UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )

 

Check the appropriate box:

Lydall, Inc.

(Name of Registrant as Specified in Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

NOTICE OF ANNUAL MEETING

To: The Owners of Lydall, Inc. Common Stock

You are cordially invited to attend the Annual Meeting of Stockholders.

The Annual Meeting of Stockholders will be held for the purposes of:

All stockholders are invited to attend the Annual Meeting. However, whether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. Therefore, we urge you to vote promptly and submit your proxy by telephone, via the Internet, or by signing, dating and returning the enclosed proxy card in the enclosed prepaid envelope. If you decide to attend the Annual Meeting, you have the right to vote in person even if you have previously submitted your proxy. If you hold your stock in “street name,” you should follow the voting instructions provided by your bank, broker or other nominee.

Sincerely,

Chad A. McDaniel
Vice President, General Counsel and Corporate Secretary

Manchester, CT
March 19, 2014

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 25, 2014.

This proxy statement, along with the Lydall, Inc. 2013 Annual Report and Form 10-K,
are available free of charge on our website at:
www.lydall.com and by clicking on Investor Relations

 

PROXY STATEMENT

 

TABLE OF CONTENTS

GENERAL INFORMATION			1
Options for Voting			1
Voting Mechanics			2
Majority Voting Policy for Election of Directors			2
Cost of Solicitation			3
Eligibility to Vote			3
Obtaining Copies			3
PROPOSAL 1 – ELECTION OF DIRECTORS			3
Biographical Information			4
Nomination Process			5
Qualifications of Nominees			6
Nominations by Stockholders			7
PROPOSAL 2 – ADVISORY VOTE ON EXECUTIVE COMPENSATION			8
PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS			9
Principal Fees and Services			9
CORPORATE GOVERNANCE			10
General			10
Committees			10
Leadership Structure			12
Independence Determination			12
Compensation Committee Interlocks and Insider Participation			12
Risk Oversight			12
Related Party Transactions			13
Board Attendance			13
Communications With Directors			13
Additional Disclosures			14
REPORT OF THE AUDIT REVIEW COMMITTEE			15
COMPENSATION DISCUSSION AND ANALYSIS			16
Overview – Executive Summary			16
Compensation Objectives			17
Create Incentives That Motivate Performance			17
Align Management and Stockholder Interests			17
Attract, Motivate and Retain Executives			17
Implementing Our Objectives			17
Overseeing Executive Compensation Programs			17
Determining Compensation			17
Role of Management			18
Role of Consultants			18

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PROXY STATEMENT

 

GENERAL INFORMATION

This proxy statement of Lydall, Inc. (“Lydall” or the “Company” or “us” or “our”), a Delaware corporation, is being mailed or otherwise furnished to stockholders on or about March 19, 2014 in connection with the solicitation by the Board of Directors (the “Board”) of Lydall of proxies to be voted at the 2014 Annual Meeting of Stockholders (the “Annual Meeting”). The Annual Meeting will be held on April 25, 2014, at 9:00 a.m. at the Hilton Hartford, Connecticut Salon B, 315 Trumbull Street, Hartford, CT 06103.

At the Annual Meeting, the stockholders will consider and vote upon the following proposals put forth by the Board:

1.  To elect the eight nominees named in the proxy statement to serve as Directors until the next annual meeting of Stockholders to be held in 2015 and until their successors are elected and qualified;

2.  To hold an advisory vote on executive compensation; and

3.  To ratify the appointment of PricewaterhouseCoopers LLP as independent auditors for the fiscal year ending December 31, 2014.

The Board recommends that you vote “FOR” the nominees for election to the Board named in the proxy, “FOR” the advisory vote on executive compensation and “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors.

The Board knows of no other matter to be presented at the Annual Meeting and the deadline for stockholders to submit proposals or nominations has passed. If any other matter should be presented at the Annual Meeting upon which a vote properly may be taken, shares represented by all proxies received by the Board will be voted in accordance with the judgment of those officers named as proxies and in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”).

YOUR VOTE IS IMPORTANT!

You are cordially invited to attend the Annual Meeting. However, to ensure that your shares are represented at the Annual Meeting, please submit your proxy or voting instructions as described in “Options for Voting.” Submitting a proxy or voting instructions will not prevent you from attending the Annual Meeting and voting in person, if you so desire, but will help the Company secure a quorum and reduce the expense of additional proxy solicitation.

Options for Voting

If you hold shares in your own name, you may vote as follows:

1.  Telephone.  To vote by telephone, please follow the instructions on the enclosed proxy card. If you vote by telephone, it is not necessary to mail your proxy card.

2.  Internet.  To vote on the Internet, please follow the instructions on the enclosed proxy card. If you vote by Internet, it is not necessary to mail your proxy card.

3.  Mail.  To vote by mail, please complete, sign and mail the proxy card in the enclosed prepaid envelope.

4.  In Person.  If you wish to vote in person, written ballots will be available at the Annual Meeting.

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We would appreciate your vote as soon as possible for use at the Annual Meeting or at any adjournments of the Annual Meeting. Properly executed proxies received by Lydall’s Corporate Secretary before the Annual Meeting will be voted as directed unless revoked. A proxy may be revoked at any time before it is exercised by: (a) notifying Lydall’s Corporate Secretary in writing; (b) delivering a proxy with a later date; or (c) attending the Annual Meeting and voting in person.

Unless you indicate otherwise, shares represented by proxies properly voted by telephone, over the Internet or signed and returned to the Company will be voted “FOR” the nominees for election to the Board named in the proxy, “FOR” the advisory vote on executive compensation and “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors.

If you hold your shares in “street name” (i.e., in a brokerage account), you should follow the voting instructions provided by your bank, broker or other nominee, including any instructions provided regarding your ability to vote by telephone or through the Internet. Please note that if you hold your shares in street name, in order to vote in person at the Annual Meeting, you must request a proxy from your broker.

Voting Mechanics

A majority in interest of the outstanding shares represented at the Annual Meeting in person or by proxy shall constitute a quorum for the transaction of business. Votes withheld from any nominee, abstentions and broker non-votes are counted as present or represented for purposes of determining the presence or absence of a quorum for the Annual Meeting.

Under New York Stock Exchange (“NYSE”) rules, your broker may vote shares held in street name on certain “routine” matters. NYSE rules consider the ratification of the appointment of the Company’s independent auditors (Proposal 3) to be a routine matter. As a result, your broker is permitted to vote your shares on this matter at its discretion without instruction from you. When a proposal is not a routine matter, such as the election of Directors (Proposal 1) and the advisory vote on executive compensation, also known as a “Say-on-Pay” proposal (Proposal 2), and you have not provided voting instructions to your broker with respect to one of these proposals, your broker cannot vote the shares on that proposal. The missing votes for these non-routine matters are called “broker non-votes.”

With respect to Proposal 1, the election of Directors, a stockholder may cast a vote for all nominees, withhold authority to vote for all nominees or withhold authority to vote for any individual nominee. Under the Company’s Bylaws, Directors are elected by a plurality of the votes cast by stockholders entitled to vote at the Annual Meeting. Neither votes that are withheld nor broker non-votes will affect the outcome of the election of directors. However, as discussed below in “Majority Voting Policy for Election of Directors”, Company policy requires an incumbent Director to tender his or her resignation if the Director does not receive a majority of the votes cast in an uncontested election.

With respect to Proposals 2 and 3, a stockholder may cast a vote for or against the proposal or abstain from voting.

With respect to Proposal 2, the Say-on-Pay proposal, and Proposal 3, the ratification of the appointment of the Company’s independent auditors, under the Company’s Bylaws, the affirmative vote of a majority of the shares present or represented at the Annual Meeting and entitled to vote and voting on the matter will constitute the stockholders’ approval. Under the Company’s Bylaws, abstentions and broker non-votes are not considered to have been voted on such matters and have the practical effect of reducing the number of affirmative votes required to achieve a majority for such matters by reducing the total number of shares from which the majority is calculated. The Say-on-Pay proposal is an advisory vote and the result will not be binding on the Board or the Company.

Majority Voting Policy for Election of Directors

Our Board has adopted a majority voting policy with respect to the election of Directors, which is set forth in the Corporate Governance Guidelines of the Company. The majority voting policy applies only to uncontested elections for Directors (i.e., elections in which the number of nominees does not exceed the number of Directors to be elected) and requires an incumbent Director nominee to tender his or her resignation if he or she does not receive the favorable vote of at least a majority of the votes cast at any meeting for the election of Directors at which a quorum is present. Under the Company’s majority voting policy, a majority of votes cast means that the number of

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shares voted “for” a Director’s election exceeds 50% of the number of the votes cast with respect to that Director’s election. Votes cast include votes to withhold authority and exclude abstentions and broker non-votes with respect to that Director’s election.

The Corporate Governance Committee will make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board will act on the tendered resignation, taking into account the Corporate Governance Committee’s recommendation, and publicly disclose (by press release, a filing with the SEC or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision within 90 days from the date of the certification of the election results. The Corporate Governance Committee, in making its recommendation, and the Board, in making its decision, may each consider any factors or other information that they consider appropriate and relevant and may act in their sole and absolute discretion. The Director who has tendered his or her resignation in accordance with this policy may not participate in the consideration of such tendered resignation by either the Corporate Governance Committee or the Board.

If an incumbent Director’s resignation is not accepted by the Board, such Director will continue to serve until the next Annual Meeting and until his or her successor is duly elected and qualified, or his or her earlier resignation or removal. If a Director’s resignation is accepted by the Board, then the Board, in its sole discretion, may fill the resulting vacancy or otherwise take action pursuant to the applicable provisions of the Company’s Bylaws and the Company’s Restated Certificate of Incorporation in effect at such time.

Cost of Solicitation

All costs of solicitation of proxies will be borne by the Company. Other costs anticipated are those ordinarily incurred in connection with the preparation and mailing of proxy materials. In addition to solicitations of proxies by mail, the Company’s Directors, officers and other employees, without additional remuneration, may solicit proxies by telephone and in person.

Eligibility to Vote

Only holders of record of Lydall’s Common Stock at the close of business on February 28, 2014 (the “Record Date”) are entitled to vote at this Annual Meeting and any adjournment thereof. As of the Record Date, there were 16,841,166 shares of Common Stock issued and outstanding, the holders of which are entitled to one vote per share.

Obtaining Copies

Our Annual Report on Form 10-K containing financial statements for the fiscal year ended December 31, 2013 (“2013 Annual Report”), has been mailed to the stockholders with this proxy statement. This proxy statement, the 2013 Annual Report, a letter to the stockholders and the accompanying proxy card were first mailed to stockholders on or about March 19, 2014. Additionally, copies of the Company’s 2013 Annual Report may be printed from www.lydall.com or will be provided without charge, upon request. Requests may be directed to the Company at Lydall, Inc., P.O. Box 151, Manchester, CT 06045-0151, Attention: General Counsel.

PROPOSAL 1 — ELECTION OF DIRECTORS

The current term of office of all of the Company’s Directors expires at the Annual Meeting and when their successors are duly elected and qualified. The Corporate Governance Committee of the Board has nominated Dale G. Barnhart, Kathleen Burdett, W. Leslie Duffy, Matthew T. Farrell, Marc T. Giles, William D. Gurley, Suzanne Hammett, and S. Carl Soderstrom, Jr. for election as Directors of the Company until the next annual meeting of stockholders to be held in 2015 and until their successors are duly elected and qualified. Each nominee is currently serving as a Director of the Company, and each nominee has consented to serve if re-elected. If any nominee becomes unavailable to serve as a Director before the Annual Meeting, the Corporate Governance Committee may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by the Corporate Governance Committee.

The Corporate Governance Committee has determined that all nominees (other than Dale G. Barnhart, the Company’s President and Chief Executive Officer) are “independent” within the meaning of the applicable NYSE rules. There are no family relationships between any Director, nominee for Director or executive officer of the Company. The Corporate Governance Guidelines of the Company specify that at

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least a majority of the members of the Board, as well as all of the members of the Audit Review Committee, the Compensation Committee and the Corporate Governance Committee, shall be “independent” within the meaning of the applicable NYSE rules.

Under the Restated Certificate of Incorporation of the Company, the Board is empowered to establish the number of Directorships between three and fifteen. The Board has currently fixed the number of Directorships at eight.

Unless otherwise instructed, it is the intention of the persons named in the accompanying proxy card to vote for the Director nominees designated by the Corporate Governance Committee. Proxies cannot be voted for a greater number of persons than the number of nominees named.

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF ALL PERSONS
NOMINATED BY THE CORPORATE GOVERNANCE COMMITTEE AS DIRECTORS OF THE COMPANY.

Biographical Information

Set forth below is biographical information pertaining to each nominee for election as a Director of the Company, including his or her principal occupation and business experience for at least the past five years and the names of other public companies for which each nominee serves as a Director or has served as a Director during the past five years. Please refer to “Qualifications of Nominees” below for a further discussion of the specific experience, qualifications, attributes and skills of each nominee that led our Corporate Governance Committee to conclude that he or she should continue to serve as one of our Directors.

Dale G. Barnhart, 61, has served as a Director since October 2007 and as our President and Chief Executive Officer since August 2007. Mr. Barnhart was the Chief Executive Officer of Synventive Molding Solutions, a manufacturer of hot runner systems, machine nozzles, temperature controllers and sprue bushings for the injection molding industry, from 2005 to 2007. Prior to that, Mr. Barnhart was a consultant working with two private equity groups and was President of Invensys Climate Control, a provider of products and services to the heating, ventilating and air conditioning and commercial refrigeration markets.

Kathleen Burdett, 58, has served as a Director since June 2003, as Chair of our Audit Review Committee since April 2004 and as a member of our Corporate Governance Committee since April 2008. Ms. Burdett served as Vice President and Chief Financial Officer of Dexter Corporation (“Dexter”), a developer and manufacturer of nonwoven products primarily used in the food packaging, medical, and hygiene markets, specialty polymers primarily used in the aerospace and electronics markets and precise, reproducible biological, and biochemical products used for applications in the life sciences industry, from 1994 until Dexter’s merger with Invitrogen Corporation (“Invitrogen”), in 2000. From 2000 until her retirement in 2002, Ms. Burdett served as a consultant to Invitrogen. Prior to that, Ms. Burdett served as the Controller and Principal Accounting Officer of Dexter and as a member of the Board of Directors of Life Technologies, Inc. (“Life Technologies”), a majority owned subsidiary of Dexter, and as Chair of the Audit Committee and as a member of the Executive Committee and the Compensation Committee of Life Technologies.

W. Leslie Duffy, Esq., 74, has served as a Director since May 1992, as Chair of our Board since August 2005 and as a member of our Corporate Governance Committee since May 2003. Mr. Duffy is a retired partner of the law firm of Cahill Gordon & Reindel LLP, where he worked from 1965 to 2012.

Matthew T. Farrell, 57, has served as a Director since August 2003, as a member of our Audit Review Committee since August 2003 and as a member of our Compensation Committee since August 2004. Mr. Farrell currently is the Executive Vice President, Finance and Chief Financial Officer of Church & Dwight Co., Inc., which manufactures and markets a wide range of products under the ARM & HAMMER® and other brand names. He has held that position since 2006. Prior to that, Mr. Farrell served as Executive Vice President and Chief Financial Officer of Alpharma, Inc., a specialty pharmaceutical company. In addition, Mr. Farrell previously served as Director, Corporate Audit, and Chief Financial Officer of the specialty chemicals business for AlliedSignal and as Vice President, Investor Relations and Communication, and member of the enterprise leadership team at Ingersoll-Rand PLC. Mr. Farrell began his career with KPMG Peat Marwick LLP, where he was an audit partner from 1989 until 1994.

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Marc T. Giles, 58, has served as a Director since April 2008 and as a member of each of our Compensation Committee and our Corporate Governance Committee since April 2008. Mr. Giles currently serves on the board of Checkpoint Systems, Inc., a global supplier of shrink management, merchandise visibility and apparel labeling solutions. He is also a Director of Gerber Scientific, Inc. (“Gerber Scientific”), a manufacturer that provides software, computerized manufacturing systems, supplies and services to a wide variety of industries, which was acquired by a private equity firm in August 2011. He was the President and Chief Executive Officer of Gerber Scientific from 2001 until February 2012 and provided transitional executive services to Gerber Scientific through December 31, 2012. Mr. Giles previously served as Senior Vice President and President of Gerber Technology, Inc. (“Gerber Technology”), a subsidiary of Gerber Scientific. Prior to joining Gerber Technology, Mr. Giles served in several senior positions in business unit management, strategy development, mergers and acquisitions and sales and marketing management with FMC Corp., a manufacturer of machinery and chemicals.

William D. Gurley, 65, has served as a Director since April 2006, as Chair of our Compensation Committee since April 2008 and as a member of our Corporate Governance Committee since April 2006. From 2005 to 2011, Mr. Gurley served as a member of the New England Advisory Council of the Federal Reserve Bank of Boston. From 1995 until his retirement in 2006, Mr. Gurley served as President and Chief Executive Officer of Stanadyne Corporation (“Stanadyne”), an engine components and fuel systems manufacturer for industries including automotive and filtration. Prior to that, Mr. Gurley held various senior executive positions at Stanadyne, including Executive Vice President of Marketing, Engineering and Operations. Mr. Gurley served as a Director on Stanadyne’s Board of Directors from 1989 to 2006. Prior to joining Stanadyne, Mr. Gurley worked in the Automotive Products Division of Garrett Corporation and the Packard Electric Division of General Motors Corporation.

Suzanne Hammett, 58, has served as a Director since January 2000, as a member of our Audit Review Committee since May 2003 and as a member of our Compensation Committee since April 2004. Ms. Hammett currently is the Executive Vice President and Chief Commercial Credit Risk Officer for Capital One, N.A., a diversified bank that offers financial products and services to consumers, small businesses and commercial clients. She has held that position since 2007. Prior to joining Capital One, N.A., Ms. Hammett served as the Executive Vice President, Chief Risk Officer for the Radian Group Inc., a credit enhancement company, from 2005 to 2007. Ms. Hammett began her career with J.P. Morgan Chase & Co., where she was an Executive Vice President and held numerous senior positions, including Head of Credit Risk Policy.

S. Carl Soderstrom, Jr., 60, has served as a Director since June 2003, as Chair of our Corporate Governance Committee since August 2004 and as a member of our Audit Review Committee since June 2003. Mr. Soderstrom currently is a member of the Board of Directors of FreightCar America, Inc. and serves as Chair of the Audit Committee and as a member of their Nominating and Corporate Governance Committee. In addition, Mr. Soderstrom currently is a member of the Board of Directors of Westar Energy, Inc. and serves as a member of their Nominating and Governance Committee and Finance Committee. From 1986 until his retirement in 2004, Mr. Soderstrom held various senior positions at Rockwell Automotive, the automotive business of Rockwell International (subsequently spun off and merged to form ArvinMeritor, Inc.) and ArvinMeritor, Inc., now known as Meritor, Inc., a global supplier of a broad range of integrated systems, modules and components serving light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets, including Senior Vice President and Chief Financial Officer. Prior to joining Rockwell Automotive, Mr. Soderstrom held positions with General Electric Company and the ALCO Controls Division of Emerson Electric Co.

Nomination Process

The Corporate Governance Committee is responsible for identifying individuals who are qualified to be Directors, consistent with criteria approved by the Board, and selecting the Director nominees for each Annual Meeting. In fulfilling its responsibility, the Corporate Governance Committee evaluates the skills and expertise needed by the Board and the skills and expertise that are possessed by current Board members. The Corporate Governance Committee seeks persons of the highest ethical standing and proven integrity, and with demonstrated ability and sound judgment, to serve as members of the Board.

When considering candidates for Director, the Corporate Governance Committee takes into account a number of factors, including the following criteria approved by the Board: (i) whether the candidate is independent under the NYSE rules, the rules and regulations under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and the independence standards adopted by the Board; (ii) whether the candidate has skills and expertise needed by the Board; (iii) whether the candidate has demonstrated ability and judgment; (iv) whether

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the candidate has prior experience as a corporate Director; (v) whether the candidate has prior public company experience; (vi) whether the candidate has prior experience in manufacturing companies; and (vii) the extent to which the candidate has other time commitments and obligations that might interfere with his or her duties and responsibilities as a Director. All members of the Audit Review Committee must meet the additional standards for independence applicable to members of an audit committee under Section 10A(m) of the Exchange Act and the NYSE rules and must satisfy the financial literacy requirements of the NYSE rules. At least one member of the Audit Review Committee must be an “audit committee financial expert,” as defined under rules promulgated by the SEC. All members of the Compensation Committee must meet the additional standards for independence applicable to members of a compensation committee under the NYSE rules. Not all Directors need to fulfill all criteria; rather, the Corporate Governance Committee seeks candidates whose skills balance or complement the skills of other Board members. No Director may sit on more than four boards of publicly-traded companies in addition to the board of the company by which he or she is employed.

The Corporate Governance Committee has not adopted a written policy with regard to the consideration of diversity when evaluating candidates for Director. However, in practice, the Committee considers diversity of viewpoint, professional experience, education and skill in assessing candidates for the Board to ensure breadth of experience, knowledge and abilities within the Board. The Committee does not assign specific weights to particular criteria that the Committee reviews and no particular criterion is a prerequisite for the consideration of any prospective nominee.

When seeking candidates for Director, the Corporate Governance Committee may solicit suggestions from incumbent Directors, management or others. In some cases, the Corporate Governance Committee has employed a search firm to identify appropriate candidates and perform screening interviews and reference checks for candidates who are then interviewed by the Corporate Governance Committee and presented to the Board if appropriate.

Unless otherwise requested by the Corporate Governance Committee, a Director shall offer not to stand for re-election at any annual meeting that follows his or her seventieth birthday. In addition, a Director shall tender his or her resignation following any change in the Director’s employment status or principal position, or any other significant change in their personal circumstances. The Board may ask the Director not to resign, or may defer acceptance of the resignation. Mr. Duffy celebrated his seventy-fourth birthday on December 31, 2013. Mr. Duffy offered not to stand for re-election at the Annual Meeting. After considering Mr. Duffy’s many contributions to the Board and his specialized experience in areas of critical importance to the Company, the Corporate Governance Committee recommended to the full Board that Mr. Duffy be asked to agree to stand for re-election at the Annual Meeting as a Director. The Board approved the recommendation of the Corporate Governance Committee. Mr. Duffy agreed to continue to serve as a Director and to stand for re-election.

Qualifications of Nominees

The Corporate Governance Committee believes the Company is well-served by its current Directors, and all such persons are willing to continue to serve as Directors. Accordingly, the Corporate Governance Committee has nominated all incumbent Directors for re-election at the Annual Meeting.

In connection with its consideration of Director nominations for the Annual Meeting, the Corporate Governance Committee considered the factors described above under “Nomination Process.” The Corporate Governance Committee has determined that each of the nominees for re-election, other than Mr. Barnhart, is “independent” as defined by the NYSE rules and that each of the nominees for re-election, including Mr. Barnhart, are free from the influence of any particular stockholder or group of stockholders whose interests may diverge from the interests of the Company’s stockholders as a whole. In addition, the Corporate Governance Committee has determined that each member of our Audit Review Committee is “financially literate” within the meaning of the NYSE rules and is an “audit committee financial expert” as defined under rules promulgated by the SEC. The Corporate Governance Committee has also determined that each member of the Compensation Committee meets the enhanced independence rules of the NYSE.

Each nominee also brings a unique background and set of skills to our Board, giving the Board as a whole competence and experience in a wide variety of areas, including executive management, manufacturing, marketing, finance, legal, private equity, corporate governance and other board service. Set forth below is each nominee’s specific experience, qualifications, attributes and skills that led the Corporate Governance Committee to conclude that he or she should serve as one of our Directors.

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Mr. Barnhart is the President and Chief Executive Officer of the Company. As such, he brings an in-depth understanding of the Company’s business, including its employees, products and markets, to our Board. In addition, Mr. Barnhart provides valuable insight through his prior executive management experience with other manufacturing businesses that are comparable to Lydall, including setting an overall strategic direction for company growth and implementing plans to effectively execute growth strategies including in international markets. Mr. Barnhart is also experienced in Lean Six Sigma, the business management strategy utilized by the Company to improve efficiency, reduce costs and meet customer expectations.

Ms. Burdett is the former Vice President and Chief Financial Officer of a publicly held manufacturing company that developed and manufactured products for the life sciences industry and manufactured and sold nonwoven fiber products. Our Charter Medical business markets and sells products in the life sciences industry and our Performance Materials business manufactures and sells nonwoven fiber products. In addition to her relevant industry experience, Ms. Burdett has prior experience serving as a Director of another publicly held company where she chaired its Audit Committee and served as a member of its Executive and Compensation Committees.

Mr. Duffy is a former partner of an international law firm, where he specialized in transactional and corporate governance matters. He has more than forty-five years of experience advising numerous business entities operating in a variety of industry sectors, including oil and gas, pharmaceuticals, healthcare, automotives, professional services, industrial manufacturing, telecommunications, consumer products, and food services, and on a variety of situations.

Mr. Farrell is the Executive Vice President and Chief Financial Officer of a publicly held manufacturing business that markets a wide range of personal care, household and specialty products. He has prior experience serving as an audit partner of KPMG Peat Marwick LLP and as a member of the executive management team of another publicly held company that manufactured and sold products in the life sciences industry. In addition to his relevant industry experience and knowledge, Mr. Farrell has professional expertise from senior management positions he has held in investor relations and communications.

Mr. Giles is a Director and the former President and Chief Executive Officer of a global manufacturing business that is comparable in size to the Company and provides software, computerized manufacturing systems, supplies and services to a wide variety of industries in over 100 countries. Until August 2011, this manufacturing business was publically traded on the NYSE. Mr. Giles also serves as a Director of an NYSE listed public company that is a supplier of shrink management, merchandise visibility and apparel labeling solutions to customers worldwide. In addition, Mr. Giles has prior experience in general management and strategy development, mergers and acquisitions, sales and marketing, and business development.

Mr. Gurley is the former President and Chief Executive Officer of a manufacturer of engine components and fuel systems. He is knowledgeable about the automotive industry in which the Company operates, having prior work experience for the executive management teams of other businesses serving the industry. He also is knowledgeable about marketing, engineering, operations and strategic planning of highly engineered products in both publicly owned and privately held companies in the United States, Europe, Asia and South America.

Ms. Hammett is the Executive Vice President and Chief Commercial Credit Risk Officer of one of the largest banking institutions in the United States, and she has prior experience working for a number of other financial institutions and investment banks. She is knowledgeable about commercial finance, business analysis and credit risk management, all of which are important to the Company’s business.

Mr. Soderstrom is the former Senior Vice President and Chief Financial Officer of a tier-one global supplier to the automotive industry. He has also held senior management positions in engineering, quality management and procurement. He currently is a Director of two other publicly held corporations, and he is a member of the Nominating and Governance Committees at both companies. He also serves as the Chair of the Audit Committee at one of those public companies, and as a member of the Finance Committee at the other.

Nominations by Stockholders

The Corporate Governance Committee will consider written proposals from stockholders for nominees for Director, provided such proposals meet the requirements set forth in the Company’s Bylaws. All such proposals will be evaluated in accordance with the criteria described above. The Corporate Governance Committee also will consider and evaluate the additional information required to be submitted

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by the stockholder submitting the proposal. For a description of the procedures a stockholder must follow to nominate a person for election to the Board, please see “Stockholder Proposals and Director Nominations” below.

PROPOSAL 2 — ADVISORY VOTE ON EXECUTIVE COMPENSATION

At the 2011 Annual Meeting, as recommended by the Board, our stockholders indicated a preference for annual stockholder advisory votes on the compensation of the Company’s Named Executive Officers (“Named Executive Officers” or “NEOs”), which is commonly referred to as “Say-on-Pay”. Accordingly, the Company submits this Say-on-Pay vote to the stockholders of the Company. Although the Say-on-Pay vote is non-binding, the Board and the Compensation Committee will review the voting results and take them into consideration when making future decisions regarding the Company’s executive compensation programs.

The goal of the Company’s executive pay program is to align more closely the interests of executives and stockholders and create long-term value for the Company’s stockholders. To this end, for 2013, the compensation of the Named Executive Officers and certain other members of management, consisted of four basic components, three of which were tied to performance against financial metrics and/or the market price of the Company’s stock:

For example, approximately 66% of the compensation paid to the Chief Executive Officer (the “CEO”) for 2013 was variable and based on Company performance against financial metrics and/or the market price of the Company’s stock. For purposes of this calculation, compensation means the sum of his 2013 salary, his 2013 incentive plan payment, the stock awards granted to him in December 2010 that were earned based on 2013 performance, the options granted to him in 2013, and other cash compensation in 2013.

For more information, please see “Compensation Discussion and Analysis: Overview — Executive Summary” and the discussion that follows.

For all of the Named Executive Officers, the annual cash bonus earned and the long term equity awards granted are tied to a mix of operating income, gross margin, free cash flow and/or earnings per share metrics — specific financial metrics that the Compensation Committee believes align to the creation of stockholder value. If a financial metric is not satisfied, no cash bonus is paid with respect to that metric, and the performance shares tied to that metric are forfeited. Similarly, stock options granted to the Named Executive Officers only have value if the share price of the Company’s stock appreciates from the date of grant.

Stockholders are urged to read the “Compensation Discussion and Analysis,” which discusses how the Company’s compensation policies and procedures implement the Company’s compensation philosophy, as well as the “2013 Summary Compensation Table” and other related compensation tables and the narrative disclosures that describe the compensation of the Company’s Named Executive Officers in fiscal 2013. The “Compensation Discussion and Analysis” highlights in more detail how the compensation of the Named Executive Officers in fiscal 2013 reflected our pay-for-performance philosophy and other key features of our executive compensation program that are designed to align the interests of the Named Executive Officers and stockholders. The Board and the Compensation Committee believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in implementing the Company’s compensation philosophy and in achieving its goals, and that the compensation of the Named Executive Officers in fiscal 2013 reflects and supports these compensation policies and procedures.

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In accordance with Section 14A of the Exchange Act, the Company is asking stockholders to indicate their approval of the compensation paid to the Company’s Named Executive Officers as described in this proxy statement. Accordingly, the Company is asking stockholders to vote “FOR” the following non-binding advisory resolution at the Annual Meeting:

“RESOLVED, that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and any related material disclosed in this proxy statement, is hereby approved.”

The outcome of this advisory vote does not overrule any decision by the Company or the Board (or any committees thereof), create or imply any changes to the fiduciary duties of the Company or the Board (or any committees thereof), or create or imply any additional fiduciary duties for the Company or the Board (or any committees thereof).

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE COMPENSATION
PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT
TO THE COMPENSATION DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.

PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The firm of PricewaterhouseCoopers LLP (“PwC”) has audited the consolidated financial statements of the Company since 1995, and the Audit Review Committee desires to continue the services of this firm for the current fiscal year. The Audit Review Committee has, therefore, appointed PwC to serve as independent auditors to conduct an audit of the Company’s consolidated financial statements for the fiscal year ending December 31, 2014. Representatives of PwC are expected to be present at the Annual Meeting, will have the opportunity to make a statement at the Annual Meeting if they desire to do so, and are expected to be available to respond to appropriate questions.

Appointment of the Company’s independent auditors is not required to be submitted to a vote of the stockholders of the Company for ratification. However, the Audit Review Committee has recommended that the Board submit this matter to the stockholders as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Review Committee will reconsider whether to retain PwC and may retain that firm, or another, without resubmitting the matter to the Company’s stockholders. Even if the appointment is ratified, the Audit Review Committee may, in its discretion, direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of the Company and the stockholders.

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS FOR FISCAL YEAR 2014.

Principal Fees and Services

The following table presents fees for professional audit services for the audit of the Company’s annual consolidated financial statements for fiscal years ended December 31, 2013 and December 31, 2012, and fees for other services rendered by PwC during those periods:

Fee Category		Fiscal 2013				% of Total				Fiscal 2012				% of Total
Audit fees		$	1,050,000				99	%		$	1,024,000				100	%
Audit-related fees			10,800				1	%			—				—
Tax fees							—				—				—
All other fees			—				—				—				—
Total Fees		$	1,060,800				100	%		$	1,024,000				100	%

Audit fees are related to services rendered in connection with the annual audit of the Company’s consolidated financial statements, including Sarbanes-Oxley Section 404 controls testing, the quarterly reviews of the consolidated financial statements included in the

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Company’s quarterly reports on Form 10-Q and international statutory audits. The majority of the work was performed by full-time, permanent employees of PwC. Audit-related fees consisted of fees billed for professional audit-related services in connection with the Company’s strategic initiatives.

All of the services described above were approved by the Audit Review Committee pursuant to the SEC rules that require audit committee pre-approval of audit and non-audit services. On an ongoing basis, management communicates specific projects and categories of services for which advance approval of the Audit Review Committee is required. The Audit Review Committee reviews these requests and advises management and the independent auditors if the Audit Review Committee pre-approves the engagement of the independent auditors for such projects and services. On a periodic basis, the independent auditors report to the Audit Review Committee the actual spending for such projects and services as compared with the approved amounts. The Audit Review Committee may delegate the ability to pre-approve audit and permitted non-audit services to a sub-committee or the Chair of the Audit Review Committee, provided that any such pre-approvals are reported at the next Audit Review Committee meeting.

The Audit Review Committee has considered whether the services provided by PwC, other than audit services, are compatible with maintaining that firm’s independence and has concluded that PwC is independent.

CORPORATE GOVERNANCE

General

Pursuant to the Delaware General Corporation Law and the Company’s Bylaws, the Company’s business, property and affairs are managed by or under the direction of the Board. Members of the Board are kept informed of the Company’s business through discussions with the Chief Executive Officer and other officers, by reviewing materials provided to them, and by participating in meetings of the Board and its committees.

The Company is committed to good corporate governance practices to ensure that the Company is managed for the long-term benefit of its stockholders. The Board has adopted Corporate Governance Guidelines to provide a framework for the effective governance of the Company. The Corporate Governance Committee periodically reviews the Corporate Governance Guidelines and recommends changes, as appropriate, to the Board for approval.

The Board has three standing committees to facilitate and assist the Board in executing its responsibilities: the Audit Review Committee, the Compensation Committee and the Corporate Governance Committee. In accordance with NYSE rules, each Committee is comprised solely of non-employee, independent Directors. The Board has adopted a charter for each of the three standing committees, and the Company has a Code of Ethics and Business Conduct applicable to all Directors, officers and employees. Links to these materials can be found on Lydall’s website at www.lydall.com. All materials available at www.lydall.com are also available to stockholders in print without charge, upon written request to Lydall, Inc., P.O. Box 151, Manchester, CT 06045-0151, Attention: General Counsel.

Committees

The table below shows current membership and indicates the chairperson (*) for each of the standing Board committees, each of whom is independent within the meaning of the applicable NYSE rules.

Audit Review		Compensation		Corporate Governance
Kathleen Burdett*		Matthew T. Farrell		Kathleen Burdett
Matthew T. Farrell		Marc T. Giles		W. Leslie Duffy
Suzanne Hammett		William D. Gurley*		Marc T. Giles
S. Carl Soderstrom, Jr.		Suzanne Hammett		William D. Gurley
				S. Carl Soderstrom, Jr.*

The Audit Review Committee assists the Board in fulfilling its responsibility to oversee the integrity of the Company’s financial reporting process, including the performance of the Company’s systems of internal accounting and financial controls, the Company’s

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internal audit function, the outside auditors’ qualifications and independence, the Company’s process for monitoring compliance with applicable legal, regulatory and ethics programs, and the annual independent audit of the Company’s financial statements.

The Audit Review Committee meets periodically with management to consider the adequacy of the Company’s internal controls and its financial reporting process. It also discusses these matters with the Company’s internal auditors, independent auditors, and appropriate Company financial personnel. The Audit Review Committee reviews the Company’s financial statements and discusses them with management and the independent auditors before those financial statements are filed with the SEC.

The Audit Review Committee meets regularly in private session with the independent auditors, has the sole authority to retain and dismiss the independent auditors, and periodically reviews their performance and independence from management. The independent auditors have unrestricted access to, and report directly to, the Audit Review Committee.

The Audit Review Committee also reviews and approves the Company’s decision to enter into all swaps transactions, has adopted and reviews annually a policy relating to the Company’s use of the non-financial end-user exception (“Swaps Policy”) and reports to the Board annually on the Company’s compliance with the Swaps Policy.

Audit Committee Financial Expert — The Board has determined that each member of the Audit Review Committee is “financially literate” within the meaning of the NYSE rules and is an “audit committee financial expert” as that term is defined under Item 407(d)(5)(ii) of Regulation S-K.

The Compensation Committee has overall responsibility for the Company’s compensation of management, incentive plans and programs. The duties and responsibilities of the Compensation Committee as set forth in its Charter include: making recommendations to the Board regarding the Company’s incentive and equity-based compensation plans and non-CEO compensation policy; reviewing and approving the Company’s goals and objectives relevant to compensation (including CEO compensation), such as the goal of attracting and retaining highly qualified individuals and motivating individual performance leading to increased stockholder value; determining and approving the Chief Executive Officer’s annual compensation, including incentive awards; reviewing and discussing the Company’s Compensation Discussion and Analysis (“CD&A”) with management and, based upon such review and discussion, considering whether it will recommend to the Board that the CD&A be included in the Company’s proxy statement; preparing the Compensation Committee Report for inclusion in the proxy statement required by applicable SEC rules; approving all grants of stock awards pursuant to the Company’s stock incentive compensation plans; approving all employment agreements and compensation arrangements for the CEO, the Named Executive Officers and other direct reports of the CEO; reviewing whether risks associated with the Company’s compensation policies and practices are reasonably likely to have a material adverse effect on the Company; reviewing the form and amount of compensation for non-management Directors and recommending changes to the Board; and retaining or obtaining advice from compensation advisors after taking into consideration certain independence factors related to said compensation advisors.

The Corporate Governance Committee has overall responsibility for developing Board membership and overseeing corporate governance of the Company. The Corporate Governance Committee is responsible for: identifying individuals who are qualified to become Board members consistent with criteria approved by the Board; selecting the Director nominees for the next Annual Meeting; making recommendations to the Board as to the membership and chairperson of each standing committee; developing and recommending to the Board a set of corporate governance guidelines applicable to the Company designed to provide for effective and efficient governance of the Company; overseeing the evaluation of the Board; and providing guidance on matters relating to corporate governance. Other duties and responsibilities of the Corporate Governance Committee include: assessing whether a director nominee who does not receive a “majority of the votes cast” in an uncontested election of directors should continue to serve as a director; reviewing annually the relationships between directors, the Company and members of management and recommending to the Board whether each director qualifies as “independent” under the Board’s definition of “independence” and the applicable NYSE rules; periodically reviewing the Board’s leadership structure to assess whether it is appropriate given the specific characteristics or circumstances of the Company; overseeing the development of a succession plan for the Chief Executive Officer and contingency planning to provide for the event that one or more senior managers were to leave the employment of the Company; evaluating the Chief Executive Officer’s performance annually and overseeing the evaluation of the Company’s executive officers; and reviewing and approving all director and officer indemnification and insurance arrangements.

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Leadership Structure

The Board, upon the recommendation of the Corporate Governance Committee, has determined that the roles of Chair of the Board and Chief Executive Officer should remain separated. Accordingly, the Board has appointed Mr. Duffy, an independent director within the meaning of NYSE rules, as the Chair of the Board. The Company has had a non-management Chair since 1998. The Board and the Corporate Governance Committee believe this leadership structure continues to be appropriate for the Company at the present time because the bifurcated leadership structure:

Independence Determination

The Board has concluded that all of the non-employee Directors, including all of those who serve on the above-described committees, are “independent” for purposes of the applicable NYSE rules, that the members of the Audit Review Committee are also “independent” for purposes of Section 10A(m)(3) of the Exchange Act and that the members of the Compensation Committee are also “independent” under the enhanced independence rules of the NYSE for compensation committee members. The Board based its independence determinations in part on a review of the responses of the Directors to questions regarding employment and compensation history, affiliations, family and other relationships (which responses indicated that no relationships or transactions exist), together with an examination of those companies with whom the Company transacts business. Although the Board maintains categorical standards to assist in determining whether non-employee Directors are independent, given the absence of any relationships or transactions between non-employee Directors and the Company, the categorical standards were not used in connection with the Board’s determinations in February 2013 or February 2014. The categorical standards are set forth in the Company’s Corporate Governance Guidelines (available on www.lydall.com).

Compensation Committee Interlocks and Insider Participation

As discussed above, all members of the Compensation Committee are independent Directors under the enhanced independence rules of the NYSE for compensation committee members. No executive officer of the Company has served as a Director or a member of a compensation committee of another company where any member of the Compensation Committee is an executive officer.

Risk Oversight

The Board oversees the Company’s risk management processes directly and through its committees. Company management is responsible for risk management on a day-to-day basis. One role of the Board and its committees is to oversee the risk management activities of management. The Board fulfills this role by discussing with management the policies and practices utilized by management in assessing and managing risks and providing input on those policies and practices, through:

Each committee reports to the full Board on a regular basis. In addition, since risk issues often overlap, committees may from time to time request that the full Board review and consider particular risks.

The Company provides detailed risk factors impacting its business in its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q filed with the SEC.

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Related Party Transactions

The Board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. Accordingly, as a general matter, the Company prefers to avoid related party transactions.

The Company follows a procedure for the review and prior approval of all related party transactions by the Corporate Controller’s Department. In addition, annually, the Corporate Secretary obtains responses of the Directors and executive officers to questions as to whether a family member of a Director or executive officer is employed by the Company and whether a Director or executive officer has any other relationship with the Company. The Company compiles a list of those companies reported (if any) and compares it against the record of companies with whom the Company transacts business, noting the dollar amount of transactions with such companies, if any. The Company then provides a report to the members of the Audit Review Committee, which reviews the information.

The Company did not engage in any related party transactions requiring disclosure during fiscal year 2013.

Board Attendance

During fiscal year 2013, the Board held eleven meetings (including six special meetings). The Audit Review Committee held five meetings (no special meetings); the Compensation Committee held nine meetings (including four special meetings) and acted by unanimous written consent on two occasions; and the Corporate Governance Committee held five meetings (including one special meeting). Each of the Directors attended at least 75% of the aggregate of the number of meetings of the Board and of the Board committees of which he or she was a member during fiscal year 2013. The Board’s practice is to meet in executive session without members of management present at every regularly scheduled Board meeting held in person and at special meetings as circumstances warrant. These sessions are presided over by the Chair of the Board.

A Board meeting is scheduled in conjunction with the Company’s Annual Meeting, and in accordance with the Corporate Governance Guidelines, all of the Director nominees are expected to attend the Annual Meeting. All Directors and nominees attended last year’s Annual Meeting.

Communications With Directors

Stockholders of Lydall and other parties may contact the Chair of the Board by email at: chairman@lydall.com and if interested in communicating with the Board, or any Director, may write to them at the following address:

Lydall, Inc.
P.O. Box 151
Manchester, CT 06045-0151

Communications are distributed to the Board, or to any individual Directors as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Board has requested that certain items that are unrelated to the duties and responsibilities of the Board should be excluded, such as product inquiries and complaints, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will be excluded, with the provision that any communication that is filtered out must be made available to any non-management Director upon request.

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Additional Disclosures

In accordance with NYSE rules, in the event that any member of the Audit Review Committee simultaneously serves on the audit committees of more than three public companies, the Board will assess whether such simultaneous service impairs the ability of such member to effectively serve as a member of the Audit Review Committee, and the Company will disclose such assessment either on or through the Company’s website or in its annual proxy statement or Annual Report on Form 10-K filed with the SEC. In addition, the Company will disclose, either on or through the Company’s website or in its annual proxy statement or Annual Report on Form 10-K filed with the SEC, any contributions by the Company to a tax exempt organization in which any non-management or independent Director serves as an executive officer if, within the preceding three years, contributions in any single fiscal year exceeded the greater of $1 million or 2% of such tax exempt organization’s consolidated gross revenues.

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REPORT OF THE AUDIT REVIEW COMMITTEE

The Audit Review Committee (the “Committee”) operates under a written Charter adopted and approved by the Board. The Charter, which defines the functions and responsibilities of the Committee, is reviewed annually and was last revised in October 2013. A link to the Committee’s charter can be found on www.lydall.com.

During 2013, all Directors who served on the Committee were “independent” for purposes of the NYSE rules and Section 10A(m)(3) of the Exchange Act. The Board has determined that none of the Committee members has a relationship with the Company that may interfere with his/her independence from the Company and its management, and that each member is an “audit committee financial expert” as defined by the Securities and Exchange Commission.

Periodically, the Committee meets with management to consider the adequacy of the Company’s internal controls and the objectivity and appropriateness of its financial reporting. The Committee also discusses these matters with PwC, the Company’s independent auditors, appropriate Company financial personnel, and internal auditors, both separately and jointly. Independent and internal auditors of the Company have unrestricted access to the Committee.

Management has primary responsibility for the Company’s financial statements and the overall reporting process, including the Company’s system of internal controls. The independent auditors audit the annual financial statements prepared by management, express an opinion as to whether those financial statements fairly present the financial position, results of operations and cash flows of the Company in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”), and discuss with the Committee the Company’s significant accounting policies, accounting estimates and management judgments reflected in the financial statements, audit adjustments arising from the audit, and other matters in accordance with Auditing Standard No. 16 (Communications with Audit Committees (“AS 16”) as adopted by the Public Company Accounting Oversight Board (“PCAOB”).

This year, the Committee reviewed the Company’s audited financial statements for the fiscal year ended December 31, 2013, and met with both management and PwC to discuss those financial statements. Management has represented to the Committee that the financial statements were prepared in accordance with U.S. GAAP. PwC has reported to the Committee that such financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the Company in accordance with U.S. GAAP.

At each regularly scheduled Committee meeting during 2013, the Committee monitored and discussed with management and PwC the status of the Company’s compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. The Committee also reviewed and discussed with management and PwC management’s and PwC’s report and attestation on internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.

The Committee has received from, and discussed with, PwC the written disclosure and the letter required by the PCAOB relating to that firm’s independence from the Company.

Based on the foregoing, the Committee has recommended to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Kathleen Burdett, Chair
Matthew T. Farrell
Suzanne Hammett
S. Carl Soderstrom, Jr.

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COMPENSATION DISCUSSION AND ANALYSIS

Overview — Executive Summary

The goal of the Company’s executive pay program is to align more closely the interests of executives and stockholders and create long-term value for the Company’s stockholders. To this end, for 2013, the compensation of the Named Executive Officers and certain other members of management, consisted of four basic components, three of which were tied to performance against financial metrics and/or the market price of the company’s stock:

For 2013, the Committee made adjustments to increase the base salaries paid to the Named Executive Officers (except for Mr. Julian and Mr. Williams, who were newly hired in 2012, and Mr. McDaniel, who was newly hired in 2013). The actual 2013 compensation of the Named Executive Officers reflects the philosophy of making a substantial portion of each executive’s compensation variable depending on the Company’s performance.

A cash payout at 128.1% of target was made to those Named Executive Officers receiving a bonus under the Company’s annual incentive performance program (the “AIP Program”) based on consolidated performance metrics for 2013 (as described in more detail below under “Annual Incentive Performance Program) reflecting:

The performance-based restricted stock awards (three-year) granted in December 2010 with vesting tied to achievement of the required year-end 2013 threshold level of earnings per share from continuing operations were certified at 120% of target (actual earnings per share were $1.14, compared to a minimum adjusted payout target of $0.88) (for more details, see discussion below under “Payouts of Prior Awards Based on 2013 Performance”).

As discussed below, in 2013, the Company provided signing bonuses to two new NEOs. The Company’s compensation program for Named Executive Officers also reflects a number of other features designed to align the interest of the Named Executive Officers and stockholders. For example, the Company enhanced its stock ownership guidelines for the Chief Executive Officer and other senior executive officers (for more details, see discussion below under “Stock Ownership”). The Company also has provisions related to the clawback or recoupment of compensation in its cash bonus programs and its equity compensation plans (see discussion below under “Adjustment or Recovery of Awards”).

Additionally, the Company provides stockholders with the opportunity to cast an annual say-on-pay advisory vote.

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Compensation Objectives

Create Incentives That Motivate Performance

The key elements of executive compensation that depend on the Company’s financial and operating performance include:

Align Management and Stockholder Interests

The Committee also provides compensation and adopts policies designed to align the interests of executives with those of the stockholders. These include:

Attract, Motivate and Retain Executives

The Committee strives to attract, motivate and retain executive officers by:

Implementing Our Objectives

Overseeing Executive Compensation Programs

The Committee has been appointed by the Board to oversee matters relating to executive compensation. Reporting to the Board, the Committee has overall responsibility for the Company’s compensation and incentive plans and programs. The Committee is composed exclusively of non-employee Directors who are “independent” as that term is defined under the NYSE rules. For a more detailed description of the Committee’s responsibilities and its composition, please see the discussion under the heading “Corporate Governance — Committees” in this proxy statement.

Determining Compensation

The Committee determines and approves the Chief Executive Officer’s compensation and approves the compensation for each of the other Named Executive Officers based upon the recommendations of the Chief Executive Officer. From time-to-time, the Committee engages independent compensation consultants to provide market and competitive information to assist it in understanding the competitive landscape for all of the Named Executive Officers and in developing compensation programs for them.

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In determining compensation for the Named Executive Officers for fiscal 2013, including the grant of stock options in December 2012 (and for Mr. McDaniel, in May 2013) and performance-based restricted stock awards in February 2013 (and for Mr. McDaniel, in May 2013) as part of fiscal 2013 compensation, the Committee considered the following: competitive pay practices (as informed by the individual experience of the Committee members, the Company’s experiences in recruiting new executive officers, and the survey data referred to below); the executive’s individual performance, responsibilities, and experiences (as informed by the input received from the CEO with respect to each other executive officer and the Board’s annual evaluation of the CEO); the Company’s performance and financial condition; and external market and economic conditions.

In addition, the Committee reviews tally sheets (which summarize the five-year compensation histories of each Named Executive Officer) and an accumulated wealth analysis (which summarizes the long-term equity-based compensation accumulated by each Named Executive Officer over the past five years). The Committee also evaluates each individual’s total compensation compared with other executives within the organization.

The Committee does not assign specific weights to any of these factors described above and, ultimately, the Committee’s compensation decisions are subjectively reached based on the Committee’s business judgment.

Periodically throughout the year, the Committee discusses the philosophy for overall compensation, considers whether to modify compensation and the relative mix of compensation elements and, on occasion, makes changes to compensation that it deems appropriate.

Role of Management

The Chief Executive Officer assists the Committee with respect to the compensation packages for the Named Executive Officers other than himself. This assistance includes making recommendations regarding salary and incentive compensation levels based on management’s review of performance, achievement of goals and objectives, and competitive market information. Executive officers do not play a role in their own compensation determinations or that of others (except that the Chief Executive Officer and the Vice President — Human Resources are involved in the compensation determinations of other executive officers), except to discuss their own respective individual performance with the Chief Executive Officer. No executive officers are involved in determining Director compensation.

Role of Consultants

The Committee considers information and advice obtained from its compensation consultant, Meridian Compensation Partners LLC (“Meridian”), in determining the compensation packages for the Named Executive Officers. Meridian is retained directly by the Committee. None of the Committee members or the Company’s executive officers has any relationship with Meridian or the individual consultants employed by Meridian. Meridian has not provided any other services to the Company other than compensation consulting services to the Committee. The Committee has determined that no conflicts of interest exist between the Company and Meridian.

In October 2012, the Committee commissioned and received an “Executive Compensation Analysis” report (the “2012 Analysis”) from Meridian. The 2012 Analysis was considered, among other factors, in connection with setting Named Executive Officer compensation for 2013.

In the 2012 Analysis, Meridian reviewed the following components of pay for each of the then-current Named Executive Officers: salary, bonus (actual and target percentage), actual total cash compensation (salary plus actual bonus paid, if any), long-term incentives (i.e., the grant value of the most recent grants) and actual total direct compensation (total cash compensation plus long-term incentives). Meridian compared these components of pay to the market median for executives at companies with similar gross revenues. Meridian used data from the Mercer Benchmark Database and the Towers Watson Survey Report, adjusted for timing and to “size adjust” compensation data for business unit positions.

The surveys described above were used by the Committee to supplement its general understanding of current compensation practices, but were not used to determine or justify the Committee’s compensation decisions. The Committee does not target payment for any compensation element or total compensation to any specified level of the companies included in the survey data. The Committee does not

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have any policies for allocating between long-term and currently paid-out compensation, between cash and non-cash compensation, among different forms of non-cash compensation, or among different forms of long-term awards.

Elements of Compensation

The 2013 compensation for the Named Executive Officers consisted of: cash base salary; a cash performance bonus opportunity under the AIP Program; long-term equity incentive awards; and other compensation including miscellaneous perquisites. In addition, the 2013 compensation for Messrs. Julian and McDaniel included cash signing bonuses paid to said NEOs following their first date of employment. Each element of compensation is explained below.

Cash Compensation

The cash compensation payable to the Company’s executive officers includes their base salaries and their annual cash bonuses, if any, payable under the Company’s AIP Program. In addition, in 2013, the Company paid cash signing bonuses to Messrs. Julian and McDaniel following their first date of employment.

Base Salary

Adjustments were made to increase the base salaries of Mr. Barnhart and Mr. Laughlan by 4.8% and 2.0%, respectively, from the 2012 base salaries for each executive, after consideration by the Committee of the following: competitive pay practices (as informed by the individual experience of the Committee members, the Company’s experiences in recruiting new executive officers, and the 2012 Analysis referred to above); the executive’s individual performance, responsibilities, and experiences (as informed by the input received from the CEO with respect to Mr. Laughlan and the Board’s annual evaluation of the CEO); the Company’s performance and financial condition; the results of the Say-on-Pay vote held at the annual meeting of stockholders in 2013; and external market and economic conditions.

Such adjustments were approved by the Committee at a regularly scheduled meeting of the Committee held on December 5, 2012. No adjustments were made to the base salaries of the other Named Executive Officers in 2013 since Messrs. Williams and Julian were newly hired in 2012, and Mr. McDaniel was newly hired in 2013. In establishing base compensation levels and a signing bonus for Mr. McDaniel, who began employment during 2013, the Committee considered the responsibilities of the position he would hold at the Company, as well as the total compensation package (base salary, bonus, equity awards and other perquisites) he had been receiving from his previous employer, increases which would be necessary to attract him to join Lydall, and the extent to which he would forfeit certain portions of his compensation in accepting employment with the Company (see also “Long-Term Incentive Awards”, below).

The 2013 base salaries of the Named Executive Officers were as follows:

Name		Base Salary for 2013 ($)
Dale G. Barnhart			520,000
Robert K. Julian			350,000
David H. Williams			275,000
James V. Laughlan			197,298
Chad A. McDaniel(1)			230,000

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Annual Incentive Performance Program

The Committee seeks to select performance metrics for the Company’s AIP Program that support the Company’s strategic objectives for the year. The performance metrics selected by the Committee for 2013 were:

The AIP Program for 2013 was approved by the Committee in February 2013. The AIP Program operates as follows:

Name		Target Bonus Percentage
Dale G. Barnhart			80	%
Robert K. Julian			50	%
David H. Williams			40	%
James V. Laughlan			30	%
Chad A. McDaniel(1)			35	%

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Percentage of Operating Income and Free Cash Flow Performance Metric Targets Achieved		AIP Program Cash Bonus Earned
Below 80%			0% Payout
81% – 89%			5% – 45% Payout
90% to 99%			50% – 95% Payout
100%			100% Payout(1)

Basis Points below Gross Margin Performance Metric Target		AIP Program Cash Bonus Earned
-100 or more			0% Payout
-90 to -99			10% Payout
-80 to -89			20% Payout
-70 to -79			30% Payout
-60 to -69			40% Payout
-50 to -59			50% Payout
-40 to -49			60% Payout
-30 to -39			70% Payout
-20 to -29			80% Payout
-10 to -19			90% Payout
Target to -9			100% Payout	(1)

To be eligible to receive a bonus payout under the AIP Program, a participant must be an employee in good standing as of the date the cash bonus is actually paid by Lydall, except as otherwise specifically agreed to by the Board or the Committee. Participants may earn an amount below or in excess of the target payout for each applicable Performance Metric Target, depending on the applicable Performance Metric that is achieved. If the operating income or free cash flow Performance Metric achieved is above 100% of the applicable Performance Metric Target, Named Executive Officers employed at corporate headquarters earn an additional payment equal to their proportionate amount of up to 30% of the excess of the consolidated operating income or consolidated free cash flow Performance Metric achieved above the Performance Metric Target, and employees who are employed at the respective business units earn an additional payment equal to their proportionate amount of up to 30% of the excess of operating income or free cash flow Performance Metric achieved above the respective business unit Performance Metric Target. If the gross margin Performance Metric achieved is 10 or more basis points above the gross margin Performance Metric Target, Named Executive Officers employed at corporate headquarters and heads of business units earn an additional payment ranging from 2.5% up to 100% of the target payout for the gross margin Performance Metric, and other employees at corporate headquarters and employees who are employed at the respective business units earn an additional payment ranging from 1.25% up to 50% of the target payout for the gross margin Performance Metric. In all cases, the maximum AIP Program payment to any Named Executive Officer is 200% of such participant’s individual target bonus.

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Based on the Company’s consolidated financial results for the year-ended December 31, 2013, the Committee determined that the Named Executive Officers earned the payments under the AIP Program set forth in the tables below:

		Consolidated Operating Income				Consolidated Free Cash Flow				Consolidated Gross Margin
Performance Achievement vs. Target			112%				82%				+10 BP
Bonus Earned: Base			100%				10%				100%
Bonus Earned: Additional For Exceeding Target			100%				0%				2.5%
Bonus Earned: Total			200%				10%				102.5%
Relative weight of the Performance Metric			50%				25%				25%
Total Bonus Earned vs. Target Payout							128.1%

Name		2013 Target Bonus				Bonus Earned vs. Target Payout				Actual Bonus Amount Earned
Dale G. Barnhart			$ 415,265				1.281				$ 532,058
Robert K. Julian			$ 175,000				1.281				$ 224,219
David H. Williams(1)			$ 110,000				0.013				$     1,375
James V. Laughlan			$  59,145				1.281				$   75,779
Chad A. McDaniel(2)			$  44,275				1.281				$   56,727

Long-Term Incentive Awards

The Committee believes that executives and other employees who are in a position to make a substantial contribution to the long-term success of the Company and to build stockholder value should have a significant equity stake in the Company. The Company uses equity grants to focus on the retention of executive officers and to enhance the alignment of the interests of executive officers with the goals of improving Company profitability and advancing stockholder interests over the long term.

Grants Made As Part of 2013 Compensation

As part of their 2013 compensation, the Company awarded incentive stock options and performance-based restricted stock awards (“PSAs”) to the Named Executive Officers. Except for an award made to Mr. Laughlan in connection with a promotion he received during 2013, no time-based restricted stock awards (“RSAs”) were made as part of the 2013 compensation packages for the Named Executive Officers, as the Committee has decided to limit the use of RSAs (which have value regardless of company performance) to special circumstances, such as new hires or retention awards, in favor of PSAs (which only have value if the specified performance goal is achieved). The Committee approved the following equity awards for the Named Executive Officers as part of their 2013 compensation package. The amounts of awards were subjectively determined by the Committee based on the factors described above under “Determining Compensation.”

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The following is a summary of the long-term incentive awards that were made to the Named Executive Officers on the dates indicated as part of their 2013 compensation:

		Time-Based Stock Option Awards (December 5, 2012, May 29, 2013)								Three-Year PSAs (February 18, 2013, May 29, 2013)								Two-Year RSAs (January 10, 2013)								Total Value of Grants Made in Dec. 2012 and January, February and May, 2013(1) ($)
Name		Number of Shares				Grant Date Fair Value(1) ($)				Number of Shares (At Target)				Grant Date Fair Value(1) ($)				Number of Shares				Grant Date Fair Value(1) ($)
Dale G. Barnhart			30,000				238,731				32,171				511,197				—				—				749,928
Robert K. Julian			15,000				119,365				15,000				238,350				—				—				357,715
David H. Williams			10,000				79,577				5,823				92,527				—				—				172,104
James V. Laughlan			3,000				23,873				2,349				37,326				5,000				76,000				137,199
Chad A. McDaniel(2)			12,500				68,525				7,500				109,350				—				—				177,875

Specifically with respect to the equity awards granted to the CEO in connection with his 2013 compensation, the Committee considered the CEO’s continued contributions relative to the ongoing execution of the Company’s strategic transformation, staffing changes within the executive team, performance among various business segments, and other accomplishments in deciding to make equity awards totaling approximately $750,000.

The time-based stock option awards granted to the Named Executive Officers in December 2012 are reflected in the Summary Compensation Table as 2012 compensation because these awards were actually granted in 2012, even though these awards relate to the 2013 compensation packages for the Named Executive Officers. For the same reason, these awards were reflected in last year’s proxy statement in the table titled “Grants of Plan-Based Awards for 2012.” The amounts reported in the Option Awards column of the “Fiscal Year 2013 Summary Compensation Table” relate to the stock options granted by the Company in December 2013 as a component of 2014 compensation. These awards, which are described below in “Fiscal 2014 Executive Compensation,” are reflected in the table titled “Grants of Plan-Based Awards for 2013.”

The Company does not have a program, plan or practice to select equity grant dates in connection with the release of favorable or negative news. The Company generally grants equity awards in connection with the regularly scheduled December meeting of its Board. With respect to 2013 compensation, stock option grants were made at a meeting of the Compensation Committee on December 5, 2012, and PSAs were awarded at a meeting of the Compensation Committee on February 18, 2013 (and on May 29, 2013 for PSAs awarded to Mr. McDaniel). See “Fiscal 2014 Executive Compensation Components” below for a discussion of the timing of equity grants with respect to 2014 compensation.

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Payouts of Prior Awards Based on 2013 Performance

The 2013 earnings per share target for the three-year PSAs granted on December 9, 2010 was initially set at $1.03 by the Committee. Since the Company divested its Affinity business unit in June 2011, and the operating results of Affinity had been factored into the 2013 earnings per share target, on December 12, 2011, the Committee adjusted the earnings per share target to $0.88 to exclude the Affinity business unit for the entirety of 2013. On February 28, 2014, the Committee certified that the 2013 earnings per share target was satisfied, as actual earnings per share for 2013 were $1.14. Accordingly, all of the PSAs awarded to the Named Executive Officers that were based on 2013 earnings per share vested at the maximum allowed of 120% of target, as set forth in the table below.

Name		Targeted Amount of Three-Year PSAs Granted on December 9, 2010				Amount of PSAs Certified by the Committee on February 28, 2014
Dale G. Barnhart			45,000				54,000
Robert K. Julian(1)			—				—
David H. Williams(2)			—				—
James V. Laughlan			3,500				4,200
Chad A. McDaniel(3)			—				—

Adjustment or Recovery of Awards

The Company has included provisions relating to the clawback or recoupment of compensation in several of its plans.

Under the Amended and Restated Lydall 2003 Stock Incentive Compensation Plan (the “2003 Stock Plan”), any award recipient who breaches his or her non-competition, non-interference, non-solicitation or confidentiality obligations to the Company may be obligated, subject to the Committee’s sole discretion, to return to the Company the economic value of any award that was realized or obtained by the recipient at any time during the six-month period prior to the date the recipient’s employment with the Company terminated. Additionally, the Committee may annul any award granted under the 2003 Stock Plan if the recipient’s employment is terminated for cause and, in such event, the Committee may, in its sole discretion, require the recipient to return to the Company the economic value of any award that was realized or obtained by the recipient at any time during the six-month period prior to the date the recipient’s employment with the Company terminated. Although the 2003 Stock Plan expired on October 24, 2012 and no further awards may be granted subsequent to that date, outstanding awards granted under the 2003 Stock Plan remain in effect and are subject to the above-described recovery provisions.

Awards under the Lydall, Inc. 2012 Stock Incentive Plan (the “2012 Stock Plan”), approved by stockholders at the 2012 Annual Meeting, are subject to the forfeiture and recoupment provisions of the 2012 Stock Plan, which provides that if the Plan Administrator (as defined in the 2012 Stock Plan) determines in good faith that a participant has engaged in fraudulent conduct relating to the Company, then such participant’s outstanding Awards shall be forfeited and, with respect to the year in which such fraudulent conduct occurred, the participant will be required to reimburse the Company for the economic value that was realized by such participant that was based on or resulted from such fraudulent conduct. In addition, any Award shall be subject to recoupment as required by the applicable provisions of any law (including the clawback provisions added by the Dodd-Frank Act), government regulation or stock exchange listing requirement (and any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

Effective January 1, 2012, the AIP Program provides that cash bonus payments are subject to recoupment if the Committee determines that a participating employee committed wrongdoing that contributed to a material misstatement, intentional or gross misconduct, a breach of a fiduciary duty to the Company or its stockholders, or fraud. In addition, at its discretion, the Committee may require a participating employee to disgorge and repay any bonus received based upon financial statements that are later restated, other than restatements due solely to facts external to the Company, such as a change in accounting principles or a retroactive change in law. Cash bonus payments also may be recouped in accordance with the applicable provisions of any law, regulation, stock exchange listing requirement or Company policy.

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Other Compensation

Severance and Change in Control Agreements — Each of the Named Executive Officers, other than Mr. Laughlan, have entered into agreements with the Company that provide for payment under specified conditions after a change in control of the Company or upon the executive’s termination under certain circumstances, as described under “Executive Compensation — Potential Payments Upon Termination or Change-In-Control”. In exchange for the receipt of the termination benefits provided for under the Employment Agreements, the Named Executive Officers are required to execute and deliver a general release of all claims in favor of the Company. As a general practice, the Company enters into change of control agreements with key members of management to ensure that they are incentivized to act in the best interests of the Company’s stockholders in the event of a prospective or actual change in control and to enhance executive retention.

Perquisites — The Company provides limited perquisites to Named Executive Officers. All of the Named Executive Officers are eligible to the same extent as all other non-union Lydall employees to participate in the Company’s medical and dental insurance and Company match to the 401(k) savings plan. The personal benefits and their attributed costs for the Named Executive Officers are included in the “All Other Compensation” column of the Summary Compensation Table below.

All Named Executive Officers, other than Mr. Laughlan, are currently covered under an Executive Life Program and an Executive Disability Insurance Program up to the applicable insurable limits. The programs provide for life insurance benefits at four times base salary for the Chief Executive Officer and three times base salary for the other Named Executive Officers, and annual executive disability proceeds at a target level of 100% of a Named Executive Officer’s base salary, in each case up to applicable insurance limits. The full amount of the premiums paid by the Company for these benefits is reflected in the “ All Other Compensation” column of the Summary Compensation Table below. If a Named Executive Officer died or became disabled on December 31, 2013, the Named Executive Officer would have been eligible for the benefits set forth in the table below:

Name		Executive Life Proceeds				Annual Executive Disability Proceeds
Dale G. Barnhart		$	2,080,000			$	180,000
Robert K. Julian		$	1,050,000			$	72,000
David H. Williams		$	825,000			$	86,256
James V. Laughlan(1)			N/A				N/A
Chad A. McDaniel		$	690,000			$	52,500

Other perquisites provided to Named Executive Officers in 2013 included car allowances and personal gas usage. The perquisites awarded to the Named Executive Officers are disclosed in the “All Other Compensation” column of the Summary Compensation Table below.

401(k)/Defined Contribution Plan — The Company provides a tax-qualified defined contribution retirement plan to eligible union and non-union employees, including Named Executive Officers, for retirement in the form of a 401(k) savings plan. For non-union participants, the 401(k) plan terms provide that the Company may make a matching contribution of a participant’s salary deferrals to the 401(k) plan, subject to IRS limits. The compensation eligible for the matching contribution includes any cash bonuses, but excludes the value of any equity compensation. In 2013, the Company provided matching contributions to the 401(k) plan for non-union employees at the rates of 100% for the first 3% contributed and 50% for the next 2% contributed.

Defined Benefit Pension Plan — Until June 30, 2006, Mr. Laughlan, the only current Named Executive Officer employed by the Company as of that date, earned benefits under the Lydall Pension Plan No. 1A, a defined benefit plan. No other Named Executive Officers currently employed by the Company benefit from the Lydall Pension Plan. The benefits under the Lydall Pension Plan No. 1A were frozen as of June 30, 2006, and all active participants were fully vested on that date, regardless of their years of credited service. The Lydall Pension Plan No. 1A was merged with the Company’s other two defined benefit pension plans effective December 31, 2010, and renamed “The Lydall Pension Plan.” Under The Lydall Pension Plan, the Named Executive Officers are eligible for a normal retirement benefit at age 65, or a reduced early retirement benefit if they meet the age and service requirements under the plan. Service continues to accumulate after June 30, 2006 for early retirement eligibility. Credited service cannot exceed actual years of service with the Company. The annual benefit payable at normal retirement, in a single life annuity, is equal to 2% of eligible compensation for all years of service from January 1, 1980 through the

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last payroll period ending before June 30, 2006 (1.75% of 1980 compensation for all years before 1980). The actuarial present value of accumulated benefits payable to each Named Executive Officer under The Lydall Pension Plan is summarized in the table below entitled “Pension Benefits for 2013.”

Welfare Plans  — The Company offers a health care plan that provides medical, dental, prescription drug, and vision coverage to its employees, including the Named Executive Officers.

Fiscal 2014 Executive Compensation Components

At the Company’s annual meeting of stockholders held in April 2013, over 96% of the votes cast on the Say-on-Pay proposal were voted in favor of the proposal. The Compensation Committee believes this affirms stockholders’ support of the Company’s approach to executive compensation, and maintained this general approach in 2013. The Compensation Committee will continue to consider the annual vote results for the Company’s Say-on-Pay proposals when making future compensation decisions for the Named Executive Officers.

The 2014 compensation for the Named Executive Officers consists of similar elements as were included with respect to 2013. The 2014 compensation was subjectively determined based on the factors described above under “Determining Compensation.” The Compensation Committee did not assign any specific weights to the various factors it considered.

Adjustments were made to increase the base salaries of the Named Executive Officers (except for Mr. Barnhart, who received no increase) for 2014 ranging from 3.0% to 3.9%, after consideration by the Compensation Committee of the following: competitive pay practices (as informed by the individual experience of the Compensation Committee members, the Company’s experiences in recruiting new executive officers, and the 2012 Analysis referred to above); the executive’s individual performance, responsibilities, and experiences (as informed by the input received from the CEO with respect to each executive officer other than the CEO and the Board’s annual evaluation of the CEO); the Company’s performance and financial condition; and external market and economic conditions.

With respect to the AIP Program for 2014, in December 2013, the Compensation Committee approved the following 2014 Performance Metrics and Performance Metrics Targets. For each of the Named Executive Officers who were employees of corporate headquarters as of January 1, 2014: consolidated operating income (50%), consolidated free cash flow (25%) and consolidated gross margin (25%). For each of the Named Executive Officers who were business unit employees as of January 1, 2014: business unit operating income (50%), business unit free cash flow (25%) and business unit gross margin (25%).

In December 2013, the Compensation Committee approved time-based incentive stock option awards related to the Named Executive Officer compensation packages for 2014. Similar to the awards made in connection with the compensation packages for 2013, the December 2013 time-based stock option awards vest in equal installments over four years. In February 2014, the Committee approved the grant of time-based Restricted Stock Awards to two of the Named Executive Officers. The RSAs will vest in equal installments over three years. In March 2014, the Committee approved the grant of Performance-Based Restricted Stock Awards to the Named Executive Officers. The three-year PSAs will be determined upon certification by the Committee that the Company has achieved an established earnings per share target for fiscal year 2016.

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The following is a summary of the time-based stock option awards that were granted to the Named Executive Officers on December 6, 2013, the time-based RSAs that were granted to two of the Named Executive Officers on February 28, 2014 and the three-year PSAs that were granted to the Named Executive Officers on March 7, 2014:

		Time-Based Stock Option Award (December 6, 2013)								Three-Year RSAs (February 28, 2014)								Three-Year PSAs (March 7, 2014)
Name		Number of Shares				Grant Date Fair Value(1) ($)				Number of Shares				Grant Date Fair Value(1) ($)				Number of Shares				Grant Date Fair Value(1) ($)
Dale G. Barnhart			23,529				225,050				—				—				30,000				657,600
Robert K. Julian			6,900				65,997				—				—				15,000				328,800
David H. Williams			4,550				43,520				—				—				15,000				328,800
James V. Laughlan			1,500				14,347				2,150				43,559				6,500				142,480
Chad A. McDaniel			4,550				43,520				4,000				81,040				15,000				328,800

While the stock options reflected in the table above related to each Named Executive Officer’s compensation package for 2014, because these stock options were granted in 2013, they are reflected in the Summary Compensation Table as a 2013 compensation item and in the table titled “Grants of Plan-Based Awards For 2013.”

Stock Ownership; Limits on Hedging and Pledging

The Board has developed and implemented share ownership guidelines that cover all directors who are not employees of Lydall (“Outside Directors”) and certain senior executive officers, including all of the Named Executive Officers. The share ownership guidelines are designed to link the personal financial interests of the covered individuals to the Company’s success and better align their interests with the interests of the Company’s stockholders.

The Company’s Corporate Governance Guidelines establish share ownership guidelines for Outside Directors (the “Outside Director Ownership Guidelines”). The Outside Director Ownership Guidelines provide that each Outside Director of the Company should acquire and hold shares of Company Common Stock equal in cost to four times the current annual stock retainer paid to each Outside Director. The guidelines stipulate that the required stock ownership level for Outside Directors should be achieved within the later of: (i) five years of the first adoption of the Corporate Governance Guidelines (which was February 23, 2006); (ii) five years of the date such person is first elected an Outside Director of the Company, unless a waiver is granted by the Compensation Committee; or (iii) as to any increased stock ownership level resulting from an increase in the annual stock retainer, five years from the date of such increase. Currently, all of the Company’s Outside Directors own a sufficient number of the Company’s shares to meet the applicable stock ownership level established by the Outside Director Ownership Guidelines.

The Company’s Stock Ownership Guidelines for Senior Executive Officers (the “Officer Ownership Guidelines”) establish share ownership requirements for the Chief Executive Officer, the Chief Financial Officer and all other Section 16 officers of the Company, which includes all of the Named Executive Officers. The Board adopted the Officer Ownership Guidelines effective January 1, 2010 and amended them effective January 1, 2014. Under the Officer Ownership Guidelines, as amended, the Chief Executive Officer is expected to acquire and hold shares of the Company’s Common Stock having a fair market value equal to four times his annual base salary and the Chief Financial Officer is expected to acquire and hold shares of the Company’s Common Stock having a fair market value equal to two times his annual base salary. Prior to the amendment of the Officer Ownership Guidelines, the Chief Executive Officer and Chief Financial Officer were expected to acquire and hold shares of the Company’s Common Stock having a fair market value equal to two times and one times their respective annual base salaries. All other officers covered by the Officer Ownership Guidelines are expected to acquire and hold shares of the Company’s Common Stock having a fair market value equal to one times his or her annual base salary. Qualifying ownership interests for purposes of the Officer Ownership Guidelines include:

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Prior to the amendment of the Officer Ownership Guidelines, the targeted stock ownership amount for each covered individual was initially determined as of the later of January 1, 2010, or the date such individual first became subject to the Officer Ownership Guidelines (the “Date of Determination”) and was based on the individual’s annual base salary in effect as of such date. Under the Officer Ownership Guidelines, as amended, the targeted stock ownership amount for each covered individual will be determined as of the later of January 1, 2014 or the date such individual first becomes subject to the Officer Ownership Guidelines (the “New Date of Determination”) and will be based on the individual’s annual base salary in effect as of such date. For purposes of determining whether a covered individual’s stock ownership amount satisfied the Officer Ownership Guidelines (prior to amendment), the fair market value of the Company’s Common Stock was equal to the closing price of the Company’s stock immediately preceding that individual’s Date of Determination. However, effective January 1, 2014, for purposes of determining whether a covered individual’s stock ownership amount satisfies the Officer Ownership Guidelines, as amended, the fair market value of the Company’s Common Stock will be equal to the average closing price of the Company’s Common Stock over the 365-day period immediately preceding the New Date of Determination. The deadline to achieve compliance with the Officer Ownership Guidelines, as amended, is the later of December 31, 2014 or the date which is five (5) years after each individual was appointed to the position giving rise to the applicability of the Officer Ownership Guidelines. The targeted stock ownership amount for each individual will be recalibrated every three (3) years after January 1, 2014 based on the then current base salary of each officer and the average closing price of the Company’s Common Stock over the preceding 365-day period. Once achieved, ownership of the applicable targeted amount of stock must be maintained for as long as an individual is covered by the Officer Ownership Guidelines.

Prior to the amendment of the Officer Ownership Guidelines, the Chief Executive Officer owned a sufficient number of shares of the Company’s Common Stock to satisfy the required stock ownership level. All of the Named Executive Officers (including the Chief Executive Officer) own or are on track to own a sufficient number of shares of the Company’s Common Stock to satisfy the required stock ownership level under the Officer Ownership Guidelines, as amended.

The Company’s Securities Law Compliance policy prohibits Directors and Executive Officers from engaging in hedging activities involving Lydall securities. Pledging of Lydall stock is discouraged, but not prohibited. The policy requires Directors and Executive Officers to obtain pre-clearance prior to entering into any pledge of Lydall stock or margin loan involving Lydall stock, and the Company may prohibit such activities at any time. None of the Company’s Directors or Named Executive Officers have any Lydall securities pledged or involved in margin loans.

Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), limits the deductibility of compensation in excess of $1 million paid to specified executive officers of public companies, unless certain specific and detailed criteria are satisfied. The Committee considers the anticipated tax treatment to the Company and the executive officers in its review and establishment of compensation programs and payments. However, to ensure that the Committee maintains the flexibility to structure executive compensation in ways that best promote the interests of the Company, the Committee will not necessarily always seek to limit executive compensation to that deductible under Section 162(m) of the Code. In fiscal year 2013, all of the compensation for the Named Executive Officers was deductible by the Company, except for approximately $18,000 of the compensation paid to Mr. Barnhart. The stock option awards granted in December 2012 and December 2013 are intended to qualify as “performance-based compensation” and therefore not be subject to the Section 162(m) limitation on deductibility.

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Compensation Committee Report on Executive Compensation

The Compensation Committee (the “Committee”) is composed of Independent Directors, as defined under applicable NYSE rules, Rule 16b-3 of the Exchange Act and Section 162(m) of the Code. The Committee was appointed by the Board and chartered to oversee the compensation of Lydall executives and Directors and to review and approve all incentive programs of the Company. The Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussion, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Matthew T. Farrell
Marc T. Giles
William D. Gurley, Chair
Suzanne Hammett

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EXECUTIVE COMPENSATION TABLES

Fiscal Year 2013 Summary Compensation Table

The following table shows the compensation awarded to, earned by or paid to the Named Executive Officers for the fiscal years 2013, 2012 and 2011.

Name and Principal Position (a)		Year (b)				Salary ($) (c)				Bonus(1) ($) (d)				Stock Awards(2) ($) (e)				Option Awards(2) ($) (f)				Non-Equity Incentive Plan Compensation(3) ($) (g)				Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) ($) (h)				All Other Compensation(5) ($) (i)				Total ($) (j)
Dale G. Barnhart, President and Chief Executive Officer			2013				522,000				—				511,197				225,050				532,058				—				58,218				1,848,523
			2012				498,111				—				632,400				238,731				458,903				—				57,072				1,885,217
			2011				496,112				—				—				135,855				279,485				—				55,024				966,476
Robert K. Julian, Executive Vice President and Chief Financial Officer*			2013				351,427				275,000				238,350				65,997				224,219				—				44,956				1,199,949
			2012				61,923				—				309,500				344,453				27,238				—				2,454				745,568
			2011				—				—				—				—				—				—				—				—
David H. Williams, President – Performance Materials*			2013				276,121				—				92,527				43,520				1,375				—				71,380				484,923
			2012				127,981				60,000				187,200				227,369				—				—				52,091				654,641
			2011				—				—				—				—				—				—				—				—
James V. Laughlan, Vice President, Chief Accounting Officer and Treasurer*			2013				198,116				—				113,326				14,347				75,779				(2,107	)			20,482				419,943
			2012				194,188				—				55,800				23,873				67,096				2,664				19,126				362,747
			2011				—				—				—				—				—				—				—				—
Chad A. McDaniel, Vice President, General Counsel and Secretary*			2013				137,168				100,000				109,350				112,045				56,727				—				19,535				534,825
			2012				—				—				—				—				—				—				—				—
			2011				—				—				—				—				—				—				—				—

Barnhart:  Car allowance and personal gas usage ($16,086), executive life insurance premium ($23,928), executive disability insurance premium ($8,004), and 401(k) Plan match ($10,200).

Julian:  Car allowance and personal gas usage ($16,027), executive life insurance premium ($12,586), executive disability insurance premium ($5,873), 401(k) Plan match ($10,200), and fitness reimbursement ($270).

Williams:  Car allowance and personal gas usage ($13,102), executive life insurance premium ($6,604), executive disability insurance premium ($2,686), relocation expense ($32,582), relocation tax gross-up ($6,057), 401(k) Plan match ($10,200), and fitness reimbursement ($149).

Laughlan:  Car allowance and personal gas usage ($9,903), 401(k) Plan match ($10,200), and fitness reimbursement ($379).

McDaniel:  Car allowance and personal gas usage ($8,582), executive life insurance premium ($2,225), executive disability insurance premium ($1,219), 401(k) Plan match ($7,339), and fitness reimbursement ($170).

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Grants of Plan-Based Awards For 2013

The following table provides information regarding stock options and cash incentive awards granted during 2013 to the Named Executive Officers.

						Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)												Estimated Future Payouts Under Equity Incentive Plan Awards(2)												All Other Stock Awards: Number of Shares of Stock or Units(3) (#) (i)				All Other Option Awards: Number of Securities Underlying Options(4) (#) (j)				Exercise or Base Price of Option Awards(5) ($/share) (k)				Grant Date Fair Value of Stock and Option Awards(6) ($) (l)
Name (a)		Grant Date (b)				Threshold ($) (c)				Target ($) (d)				Maximum ($) (e)				Threshold (#) (f)				Target (#) (g)				Maximum (#) (h)
Dale G. Barnhart							5,191				415,265				830,530
			2/18/13																25,737				32,171				38,605																511,197
			12/6/13																																23,529				16.98				225,050
Robert K. Julian							2,188				175,000				350,000
			2/18/13																12,000				15,000				18,000																238,350
			12/6/13																																6,900				16.98				65,997
David H. Williams							1,375				110,000				220,000
			2/18/13																4,658				5,823				6,988																92,527
			12/6/13																																4,550				16.98				43,520
James V. Laughlan							739				59,145				118,290
			1/10/13																												5,000												76,000
			2/18/13																1,879				2,349				2,819																37,326
			12/6/13																																1,500				16.98				14,347
Chad A. McDaniel*							553				44,275				88,550
			5/29/13																6,000				7,500				9,000																109,350
			5/29/13																																12,500				14.58				68,525
			12/6/13																																4,550				16.98				43,520

31

Outstanding Equity Awards at Fiscal Year-End 2013

The following table provides a list of outstanding equity awards for each Named Executive Officer as of December 31, 2013.

		Option Awards(1)																				Stock Awards(2)
Name (a)		Date of Grant (b)				Number of Securities Underlying Unexercised Options (#) Exercisable (c)				Number of Securities Underlying Unexercised Options (#) Unexercisable (d)				Option Exercise Price ($) (e)				Option Expiration Date (f)				Number of Shares or Units of Stock That Have Not Vested (#) (g)				Market Value of Shares or Units of Stock That Have Not Vested ($) (h)(3)				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i)(4)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j)(5)
Dale G. Barnhart			10/23/07				30,000								11.12				10/23/2017
			12/03/07				4,000								9.70				12/03/2017
			12/09/08				5,000								4.64				12/09/2018
			12/11/09				44,000*								5.54				12/11/2019
			12/09/10																												45,000				792,900
			12/09/10				22,500*				7,500*				7.80				12/09/2020
			12/19/11				12,500				12,500				8.94				12/19/2021
			05/14/12																												51,000				898,620
			12/05/12				3,237				9,711				13.29				12/05/2022
			12/05/12				4,263				12,789				13.29				12/05/2022
			02/18/13																												32,171				566,853
			12/06/13								23,529*				16.98				12/06/2023
Robert K. Julian			11/09/12				7,500				22,500				12.38				11/09/2022
			11/09/12																				25,000	(6)			440,500
			12/05/12				3,750*				11,250*				13.29				12/05/2022
			02/18/13																												15,000				264,300
			12/06/13								6,900*				16.98				12/06/2023
David H. Williams			08/02/12				5,000				15,000				12.48				08/02/2022
			08/02/12																				11,250	(7)			198,225
			12/05/12				2,500				7,500				13.29				12/05/2022
			02/18/13																												5,823				102,601
			12/06/13								4,550*				16.98				12/06/2023
James V. Laughlan			12/07/05				2,250								7.65				12/07/2015
			12/07/06				900								10.87				12/07/2016
			12/03/07				1,000								9.70				12/03/2017
			12/09/08				1,000								4.64				12/09/2018
			12/11/09				1,500								5.54				12/11/2019
			12/09/10				3,375				1,125				7.80				12/09/2020
			12/09/10																												3,500				61,670
			12/19/11				2,750				2,750				8.94				12/19/2021
			05/14/12																												4,500				79,290
			12/05/12				750				2,250				13.29				12/05/2022
			01/10/13																				5,000	(8)			88,100
			02/18/13																												2,349				41,389
			12/06/13								1,500				16.98				12/06/2023
Chad A. McDaniel			05/29/13								12,500				14.58				5/29/2023
			05/29/13																												7,500				132,150
			12/06/13								4,550				16.98				12/06/2023

32

33

Option Exercises and Stock Vested For 2013

The following table shows stock option exercises and vesting of restricted stock awards by the Named Executive Officers during 2013, including the aggregate value of gains on the date of exercise and stock acquired on vesting and the value realized on vesting.

		Option Awards								Stock Awards
Name (a)		Number of Shares Acquired on Exercise (#) (b)				Value Realized on Exercise ($) (c)				Number of Shares Acquired on Vesting(1) (#) (d)				Value Realized on Vesting(2) ($) (e)
Dale G. Barnhart			—				—				75,200				1,223,128
Robert K. Julian			—				—				—				—
David H. Williams			—				—				3,750				60,038
James V. Laughlan			—				—				600				10,110
Chad A. McDaniel			—				—				—				—

Pension Benefits for 2013

The following table summarizes the actuarial present value of accumulated benefits payable to each Named Executive Officer under The Lydall Pension Plan, including the number of years of service credited to each. As stated in the Compensation Discussion and Analysis, benefits under The Lydall Pension Plan were frozen as of June 30, 2006 for non-union employees, and credited service is determined as of the last payroll period ending before June 30, 2006. Interest rate and mortality assumptions used to compute the present value of benefits are the same as used in the Company’s financial statements, except no pre-retirement decrements are reflected in these calculations. The assumed retirement age is 65, which is the normal retirement age as defined in The Lydall Pension Plan. Please see the Compensation Discussion and Analysis for additional information.

Name (a)		Plan Name (b)				Number of Years Credited Service (#) (c)				Present Value of Accumulated Benefit ($) (d)				Payments During Last Fiscal Year ($) (e)
Dale G. Barnhart			—				—				—				—
Robert K. Julian			—				—				—				—
David H. Williams			—				—				—				—
James V. Laughlan			The Lydall Pension Plan				0.7				7,660				—
Chad A. McDaniel			—				—				—				—

34

Potential Payments Upon Termination or Change-in-Control

The Company has entered into agreements with its Named Executive Officers, except Mr. Laughlan, pursuant to which each such Named Executive Officer may be entitled to specified compensation and benefits upon the termination of his employment.

The agreements with each of Mr. Barnhart, Mr. Julian, Mr. Williams and Mr. McDaniel provide that, if an executive’s employment is terminated by the Company without “cause,” or by the executive for “good reason,” and such termination of employment does not occur within 18 months of a “change in control” (except that the agreement with Mr. Williams does not include a “good reason” trigger; and the agreements with Mr. Julian and Mr. McDaniel do not include “good reason” triggers other than in the event of a change in control), the Company shall pay the executive a severance benefit equal to the sum of (i) an amount equal to the executive’s annual base salary in effect immediately preceding the date of termination, and (ii) an amount equal to the average of the executive’s annual bonuses for the three calendar years immediately preceding the date of termination (the “Severance Benefit”). The Severance Benefit generally shall be paid in equal installments spread over the twelve-month period beginning on the date of termination, unless the executive is deemed to be a “specified employee,” as that term is defined in Section 409A of the Internal Revenue Code of 1986, as amended (a “Specified Employee”), in which case different payment rules apply. In the event that the executive elects to continue coverage under the Company’s health plan pursuant to COBRA, for a period of up to twelve months, the Company also shall pay the same percentage of the executive’s premium for COBRA coverage for the executive and, if applicable, his or her spouse and dependent children, as the Company paid at the applicable time for coverage under such plan for actively employed members of senior management. In addition, for the period beginning on the date of the executive’s termination of employment and ending on the earlier of (i) the date that is 12 months after the date of such termination of employment or (ii) the date on which the executive becomes eligible for life insurance benefits from another employer, the Company will continue to provide the life insurance benefits that the Company would have provided to the executive if the executive had continued in employment with the Company for such period, but only if the executive timely pays the portion of the premium for such coverage that members of senior management of the Company generally are required to pay for such coverage, if any. Finally, the executive is entitled to receive up to twelve months of outplacement services at a cost not to exceed $10,000. The Company’s obligation to provide the foregoing severance benefits is subject to the executive’s execution and delivery, without revocation, of a valid release of all claims against the Company.

In the event that an executive’s employment is terminated by the Company without “cause,” or by the executive for “good reason” (except that the agreement with Mr. Williams does not include a “good reason” trigger), and such termination of employment occurs within 18 months of a “change in control” (collectively, a “Change In Control Trigger”), the Company shall pay the executive a severance benefit equal to two times the sum of (i) his/her annual rate of base salary in effect immediately preceding his/her termination of employment, and (ii) the average of his/her last three years highest annual bonuses earned under the Company’s annual bonus plan for any of the five calendar years preceding his/her termination of employment (the “COC Severance Benefit”). The COC Severance Benefit shall be paid in a lump sum within thirty days after the date of termination, unless the executive is deemed to be a Specified Employee, in which case different payment rules apply. Upon the occurrence of such a Change In Control Trigger, the Company shall pay the executive a bonus for the year of termination in an amount equal to a specified portion of the executive’s target bonus opportunity for the year of termination. In general, for a period of up to 24 months, the executive is entitled to remain covered by the medical, dental, life insurance and, if reasonably commercially available through nationally reputable insurance carriers, long-term disability plans (except Mr. Julian, Mr. McDaniel and Mr. Williams, who shall be covered by the executive long-term disability plans) of the Company that covered the executive immediately prior to the termination of his employment, as if he had remained in the employ of the Company. The executive is entitled to receive the outplacement services described above and the vesting of all unvested stock options and restricted stock awards shall be accelerated in full. Finally, the executive is entitled to an automobile allowance for a period of up to 24 months.

35

Set forth below is a summary of the payments that would have been made to the each of the Named Executive Officers had the below-specified event occurred on December 31, 2013.

BENEFITS BY TRIGGERING EVENT ON DECEMBER 31, 2013		Dale G. Barnhart				Robert K. Julian				David H. Williams				Chad A. McDaniel
Death
Bonus – Bonus for the year of death equal to a pro rata portion of the average of the three highest annual bonuses earned in the five years preceding year of death			315,806				—				—				—
COBRA for family for 12 months, less employee contribution.			5,180				—				—				—
Executive Life Insurance proceeds			2,080,000				1,050,000				825,000				690,000
Aggregate Total in Event of Death			2,400,986				1,050,000				825,000				690,000
Disability
Base salary – 12 months, less payments made to NEO under any Company disability programs			220,000				—				—				—
Bonus – Pro rata bonus for the calendar year of termination			532,058				—				—				—
COBRA(1) for NEO and family for 12 months, less employee contribution			10,341				—				—				—
Life Insurance(1,2) coverage for 12 months less employee contribution			24,381				—				—				—
Executive Disability Insurance proceeds			180,000				72,000				86,256				52,500
Aggregate Total in Event of Disability			966,780				72,000				86,256				52,500
Cause(3) Termination or Voluntary Resignation (other than Good Reason Self-Quit)
No additional benefits
Aggregate Total in Event of Cause(3) Termination or Voluntary Resignation			—				—				—				—
Non-Cause Termination or Good Reason(4) Self-Quit
Severance – base salary for 12 months (5)			520,000				350,000				275,000				230,000
Bonus – in an amount equal to the average of the three preceding years’ annual bonuses earned, paid over 12 months (5)			315,806				27,238				—				—
COBRA(1) for NEO and family for maximum of 12 months, less employee contribution			10,341				12,622				13,089				12,622
Life Insurance coverage for 12 months less employee contribution(1,2)			24,381				11,890				6,604				4,450
Outplacement services not to exceed $10,000			10,000				10,000				10,000				10,000
Aggregate Total in Event of Non-Cause Termination or Good Reason Self-Quit			880,528				411,750				304,693				257,072
Change of Control Termination Benefit Including Good Reason Self-Quit After Change of Control(6)
Severance – Lump-sum severance benefit equal to two times annual base salary plus an average of the three highest annual bonuses earned in the five years preceding year of (7)			1,671,612				754,476				550,000				460,000
Year of Termination Bonus – equal to a pro rata portion of target bonus opportunity, payable in a lump sum(7,8)			416,000				175,000				110,000				47,859
Medical, dental, life and if applicable, long term disability coverage for 24 months under the Company’s plans, for NEO and family, less employee contribution(2)			88,736				61,861				44,757				39,961
Stock option/award vesting acceleration(9)			2,553,007				875,829				413,313				173,062
Outplacement services not to exceed $10,000			10,000				10,000				10,000				10,000
Car allowance for 24 months			24,000				24,000				19,200				24,000
Aggregate Total in Event of Change of Control			4,763,355				1,901,166				1,147,270				754,882

36

37

2013 DIRECTOR COMPENSATION

Board compensation for Directors during fiscal year 2013 is summarized in the table below:

Name (a)		Fees and Retainers Earned or Paid in Cash ($) (b)(1)				Stock Awards ($) (c)(2)				Option Awards ($) (d)(3)				Non-equity Incentive Plan Compensation ($) (e)				Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) (f)				All Other Compensation ($) (g)				Total ($) (h)
Kathleen Burdett			69,125				36,010				—				—				—				—				105,135
W. Leslie Duffy, Esq.			120,000				36,010				—				—				—				—				156,010
Matthew T. Farrell			62,000				36,010				—				—				—				—				98,010
Marc T. Giles			53,500				36,010				—				—				—				—				89,510
William D. Gurley			59,500				36,010				—				—				—				—				95,510
Suzanne Hammett			62,000				36,010				—				—				—				—				98,010
S. Carl Soderstrom, Jr.			63,500				36,010				—				—				—				—				99,510