Exhibit 10.1


 


	



 	
        Director Compensation Program 

        including the

        Independent Director Compensation Policy

        pursuant to the

        2012 Long Term Incentive Plan



 


Unless the context otherwise requires, all capitalized terms
used herein shall have the respective meanings assigned to them in the Servotronics, Inc. 2012 Long Term Incentive Plan (the “Plan”).


 


EQUITY AWARDS


 


The following shall constitute the equity awards under the Independent
Director Compensation Policy under the Plan:


 


Annual Retainer
Share Award


 


(a)           Each year, as of
the date of the Company’s annual meeting of shareholders, the Company shall automatically award Restricted Shares to each
Independent Director who has been elected or reelected as a member of the Board of Directors at the annual meeting. The number
of Restricted Shares shall be equal to $25,000 divided by the Fair Market Value of a Share on the date of such election. If a fraction
results, the number of Shares shall be rounded up to the next whole number.


 


(b)           If an Independent
Director is elected or appointed to the Board of Directors other than at an annual meeting of the Company and has not received
an award pursuant to paragraph (a) during the twelve months preceding election or appointment, the Company shall automatically
award to the Independent Director a number of Restricted Shares that is equal to the amount determined pursuant to paragraph (a)
based on the date of election or appointment multiplied by a fraction, the numerator of which is the remainder of 365 minus the
number of days between the adjournment of the last annual meeting and the effective date of the appointment or election, and the
denominator of which is 365. If a fraction results, the number of Restricted Shares shall be rounded up to the next whole number.


 


(c)           The Company shall
issue the Restricted Shares awarded under this paragraph (a) or (b) on the first business day following the effective date of the
election, reelection or appointment. The Restricted Shares awarded under paragraph (a) will vest in four quarterly installments
on the date of each of the three regularly scheduled quarterly board meetings to review the financial statements for the quarters
ending June 30, September 30 and December 31 (each a “Quarterly Board Meeting”) each year following the annual meeting
and the remainder of which shall vest on the date of the next annual meeting. The Restricted Shares awarded under paragraph (b)
will vest in equal parts on the date of the remaining Quarterly Board Meetings and the remainder of which shall vest on the date
of the next annual meeting. The Company will credit a bookkeeping account with amounts equal to the dividends payable with respect
to the Restricted Shares and the amounts credited to the dividend account will be payable as the Restricted Shares vest. If an
Independent ceases to serve as a Board member for any reason other than due to death, then all Restricted Stock that is not then
vested shall be immediately forfeited. If an Independent Director ceases to serve as a Board member by reason of death then all
Restricted Stock shall immediately become vested.


 






     


     


    

 


CASH COMPENSATION


 


Payment Amount


 


Independent Directors shall be eligible to receive an annual
cash retainer of $60,000 for service on the Board. For purposes of this Policy, “annual” means from Annual Shareholders’
Meeting to Annual Shareholders’ Meeting each year.


 


No Separate Meeting Fees


 


No separate meeting fees shall be paid for Board or committee
meetings or for actions taken by unanimous written consent in lieu of a meeting in accordance with the Company’s Bylaws.


 


Payment Schedule


 


The annual retainers for service on the Board as set forth above
shall be paid by the Company in arrears in twelve equal monthly installments, the first installment being paid on the date of the
one month anniversary of the Annual Shareholders’ Meeting and the remaining installments being paid on each successive one
month anniversary date (each such payment date, a “Monthly Payment Date”); provided, however, that if the Company’s
Annual Shareholders’ Meeting for the following year occurs prior to the end of the one year period, the final Monthly Payment
Date shall be paid on the day of such Annual Shareholders’ Meeting. If any Independent Director holds office as a director
of the Board for less than a full monthly period, such Independent Director shall only be entitled to a pro-rated amount of their
applicable annual retainer as measured from the most recent Monthly Payment Date through the date on which the Independent Director
shall have ceased to serve on the Board.


 


New Directors


 


In the event a new Independent Director is elected or appointed
to the Board, such Independent Director shall be eligible to receive as compensation for service as a member of the Board a pro-rated
amount of the annual retainer as measured from the date of appointment or election through the next scheduled Monthly Payment Date
and thereafter shall be paid in conformity with the other Independent Directors.


 


TRAVEL EXPENSE REIMBURSEMENT


 


Each of the Independent Directors shall be entitled to receive
reimbursement for reasonable travel expenses which they properly incur in connection with their functions and duties as a director.


 


Reimbursement for travel expenses incurred is also initiated
by the Director, by submitting a Director Expense Reimbursement Form and accompanying receipts to the Finance Department. The reimbursement
will be processed within one week of receipt by the Finance Department.