EX-10.23






Exhibit 10.23


DESCRIPTION OF DIRECTOR COMPENSATION


Cash
Compensation for Non-Employee Directors


     We
provide non-employee directors the following cash compensation:



	 	 	 	 	 
	Annual Cash Retainer(1)
	 	 	 	 
	Non-Executive Chairman of the Board(2)
	 	$	134,500	 
	Lead Director(2)
	 	$	54,500	 
	All Other Non-Employee Directors
	 	$	34,500	 
	 
	 	 	 	 
	Annual Cash Stipend for Committee Chairman(1)
	 	 	 	 
	Audit Committee
	 	$	16,500	 
	Compensation Committee
	 	$	13,500	 
	Nominating/Corporate Governance Committee
	 	$	13,500	 
	 
	 	 	 	 
	Annual Cash Stipend for Committee Service (other than as Chairman)(1)
	 	 	 	 
	Audit Committee
	 	$	9,900	 
	Compensation Committee
	 	$	8,000	 
	Nominating/Corporate Governance Committee
	 	$	8,000	 






 




			
	(1)	 	Cash portions of directors’ fees are paid quarterly.
	 
	(2)	 	Mr. Yost served as the Non-Executive Chairman of the Board from
January 1, 2007 to December 31, 2007. On January 1, 2008, he assumed
the role of Lead Director and Mr. Cardoso assumed the role of Chairman
of the Board.



Equity Compensation


     Equity
compensation for our non-employee directors consists of:



	 	 	 
	Annual Grant of Restricted Stock or
Deferred Stock Credits
	 	 
	All Non-Employee Directors
	 	$40,000
	Stock Options(1)
	 	One-time grant of 14,000 shares
upon election to Board of
Directors; annual grant of
7,000 shares thereafter.








 




			
	(1)	 	These numbers have been adjusted to reflect the 2-for-1 stock split
effected by the company on December 18, 2007. Prior to the stock
split, non-employee directors received a one-time grant of
7,000 shares upon election to Board of Directors and an annual grant
of 3,500 shares thereafter.





Perquisites and Personal Benefits




     All non-employee directors receive $50,000 of life insurance coverage, which is paid for by
the company. In addition, directors receive tax reimbursements for income imputed to them for the
premiums paid by the company for this insurance. Directors are also reimbursed for travel and
related expenses for attendance at Board or committee meetings.



Deferred Fee Plan




     We have a Deferred Fee Plan for Non-Employee Directors (the “Deferred Fee Plan”). On an annual
basis, our non-employee directors may elect to defer payment of any Board or committee compensation
to a later time (with interest at a rate of prime minus 2%). In addition, any non-employee director
may elect to receive stock credits, representing shares of our common stock, with respect to all or
a portion of any compensation deferred under the Deferred Fee Plan. Dividend equivalents are
credited to the account of any director who has elected to receive stock credits. Dividend
equivalents are calculated at the same rate as the current dividend; there is



 









 







no preferential or
above-market earnings potential for deferrals into stock credits. The Deferred Fee Plan is
currently unfunded. In the event of a change in control, we would fund the deferred payments by a
transfer of cash into a deferred compensation trust (a so-called “Rabbi Trust”), administered by an
independent trustee.



Directors Stock Incentive Plan




     Under the Directors Stock Incentive Plan, any non-employee director may elect to receive
shares of our common stock in lieu of all or a portion of any Board or committee compensation that
is not deferred pursuant to the Deferred Fee Plan.



Matching Gift Program




     Directors are eligible to participate in our Matching Gifts Program, which is also generally
available to all U.S. employees. Under the program, the Kennametal Foundation will match gifts to
qualified institutions on a dollar-for-dollar basis up to $5,000 per calendar year.