EXHIBIT 10.31
 
AMERICAN TECHNOLOGY CORPORATION

SUMMARY SHEET
OF
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
 

Compensation of Directors
 
Until June 2005, our non-employee directors did not receive cash fees as
compensation for their services. In June 2005, we began compensating our
non-employee directors in the amount of $1,000 per month, paid quarterly in
arrears. Each of our non-employee directors serving between January 1 and May
31, 2005, was paid a one-time fee of $5,000 in recognition of service during
that period. Our directors are also reimbursed for the expenses of attending
directors’ or committee meetings. Our directors have received in the past, and
may receive in the future, stock option grants. In June 2005, we granted three
of our non-employee directors an option exercisable for 50,000 shares of common
stock with an exercise price equal to the closing price of the common stock on
the date of grant and expiring five years after the date of grant. These options
vest quarterly over five years, subject to continued service and other
conditions.
 
Compensation of Executive Officers

The executive officers of the Company serve at the discretion of the Board of
Directors. From time to time, the Compensation Committee of the Board of
Directors reviews and determines the salaries that are paid to the Company's
executive officers. The following table sets forth the annual salary rates for
the Company’s current executive officers as of the date of this report on Form
10-K:

Elwood G. Norris, Chairman
$200,000
John R. Zavoli, President, Chief Operating Officer and Interim Chief Financial
Officer
$250,000
Karen Jordan, Chief Accounting Officer
$140,000
James Croft III, Chief Technology Officer and Vice President of Advanced
Development
$165,000
Bruce Gray, Vice President, Commercial Group
$200,000
Alan J. Ballard, Vice President, Government and Military Division
$145,000
Rose Tomich-Litz, Vice President, Operations
$157,500

Employment Arrangements with Current Executive Officers
 
The following discussion summarizes the employment arrangements between us and
our current executive officers as of the date of this report on Form 10-K:
 

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Mr. Elwood G. Norris - Effective September 1, 1997, we entered into a three year
employment contract with Mr. Norris, for his services as Chief Technology
Officer. The three-year term expired on August 31, 2000, but the agreement
remains in effect until one party gives thirty days advance notice of
termination to the other. Mr. Norris now serves as Chairman under the term of
this agreement. The agreement, as amended by the Compensation Committee,
provides for a base salary of $16,667 per month. The agreement provides that Mr.
Norris will participate in bonus, benefit and other incentives at the discretion
of the Board of Directors. Mr. Norris has agreed not to disclose trade secrets
and has agreed to assign certain inventions to us during employment. We are also
obligated to pay Mr. Norris certain royalties. See "Certain Relationships and
Related Transactions" in our Form 10-K/A filed March 18, 2005.
 
Mr. John R. Zavoli - On October 17, 2005, we entered into a letter agreement
with John R. Zavoli, pursuant to which Mr. Zavoli was appointed as our president
and chief operating officer, commencing November 1, 2005, and as interim chief
financial officer commencing December 16, 2005. Mr. Zavoli was a director of our
company and was a member of the audit and compensation committees until he
resigned the committee appointments in connection with entering into the letter
agreement. The letter agreement provides for an annual base salary of $250,000
and eligibility for an annual bonus, as recommended by the compensation
committee and approved by the board of directors. Mr. Zavoli's employment is not
for a specified period or term of employment and is terminable at-will by us or
by Mr. Zavoli for any reason, with or without notice. Mr. Zavoli will be
entitled to severance benefits in the form of up to a maximum of six months of
salary and health benefit continuation if we terminate his employment without
cause or he resigns for good reason.

Ms. Karen Jordan - On December 16, 2005, our board of directors approved the
appointment of Karen Jordan as our chief accounting officer. Ms. Jordan entered
into a letter agreement with the Company dated October 26, 2005, and joined the
Company in November 2005, as director of finance. Ms. Jordan’s annual salary is
$140,000 and she participates in bonus, benefit and other incentives at the
discretion of the compensation committee of our board of directors. Ms Jordan’s
employment is not for a specified period or term of employment and is terminable
at-will by us or by Ms. Jordan for any reason, with or without notice.
 
Mr. James Croft III - On August 17, 2005, our board of directors approved the
appointment of Mr. James Croft III as our Chief Technology Officer and Vice
President of Advanced Development. Mr. Croft has served as our Vice President of
Research and Development since February 28, 2000, and, prior to that, as our
Vice President of Engineering from September 15, 1997. Mr. Croft is employed
pursuant to the terms of an employment agreement dated February 28, 2000, which
terms have been orally modified.

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Under the terms as modified, Mr. Croft's annual salary is $165,000, and he
participates in bonus, benefit and other incentives at the discretion of the
compensation committee of our board of directors. We presently exclusively
license two pre-employment inventions from Mr. Croft through March 2008. We are
not currently marketing products using these inventions, and we are not
currently paying royalties to Mr. Croft for these inventions. We plan to
negotiate further revisions to our agreement with Mr. Croft, including our right
to continue the license beyond March 2008. The initial term of the employment
agreement dated February 28, 2000 has expired, and as a result, either we or Mr.
Croft may terminate his employment for any reason upon thirty days advance
notice. 

Mr. Bruce Gray -- We entered into a letter agreement with Mr. Bruce Gray, under
which Mr. Gray was employed as our Vice President of the Commercial Products
Group effective March 21, 2005. Mr. Gray currently serves as our Vice President,
Commercial Group. The letter agreement provides for an annual base salary of
$200,000 and an annual sales commission, payable on a quarterly basis, based on
revenues and billings. Mr. Gray's employment is terminable at-will by us or by
Mr. Gray for any reason, with or without notice.

Mr. Alan J. Ballard -- On November 17, 2005, our board of directors approved the
appointment of Mr. Alan J. Ballard as our Vice President, Government and
Military Division. Mr. Ballard joined American Technology Corporation in January
2004 and has held various positions in our Government Group, most recently
Senior Director of U.S. Military Sales, Government and Force Protection Group.
Mr. Ballard's annual salary is $145,000, and he participates in bonus, benefit
and other incentives at the discretion of the compensation committee of our
board of directors. Mr. Ballard's employment is terminable at-will by us or by
Mr. Ballard for any reason, with or without notice.

Ms. Rose Tomich-Litz - On November 30, 2005, our board of directors approved the
appointment of Ms. Rose Tomich-Litz as our Vice President, Operations. Ms.
Tomich-Litz's annual salary is $157,500, and she participates in bonus, benefit
and other incentives at the discretion of the compensation committee of our
board of directors. Ms. Tomich-Litz's employment is terminable at-will by us or
by Ms. Tomich-Litz for any reason, with or without notice.

Executive officers in charge of revenue producing business segments may also
participate in a broad-based commission arrangement. Under our existing
commission arrangements, commissions are awarded to certain individuals in each
of our business segments based on revenue or billings within the segment. All
commission plans and commissions payable to executive officers are reviewed and
approved by the Compensation Committee.
 
 
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