ADDVANTAGE TECHNOLOGIES GROUP INC (Form: 8-K, Received: 03/09/2007 09:53:11)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported) March 5, 2007

ADDVANTAGE TECHNOLOGIES GROUP, INC.

( Exact name of Registrant as specified in its Charter)

(State or other Jurisdiction of Incorporation)

1-10799	73-1351610
(Commission file Number)	(IRS Employer Identification No.)

1221 E. Houston, Broken Arrow Oklahoma	74012
(Address of Principal Executive Offices)	(Zip Code)

(Registrant's Telephone Number, Including Area Code)

(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 (see General InstructionA.2. below):

□	Written Communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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

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

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

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 6, 2007, the Board of Directors of ADDvantage Technologies Group, Inc. (the “Company”) approved a new Senior Management Incentive Compensation Plan (the “Incentive Plan”). Participating in the Incentive Plan will be the Chairman of the Board (“Chairman”), President and Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”) and Chief Financial Officer (“CFO”) as well as other participants subject to the approval of the Compensation Committee of the Board of Directors.

Awards under the new Incentive Plan, ranging from 15% to 55% of base salary for each of the Chairman and CEO, 11.25% to 41.3% of the base salary of the COO and 7.5% to 27.5% of the base salary of the CFO, will be based on actual earnings before interest and taxes in relation to a target amount. The target amount was established as a set percentage of an amount equal to 105% of the Company's prior year revenue.

The new Incentive Plan replaces the Senior Management Incentive Compensation Plan that was approved on March 6, 2006. Awards under the prior plan, ranging from 25% to 100% of the base salary for each of Chairman and CEO and 15% to 70% of the base salary for the CFO, were based on actual earnings before interest and taxes in relation to a target amount.

A copy of the Incentive Plan is attached as Exhibit 10.1 to this current report on Form 8-K and is incorporated herein by reference.

Item 8.01 Other Events.

The annual meeting of stockholders of ADDvantage Technologies Group, Inc. (the "Company") was held on March 6, 2007. At the meeting the shareholders approved, either in person or by proxy vote, the director nominees including Kenneth A. Chymiak, David E. Chymiak, Stephen J. Tyde, Freddie H. Gibson and Henry F. McCabe and ratified the appointmant of Hogan & Slovacek as the Company’s independent auditors for fiscal year 2007.

ITEM 9.01 Financial Statements and Exhibits.

The following exhibit is furnished herewith:

10.1 Senior Management Incentive Compensation Plan

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.

ADDVANTAGE TECHNOLOGIES GROUP, INC.

Date: March 9, 2007	By: /s/ Kenneth A. Chymiak
	Kenneth A. Chymiak
	President and Chief Executive Officer

Exhibit Number Description

10.1	Senior Management Incentive Compensation Plan

ADDvantage Technologies Group, Inc.

Incentive Compensation Plan -

Senior Management

Section I

Plan Objectives

This incentive compensation plan has been established to accomplish several important objectives:

·	Improve company profitability and performance.

·	Provide participants with an incentive to contribute at the highest level in growing company profits.

·	Provide significant incentive opportunities to plan participants, in line with demonstrated results.

·	Enable the company to attract, motivate and retain high-caliber talent.

Section II

Plan Participants

Participation in this incentive compensation plan will be limited to those individuals in positions to have direct and significant influence on company performance and profitability.

Initially, participation in this plan will be limited to the following key personnel:

· Chairman of the Board

· President/CEO

· Executive Vice President, COO

· Vice President, Finance (CFO)

Other participants may be included in the plan, subject to approval by the Compensation Committee of the Board of Directors.

Section III

Basic Plan Provisions

1. Awards under this incentive plan will be based on actual earnings before interest and taxes (EBIT) in relation to established performance targets.

- -

2. Annually, a Target for EBIT will be established. The Target will be based on the following basic formula:

Previous Year’s Sales

x 1.05

= Sales Threshold

x 16.0% ROS ^*

= EBIT Target

For example, if sales in FY-06 were $52.5 million, then the EBIT Target would be set as follows:

$52.5 mil. x 1.05 = $55.1 mil. x 16.0% = $8.82 mil.

3. The primary basis for determining incentive awards will be actual EBIT in relation to the EBIT Target. The following schedule will be used in determining incentive awards:

% Target CEO COO CFO

(% Salary) (% Salary) (% Salary)

105% 15% 11.25% 7.5%

110% 20% 15.0% 10.0%

115% 25% 18.8% 12.5%

120% 30% 22.5% 15.0%

125% 35% 26.3% 17.5%

130% 40% 30.0% 20.0%

135% 45% 33.8% 22.5%

140% 50% 37.5% 25.0%

145+% 55% 41.3% 27.5%

4. The incentive award as a percentage of salary for the Chairman will be the same as for the President/CEO. For example, if the company earns 110% of Target, then the Chairman and President/CEO will earn a 20% incentive award, as a percentage of annual salary, and the COO will earn 15% and the CFO will earn a 10% incentive award.

- -

Section IV

Payment of Incentive Awards

Incentive awards under this plan will be paid following the close of the fiscal year, once audited financial statements are available. Normally, incentive awards will be paid no later than December of the following fiscal year.

The following guidelines will be observed in determining and paying incentive awards to plan participants:

·	Incentive awards will be calculated as a percentage of the actual base salary paid to the participant during the year in which the award is earned.

·	The participant’s performance must be assessed as at least “meets expectations” or no incentive award will be earned or paid.

·	The participant must be employed by the company at the time the award is paid in order to be eligible for payment.

·	The payment of incentive awards may not cause the company to earn less in net income than a 10% return on sales.

·	All incentive awards will be approved by the Compensation Committee of the Board of Directors.

Section V

Plan Administration

This incentive compensation plan will be administered by the Compensation Committee of the Board of Directors. No member of the Compensation Committee will be a participant in this plan.

The Compensation Committee will exercise the following responsibilities in the administration of this plan:

·	Adopting the plan and approving its provisions.

·	Revising the performance targets in the plan and the associated incentive opportunities available to participants.

·	Monitoring and evaluating performance in relation to established performance targets.

·	Monitoring the plan, in relation to its objectives, and revising or discontinuing it as appropriate.

·	Approving incentive awards to participants.

This incentive plan may be modified or discontinued, at any time, without advance notice to participants. Moreover, this incentive plan does not represent an employment contract nor a commitment by the company to the employment of any plan participant for a specified term.

* * * * * * *

Villareal & Associates

February - 2007

^* EBIDTA as a percentage of annual sales.