METHODE ELECTRONICS INC (Form: 8-K, Received: 04/06/2007 16:18:30)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 6, 2007

METHODE ELECTRONICS, INC.

(Exact name of registrant as specified in its charter)


Delaware State of Other Jurisdiction of Incorporation		0-2816 Commission File Number		36-2090085 I.R.S. Employer Identification Number

7401 West Wilson Avenue
Chicago, IL 60706
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (708) 867-6777

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

During fiscal-year 2007, the Compensation Committee of Methode Electronics, Inc. (the “Company”) and Donald W. Duda, President and Chief Executive Officer, have been working together to address certain issues under Section 162(m) and Section 409A of the Internal Revenue Code related to Mr. Duda’s compensation.

Section 162(m) imposes a $1 million annual limit on the amount that can be deducted by the Company for compensation paid to Mr. Duda, subject to certain exceptions. The scheduled lapse of the restrictions on Mr. Duda’s 2005 and 2006 restricted stock awards in April 2008 and April 2009, respectively, would not qualify for an exception under Section 162(m). As such, the value of these awards would be required to be included for purposes of determining whether the $1 million limit has been exceeded in each such fiscal year. Section 409A subjects the recipient of certain forms of non-qualified deferred compensation to an additional 20% tax. Certain payments to be made to Mr. Duda under the 2003 Cash Bonus Agreement described below would be subject to this additional tax.

In order to mitigate the Section 162(m) deductibility issue, eliminate the 409A tax consequences to Mr. Duda, and eliminate variable accounting with respect to the 2003 Cash Bonus Agreement, the Compensation Committee approached Mr. Duda regarding the available alternatives. Mr. Duda and the Compensation Committee worked diligently to review and assess the alternatives with the assistance of external legal and compensation advisors. The resolution agreed upon involves multiple steps, including the exercise of stock options and sale of all of the underlying stock by Mr. Duda, the current payment of a portion of the cash bonus to Mr. Duda under the 2003 Cash Bonus Agreement, the amendment of the Cash Bonus Agreement and Mr. Duda’s 2005 and 2006 Restricted Stock Award Agreements, and the deferral of certain bonus amounts by Mr. Duda.

Amended and Restated Restricted Stock Unit Award Agreements

On April 6, 2007, the Company and Mr. Duda entered into the Amended and Restated Restricted Stock Unit Award Agreements. Pursuant to these agreements, the 2005 and 2006 restricted stock awards were amended and restated into the form of restricted stock units. Under the terms of the amended restricted stock units, at such time as the value of the award is deductible by the Company or Mr. Duda’s employment terminates, shares of non-restricted common stock will be delivered to Mr. Duda. The conversion mitigates the Section 162(m) issue because restricted stock units are deductible by the Company when paid to the executive, in contrast to restricted stock which is deductible upon vesting. The Amended and Restated Restricted Stock Unit Award Agreements do not amend or modify any other provisions under the 2005 and 2006 restricted stock awards, including, without limitation, the vesting period or performance criteria.

Deferral of 2008 and 2009 Cash Bonus

In 2005 and 2006, the Company agreed to pay Mr. Duda a cash bonus if the Company met certain financial targets measured as of the end of a three-year period. These cash bonuses do not qualify for an exception under Section 162(m) and will be included for purposes of calculating the $1 million cap in the year paid. Pursuant to an election form executed on April 6, 2007, Mr. Duda has deferred one hundred percent (100%) of these bonuses pursuant to the Company’s Deferred Compensation Plan. The bonuses are deferred until 2012 and 2013, respectively. It is currently anticipated that at such time, a substantial portion of Mr. Duda’s annual compensation would qualify for an exception under Section 162(m).

Amended Cash Bonus Agreement

Pursuant to the 2003 Cash Bonus Agreement, Mr. Duda was entitled to two cash bonuses. The amount of the first cash bonus was to be determined by multiplying 100,000 by the value of the Company’s common stock in excess of $10.50 (the value of common stock on the date of Mr. Duda’s 2002 stock option grant). The bonus vested in 25% annual increments commencing in June 2003 and ending in June 2006. The amount of the second cash bonus was to be determined by multiplying 150,000 by the value of the common stock in excess of $11.44 (the value of common stock on the date of Mr. Duda’s 2003 stock option grant). The bonus vests in 25% annual increments commencing in July 2004 and ending in July 2007. Under the 2003 Cash Bonus Agreement, Mr. Duda was required to exercise all vested options under the 2002 and the 2003 grants prior to receiving any cash bonuses thereunder. Pursuant to Section 409A, any portion of the cash bonuses which were vested as of January 1, 2005 are grandfathered and not subject to Section 409A. The portions of the cash bonuses that were not vested as of that date are subject to Section 409A and, pursuant to the terms of the Cash Bonus Agreement, would subject Mr. Duda to an additional 20% tax on these bonus amounts.

In connection with addressing the issues outlined above, Mr. Duda agreed to elect to receive payment of all cash bonus amounts payable under the 2003 Cash Bonus Agreement that were vested as of January 1, 2005 and not subject to the provisions of Section 409A. In order to make this election, Mr. Duda was required to exercise all vested options under the 2002 and 2003 stock option grants (175,000 shares). The provision of Section 409A prohibited the amendment of the 2003 Cash Bonus Agreement to waive this condition without triggering the 20% additional tax. Mr. Duda exercised these options on April 4 and April 5, 2007, and subsequently sold the underlying 175,000 shares of common stock at a weighted average sale price of $15.32 per share. Also on April 5, 2007, Mr. Duda elected to receive a partial payment under the 2003 Cash Bonus Agreement. The Company and Mr. Duda agreed that for purposes of this payment and the payments pursuant to the Amended Cash Bonus Agreement described below, the value of the Company’s common stock would equal $15.32 per share, the weighted average sales price of the sale of the 175,000 shares. Pursuant to the terms of the Cash Bonus Agreement, these cash bonuses totaled $241,000 [($15.32 — $10.50) × 100,000 × 50%] and $145,500 [($15.32 — $11.44) × 150,000 × 25%],or $386,500 in the aggregate. These amounts will be included for purposes of determining whether Mr. Duda’s compensation has exceeded the $1 million limit in fiscal-year 2007.

As of April 6, 2007, the Company and Mr. Duda entered into an Amended Cash Bonus Agreement. Pursuant to the Amended Cash Bonus Agreement, the Company will pay Mr. Duda cash bonuses in the amount of $241,000 [($15.32 — $10.50) × 100,000 × 50%] and $436,500 [($15.32 — $11.44) × 150,000 × 75%], or $677,500 in the aggregate. These cash bonuses are payable on the earliest of the following: (i) May 15, 2009; (ii) the date of Mr. Duda’s termination of employment for any reason; or (iii) Mr. Duda’s death or disability; provided, however, that if, upon the payment date, the payment is not deductible by the Company under Section 162(m), the payment will be delayed until such time as it is deductible. In such case, the amount may be payable in one or more installments. Mr. Duda is not entitled to any other compensation pursuant to the Amended Cash Bonus Agreement.

The Amended Cash Bonus Agreement and the Amended and Restated Restricted Stock Unit Award Agreements are filed as Exhibit 10.1, 10.2 and 10.3, respectively to this Form 8-K. The foregoing descriptions are qualified in their entirety by reference to the full text of the Amended Cash Bonus Agreement and the Amended and Restated Restricted Stock Unit Award Agreements.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits


10.1		Amended Cash Bonus Agreement effective as of April 6, 2007, between the Company and Donald W. Duda.
10.2		Amended and Restated Restricted Stock Unit Award Agreement effective as of June 15, 2005, between the Company and Donald W. Duda.
10.3		Amended and Restated Restricted Stock Unit Award Agreement effective as of August 7, 2006, between the Company and Donald W. Duda.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	Methode Electronics, Inc.

Date: April 6, 2007	By:	/s/ Donald W. Duda
		Donald W. Duda
		President and Chief Executive Officer

Exhibit 10.1

METHODE ELECTRONICS, INC.
AMENDED CASH BONUS AGREEMENT

THIS AMENDED CASH BONUS AGREEMENT, effective as of April 6, 2007 (the “Amended Agreement”), is entered into by and between METHODE ELECTRONICS, INC., a Delaware corporation (the “Company”), and Donald W. Duda (“Employee”).

WHEREAS, Employee has served and continues to serve the Company as President of the Company;

WHEREAS, Section 3 of the Methode Electronics, Inc. 2000 Stock Plan (the “Plan”) limits the total number of shares of Company common stock with respect to which awards may be granted under the Plan to a participant in any calendar year to 100,000 shares;

WHEREAS, on May 4, 2001, the Company granted Employee a stock option award under the Plan with respect to 200,000 shares of Company common stock;

WHEREAS, on June 10, 2002, the Company granted Employee a stock option award under the Plan with respect to 200,000 shares of Company common stock;

WHEREAS, each of the two stock option awards described above is void to the extent that it attempted to grant a stock option with respect to more than 100,000 shares of Company common stock;

WHEREAS, on July 3, 2003, the Company granted Employee a stock option award under the Plan with respect to 100,000 shares of Company common stock, but would have granted him a stock option award with respect to 250,000 shares but for the 100,000 share annual limitation referred to above;

WHEREAS, the Company desires to reward Employee for his services to the Company and to encourage him to continue to work for the benefit of the Company in a manner that will benefit all Company shareholders and to compensate him for the stock option awards described above that exceeded or would have exceeded the Plan’s 100,000 share annual limitation;

WHEREAS, the Company and Employee entered into a Cash Bonus Agreement effective as of August 22, 2003 (“the Cash Bonus Agreement”) to accomplish the foregoing;

WHEREAS, on April 4 and 5, 2007, the Employee exercised all of the vested stock options awarded to him on June 10, 2002 and on July 3, 2003 and subsequently sold the underlying 175,000 shares of common stock at a weighted average sale price of $15.32 per share (the “Average Option Sale Price”);

WHEREAS, pursuant to the terms of the Cash Bonus Agreement, as of April 5, 2007, the Employee elected to be paid as deferred compensation a cash bonus equal to $241,000.00 (the Average Option Sale Price — $10.50) × 100,000 × 50%;

WHEREAS, pursuant to the terms of the Cash Bonus Agreement, as of April 5, 2007, the Employee elected to be paid as deferred compensation a cash bonus equal to $145,500.00 (the Average Option Sale Price — $11.44) × 150,000 × 25%; and

WHEREAS, pursuant to discussions between Employee and the Compensation Committee of the Company’s Board of Directors and in consideration of the implications of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the parties desire to amend the Cash Bonus Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and obligations herein after set forth and Employee’s agreement to convert his 2005 and 2006 Restricted Stock Awards to Restricted Stock Units pursuant to the Amended and Restated Restricted Stock Award Agreements dated as of the date hereof, the Company agrees to pay Employee certain deferred cash bonuses on the terms and conditions set forth herein.

1. The Company will pay Employee as deferred compensation a cash bonus equal to $241,000.00 (the Average Option Sale Price — $10.50) × 100,000 × 50%. The cash bonus payment pursuant to this Section shall be payable on the earliest of the following:

a. May 15, 2009;

b. the date of Employee’s “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code for any reason other than death or disability; or

c. Employee’s death or disability.

For all purposes of this Amended Agreement, Employee will be considered disabled only if because of a medically determinable physical or mental impairment that can be expected to result in death or that can be expected to last for a continuous period of at least 12 months: (i) he is unable to engage in any substantial gainful activity; or (ii) he is receiving income replacement benefits for a period of at least three months under an accident and health plan of the Company.

If and to the extent that the Company reasonably anticipates that its income tax deduction with respect to any payment under this Amended Agreement, including any payment under this Section or Section 2 hereof, will be limited or eliminated by application of Code Section 162(m), the payment shall be delayed until either (i) the earliest date at which the Company reasonably anticipates that the Company’s deduction for the payment will not be limited or eliminated by application of Code Section 162(m), or (ii) the calendar year in which occurs the Employee’s separation from service.

Notwithstanding anything herein to the contrary, in the event that the Employee is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, any payment under this Amended Agreement, including any payment under this Section or Section 2 hereof, shall be delayed until the earlier of (i) six months after the Employee’s separation from service with the Company and (ii) the Employee’s death, if such a delay is necessary to avoid the imposition of additional tax and interest on the Employee under Section 409A(a)(1)(B) of the Code.

2. The Company will pay Employee as additional deferred compensation another cash bonus equal to $436,500.00 (the Average Option Sale Price — $11.44) × 150,000 × 75%. The cash bonus payment pursuant to this Section shall be payable on the earliest of the following:

a. May 15, 2009;

b. the date of Employee’s “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code for any reason other than death or disability; or

c. Employee’s death or disability.

3. Nothing herein contained shall confer on Employee any right with respect to continuation of employment by the Company or its subsidiaries or affiliates, or interfere with the right of the Company or its subsidiaries or affiliates to terminate at any time the employment of Employee.

4. This Amended Agreement may not be assigned by the Company without the written consent of Employee but the obligations of the Company under this Amended Agreement shall be the binding legal obligations of any successor to the Company by merger or other business combination, and in the event of any business combination or transaction that results in the transfer of substantially all of the assets or business of the Company, the Company will cause the transferee to assume the obligations of the Company under this Amended Agreement. Neither this Amended Agreement nor the bonuses hereunder may be assigned by Employee during Employee’s life, and any payment arising as the result of Employee’s death shall be paid to one or more beneficiaries designated by Employee in a form approved by the Company, or in the absence of any such designation, to Employee’s estate.

5. The validity, interpretation, construction and performance of this Amended Agreement shall be governed by the laws of the State of Illinois, without regard to the conflict of law principles thereof.

6. The Company may withhold from any payment that it is required to make under this Amended Agreement amounts sufficient to satisfy applicable withholding requirements under any federal, state or local law.

7. This Amended Agreement supersedes the Cash Bonus Agreement. This Amended Agreement may be amended at any time by written agreement between the Company and Employee. Any such amendment shall be made pursuant to a resolution of the Compensation Committee of the Company’s Board of Directors.

8. Cash payments under this Amended Agreement shall constitute general obligations of the Company. Employee shall have only an unsecured right to payment thereof out of the general assets of the Company.

9. In the event that any provision or portion of this Amended Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Amended Agreement shall be unaffected thereby and shall remain in full force and effect.

10. The parties initially shall attempt to resolve by direct negotiation any dispute, controversy or claim arising out of or relating to this Amended Agreement or its breach or interpretation (each, a “Dispute”). For purposes of this negotiation, the Company shall be represented by one or more of its independent directors appointed by the Board of Directors. If the parties are unable to resolve the Dispute by direct negotiation within 30 days after written notice by one party to the other of the Dispute, either party may initiate a confidential, binding arbitration to resolve the Dispute. All such Disputes shall be arbitrated in Chicago, Illinois pursuant to the arbitration rules of J.A.M.S. Endispute before a single arbitrator. (If, at the time of any Dispute, J.A.M.S. Endispute has ceased to exist, all such Disputes shall be arbitrated in Chicago, Illinois pursuant to the arbitration rules of the American Arbitration Association before a single arbitrator.) Judgment upon any award rendered by the arbitrator may be entered in any court having jurisdiction, and both parties consent and submit to the jurisdiction of such court for purposes of such action. Nothing in this Amended Agreement shall preclude either party from seeking equitable relief from a court of competent jurisdiction. The statute of limitations, estoppel, waiver, laches and similar doctrines, which would otherwise be applicable in any action brought by a party shall be applicable in any arbitration proceeding, and the commencement of an arbitration proceeding shall be deemed the commencement of an action for those purposes. The Federal Arbitration Act shall apply to the construction, interpretation and enforcement of this arbitration provision.

11. This Amended Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

12. This Amended Agreement supersedes and cancels all prior written or oral agreements and understandings relating to the terms of this Amended Agreement.

IN WITNESS WHEREOF, the parties have executed this Amended Agreement as of the date written above.



METHODE ELECTRONICS, INC.		EMPLOYEE

By:	/s/ Paul G. Shelton	Donald W. Duda
	Chairman of the Compensation Committee

Exhibit 10.2

METHODE ELECTRONICS, INC.
AMENDED AND RESTATED
RESTRICTED STOCK UNIT AWARD AGREEMENT
(EXECUTIVE AWARD / PERFORMANCE-BASED)

This agreement (the “Award Agreement”) effective as of June 15, 2005 (the “Award Date”), is entered into by and between Methode Electronics, Inc., a Delaware corporation (the “Company”) and Donald W. Duda (the “Grantee”). This Award Agreement amends and restates the Restricted Stock Award Agreement by and between the Company and the Grantee dated June 15, 2005 (the “Predecessor Agreement”). As of the date this Award Agreement is accepted by both parties, the Predecessor Agreement will be void and otherwise superseded by this Award Agreement, and the Grantee will return any Restricted Stock awarded to him under the Predecessor Agreement. All capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them by the Methode Electronics, Inc. 2004 Stock Plan (the “Plan”).

1. General . This Award Agreement and the Restricted Stock Units awarded herein are subject to all of the provisions of the Plan applicable to Restricted Stock Units. Unless otherwise provided herein, the Plan provisions are incorporated by reference and made a part hereof to the same extent as if set forth in their entirety herein. A copy of the Plan is on file in the offices of the Company.

2. Grant . The Company hereby grants to Grantee a total of 125,000 Restricted Stock Units (the “Restricted Stock Units”), subject to the restrictions set forth in Section 3 hereof and the Plan.

3. Restrictions .

	(a)		None of the Restricted Stock Units may be sold, transferred, pledged, hypothecated or otherwise encumbered or disposed of.

	(b)		Any Restricted Stock Units that are not vested shall be forfeited to the Company immediately upon termination of the Grantee’s employment with the Company and all of its Subsidiaries and Affiliates.

	(c)		Any Restricted Stock Units that are not vested may be forfeited to the Company in accordance with Section 7 of this Award Agreement.

4. Payment for Restricted Stock Units .

(a)

The Company will pay one share of Common Stock to the Grantee for each vested Restricted Stock Unit upon the earlier of the following events, but in no case earlier than the date the Award becomes vested under Section 6:

	(i)		thirty (30) days after the Grantee’s date of termination of employment with the Company and all of the Company’s Subsidiaries and Affiliates; or

	(ii)		the last day of the Company’s fiscal year in which the payment of

Common Stock in satisfaction of the Restricted Stock Units becomes deductible to the Company under Section 162(m) of the Code, in which case the Company may pay out a portion of the Restricted Stock Unit Award if payment of the entire Award would not be deductible to the Company and the remaining portion of the Award shall be paid when, and to the extent, the payment becomes deductible. If the Grantee has other outstanding vested awards that are conditioned on payment being deductible to the Company, the vested awards that do not have performance-based criteria shall be paid first and in the order they were first granted.

(b)

Notwithstanding the foregoing, in the event that the Grantee is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, any payment under this Award Agreement shall be delayed until the earlier of (i) six months after the Grantee’s separation from service with the Company and (ii) the Grantee’s death, if such a delay is necessary to avoid the imposition of additional tax and interest on the Grantee under Section 409A(a)(1)(B) of the Code.

5. Rights as Stockholder . The Grantee shall have no rights as a stockholder with respect to any Restricted Stock Units. The Grantee will only have stockholder rights after a stock certificate is issued.

6. Vesting .

(a)

Vesting Date . The determination as to the number of Restricted Stock Units which shall vest pursuant to Section 6(b) shall be made as of May 3, 2008 (the “Vesting Date”), provided Grantee is employed by the Company (or a Subsidiary or Affiliate thereof) continuously between the Award Date and the Vesting Date.

	(b)		Amount of Restricted Stock Units that Vest . Exhibit A sets forth a table of percentages which vary based upon certain performance criteria of the Company between the Award Date and the Vesting Date. Grantee shall vest in the percentage of Restricted Stock Units granted to Grantee on the Award Date that corresponds to the performance of the Company on the Vesting Date. The percentage used to determine the amount of Grantee’s Restricted Stock Units that vest shall be determined in the absolute discretion of the Committee. As set forth in Section 7(a), the percentage of Restricted Stock Units not vested on the Vesting Date shall be forfeited.

	(c)		Termination of Employment Prior to the Vesting Date . Notwithstanding the provisions of 6(a) and 6(b) herein, Restricted Stock Units granted hereunder shall vest, in an amount determined according to the calculation set forth below, if the Grantee’s employment with the Company and all of its Subsidiaries and Affiliates is terminated prior to the Vesting Date, due to: (i) retirement on or after Grantee’s sixty-fifth birthday; (ii) retirement on or after Grantee’s fifty-fifth birthday with consent of the Company; (iii) retirement at any age on account of total and permanent disability as determined by the Company; (iv) death; or (v) a Change

			of Control as defined in the Plan. For purposes of this Section 6(c), “Early Termination Date” shall refer to the occurrence of one of the events set forth in (i), (ii), (iii) and (iv), and “Change of Control Date” shall refer to the occurrence of the event set forth in (v). For clarity, Exhibit B attached hereto and incorporated herein sets forth an example in which the Restricted Stock Units vest upon the Change of Control Date as described in Section 6(b)(v). If Grantee’s employment terminates on the Early Termination Date or there is a Change of Control, then Grantee’s Restricted Stock Units shall vest as of the Early Termination Date or Change of Control Date, as follows: Grantee shall vest in the percentage of Restricted Stock Units that, extrapolated from the performance growth of the Company from the Award Date to the most recent prior fiscal quarter to the Early Termination Date or the Change of Control Date, would have vested on the Vesting Date, multiplied by a fraction the numerator of which is the number of months elapsed since May 1, 2004 (rounded up) and the denominator of which is 36.
	(d)		Change of Control . In the event of a Change of Control, Section 6(c) of this Award Agreement shall govern vesting hereunder, and Section 11.3 of the Plan shall be inapplicable.

7. Forfeiture .

	(a)		Forfeiture of Restricted Stock Units not Vested . As of the Vesting Date, Grantee shall forfeit all Restricted Stock Units not vested pursuant to Section 6(b) or Section 6(c) hereof. By example, pursuant to Section 6(b), if Grantee vests in 65% of the Restricted Stock Units granted to Grantee on the Award Date, Grantee thereby forfeits 35% of the Restricted Stock Units granted to Grantee on the Award Date.

	(b)		Forfeiture if the Grantee Engages in Certain Activities . If at any time the Grantee engages in any activity adverse, contrary or harmful to the interests of the Company, including, but not limited to: (i) conduct related to the Grantee’s employment for which either criminal or civil penalties against the Grantee may be sought, (ii) while employed by the Company or any Subsidiary or Affiliate, serving as a consultant, advisor or in any other capacity to an entity that is, or proposes to be, in competition with or acting against the interests of the Company, (iii) employing or recruiting any present, former or future employee of the Company, whether individually or on behalf of another person or entity, that is, or proposes to be, in competition with or acting against the interests of the Company, (iv) disclosing or misusing any confidential information or material concerning the Company, or (v) participating in a hostile takeover attempt, then the unvested Restricted Stock Units shall be forfeited to the Company effective as of the date on which the Grantee entered into such activity, unless terminated sooner by operation of another term or condition of this Award Agreement or the Plan.

	(c)		Right of Set-off . If the Grantee owes the Company any amount by virtue of Section 7(b) above, then the Company (or any Subsidiary or Affiliate) may

			recover such amount by setting it off from any amounts the Company (or any Subsidiary or Affiliate) owes or may owe the Grantee from time to time. By accepting these Restricted Stock Units and signing this Award Agreement in the space provided below, the Grantee consents to a deduction of any amount the Grantee may owe the Company by virtue of Section 7(b) above from any amounts the Company (or any Subsidiary or Affiliate) owes or may owe the Grantee from time to time (including amounts owed to the Grantee as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to the Grantee). Whether or not the Company elects to make any set-off in whole or in part, if the Company does not recover by means of set-off the full amount the Grantee owes it, calculated as set forth above, the Grantee agrees to pay immediately the unpaid balance to the Company.
	(d)		Committee Discretion . The Committee may release the Grantee from the obligations under Section 7(b) above if the Committee determines in its sole discretion that such action is in the best interest of the Company.

8. Other Terms and Conditions . The Committee shall have the discretion to determine such other terms and provisions hereof as stated in the Plan.

9. Applicable Law . The validity, construction, interpretation and enforceability of this Award Agreement shall be determined and governed by the laws of the State of Illinois without regard to any conflicts or choice of law rules or principles that might otherwise refer construction or interpretation of this Award Agreement to the substantive law of another jurisdiction, and any litigation arising out of this Award Agreement shall be brought in the Circuit Court of the State of Illinois or the United States District Court of the Eastern Division of the Northern District of Illinois and the Grantee consents to the jurisdiction and venue of those courts.

10. Severability . The provisions of this Award Agreement are severable and if any one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially unenforceable provision to the extent enforceable in any jurisdiction, shall nevertheless be binding and enforceable.

11. Waiver . The waiver by the Company of a breach of any provision of this Award Agreement by Grantee shall not operate or be construed as a waiver of any subsequent breach by Grantee.

12. Binding Effect . The provisions of this Award Agreement shall be binding upon the parties hereto, their successors and assigns, including, without limitation, the Company, its successors or assigns, the estate of the Grantee and the executors, administrators or trustees of such estate and any receiver, trustee in bankruptcy or representative of the creditors of the Grantee.

that any federal, state, local or foreign tax or withholding payment is required relating to the vesting of shares arising from this grant, the Company shall have the right to require such payments from Grantee, or withhold such amounts from other payments due Grantee from the Company or any Subsidiary or Affiliate.

14. No Retention Rights . Nothing herein contained shall confer on the Grantee any right with respect to continuation of employment by the Company or its Subsidiaries or Affiliates, or interfere with the right of the Company or its Subsidiaries or Affiliates to terminate at any time the employment of the Grantee.

15. Construction . This Award Agreement is subject to and shall be construed in accordance with the Plan, the terms of which are explicitly made applicable hereto. In the event of any conflict between the provisions hereof and those of the Plan, the provisions of the Plan shall govern.

GRANTEE



/s/ Donald W. Duda
Donald W. Duda

METHODE ELECTRONICS, INC.



	By:	/s/ Douglas A. Koman
		Douglas A. Koman
	Its:	Vice President, Corporate Finance and Chief Financial Officer

Exhibit 10.3

METHODE ELECTRONICS, INC.
AMENDED AND RESTATED
RESTRICTED STOCK UNIT AWARD AGREEMENT
(EXECUTIVE AWARD / PERFORMANCE-BASED)

This agreement (the “Award Agreement”) effective as of August 7, 2006 (the “Award Date”), is entered into by and between Methode Electronics, Inc., a Delaware corporation (the “Company”) and Donald W. Duda (the “Grantee”). This Award Agreement amends and restates the Restricted Stock Award Agreement by and between the Company and the Grantee dated August 7, 2006 (the “Predecessor Agreement”). As of the date this Award Agreement is accepted by both parties, the Predecessor Agreement will be void and otherwise superseded by this Award Agreement, and the Grantee will return any Restricted Stock awarded to him under the Predecessor Agreement. All capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them by the Methode Electronics, Inc. 2004 Stock Plan (the “Plan”).

2. Grant . The Company hereby grants to Grantee a total of 100,000 Restricted Stock Units (the “Restricted Stock Units”), subject to the restrictions set forth in Section 3 hereof and the Plan.

3. Restrictions .

	(a)		None of the Restricted Stock Units may be sold, transferred, pledged, hypothecated or otherwise encumbered or disposed of.

	(b)		Any Restricted Stock Units that are not vested shall be forfeited to the Company immediately upon termination of the Grantee’s employment with the Company and all of its Subsidiaries and Affiliates.

	(c)		Any Restricted Stock Units that are not vested may be forfeited to the Company in accordance with Section 7 of this Award Agreement.

4. Payment for Restricted Stock Units .

(a)

(i)

thirty (30) days after the Grantee’s date of termination of employment with the Company and all of the Company’s Subsidiaries and Affiliates; or

(ii)

the last day of the Company’s fiscal year in which the payment of Common Stock in satisfaction of the Restricted Stock Units becomes deductible to the Company under Section 162(m) of the Code, in which case the Company may pay out a portion of the Restricted Stock Unit Award if payment of the entire Award would not be deductible to the Company and the remaining portion of the Award shall be paid when, and to the extent, the payment becomes deductible. If the Grantee has other outstanding vested awards that are conditioned on payment being deductible to the Company, the vested awards that do not have performance-based criteria shall be paid first and in the order they were first granted.

(b)

6. Vesting .

	(a)		Vesting Date . The determination as to the number of Restricted Stock Units which shall vest pursuant to Section 6(b) shall be made as of May 2, 2009 (the “Vesting Date”), provided Grantee is employed by the Company (or a Subsidiary or Affiliate thereof) continuously between the Award Date and the Vesting Date.

	(b)		Amount of Restricted Stock Units that Vest . Exhibit A sets forth a table of percentages which vary based upon certain performance criteria of the Company between the Award Date and the Vesting Date. Grantee shall vest in the percentage of Restricted Stock Units granted to Grantee on the Award Date that corresponds to the performance of the Company on the Vesting Date. The percentage used to determine the amount of Grantee’s Restricted Stock Units that vest shall be determined in the absolute discretion of the Committee. As set forth in Section 7(a), the percentage of Restricted Stock Units not vested on the Vesting Date shall be forfeited.

	(c)		Termination of Employment Prior to the Vesting Date . Notwithstanding the provisions of 6(a) and 6(b) herein, Restricted Stock Units granted hereunder shall vest, in an amount determined according to the calculation set forth below, if the Grantee’s employment with the Company and all of its Subsidiaries and Affiliates is terminated prior to the Vesting Date, due to: (i) retirement on or after Grantee’s sixty-fifth birthday; (ii) retirement on or after Grantee’s fifty-fifth birthday with consent of the Company; (iii) retirement at any age on account of total and

			permanent disability as determined by the Company; (iv) death; or (v) a Change of Control as defined in the Plan. For purposes of this Section 6(c), “Early Termination Date” shall refer to the occurrence of one of the events set forth in (i), (ii), (iii) and (iv), and “Change of Control Date” shall refer to the occurrence of the event set forth in (v). For clarity, Exhibit B attached hereto and incorporated herein sets forth an example in which the Restricted Stock Units vest upon the Change of Control Date as described in Section 6(b)(v). If Grantee’s employment terminates on the Early Termination Date or there is a Change of Control, then Grantee’s Restricted Stock Units shall vest as of the Early Termination Date or Change of Control Date, as follows: Grantee shall vest in the percentage of Restricted Stock Units that, extrapolated from the performance growth of the Company from the Award Date to the most recent prior fiscal quarter to the Early Termination Date or the Change of Control Date, would have vested on the Vesting Date, multiplied by the percentage set forth in Exhibit C (column (d)) corresponding to the number of months elapsed since April 30, 2006 (rounded up).
	(d)		Change of Control . In the event of a Change of Control, Section 6(c) of this Award Agreement shall govern vesting hereunder, and Section 11.3 of the Plan shall be inapplicable.

7. Forfeiture .

	(a)		Forfeiture of Restricted Stock Units not Vested . As of the Vesting Date, Grantee shall forfeit all Restricted Stock Units not vested pursuant to Section 6(b) or Section 6(c) hereof. By example, pursuant to Section 6(b), if Grantee vests in 65% of the Restricted Stock Units granted to Grantee on the Award Date, Grantee thereby forfeits 35% of the Restricted Stock Units granted to Grantee on the Award Date.

	(b)		Forfeiture if the Grantee Engages in Certain Activities . If at any time the Grantee engages in any activity adverse, contrary or harmful to the interests of the Company, including, but not limited to: (i) conduct related to the Grantee’s employment for which either criminal or civil penalties against the Grantee may be sought, (ii) while employed by the Company or any Subsidiary or Affiliate, serving as a consultant, advisor or in any other capacity to an entity that is, or proposes to be, in competition with or acting against the interests of the Company, (iii) employing or recruiting any present, former or future employee of the Company, whether individually or on behalf of another person or entity, that is, or proposes to be, in competition with or acting against the interests of the Company, (iv) disclosing or misusing any confidential information or material concerning the Company, or (v) participating in a hostile takeover attempt, then the unvested Restricted Stock Units shall be forfeited to the Company effective as of the date on which the Grantee entered into such activity, unless terminated sooner by operation of another term or condition of this Award Agreement or the Plan.

	(c)		Right of Set-off . If the Grantee owes the Company any amount by virtue of Section 7(b) above, then the Company (or any Subsidiary or Affiliate) may recover such amount by setting it off from any amounts the Company (or any Subsidiary or Affiliate) owes or may owe the Grantee from time to time. By accepting these Restricted Stock Units and signing this Award Agreement in the space provided below, the Grantee consents to a deduction of any amount the Grantee may owe the Company by virtue of Section 7(b) above from any amounts the Company (or any Subsidiary or Affiliate) owes or may owe the Grantee from time to time (including amounts owed to the Grantee as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to the Grantee). Whether or not the Company elects to make any set-off in whole or in part, if the Company does not recover by means of set-off the full amount the Grantee owes it, calculated as set forth above, the Grantee agrees to pay immediately the unpaid balance to the Company.

	(d)		Committee Discretion . The Committee may release the Grantee from the obligations under Section 7(b) above if the Committee determines in its sole discretion that such action is in the best interest of the Company.

8. Other Terms and Conditions . The Committee shall have the discretion to determine such other terms and provisions hereof as stated in the Plan.

11. Waiver . The waiver by the Company of a breach of any provision of this Award Agreement by Grantee shall not operate or be construed as a waiver of any subsequent breach by Grantee.

13. Withholding . Grantee agrees, as a condition of this grant, to make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the vesting of the Restricted Stock Units acquired under this grant. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to the vesting of shares arising from this grant, the Company shall have the right to require such payments from Grantee, or withhold such amounts from other payments due Grantee from the Company or any Subsidiary or Affiliate.

GRANTEE



/s/ Donald W. Duda
Donald W. Duda

METHODE ELECTRONICS, INC.



	By:	/s/ Douglas A. Koman
		Douglas A. Koman
	Its:	Vice President, Corporate Finance and Chief Financial Officer