EXECUTIVE AND DIRECTOR COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Philosophy

The primary objectives of the Compensation Committee of our Board of Directors with respect to the determination and administration of our Company’s executive compensation programs are to:

Background

Our Compensation Committee’s historical philosophy with respect to executive officer compensation has emphasized performance-based compensation. This philosophy has resulted in base salaries that are generally at or slightly below the median of peers with higher levels of compensation based on performance achievement, which together with long-term equity-based incentive compensation, can result in above median total compensation when performance levels are achieved. When analyzing the compensation structure in 2008 and making its decisions for 2009, the Compensation Committee considered multiple factors, including the input of Mercer, its compensation consultant, the experience of its members, the performance of our executive officers and the Company and prevailing economic conditions. Additionally, the Compensation Committee reviewed whether its current compensation philosophy encourages executive officers to take undue risk in order to meet compensation targets. The Compensation Committee also considered the advantages and disadvantages of altering the performance-based structure and how any potential changes could impact our compensation goals or encourage our executive officers to take unnecessary risk. The Compensation Committee determined that a compensation structure weighted towards performance-based compensation continues to be appropriate for the Company and achieves the Company’s goal of retaining and appropriately compensating our executive officers while aligning their interests with those of our stockholders without encouraging the assumption of undue risk.

As a matter of perspective on the compensation trends at our Company, it is necessary to understand our recent history with respect to compensation. Prior to our initial public offering in 2006, our compensation strategy provided for significant cash incentive compensation awards and the vesting of a portion of stock option grants based upon the Company’s financial and stock performance, including, in the case of pre-initial public offering stock option grants, the return on investment of First Reserve Fund X, L.P. (“First Reserve”), an affiliate of First Reserve Corporation, realized when it disposed of its remaining ownership interest in us in connection with a secondary offering of our Common Stock in June 2007.

From the time of the acquisition of the Company by First Reserve in October 2005 (the “Acquisition”) until the secondary offering in June 2007, we were controlled by First Reserve. All our compensation arrangements in place through the end of fiscal year 2006 were put in place prior to our initial public offering, which was completed on July 31, 2006, and were not modified, except for those modifications necessary to reflect our Company’s public company status, in connection with the initial public offering. Although our Board of Directors and Compensation Committee were responsible for the implementation and administration of all of our benefit and compensation plans before our initial public offering, all compensation decisions relating to the Chief Executive Officer and the other executive officers were subject to the review of First Reserve directly or through its representatives. Moreover, the Board of Directors under which our executive compensation plans were adopted before our initial public offering as well as the Compensation Committee were comprised of a number of directors affiliated with First Reserve.

16

As part of and subsequent to our initial public offering, additional independent directors joined our Board of Directors and we altered the membership of our Compensation Committee so that since May 2007, all members are independent directors.

During 2007 and 2008, our Compensation Committee engaged Mercer, an independent outside compensation consulting firm, to assist the Compensation Committee in its review of our entire executive compensation program. The review included a study to identify companies that should be considered as peer group companies for executive compensation purposes, as well as a review of our compensation objectives and philosophy, and the individual components of our total compensation package for our executive officers. For further discussion of the Compensation Committee’s engagement of Mercer, see “Corporate Governance and Related Matters—Information Regarding Meetings and Committees of the Board of Directors—Compensation Committee” above.

Benchmarking Methodology

Our Compensation Committee believes that benchmarking provides the Company with a useful tool to gauge the appropriateness of our current compensation objectives and philosophy. Comparing Company performance and each element of our executive officers’ total compensation to the compensation information of similarly situated executives at companies that we consider to be our peers allows the Compensation Committee to consider the compensation framework of those companies that face similar challenges in competition for talent when making compensation decisions.

With the assistance of Mercer, the Compensation Committee identified a group of companies with which the Compensation Committee believes the Company is in a comparable position with respect to competition for talent and for stockholder investment, and which are similar in size and business mix to the Company (the “Compensation Peer Group”). From time to time the Compensation Committee reviews the companies it considers to be peers for compensation purposes and changes the Compensation Peer Group as it deems necessary. The Compensation Peer Group aids the Compensation Committee in determining appropriate base salaries, short-term incentives and total overall compensation for our executives. In connection with the Compensation Committee’s evaluation of public company compensation standards, the Compensation Committee reviewed the 25th percentile, median and 75th percentile data for the Compensation Peer Group in each element of compensation (base salary, target annual cash incentive compensation, target long-term equity based compensation as well as the resulting total direct compensation). These comparisons are simply a point of reference for measurement and not the determinative factor in setting our executives’ compensation. The Compensation Committee does not use formulas or rigidly set the compensation of our executives based on this data. The purpose of the comparison is not to supplant the Compensation Committee’s analysis of various factors considered in making compensation decisions, such as prior year Company and business unit financial performance, shareholder return, internal pay equity, compensation history and the individual performance of our executive officers. The Compensation Committee also considers the recommendations and input from our Chief Executive Officer as described under “Corporate Governance and Related Matters—Role of Executive Officers in Compensation Decisions” above.

Because the comparative compensation information is just one of the several analytic tools that are used in setting executive compensation, the Compensation Committee has discretion in determining the nature and extent of its use. Further, given the limitations associated with comparative pay information for setting individual executive compensation, such as identifying peer companies within our industry that are substantially similar in size and business mix, the Compensation Committee may elect to not use the comparative compensation information at all in the course of making compensation decisions.

17

The following 11 companies comprised our Compensation Peer Group in 2008 and represent the same peer group as 2007, except for one company (Hydril Co.) that ceased to be public:

Pay Mix and Total Compensation for Executive Officers

The Company intends to attract and retain talented executives with competitive salaries and annual cash incentive compensation opportunities that deliver market-appropriate awards based on annual performance, balanced by long-term equity-based incentive compensation awards that also provide market-competitive opportunities to increase value commensurate with stockholder gains. Historically and as discussed above, the Company has relied more heavily on performance-based compensation to offset slightly below-median base salaries, which together with long-term equity-based incentive compensation, generally has comprised a total direct compensation package for our executives above the median of the Compensation Peer Group when targeted performance levels are achieved. This variable pay focus is appropriate for a company such as ours that has historically seen significant fluctuations in performance based on the cyclical aspects of our business. Given the current economic downturn conditions and the cyclic nature of our business, the Compensation Committee believes that a performance-based focus on compensation strikes an appropriate balance between competitively compensating our executive officers on a flexible-cost basis and mitigating the risk that our incentive structure encourages our executives to make decisions that might negatively impact the long-term financial condition of the Company.

Elements of Compensation

Executive compensation consists of the following primary components:

Base Salary. Base salaries are reviewed annually, and adjusted from time to time to reflect performance, experience, responsibilities and market conditions. Salary review is conducted by the Compensation Committee before or during the early part of the fiscal year for which the base salary will become effective. The Compensation Committee is responsible for setting the base salary of the Chief Executive Officer, and takes into account his individual responsibilities, performance and experience, and the competitive market compensation paid by other companies of similar size in similar industries. In setting the Chief Executive Officer’s salary, the Compensation Committee relies on the experience of its members after an analysis of market data provided by Mercer and the Chief Executive Officer’s individual responsibilities, performance and experience relative to those of chief executive officers at companies within the Compensation Peer Group. Base salary decisions with respect to the other executive officers are recommended to the Compensation Committee by the Chief Executive Officer. In making this recommendation, the Chief Executive Officer considers each executive officer’s individual responsibilities, performance and experience, and market data provided by Mercer, including compensation paid to other executive officers with similar levels of experience, scope of responsibilities, performance and potential in the Compensation Peer Group. However, any increase in base salary is granted at the sole discretion of the Compensation Committee.

The current base salary for the Chief Executive Officer, which is $500,000 for 2009, represents no increase in salary compared to 2008. The base salaries for the executive officers other than the Chief Executive Officer for 2009 are: $262,150 for the Executive Vice President and Chief Financial Officer (no increase from 2008); $243,000 for the Vice President, General Counsel and Secretary (an increase from $210,000 for 2008); $192,000 for the Vice-President—Corporate Development and Treasurer (no increase from 2008); and $163,800 for the Chief Accounting Officer and Controller (an increase from $156,000 for 2008). In making recent base salary

18

determinations, the Compensation Committee considered, among other things, the recent economic downturn and economic climate in general, the experience of the members of the Committee and input from the Chief Executive Officer (with respect to compensation of the other executive officers), analysis of peer compensation market data provided by Mercer and the responsibilities, performance and experience of the Company’s executive officers relative to those of named executive officers at companies within the Compensation Peer Group. The Compensation Committee determined for 2009, with the exception of Messrs. Klaben and Webster, not to raise base salaries of the named executive officers in light of the challenging general economic environment. The decision generally to freeze base salaries for 2009 at 2008 levels is consistent with the Company’s determination to freeze base salaries for senior managers generally for 2009. The Compensation Committee raised the 2009 base salaries of Messrs. Klaben and Webster to levels slightly below peer median based on the determination that the base salaries for Messrs. Klaben and Webster in 2008 were well below the median base salaries of similarly situated executives in the Compensation Peer Group. The Compensation Committee also determined that Mr. Thomas’ base salary was well below the peer group median, but in light of current economic conditions elected to increase Mr. Thomas’ long-term performance-based compensation opportunities rather than raising his base salary for 2009.

Annual and Other Cash Incentive Awards. In addition to their base salary, executive officers are eligible to earn an annual cash incentive bonus. Consistent with our performance-based compensation philosophy, the annual cash incentive bonus represents a significant portion of total compensation. The purpose of annual cash bonuses is to attract, retain, motivate and reward participants by providing them with the opportunity to earn competitive compensation directly linked to our performance. Our annual incentive plan was designed to provide our executive officers with incentive compensation based upon the achievement of pre-established performance goals. The performance criteria are tied to Company, rather than individual performance. This approach historically has been taken by our Company in light of our emphasis on performance-based compensation tied to Company financial and operational performance, rather than qualitative individual performance assessments. The Compensation Committee recognizes that when performance-based compensation becomes a disproportionate percentage of total compensation or is not appropriately structured and managed in the context of a total compensation package, certain incentives may be created for executive officers to take risks in order to achieve compensation targets that they might not otherwise take or that are not in the best long-term interests of the Company or its stockholders. The Compensation Committee believes that the Company’s compensation structure, while performance-based, is appropriately structured to mitigate those risks because our executives’ performance-based compensation is one part of a structured compensation package that includes elements of compensation that align the interests of our executive officers with the long-term interests of our stockholders and the overall success of the Company. Further, the Compensation Committee can modify any cash incentive bonus in its discretion in the event of an unanticipated or unearned outcome, which allows the Compensation Committee to maintain appropriate control over performance-based compensation.

Since fiscal year 2007, annual cash bonuses have been awarded under the Chart Industries, Inc. Incentive Compensation Plan (the “Incentive Compensation Plan”). Annual cash bonuses awarded in fiscal year 2006 were awarded under the 2006 Chart Executive Incentive Compensation Plan (the “2006 Bonus Plan”). The Incentive Compensation Plan provides the Compensation Committee with significant flexibility to establish performance criteria and performance periods for which cash incentive compensation will be awarded. Under the Incentive Compensation Plan, a performance period may be for a fiscal year or a multi-year cycle, as determined by the Compensation Committee, and the performance objectives upon the attainment of which target incentive bonuses will be awarded may be based on one or more of certain performance criteria which may relate to us, one or more of our subsidiaries, our divisions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the Compensation Committee determines. The Compensation Committee may appropriately adjust any performance evaluation under a performance objective or objectives to reflect or exclude certain extraordinary events that may occur during the performance period. If there is a change in control, as defined in the Incentive Compensation Plan, the Compensation Committee will determine promptly, in its discretion, whether and to what extent the performance criteria have been met or will be deemed to have been met for the year in which the

19

change in control occurs and for any completed performance period for which a determination under the plan has not been made. If the Committee determines the criteria have been met, participants will receive their bonuses as soon as practicable, but in no event more than 30 days after the determination.

Pursuant to the terms of the Incentive Compensation Plan, no executive officer or other participant may receive a bonus, with respect to any fiscal year, in excess of $5.0 million. The Compensation Committee has absolute discretion to reduce or eliminate the amount otherwise payable under the Incentive Compensation Plan and to establish rules or procedures which limit the amount payable to a participant to an amount that is less than the amount otherwise approved as that participant’s incentive bonus, except that following a change in control the Compensation Committee continues to have such right only in the event that a participant engages in misconduct or materially fails to fulfill his or her duties, in each case, as determined by the Compensation Committee.

If approved and adopted by stockholders, beginning in 2010, annual cash bonuses, if any, will be awarded under the Chart Industries, Inc. 2009 Incentive Compensation Plan (the “2009 Incentive Compensation Plan”). For a description of the 2009 Incentive Compensation Plan, see “Approval and Adoption of the Chart Industries, Inc. 2009 Incentive Compensation Plan” below.

Our Compensation Committee set annual incentive compensation targets and performance measures for our 2008 fiscal year under the Incentive Compensation Plan. Under these targets, our executive officers were eligible to earn a cash incentive bonus for our 2008 fiscal year if performance exceeded threshold amounts in an amount up to a pre-determined percentage, ranging from 67.5% to 165% of the executive officer’s base salary (with higher ranked officers eligible to receive a higher percentage of base salary), at maximum performance levels. The performance measures established under the Incentive Compensation Plan for the 2008 fiscal year for executive officers were operating income, net income and working capital, weighted for purposes of calculating the award at 70%, 15% and 15%, respectively. Working capital as used for awards under the Incentive Compensation Plan measures the Company’s net working capital use efficiency determined relative to the Company’s rolling average sales. The Compensation Committee selected these measures in an effort to more closely align executive officer cash bonus measures to measures that are believed to be meaningful indications of our performance for our stockholders. These performance measures were set at levels that were believed to represent, when they were set in early 2008, significant performance that would involve some difficulty at the threshold levels, increased difficulty at the 100% target levels, and significant difficulty at the maximum levels, in each case relative to historical trends and future expectations at the time the levels were set. Actual performance below the minimum performance threshold for a performance objective would result in no payment based on that objective. The table below details the threshold, target and maximum performance levels for each of the performance measures established by the Compensation Committee for fiscal 2008 (performance measures for working capital permit awards to be paid in excess of target proportionate to operating income performance exceeding target performance):

Following the end of the 2008 fiscal year, the Compensation Committee determined (i) whether and to what extent any of the established performance objectives were satisfied for 2008, and (ii) for each executive officer employed as of the last day of 2008, the actual bonus to which such executive officer is entitled for 2008. Actual results for each of the performance measures established for the 2008 fiscal year were as follows: (i) operating income, $128,790,000; net income, $75,626,000; and working capital, 12.6%. The preceding numbers reflect the Compensation Committee’s adjustment from actual results for purposes of incentive compensation payouts, as the Committee adjusted downward, on a net basis, from actual performance to disregard certain unusual items

20

such as the reversal of contingent liabilities. The following table summarizes the fiscal 2008 payout opportunities that were available for each of our executive officers upon satisfaction of the annual incentive target and annual maximum performance measures and the actual payout of annual cash incentive payments for fiscal 2008:

The incentive payments were paid to the executives on March 13, 2009 and are included in the 2008 Summary Compensation Table.

Payments made under the Incentive Compensation Plan are intended to be exempt from the deduction limitations of Section 162(m) of the Internal Revenue Code under transition reliance period rules applicable to compensation paid pursuant to a plan that existed before we became publicly held and that was disclosed in our initial public offering prospectus. The proposed 2009 Incentive Compensation Plan has been designed to allow compliance with the exclusion from the deduction limitations of Section 162(m) of the Internal Revenue Code for performance-based compensation.

For fiscal year 2009, each of our executive officers is eligible to receive an annual bonus of up to 150% of a target amount designated for each executive, based upon a percentage of such executive’s 2009 base salary (the “Base Target”). Base Targets for fiscal year 2009 are the same as 2008 and are as follows: (i) Mr. Thomas, 110%; (ii) Mr. Biehl, 100%; (iii) Mr. Klaben, 75%; (iv) Mr. Hoppel, Jr., 65%; and (v) Mr. Webster, 45%. The performance measures established under the Incentive Compensation Plan for the 2009 fiscal year for executive officers are operating income, net income and working capital, weighted for purposes of calculating the award at 65%, 15% and 20%, respectively. Working capital as used for 2009 awards under the proposed Incentive Compensation Plan measures the Company’s net working capital use efficiency determined relative to the Company’s rolling average sales. The performance measures remain the same as in 2008. In the current economic environment which emphasizes cash generation and cash preservation, the Compensation Committee believes that weighting working capital more heavily in 2009 than 2008 relative to operating income and net income, more closely aligns the cash bonus measures with measures that are believed to be meaningful indications of our performance in the current economic environment in which liquidity and cash have taken on greater emphasis. Specific threshold, target and maximum performance levels are different from those set in 2008. We believe that disclosing the specific performance levels to be used for determining annual bonuses would cause us competitive harm by potentially disrupting our customer relationships and providing competitors with insight into our business strategy, pricing margins, capabilities and current compensation for executive talent. In order to achieve the threshold levels used for fiscal year 2009, we believe we have to be successful in matching our cost structure to an environment of reduced orders without harming our business and without new negative macroeconomic pressures arising. Similarly, we would expect to have accomplished matching our cost structure to an environment of reduced orders while successfully identifying and exploiting significant niche opportunities to grow during 2009 without further sustained deterioration of industry conditions to achieve the 100% target levels. To achieve maximum bonus levels, we believe it would require matching our cost structure to an environment of reduced orders while successfully identifying and executing on many opportunities to exploit our strengths during 2009 with a return of some industry conditions to normalcy by mid-2009. In the current economic environment it is difficult to forecast future Company performance and correspondingly difficult to set realistic and appropriate bonus targets tied to Company performance that are consistent with our

21

overall compensation philosophy. The target performance levels for 2009 were set at the end of 2008 and in early 2009 and macroeconomic events occurring during this time have led the Compensation Committee to believe that there are significant economic headwinds making even attainment of minimum performance levels difficult for 2009. Accordingly, taking into consideration the Company’s overall compensation structure and compensation philosophy, and broader economic and financial challenges facing the Company for 2009 impacting the level of significant difficulty to achieve target performance, the Compensation Committee set the minimum threshold level to earn any incentive compensation award for 2009 at 50% of target performance, with any incentive award interpolated at performance levels between 50% and 100% of target.

Long-Term Incentive Compensation. The third primary element of the Company’s executive compensation program is comprised of long-term compensation awards, which the Compensation Committee historically has delivered in the form of non-qualified stock option awards and performance units that vest based on Company financial and stock price performance. During 2008 the Compensation Committee continued to evaluate the long-term incentive compensation structure and considered what other forms of equity-related compensation may align the long-term interests of management and our stockholders. Under the Company’s equity incentive plans approved by stockholders in the past the Company also may grant awards of stock appreciation rights, restricted stock, restricted stock units, and other stock-based grants, including shares of our Common Stock granted in the form of other equity and performance-based incentives, as may be deemed appropriate by the Compensation Committee. The Compensation Committee believes the primary benefit of equity-based awards is to motivate executives to increase stockholder value as equity-based awards generally only increase in value if the Company’s stock price increases from the time the awards are granted.

Prior to the initial public offering, the Compensation Committee granted options as non-qualified stock options to our executive officers under the 2005 Stock Incentive Plan. Approximately 35% of these options were what we refer to as “time options,” which vest and become exercisable over five years, assuming the holder thereof continues to be employed by us. The remaining portion of these options, which we refer to as “performance options,” vested and became exercisable (or were forfeited) upon completion of our secondary offering in June 2007 and the achievement of the “Fund X Net Return,” which is the amount received by First Reserve in respect of its investment in us divided by the amount of the investment by First Reserve in us, which we refer to as the Fund X Investment. In connection with the completion of the secondary offering in which First Reserve determined to dispose of all of its remaining investment in us and First Reserve’s realization of a specific Fund X Net Return upon completion of the offering, 82% of the performance-based options held by executive officers and other members of management vested while the remaining 18% were forfeited. For a description of the compensation expense we incurred in 2007 related to performance stock options held by executive officers, and related valuation assumptions, see note (2) to “2008 Summary Compensation Table.”

Equity-based compensation remains an important component of the Company’s compensation strategy and an important tool for us with respect to attracting and retaining executive talent and aligning the interests of our executive officers with the interests of our stockholders. This goal has become increasingly more important to the Compensation Committee as the Company continues to address fundamental changes in its industry and their effect on the Company’s performance and stock price. From 2007 to the present, our equity-based awards have been developed with the benefit of analysis and advice of Mercer that transitioned us from providing primarily traditional stock option awards, to a more balanced portfolio approach relying not only on stock options, but also elements tied to both performance relative to our peers and performance goals set internally over a multi-year period. Based on data provided by Mercer, approximately one-third of the value under this long-term incentive program is delivered as annual grants of stock option awards while the remaining approximate two-thirds of an executive’s target long-term compensation value is delivered in the form of performance units.

Stock option grants under the long-term incentive program are planned to be made annually at the discretion of the Compensation Committee and generally vest ratably over a four-year period, unless otherwise determined by the Compensation Committee. Continued service of the executive is required during the vesting period. In our

22

2008 fiscal year, we awarded non-qualified stock options covering a total of 33,470 shares of Common Stock, at an exercise price of $30.95 per share, to executive officers, under our equity incentive plan. For a description of the compensation expense we incurred in 2008 related to stock options held by executive officers, and related valuation assumptions, see note (2) to “2008 Summary Compensation Table.”

On January 2, 2009, we awarded the following non-qualified stock options to executive officers under our equity incentive plan at an exercise price of $11.00 per share: (i) Mr. Thomas, 50,000; (ii) Mr. Biehl, 9,750; (iii) Mr. Klaben, 5,210; (iv) Mr. Hoppel, 4,140; and (v) Mr. Webster, 3,360. In determining the number of stock options to grant to the executive officers in 2009, the Compensation Committee considered, among other matters, the prevailing option valuation methodologies, the expected value of the 2008 option awards, the expected value of 2009 awards at varying grant levels, the impact of changes in the stock price and the competitiveness of the long-term compensation package at varying reward levels. Based on the preceding factors, the Compensation Committee elected to increase the number of options granted to Messrs. Biehl, Klaben, Hoppel and Webster for 2009 to partially offset the diminution in total value, according to prevailing valuation methods, of the option grants had the grant size remained similar to 2008. Even with the increase in number of options granted, according to prevailing valuation methods the options granted in 2009 to Messrs. Biehl, Klaben, Hoppel and Webster carry a lower expected value than the expected value of their 2008 awards on the date of grant. Mr. Thomas’ option grant was somewhat larger in number than his 2008 grant in part to make up for the diminution in value had the size of his grant remained at 2008 levels and also to supplement Mr. Thomas’ below-market base salary.

Long-term performance unit awards, which may be paid in cash or stock at the Compensation Committee’s discretion, are designed to align the interests of the executives with our longer-term strategic objectives and to reward the achievement of certain pre-determined objectives. Performance units are anticipated to be granted annually at the discretion of the Compensation Committee and vest based on the attainment of predefined performance goals over three-year overlapping performance periods (30 months in the case of the 2007 awards). Performance units were granted for 2008 to executive officers as follows: (i) Mr. Thomas, 17,430; (ii) Mr. Biehl, 5,990; (iii) Mr. Klaben, 2,780; (iv) Mr. Hoppel, Jr., 2,540; and (v) Mr. Webster, 2,060.

For the long-term performance units granted in 2008 and 2007, amounts that may potentially be paid will depend on two performance measures:

As of December 31, 2008, it was determined, based on current long-term projections, that it was unlikely that either of the 2007 or 2008 awards of performance units based on EBITDA growth would be earned at any level at the end of their respective performance periods. In conjunction with this determination, all previously recognized stock-based compensation expenses related to the 2007 and 2008 performance unit awards based on EBITDA growth were reversed in 2008. Because the RTSR portion of the 2007 and 2008 performance unit awards is based on the price of our stock relative to the stock prices of the companies in the Long-Term Incentive Peer Group measured at the end of the relevant performance periods, it is very difficult to predict the amount of awards that may be earned, if any, at the end of the performance periods based on RTSR performance. If the

23

performance periods for the 2007 and 2008 awards ended and the calculation was performed as of December 31, 2008, we believe that the RTSR awards made in 2007 or 2008 would not have been earned at any level.

On February 23, 2009, we awarded performance units to our executive officers as follows: (i) Mr. Thomas, 26,150; (ii) Mr. Biehl, 8,990; (iii) Mr. Klaben, 4,800; (iv) Mr. Hoppel, 3,810; and (v) Mr. Webster, 3,090. These performance units vest based on RTSR and EBITDA performance over a three-year performance period beginning in 2009 and ending on December 31, 2011. For the long-term performance units granted in early 2009, the Compensation Committee considered the advice of Mercer and the current economic conditions and elected to change the second performance measure from absolute Company EBITDA growth to Company EBITDA growth relative to the EBITDA growth of the Long-Term Incentive Peer Group. Given the uncertainty and unpredictability of the current economic climate and the resulting difficulty in forecasting absolute Company performance over a three-year period, the Compensation Committee believes that the award of performance units based on Company performance relative to a selected peer group more accurately meets the Company’s goal of attracting and retaining talented executives while aligning the interests of executives with the interests of our stockholders by removing some variability based on broader economic conditions beyond the Company’s reasonable control. The same peer group used to calculate RTSR is used to calculate the relative EBITDA (“REBITDA”) performance measure. Accordingly, for the long-term performance units granted in 2009, amounts that may potentially be paid will depend on two performance measures:

The Long-Term Incentive Peer Group for the performance period 2009-2011 is the same as for the 2007-2009 and 2008-2010 performance periods and consists of those companies which comprise the Compensation Peer Group plus several additional companies that were chosen for their comparable industry exposure. The following Companies make up the Long-Term Incentive Peer Group:

Threshold, target and maximum performance levels and corresponding payout levels for our performance are established for each performance cycle, with awards interpolated for performance between threshold and target and between target and maximum. In addition to performance requirements, the performance units contain transfer and certain other restrictions. Each performance unit represents a right to receive one share or its value in cash. The performance units are paid in shares or in cash, as determined by the Compensation Committee, within 60 days after the close of the performance period.

The performance units granted in 2007 and 2008 may be earned in a range between 35%, 100% and 150% of the number of units specified in the grant document, depending on whether Company performance meets the minimum performance threshold for each performance measure, meets the 100% target for each performance

24

measure, or meets or exceeds the maximum target level for each performance measure for the performance period, respectively. For the performance units awarded in 2007 and 2008, the threshold, target and maximum percentage rankings for Company RTSR performance are 50%, 75% and 90%, respectively, relative to Long-Term Incentive Peer Group performance. Because of the use of EBITDA to measure the performance units granted in 2007 and 2008, we believe that disclosing the specific performance levels would cause us competitive harm by potentially disrupting our customer relationships and providing competitors with insight into our Company’s business strategy, pricing margins, capabilities and current compensation for executive talent. We believe the performance levels used involve some difficulty at the threshold levels, increased difficulty at the 100% target levels, and significant difficulty at the maximum levels, in each case relative to historical trends and future expectations at the time the levels were set. As of December 31, 2008 it was determined, based on long-term projections, that it was unlikely that the 2007 or 2008 performance unit awards based on EBITDA growth would be earned at any level at the end of their respective performance periods. Accordingly, we recognized no compensation expense in 2008 for performance units awarded in 2008 with respect to the portion that vests based on EBITDA performance and reversed in 2008 the compensation expense previously realized with respect to the EBITDA portion of the performance units awarded in 2007.

The performance units granted in 2009 may be earned in a range between 10%, 100% and 150% of the number of units specified in the grant document, depending on whether Company performance meets the minimum performance threshold for each performance measure, meets the 100% target for each performance measure, or meets or exceeds the maximum target level for each performance measure for the performance period, respectively. In no event will the number of earned performance units exceed 150% of the number of units specified in the grant document. For the performance units awarded in early 2009, the threshold, target and maximum percentage rankings for RTSR and REBITDA growth are 35%, 55% and 75%, respectively, relative to Long-Term Incentive Peer Group performance. The Committee retains full discretion with respect to setting the targets for performance-vesting stock awards granted from time to time to respond to changes in market and economic conditions.

In connection with the adoption of the new long-term incentive program in 2007, the Compensation Committee also implemented stock ownership guidelines for our senior executives. The guidelines set guideline levels of ownership of our Common Stock for our Chief Executive Officer at three times base salary and for other executive officers at one times base salary. Executives who do not meet the guidelines are expected to satisfy them within five years. The ownership guidelines are intended to be administered and reviewed periodically by the Compensation Committee.

Our stock options and performance units are issued under our Amended and Restated Chart Industries, Inc. 2005 Stock Incentive Plan (the “2005 Stock Incentive Plan”), which was initially adopted effective November 23, 2005, in connection with the Acquisition. The plan, as amended and restated, was adopted by the Board of Directors and approved by our stockholders in connection with our initial public offering. For further discussion of the 2005 Stock Incentive Plan, see “Discussion of Summary Compensation Table and Grants of Plan-Based Awards Table—Equity and Incentive Plan Awards” below. The Company has proposed a new 2009 Omnibus Equity Plan to replace the existing stock incentive plan and, if it is approved by stockholders, the Company does not plan to make any new grants pursuant to the 2005 Stock Incentive Plan. If approved and adopted by stockholders, the proposed 2009 Omnibus Equity Plan will allow for many different types of equity-based incentive compensation awards. For a description of the 2009 Omnibus Equity Plan, see “Approval and Adoption of the Chart Industries, Inc. 2009 Omnibus Equity Plan” below.

Option Grant Policies. For stock options granted under the 2005 Stock Incentive Plan and any future grants under the 2009 Omnibus Equity Plan, the exercise price per share is equal to the fair market value on the applicable date of grant, which is defined for purposes of the 2005 Stock Incentive Plan as the average of the closing bid and closing asked price of the Common Stock quoted on NASDAQ on the date of grant and for purposes of the 2009 Omnibus Equity Plan as the closing price of the Common Stock quoted on NASDAQ on the date of grant. We have not made any equity grants in connection with the release or withholding of material non-public information.

25

Equity grants in the form of stock awards made to our non-employee directors, as discussed below under “Director Compensation,” were granted and reflected in our consolidated financial statements, based upon the applicable accounting guidance, at fair market value of our Common Stock on the date of grant. Other than with respect to regular quarterly stock awards made to our non-employee directors as described below, we do not have any program, plan or policy which requires us to grant equity compensation on specified dates.

Deferred Compensation. The terms of our Amended and Restated Voluntary Deferred Income Plan are described below under “—2008 Nonqualified Deferred Compensation Table.” Participation in this plan is entirely voluntary, and we presently do not offer any matching monies or contributions. We offered this plan to our executive officers to defer their compensation to subsequent years to help with their personal tax planning. Of the executive officers, only Mr. Thomas has elected to participate in this plan in recent years, electing to defer portions of his compensation for 2007.

Other Benefits. Executive officers are eligible to participate in all of our employee benefit plans, including our 401(k) Plan, health, life and disability insurance, retirement, deferred compensation and fringe benefits, as well as any equity compensation plans, as in effect from time to time, on the same basis as those benefits are generally made available to other senior executives of the Company. Additionally, all of our executive officers receive automobile allowances. In accordance with our performance-based compensation philosophy, we intend to continue to maintain modest executive benefits and perquisites for officers; however, the Compensation Committee in its discretion may revise, amend or add to the officer’s executive benefits and perquisites if it deems it advisable, subject to the applicable terms of the executive employment agreements.

Change in Control Payments

None of the executive officers’ respective employment agreements in place during fiscal year 2007 provided for change in control payments; however the agreements provided for severance benefits payable upon an executive’s involuntary termination without cause or resignation with good reason, irrespective of whether it related to a change in control. In addition, our stock options and performance unit awards provided for accelerated vesting of outstanding time options and performance units upon a change in control (as defined in the 2005 Stock Incentive Plan).

During 2007, the Compensation Committee reviewed the competitiveness of the Company’s executive employment agreements and requested that Mercer provide the Company with data regarding change in control and employment arrangements for executives among the Company’s Compensation Peer Group. In addition to its analysis of the data provided by Mercer, the Compensation Committee considered additional data regarding the potential costs associated with adopting new employment agreements. In February 2008, the Compensation Committee approved the implementation of new employment agreements for the Company’s executive officers which include change in control provisions. The Compensation Committee believes that the adoption of the new employment agreements assists the Company in attracting and retaining executive talent. The benefits conferred in these agreements range from one to three times the individual’s base salary plus target annual cash incentive compensation, and other benefits, and are effective for termination of employment (including constructive termination) outside of the change in control context, and in the event of both a change in control and termination of employment (including a constructive termination) within two years following the change of control. The arrangements provide higher (three and two times base salary and annual compensation for the CEO and CFO, respectively) multiples of compensation upon separation following a change in control for the Chief Executive Officer and Chief Financial Officer only. The Compensation Committee believes that providing such benefits only to the Chief Executive and Chief Financial Officers provides sufficient protection for the Company in retaining its executive officers. For this purpose, a change in control would generally occur in any of the following instances:

26

In addition, immediately upon any change in control (as defined in our Amended and Restated Voluntary Deferred Income Plan) Mr. Thomas’ interest in all amounts credited to his account under this plan will fully and immediately vest and become nonforfeitable. There currently are no Company contributions credited to Mr. Thomas’ account or any other employees’ account under this plan. In addition, our executive officers may receive payments under our Incentive Compensation Plan following a change in control (as defined in the Incentive Compensation Plan) if the Compensation Committee determines the performance criteria have been met, as described above under “Elements of Compensation—Annual and Other Cash Incentive Awards.”

In December 2008, the Compensation Committee approved amendments to the executive employment agreements to ensure compliance with the requirements of Section 409A of the Internal Revenue Code of 1986. The amendments, which became effective on January 1, 2009, were technical in nature and did not materially change terms of the agreements.

For more information on change in control and severance benefits, see “Other Potential Post-Employment Payments” below.

Anticipated Changes in Executive Compensation

Our executive compensation programs will continue in their current form until such time as the Compensation Committee determines in its discretion that revisions to our current plans or replacement plans are advisable. Such revisions may include changes in our compensation arrangements and analysis in the future, including the peers against which our committee measures executive compensation, changes in equity or other long-term incentives, and other changes as the committee may determine.

27

28

The fair value of the options granted on November 23, 2005 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of 4.80 percent; dividend yields of 0.0 percent; volatility factors of the expected market price of the Company’s Common Stock of 47.0 percent; and a weighted average expected life of 7.5 years for the options.

The fair value of the options granted on March 29, 2006 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of 5.0 percent; dividend yields of 0.0 percent; volatility factors of the expected market price of the Company’s Common Stock of 47.0 percent; and a weighted average expected life of 7.5 years for the options.

The fair value of the options granted on April 27, 2006 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of 5.3 percent; dividend yields of 0.0 percent; volatility factors of the expected market price of the Company’s Common Stock of 47.0 percent; and a weighted average expected life of 7.5 years for the options.

The fair value of the options granted on August 2, 2007 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of 4.97 percent; dividend yields of 0.0 percent; volatility factors of the expected market price of the Company’s Common Stock of 48.9 percent; and a weighted average expected life of 7 years for the options.

The fair value of the options granted on January 2, 2008 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of 3.54 percent; dividend yields of 0.0 percent; volatility factors of the expected market price of the Company’s Common Stock of 47.9 percent; and a weighted average expected life of 6.25 years for the options.

29

30

31

32

Discussion of Summary Compensation Table and Grants of Plan-Based Awards Table

Description of Employment Agreements

In connection with its review of executive officer compensation arrangements, the Compensation Committee approved, and the Board of Directors ratified, employment agreements entered into effective February 26, 2008 by each of the Company’s executive officers (the “Employment Agreements”). The Employment Agreements for Messrs. Thomas, Biehl, Hoppel and Klaben replace existing employment agreements with these executive officers, which were initially put into place prior to the Company’s initial public offering and were in a form more customary for private equity portfolio companies. The Company also entered into an employment agreement with Kenneth J. Webster, who was appointed as the Company’s Chief Accounting Officer and Controller on March 1, 2008.

In December 2008, the Compensation Committee approved amendments to the Employment Agreements to ensure compliance with the requirements of Section 409A of the Internal Revenue Code of 1986. The amendments, which became effective on January 1, 2009, were technical in nature and did not materially change terms of the Employment Agreements.

The Employment Agreements provide for an initial two year employment term which automatically renews for additional one year periods. The Employment Agreements further provide for an automatic three year extension in the event of a “change in control” of the Company (as such term is defined in the Employment Agreements).

During the employment term, the executive is entitled to receive at least the base salary in effect as of the effective date of the Employment Agreement, together with the right to participate in the Company’s employee benefit plans, including health, life and disability insurance, retirement, deferred compensation and fringe benefits, as well as any incentive and equity compensation plans, as in effect from time to time, on the same basis as such plans are made available to other senior executives, and to receive a car allowance. Annual base salaries of the Company’s executive officers under their respective Employment Agreements for 2009 are as follows: (i) Samuel F. Thomas, Chairman, Chief Executive Officer and President, $500,000; (ii) Michael F. Biehl, Executive Vice President and Chief Financial Officer, $262,150; (iii) Matthew J. Klaben, Vice President, General Counsel and Secretary, $243,000; (iv) James H. Hoppel, Jr., Vice President—Corporate Development and Treasurer, $192,000; and (v) Kenneth J. Webster, Chief Accounting Officer and Controller, $163,800.

Pursuant to the Employment Agreements, during the employment term, each executive is eligible to receive an annual bonus (an “Annual Bonus”) of up to one hundred fifty percent (150%) of a target amount designated for each executive, based upon a percentage of such executive’s annual base salary (the “Base Target”). Annual Bonuses are based upon the achievement of performance targets established by the Board of Directors, or a duly authorized committee thereof, within the first three months of each fiscal year during the employment period. Annual Bonuses, if any, are payable within two and one-half months after the end of the applicable fiscal year. Annual Bonuses are determined in accordance with the terms of the Company’s Incentive Compensation Plan, as currently in effect and as it may be amended from time to time, including any successor plan, such as the proposed 2009 Incentive Compensation Plan. In the event of a change in control, the Annual Bonus may be pro-rated in accordance with the terms of the Incentive Compensation Plan or such a successor plan. Base Targets of the Company’s executive officers under their respective employment agreements are as follows: (i) Samuel F. Thomas, Chairman, Chief Executive Officer and President, 110% of base salary; (ii) Michael F. Biehl, Executive Vice President and Chief Financial Officer, 100% of base salary; (iii) Matthew J. Klaben, Vice President, General Counsel and Secretary, 75% of base salary; (iv) James H. Hoppel, Jr., Vice President—Corporate Development and Treasurer, 65% of base salary; and (v) Kenneth J. Webster, Chief Accounting Officer and Controller, 45% of base salary.

Under the Employment Agreements, our executive officers are entitled to receive monthly automobile allowances for 2009 in the following amounts: (i) Mr. Thomas, $1,000; (ii) Mr. Biehl, $1,000; (iii) Mr. Klaben, $800; (iv) Mr. Hoppel, Jr., $800; and (v) Mr. Webster, $800.

33

Additionally, in connection with our initial public offering, consummated on July 31, 2006, we entered into amended and restated management stockholder’s agreements, effective as of April 1, 2006, with certain members of our management, including Messrs. Thomas, Biehl, Klaben and Hoppel, and FR X Chart Holdings LLC, an affiliate of First Reserve.

Pursuant to and subject to the terms of the amended and restated management stockholder’s agreements, each of these executives has the opportunity to include in registered sales of our Common Stock (other than an initial public offering or relating to any employee benefit plan or corporate merger, acquisition or reorganization) and any shelf registration statement filed by us with respect to our Common Stock, all or any part of the “registrable securities” (as such term is defined in the amended and restated management stockholder’s agreements) then held by the executive. We will pay all of the expenses associated with an offering of such shares. Underwriting discounts will be shared proportionally.

For more terms, including post-termination payments and restrictive covenants, see “Other Potential Post-Employment Payments.”

Equity and Incentive Plan Awards

Chart Industries, Inc. Incentive Compensation Plan

Cash bonuses payable for 2007, 2008 and, if earned, for 2009 to the executive officers are payable pursuant to and in accordance with the Incentive Compensation Plan, which was adopted by the Board of Directors and approved by our stockholders on July 17 and July 18, 2006, respectively. The performance measures established under the Incentive Compensation Plan for fiscal year 2007 and 2008 for executive officers were operating income, net income and working capital. The Compensation Committee selected these measures in an effort to more closely align executive officer cash bonus measures to measures that are believed to be meaningful indications of our performance for our public stockholders. Under these targets, our executive officers were eligible to earn a cash incentive bonus for our 2007 and 2008 fiscal years if performance exceeded threshold amounts in an amount up to a pre-determined percentage, ranging from 67.5% to 165% of the executive officer’s base salary (with higher ranked officers eligible to receive a higher percentage of base salary), at maximum performance levels. Actual performance below the minimum performance threshold for a performance objective would result in no payment based on that objective. Our Compensation Committee has determined that our financial performance for 2008 achieved a weighted level of 131.08% of our 2008 performance measures, compared to a weighted level of 148.57% for 2007. Accordingly, we paid the annual bonuses for 2007 and 2008 to our named executive officers set forth in the 2008 Summary Compensation Table under the caption “Non-Equity Incentive Plan Compensation.”

2006 Chart Executive Incentive Compensation Plan

Cash bonuses paid for 2006 to the executive officers were paid pursuant to and in accordance with the 2006 Bonus Plan, which was adopted March 1, 2006 and approved by our stockholders on July 18, 2006. The material performance targets under the 2006 Bonus Plan, as established by the Compensation Committee of the Board, included working capital and EBITDA (earnings before interest, tax, depreciation and amortization) targets. Participants were eligible to earn a bonus of up to a pre-determined percentage of the participant’s base salary, ranging from 90% to 165% of the base salaries for executive officer participants during 2006 at maximum performance levels. Our Compensation Committee determined that our financial performance for 2006 exceeded the maximum target levels for each named executive officer performance measure under the 2006 Bonus Plan. Accordingly, we paid the annual bonuses to our named executive officers set forth in the 2008 Summary Compensation Table under the caption “Non-Equity Incentive Plan Compensation”.

Amended and Restated Chart Industries, Inc. 2005 Stock Incentive Plan

The 2005 Stock Incentive Plan was initially adopted effective November 23, 2005, in connection with the Acquisition. The plan, as amended and restated, was adopted by the Board of Directors and approved by our

34

stockholders in connection with our initial public offering. The 2005 Stock Incentive Plan was amended and restated at that time to reflect the fact that our public company status made certain provisions under the original plan no longer applicable.

The 2005 Stock Incentive Plan provides for the grant of (1) options that are not incentive stock options, (2) stock appreciation rights, (3) restricted stock, (4) restricted stock units, and (5) other stock-based grants, including shares of our Common Stock awarded to our non-employee directors, executive officers, other key employees and consultants. As of March 31, 2009, there were 2,496,088 shares of Common Stock reserved for issuance under the 2005 Stock Incentive Plan. This number includes shares reserved for future new grants, however new grants will not be made under the 2005 Stock Incentive Plan if stockholders approve and adopt the proposed 2009 Omnibus Equity Plan. See “Approval and Adoption of the Chart Industries, Inc. 2009 Omnibus Equity Plan.” For information about Common Stock issuable under outstanding awards under the 2005 Stock Incentive Plan at March 31, 2009, see “Equity Compensation Plan Information.”

The 2005 Stock Incentive Plan is administered by our Board of Directors, which has delegated its duties and powers in whole or in part to our Compensation Committee. The Compensation Committee has the full power and authority to establish the terms and conditions of any award consistent with the provisions of the 2005 Stock Incentive Plan and to waive any such terms and conditions at any time. The Compensation Committee also has the authority to grant awards under the 2005 Stock Incentive Plan. The Compensation Committee is authorized to interpret the 2005 Stock Incentive Plan, to establish, amend and rescind any rules and regulations relating to the 2005 Stock Incentive Plan and to make any other determinations that it deems necessary or desirable for the administration of the 2005 Stock Incentive Plan. The Compensation Committee is authorized to correct any defect or supply any omission or reconcile any inconsistency in the 2005 Stock Incentive Plan in the manner and to the extent the committee deems necessary or desirable.

Prior to the initial public offering, the Compensation Committee granted to our executive officers under the 2005 Stock Incentive Plan certain options as non-qualified stock options, which were granted as follows: approximately 35% vest and become exercisable over the passage of time, which we refer to as “time options,” assuming the holder thereof continues to be employed by us, and the remaining portion vests and becomes exercisable based upon the achievement of certain performance targets, which we refer to as “performance options.” These time options generally become exercisable by the holder of the option in installments of 20% on each of the first five anniversaries of the grant date. The performance based stock options vested at 82% based upon the return on investment that First Reserve realized when it liquidated its ownership interest in us in connection with the secondary offering in June 2007.

The exercise price per share for options is equal to the fair market value of the underlying shares on the applicable date of grant, subject to any adjustments to outstanding options permitted in connection with significant transactions, such as our initial public offering. An option holder may exercise an option by written notice and payment of the exercise price (1) in cash, (2) to the extent permitted by the Board, by the surrender of a number of shares of Common Stock already owned by the option holder for at least six months (or such other period as established from time to time by the Board to avoid adverse accounting treatment applying generally accepted accounting principles), (3) in a combination of cash and shares of Common Stock (as qualified by clause (2)), (4) through the delivery of irrevocable instructions to a broker to sell shares obtained upon the exercise of the option and deliver to us an amount equal to the exercise price for the shares of Common Stock being purchased or (5) through such cashless exercise procedures as the Board may permit. Option holders who are subject to the withholding of federal and state income tax as a result of exercising an option may satisfy the income tax withholding obligation through the withholding of a portion of the shares of Common Stock to be received upon exercise of the option.

The 2005 Stock Incentive Plan is intended to aid us in recruiting and retaining key employees, directors and consultants of outstanding ability and to motivate such employees, directors or consultants to exert their best efforts on behalf of us and our affiliates by providing incentives through the granting of awards. Our Compensation Committee historically has taken the view that providing our executive officers with a proprietary interest in our success further aligns the incentives of our executive officers with those of our stockholders.

35

36

Pursuant to the Company’s Amended and Restated Chart Industries, Inc. Voluntary Deferred Income Plan (the “Deferred Income Plan”), eligible employees and directors are entitled to elect to defer up to 100% of their compensation, consisting of total salary, bonuses and commissions or director and meeting fees payable in a calendar year. Regardless of the circumstances under which a participant’s relationship with the Company terminates, all deferrals made pursuant to the plan will be fully vested. Contributions made by the Company, and any gains or losses on such contributions, vest ratably over three years of participation in the Deferred Income Plan. Generally, elections are made by participants in the taxable year immediately prior to the taxable year to

37

which the deferral pertains, and are effective as of the first day of such taxable year. The Deferred Income Plan is unfunded and all benefits under the plan are payable solely from the general assets of the Company.

Benefits under the Deferred Income Plan are payable upon the participant’s reaching his or her normal or early retirement date or termination of employment. Payments are made either in a lump sum, or in equal annual installments for a period of up to ten years, as designated by the participant at the time of deferral. Payments may be accelerated under the Deferred Income Plan in the event that (1) a plan interest is awarded to a former spouse of a participant under court order; (2) a “change in control” (as defined under the operation of the Deferred Income Plan) occurs; (3) a participant has an unforeseeable emergency; (4) a participant becomes disabled; or (5) death occurs prior or subsequent to commencement or completion of payment of benefits, respectively. The Company would not expect to permit a participant to receive more than one distribution as a result of an unforeseeable emergency in any calendar year. A participant may also elect to receive an in-service distribution at the time of completing an election of deferral, and such payment is payable in a lump sum on the in-service withdrawal date. For information regarding post-termination payments under the plan, see “Other Potential Post-Employment Payments.”

Participants in the Deferred Income Plan may direct the investment of their balance held within the plan among a number of alternative investment fund options, and earnings and losses on participants’ investments are determined based on the individual performance of the underlying investment options. A participant may regularly change their investment allocation within the plan. A rabbi trust has been established under the plan to hold assets separate from our other assets for the purpose of paying future participant benefit obligations. Assets held in the rabbi trust are available to our general creditors in the event of our insolvency.

Notwithstanding anything in the Deferred Income Plan to the contrary, the Deferred Income Plan is administered in accordance with the requirements of, or to meet the requirements for exemption from, Section 409A of the Internal Revenue Code.

38

OTHER POTENTIAL POST-EMPLOYMENT PAYMENTS

The table below reflects the amount of compensation payable to each of the named executive officers of our Company under their respective employment agreements (a) in the event of termination of the executive’s employment due to resignation without good reason and termination for cause, involuntary termination without cause or resignation with good reason and not within two years after a change in control, death, disability or retirement, and involuntary termination without cause or resignation with good reason within two years after a change in control, and (b) upon a change in control. The amounts shown assume that such termination was effective as of December 31, 2008, the last business day of 2008, and thus include amounts earned through such time and are estimates of the amounts which would be paid out to the executives upon their termination. The actual amounts to be paid out can only be determined at the time of an executive’s actual separation from our Company.

Payments made upon Involuntary Termination for “Cause” or Resignation without “Good Reason”

Salary, Bonus and Benefits.  Pursuant to the terms of the employment agreements, in the event that a named executive officer is terminated by us for “Cause” or resigns without “Good Reason,” he is entitled to receive his base salary, annual bonus and benefits, including accrued but unpaid vacation, that are earned but unpaid as of the date of termination. Under the terms of the employment agreements, “Cause” is defined as the executive’s willful failure to perform duties, commission of, or plea of guilty or no contest to a felony or crime involving moral turpitude, willful malfeasance or misconduct which is demonstrably injurious to us or our subsidiaries, material breach of the material terms of the agreement, commission of an act of gross negligence, corporate waste, disloyalty or unfaithfulness to us which adversely affects our business or that of our subsidiaries or affiliates, or any other act or course of conduct which will demonstrably have a material adverse effect on us or a subsidiary or an affiliate’s business. “Good Reason” is defined as: (i) a material diminution in executive’s base salary (excluding any general salary reduction similarly affecting substantially all other senior executives of the Company as a result of a material adverse change in the Company’s prospects or business); (ii) a material diminution in executive’s authority, duties, or responsibilities; (iii) a material change in the geographic location at which executive must perform services; or (iv) any other action or inaction that constitutes a material breach by the Company of the employment agreement.

Treatment of Nonqualified Stock Options.  Under the terms of the stock option agreements under which the non-qualified stock options were awarded to the named executive officers, in the event that a named executive officer is terminated by us for Cause or resigns without Good Reason, the unvested portion of all stock options will be cancelled.

Treatment of Performance Units. Under the terms of the performance unit agreements under which the performance units were awarded to the named executive officers, in the event that a named executive officer is terminated by us for Cause or resigns without Good Reason during the performance period, all performance units will be cancelled.

Treatment of Deferred Compensation.  Under the terms of the Deferred Income Plan, in the event that a participant’s employment is terminated due to (1) conviction of certain crimes enumerated in the Deferred Income Plan or (2) any breach of the duty of loyalty to us, any acts of omission in the performance of a participant’s Company duties not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction in the performance of a participant’s Company duties from which the participant derived an improper personal benefit (“Cause under the Deferred Income Plan”), the participant will not be entitled to receive any benefits or payments under the terms of the plan, other than the participant deferrals.

Payments made upon Involuntary Termination Without Cause or Resignation for “Good Reason”

Salary, Bonus and Benefits.  Pursuant to the terms of the employment agreements, in the event that a named executive officer is terminated by us without Cause or resigns for Good Reason not within two years of a change

39

in control, he is entitled to receive his base salary, annual bonus and benefits, including accrued but unpaid vacation, that are earned but unpaid as of the date of termination and, subject to the execution and delivery of a release of claims against us and compliance with the restrictive covenants described below under—“Restrictive Covenants that Apply During and After Termination of Employment”, (1) a lump sum payment equal to the following percentage of the executive’s base salary and target annual bonus: Mr. Thomas, 200%; Mr. Biehl, 150%; and all other officers, 100%; and (2) continued coverage under the Company’s group health plans for the following period, depending upon the executive’s position: Mr. Thomas, 24 months; Mr. Biehl, 18 months; and all other executives, 12 months. To the extent that continued coverage is not permissible under the terms of such plans beyond eighteen months, we may instead pay an amount equal to the premium subsidy we would have otherwise paid on the executive officer’s behalf for such coverage.

Treatment of Nonqualified Stock Options.  Under the terms of the stock option agreement under which the non-qualified stock options were awarded to the named executive officers, in the event that a named executive officer is terminated by us without Cause or resigns for Good Reason, any unvested stock options will be cancelled by us without consideration.

Treatment of Performance Units.  Under the terms of the performance unit agreements under which the performance units were awarded to the named executive officers, in the event that a named executive officer is terminated by us without Cause or resigns for Good Reason during the performance period, all performance units will be cancelled.

Treatment of Deferred Compensation.  Under the terms of the Deferred Income Plan, in the event that a participant’s employment is terminated by us without Cause under the Deferred Income Plan or by resignation for Good Reason, the participant will be entitled to receive benefits and payments based upon the participant’s vested account.

Payments made upon Termination by Reason of Death or Disability; Retirement

Salary, Bonus and Benefits.  Pursuant to the terms of the employment agreements, in the event that a named executive officer is terminated by reason of death or becomes physically or mentally incapacitated and therefore unable for a period of six consecutive months or an aggregate of nine months in any twenty-four consecutive month period to perform his duties (“Disability”) he will be entitled to receive his base salary, annual bonus and benefits, including accrued but unpaid vacation, that are earned but unpaid as of the date of termination and, a pro rata portion of the annual bonus, if any, that the executive would have been entitled to receive for the year in which the termination occurs, based on our actual results for the year and the percentage of the fiscal year that has elapsed through the date of the executive’s termination of employment.

Treatment of Nonqualified Stock Options.  Under the terms of the stock option agreements under which the non-qualified stock options were awarded to the executive officers, in the event that a named executive officer is terminated due to death or Disability, (x) any stock options awarded in 2005 or 2006 that would have vested in the calendar year in which such termination occurs, will become fully vested and (y) any stock options awarded in 2007, 2008 or 2009 will become immediately vested. Under the terms of the stock option agreements governing stock options awarded in 2007, 2008 and 2009, in the event a named executive officer is terminated due to retirement upon reaching the age of 60, provided the executive has completed 10 years of service with us (“Retirement”), the options will continue to vest and become exercisable as if the officer had remained employed. No named executive officer was eligible for Retirement on December 31, 2008, and accordingly, the table below does not present any benefits associated with Retirement.

Treatment of Performance Units . Under the terms of the performance unit agreement under which the performance units were awarded to the named executive officers, in the event that a named executive officer is terminated due to Retirement, death or Disability during the performance period, the executive (or his or her

40

beneficiary or beneficiaries) shall be entitled to a pro-rated number of units or, if the Compensation Committee so elects, the cash equivalent, calculated by multiplying (x) by (y) where: (x) is the number of Shares, if any, that would have been earned by the executive as the result of the satisfaction of the performance requirements; and (y) is the number of months that the executive was employed (rounded up to the nearest whole number) during the performance period divided by the number of months in the performance period. No named executive officer was eligible for Retirement on December 31, 2008, and accordingly, the table below does not present any benefits associated with Retirement.

Treatment of Deferred Compensation.  Under the terms of the Deferred Income Plan, in the event that a participant’s employment is terminated due to death or Disability (as defined in the Deferred Income Plan), the benefit payable to the participant under the Deferred Income Plan will fully vest. We will distribute the participant’s account as soon as practicable following the date of death or Disability. In the event that either death or Disability occurs prior to commencement of the payment of benefits, payments will be made as a lump sum. In the event that a participant’s employment is terminated due to death following the commencement of the payment of benefits, but prior to the completion of all such benefits, we will continue to make installment payments over the remainder of the period, as though the participant had survived.

Payments made upon Expiration of Employment Term

Salary, Bonus and Benefits.  Pursuant to the terms of the employment agreements, in the event that the employment of a named executive officer is terminated upon expiration of the employment term without renewal, he will be entitled to receive his base salary, annual bonus and benefits, including accrued but unpaid vacation, that are earned but unpaid as of the date of termination. No named executive officer’s employment agreement could have terminated on December 31, 2008, as a result of the rolling term of the agreement, since we could not have provided the required notice one, two or three years before expiration under the terms of the applicable agreement. Accordingly, no benefits are shown in the table below related to expiration of the employment agreement term on December 31, 2008.