "TARGET BONUS PERCENTAGE" shall mean, with respect to any Executive,

the target bonus percentage specified for such Executive in his or her

Employment Agreement.

 

3.       DETERMINATION OF BONUS AMOUNTS

 

         For each Fiscal Year falling in whole or in part within an Executive's

Term of Employment, as defined in his or her Employment Agreement, the Executive

shall be entitled to receive a Bonus in an amount determined in accordance with

the provisions of this Section 3, subject, however, to the provisions of Section

4.

 

         (a) The amount of the Bonus payable to an Executive for each such

Fiscal Year shall be equal to (i) the Target Bonus Percentage of the Executive's

Base Salary for such year, multiplied by (ii) the Performance Percentage for

such year, as determined under (b) below.

 

         (b) The Performance Percentage for any Fiscal Year shall be determined

in accordance with the following provisions:

 

             (i) If the Return on Equity equals or exceeds the Maximum R.O.E.

         Target for the year, the Performance Percentage for the year shall be

         100%.

 

             (ii) If the Return on Equity equals or is less than the Minimum

         R.O.E. Target for the year, the Performance Percentage for the year

         shall be zero, and no Bonus shall be payable under the Plan for such