UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-K/A
 (Amendment
No. 1)
  [X]           ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES
EXCHANGE ACT OF 1934
  For the
fiscal year ended December 31, 2007
  [  ]           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE
SECURITIES EXCHANGE ACT OF 1934
 
 Commission
File No. 0-18348
 
 BE
AEROSPACE, INC.
 (Exact
name of registrant as specified in its charter)
 
 Delaware
              06-1209796(State
      or other jurisdiction of incorporation or organization)
              (I.R.S.
      Employer Identification No.)1400
      Corporate Center Way, Wellington, Florida
              33414(Address
      of principal executive offices)
              (Zip
      Code)
 
 (561)
791-5000
 (Registrant's
telephone number, including area code)
 
 Securities
registered pursuant to Section 12(b) of the Act:  None
 Securities
registered pursuant to Section 12(g) of the Act:
 Common
Stock, $.01 Par Value
 (Title of
Class)
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
 Yes [X] No
[   ].
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
 Yes
[   ] No [X].
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days:
 Yes [X] No
[   ].
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [  ]
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
 Large
accelerated filer [X]   Accelerated filer [  ]  
Non-accelerated filer (do not check if a smaller reporting company)
[  ]
 Smaller
reporting company [  ]
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yes
[   ] No [X].
 
 The
aggregate market value of the registrant's voting stock held by non-affiliates
was approximately $3,814.3 million on June 29, 2007 based on the closing sales
price of the registrant's common stock as reported on the Nasdaq National Market
as of such date, which is the last business day of the registrant's most
recently completed second fiscal quarter.  Shares of common stock held
by executive officers and directors and persons who own 5% or more of
outstanding common stock have been excluded since such persons may be deemed
affiliates.  This determination of affiliate status is not a
determination for any other purpose.  The number of shares of the
registrant's common stock, $.01 par value, outstanding as of February 14, 2008
was 93,073,529 shares.










TABLE
OF CONTENTS










PagePART IIIITEM 10.  DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
            2ITEM 11.  EXECUTIVE
      COMPENSATION
            6ITEM 12.  SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
            27ITEM 13.  CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
            29ITEM 14.  PRINCIPAL
      ACCOUNTING FEES AND SERVICES
            30PART IVITEM 15.  EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES
            31INDEX
      TO EXHIBITS
            31SIGNATURES
            32






i




EXPLANATORY
NOTE




BE
Aerospace, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-K/A to
its Annual Report on Form 10-K for the fiscal year ended December 31, 2007 (the
“Form 10-K”) to provide additional information required by Part III. This
Amendment No. 1 on Form 10-K/A does not change the previously reported financial
statements or any of the other disclosures contained in Part I or Part
II.  Part IV is being amended solely to add new certifications in
accordance with Rule 13a-14(a) of the Securities Exchange Act of
1934.




PART
III




ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE




The
following table sets forth information regarding our directors and executive
officers as of February 15, 2008. Officers of the Company are elected annually
by the Board of Directors.
 
 Title
                Age
                PositionAmin
      J. Khoury
                68
                Chairman
      of the Board and Chief Executive OfficerCharles
      L. Chadwell
                67
                Director
      (2),(3)Jim
      C. Cowart
                56
                Director
      (1),(3)Richard
      G. Hamermesh
                60
                Director
      (1),(3)Robert
      J. Khoury
                65
                DirectorJonathan
      M. Schofield
                67
                Director
      (2),(3)Arthur
      E. Wegner
                64
                Director
      (1),(3)Michael
      B. Baughan
                48
                President
      and Chief Operating OfficerThomas
      P. McCaffrey
                53
                Senior
      Vice President, Chief Financial Officer and TreasurerWayne
      Exton
                44
                Vice
      President and General Manager, Business Jet SegmentWerner
      Lieberherr
                49
                Vice
      President and General Manager, Commercial Aircraft Products
      GroupRobert
      A. Marchetti
                65
                Vice
      President and General Manager, Distribution SegmentEdmund
      J. Moriarty
                64
                Vice
      President-Law, General Counsel and SecretaryStephen
      R. Swisher
                49
                Vice
      President-Finance and Controller
  ________(1)
                Member,
      Audit Committee(2)
                Member,
      Compensation Committee(3)
                Member,
      Nominating and Governance Committee
  Director
Classification
 
 Our
restated certificate of incorporation provides that the Board of Directors is to
be divided into three classes, each nearly as equal in number as possible, so
that each director (in certain circumstances after a transitional period) will
serve for three years, with one class of directors being elected each
year.  The Board is currently comprised of two Class I Directors (Jim
C. Cowart and Arthur E. Wegner), two Class II Directors (Robert J. Khoury and
Jonathan M. Schofield) and three Class III Directors (Amin J. Khoury, Charles L.
Chadwell and Richard G. Hamermesh). The terms of the Class I, Class II and Class
III Directors expire at the end of each respective three-year term and upon the
election and qualification of successor directors at annual meetings of
stockholders held at the end of each fiscal year. Our executive officers are
elected annually by the Board of Directors following the annual meeting of
stockholders and serve at the discretion of the Board of Directors.
 
 2
 
 Current
Directors
 
 Amin J. Khoury has been the
Chairman of the Board since July 1987 when he founded the
company.  Effective December 31, 2005, Mr. Amin J. Khoury was
appointed Chief Executive Officer.  Mr. Amin J. Khoury also served as
the company’s Chief Executive Officer until April 1, 1996.  Since
1986, Mr. Khoury has been a director of Synthes, Inc., the world’s leading
manufacturer and marketer of orthopedic trauma implants and a leading global
manufacturer and marketer of cranial-maxillofacial and spine implants. Mr.
Khoury is a member of the board of directors of the Aerospace Industries
Association.  Mr. Khoury is the brother of Robert J.
Khoury.
 
 Charles L. Chadwell has been
a Director since January 2007.  He was the Vice President and General
Manager, Commercial Engine Operations for GE Aircraft Engines, from which he
retired in 2002.  After joining General Electric in 1965, he held a
variety of management positions, including:  Program Manager, CF6-80C
program; Plant Manager, GE Aircraft Engines’ Wilmington, North Carolina plant;
General Manager, GE Aircraft Engines’ Sourcing Operations; General Manager;
Production Operations, GE Aircraft Engines’ Lynn, Massachusetts plant; Vice
President, GE Aircraft Engines Human Resources; and Vice President and General
Manager, Production and Procurement, GE Aircraft Engines.
 
 Jim C. Cowart has been a
Director since November 1989.  Since September 2005, Mr. Cowart has
been a Director of EAG Limited, a company listed on the London Stock Exchange,
which is a provider of microanalytic laboratory services including surface
analysis and materials characterization.  Since September 2004, Mr.
Cowart has been Chairman and Chief Executive Officer of Auriga Medical Products
GmbH, a distributor of medical devices.  He is a Principal of Cowart
& Co. LLC and Auriga Partners, Inc., private capital firms that provide
strategic planning, competitive analysis, financial relations and other
services.  From August 1999 to May 2001, he was Chairman of QualPro
Corporation, an aerospace components manufacturing company.  From
January 1993 to November 1997, he was the Chairman and CEO of Aurora Electronics
Inc. Previously, Mr. Cowart was a founding general partner of Capital Resource
Partners, a private investment capital manager, and held various positions in
investment banking and venture capital with Lehman Brothers, Shearson Venture
Capital and Kidder, Peabody & Co.
 
 Richard G. Hamermesh has been
a Director since July 1987. Dr. Hamermesh has been a Professor of Management
Practice at Harvard Business School since July 1, 2002. From 1987 to 2001, he
was a co-founder and a Managing Partner of The Center for Executive Development,
an executive education and development consulting firm.  From 1976 to
1987, Dr. Hamermesh was a member of the faculty of Harvard Business School. He
is also an active investor and entrepreneur, having participated as a principal,
director and investor in the founding and early stages of more than 15
organizations.
 
 Robert J. Khoury has been a
Director since July 1987, when he co-founded the company.  On December
31, 2005, Mr. Khoury retired from service as the company’s President and Chief
Executive Officer, a position he held since August 2000.  From April
1996 through August 2000, he served as Vice Chairman.  Mr. Khoury is
the brother of Amin J. Khoury.
 
 Jonathan M. Schofield has
been a Director since April 2001. From December 1992 through February 2000, Mr.
Schofield served as Chairman of the Board and CEO of Airbus North America
Holdings, a subsidiary of Airbus Industrie, a manufacturer of large civil
aircraft, and served as Chairman from February 2000 until his retirement in
March 2001. From 1989 until he joined Airbus, Mr. Schofield was President of
United Technologies International Corporation. Mr. Schofield is currently a
member of the board of directors of Aero Sat, Inc., Nordam Group and
TurboCombustor Technology, Inc.; and is a trustee of LIFT Trust.
  Arthur E. Wegner has been a
Director since January 2007.  Mr. Wegner retired in 2000 as Executive
Vice President of Raytheon Company and Chairman of Raytheon
Aircraft.  He joined Raytheon Company in July 1993 as a Senior Vice
President and was appointed Chairman and CEO of Raytheon’s Beech Aircraft
Corporation.  In September 1994, he was appointed Chairman and CEO of
Raytheon Aircraft, which was formed by the merger of Raytheon subsidiaries,
Beech Aircraft and Raytheon Corporate Jets.  He became Chairman of
Raytheon Aircraft in 2000.  He was elected an Executive Vice President
of Raytheon Company in March of 1995.  Mr. Wegner came to Raytheon
Company after 20 years with United Technologies Corporation (UTC), where he was
Executive Vice President and President of UTC’s Aerospace and Defense
Sector.  Prior to that he was President of UTC’s Pratt and Whitney
Division.  Mr. Wegner is past Chairman of the Board of Directors of
the General Aviation Manufacturers Association and the Aerospace Industries
Association.
 
 3
 Executive
Officers
 
 Michael B. Baughan has been
President and Chief Operating Officer since December 31, 2005.  From
July 2002 to December 31, 2005, Mr. Baughan served as Senior Vice President and
General Manager of Commercial Aircraft Segment. From May 1999 to July 2002, Mr.
Baughan was Vice President and General Manager of Seating Products. From
September 1994 to May 1999, Mr. Baughan was Vice President, Sales and Marketing
for Seating Products. Prior to 1994, Mr. Baughan held various positions
including President of AET Systems, Manager of Strategic Initiatives at The
Boston Company (American Express) and Sales Representative at Dow Chemical
Company.
 
 Thomas P. McCaffrey has been
Senior Vice President and Chief Financial Officer since May 1993. From August
1989 through May 1993, Mr. McCaffrey was a Director with Deloitte & Touche
LLP, and from 1976 through 1989 served in several capacities, including Audit
Partner, with Coleman & Grant LLP.
 
 Werner Lieberherr has been
Vice President and General Manager of our Commercial Aircraft Products Group,
which is comprised of our Seating, Interior Products and Engineering Systems
segments since July 2006.  Prior to joining our company, Mr.
Lieberherr spent 20 years with  Alstom Power, Inc., where he served in
various senior management positions in Europe, Asia, and North America,
including President, Managing Director, Vice President Project Management
Worldwide, and General Manager-Sales.
 
 Wayne R. Exton has been Vice
President and General Manager, Business Jet Segment since May
2006.  From November 2005 to April 2006, Mr. Exton served as Vice
President and General Manager of the super first class division of the Business
Jet Segment.  Prior to joining our company, Mr. Exton spent nine years
at the Britax Automotive and Aerospace Divisions of Britax PLC, serving in a
variety of senior management positions including President, Vice President
Operations and Director of Global Marketing and Sales.  Before joining
Britax PLC, Mr. Exton held several senior management positions at Magneti
Marelli (a division of Fiat), and Lucas Electrical.
 
 Robert A. Marchetti has been
Vice President and General Manager of Fastener Distribution Segment since April
2002. From February 2001 to April 2002, Mr. Marchetti was Vice President of
Machined Products Group. From 1997 to January 2001 Mr. Marchetti was employed by
Fairchild Corporation’s Fasteners Division with his last position being Senior
Vice President and Chief Operating Officer. From 1990 to 1997, Mr. Marchetti
served as a corporate officer of UNC Inc. where he held several senior positions
such as Corporate VP of Marketing, President of Tri-Remanufacturing and Chief
Operating Officer of the Accessory Overhaul Division. From 1989 to 1990, he
served as President of AWA Incorporated. From 1986 through 1989, Mr. Marchetti
was Vice President of Marketing at General Electric Aircraft Engines and General
Manager for a Component Repair Division. From 1965 through 1986 he held several
sales and general management positions with Copperweld Corporation and Carlisle
Corporation.
 
 Edmund J. Moriarty has been
Vice President-Law, General Counsel and Secretary since November 1995. From 1991
to 1995, Mr. Moriarty served as Vice President and General Counsel to Rollins,
Inc., a national service company. From 1982 through 1991, Mr. Moriarty served as
Vice President and General Counsel to Old Ben Coal Company, a wholly owned coal
subsidiary of The Standard Oil Company.
 
 Stephen R. Swisher has been
Vice President-Finance and Controller since August 1999. Mr. Swisher has been
Controller since 1996 and served as Director of Finance from 1994 to 1996. Prior
to 1994, Mr. Swisher held various management positions at Burger King
Corporation and Deloitte & Touche LLP.
 
 Audit
Committee
 
 We have a
separately-designated standing Audit Committee established in accordance with
section 3(a)(58)(A) of the Exchange Act.  Messrs. Cowart, Hamermesh
and Wegner currently serve as members of the Audit Committee.  Under
the current SEC rules and the rules of the Nasdaq, all of the members are
independent.   Our Board of Directors has determined that Mr.
Cowart is an “audit committee financial expert” in accordance with current SEC
rules.  Mr. Cowart is also independent, as that term is used in Item
407 of Regulation S-K of the federal securities laws.
 
 4
 Section
16(a) Beneficial Ownership Reporting Compliance
 
 Section
16(a) of the Exchange Act requires the Company’s directors and executive
officers, and persons who own more than 10 percent of a registered class of the
Company’s equity securities, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. Officers, directors and
greater-than-10-percent stockholders are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all Section 16(a)
forms they file.
 
 Due to an
administrative error, Forms 4 for reporting exempt transactions by Messrs.
Cowart, Hamermesh, Khoury, Chadwell, Schofield and Wegner with respect to
quarterly allocations of deferred shares under the Directors Plan since 2001
were filed after the relevant due dates. To the Company’s knowledge, during
2007, all other Section 16(a) filing requirements applicable to its officers,
directors and greater-than-10-percent beneficial owners were complied with. In
making the above statements, the Company has relied on the written
representations of its directors and officers and a review of the copies of the
Section 16(a) reports that have been filed with the Securities and Exchange
Commission.
 
 Code
of Ethics
  We have
adopted a code of ethics, or Code of Business Conduct, to comply with the rules
of the SEC and Nasdaq.  The Code of Business Conduct applies to our
directors, officers and employees worldwide, including our principal executive
officer and senior financial officers.  A copy of our Code of Business
Conduct is maintained on our website at www.beaerospace.com.
 
  5




ITEM 11.  EXECUTIVE COMPENSATION




COMPENSATION
DISCUSSION & ANALYSIS




The
Objectives of our Named Executive Officer Compensation
Program






The
following Compensation Discussion and Analysis addresses the objectives and
elements of our executive compensation program, how our Compensation Committee
uses external information to assist their oversight of our executive
compensation and how we measure individual and Company performance.




The
objectives of our 2007 executive compensation program were as
follows:
   ●
              Provide
      a total compensation opportunity that is competitive with the market for
      executive talent, thereby enabling us to attract, retain and motivate our
      executives;●
              Ensure
      a strong relationship between pay and performance, including both rewards
      for results that meet or exceed performance targets and consequences for
      results that are below performance targets; and●
              Align
      executive and shareholder interests through the provision of long-term
      incentives that link executive compensation to shareholder value
      creation.




Our
Named Executive Officers








Our named
executive officers include our six most highly compensated executives during
2007, consisting of: Amin J. Khoury, Chairman & Chief Executive
Officer; Michael B. Baughan, President & Chief Operating Officer;
Thomas P. McCaffrey, Senior Vice President, Chief Financial Officer &
Treasurer; Werner Lieberherr, Vice President & General
Manager—Commercial Aircraft Products Group; Robert Marchetti, Vice
President & General Manager—Distribution Segment; and Wayne Exton, Vice
President & General Manager—Business Jet Segment.




What
our Compensation is Intended to Reward






Company
Performance.Through
the provision of short and long-term incentives, our executive compensation
program is designed to reward: (i) the achievement of short-term financial
goals measuring revenue, operating margins, cash flow and bookings and
(ii) the execution of our long-term strategic goals and objectives. We
believe that revenue growth, operating margin expansion, cash flow growth and
bookings expansion are the key short-term drivers of shareholder value. On a
longer term basis we believe shareholder value is created through the successful
execution of a sound business strategy.




Our
business strategy is to maintain a leadership position and best serve our
customers by:




●
            offering
      the broadest and most innovative products and services in the
      industry;●
            offering
      a broad range of engineering services, including design, integration,
      installation and certification services, and aircraft reconfiguration,
      along with passenger-to-freighter conversion services;●
            pursuing
      the highest level of quality in every facet of our operations, from the
      factory floor to customer support;●
            aggressively
      pursuing continuous improvement initiatives in all facets of our
      businesses, and in particular our manufacturing operations, to reduce
      cycle time, lower cost, improve quality and expand our margins;
      and●
            pursuing
      a worldwide marketing and product support approach focused by airline and
      general aviation airframe manufacturers and encompassing our entire
      product line.




6




Our
Compensation Committee performs annual reviews of our performance and the
contributions of each of our named executive officers to ensure that our
executive compensation program rewards the achievement of our financial
objectives and the execution of our business strategy.




Individual
Performance.In
addition to overall Company performance, our compensation program rewards
individual performance toward the attainment of our goals and objectives. In
setting the targeted pay level of the individual named executive officers, a
variety of factors are considered, including: competencies, skills, prior
experience, scope of responsibility and accountability within the
organization.




On an
annual basis, each named executive officer’s attainment of goals and
demonstration of defined leadership competencies is assessed by our Chairman and
Chief Executive Officer through our leadership performance and development
assessment process. Our CEO recommends to the Compensation Committee the base
salaries of each of our named executive officers as of July 1 of each year and
incentive compensation awards for the preceding year to the Compensation
Committee. The Compensation Committee performs a similar assessment of our CEO
after the conclusion of the fiscal year and approves his base salary and
incentive compensation.




During
2007 the Compensation Committee changed the date for adjusting base salaries
from January 1 to July 1 of each year in order to provide ongoing discussions
regarding performance and compensation throughout the year. As a result of this
change, we now adjust base salaries for all of our employees as of July 1 of
each year, we award long term incentives on November 15 of each year and we
award annual cash incentives in the first quarter of the following
year.




The
Elements of our Compensation Program






At the
beginning of each year the Compensation Committee determines the targeted range
of compensation levels which may be earned by each named executive officer. For
2007, aggregate compensation amounts for named executive officers (depending on
their title and position) were established in the following forms and
percentages: base salary (approximately 27% - 36% of total targeted
compensation); annual cash incentive (approximately 27% - 33% of total targeted
compensation); and long term equity incentives (approximately 33%-47% of total
targeted compensation). Long term equity incentives in 2007 consisted of
restricted stock awards which generally vest ratably over a four year
period.




The
aggregate total targeted maximum compensation, expressed as a percentage of
annual base salary, for each named executive officer (depending on title and
position) was as follows for 2007: base salary (100%), performance-based cash
incentives (100% - 120%) and long term equity incentives (100% -
175%).




Base
Salary. We
provide each of our named executive officers with a competitive fixed annual
base salary. The base salaries for our named executive officers are reviewed
annually by the Compensation Committee, taking into account the results achieved
by the executive, the executive’s future potential, scope of responsibilities
and experience, and competitive salary practices. We believe that it is
important to pay a base salary that is consistent with similarly sized industry
peers with similar continuous performance characteristics. In 2007, base salary
increases, exclusive of increases associated with promotions and changes in
responsibilities for our named executive officers, ranged from 6.0% to 7.0% of
their 2006 base salaries. As more fully described under the heading “External
Benchmarking” below, these increases generally positioned our named executive
officers’ base salary levels between the 50th and
75th
percentile of the base salaries of executives in comparable positions as
reflected in peer company and general industry compensation survey
data.




Annual Cash
Incentives. In 2007
our named executive officers were eligible to receive annual cash incentives
pursuant to our Management Incentive Plan, or MIP, based on the attainment of
both Company and individual performance goals. We believe that directly linking
a significant portion of our named executive officers’ cash compensation to an
individual segment or aggregate corporate performance (as applicable) is an
important factor in achieving our corporate objectives.




In
January 2007 the Compensation Committee approved the financial metrics
against which cash incentives are awarded and established an annual cash
incentive opportunity for each named executive officer under the
MIP.  2007 financial metrics and weighting with respect to each goal
are as follows:




●
            30%—operating
      earnings;




7




●
              30%—operating
      cash flow (generally defined as earnings before interest, taxes,
      depreciation and/or amortization, or EBITDA, plus or minus changes in
      working capital (and other current and non-current assets and
      liabilities), less capital expenditures)●
              20%—operating
      margin; and●
              20%—bookings.




These
performance metrics are evaluated on an annual basis to ensure we measure what
we believe are the most relevant business measures of total business
performance. The performance goals are established as part of our annual
financial planning process and are the measure against which all MIP
participants’ performance is measured. We do not disclose the specific corporate
or business segment targets since they contain competitively sensitive
information and the specific targets are not material to an understanding of
incentive compensation awards to the named executive officers. However, we
believe each of the targets is appropriate and obtainable.




A targeted
level of performance was established for each financial metric set forth
above.




The
aggregate total amount of MIP funds available to be awarded is determined on a
site, segment and corporate level based on the achievement of the goals approved
by our Compensation Committee. The amounts deemed to be earned by a site,
segment or our Company overall are then awarded to each participant, including
our named executive officers, with each participant’s award allocated on the
basis of their actual individual performance for the year. MIP awards are based
on both the financial performance of their segment or our Company, as
applicable, and an individual’s relative contribution to the success of their
segment or our Company, as applicable, during the year. Some awards are equal to
100% of the maximum amount that may be awarded and others are closer to 50% of
the total award. Over the past several years the average award for all our MIP
participants has ranged from 70%-75% of the maximum award.




During
2007, payment of the portion of a cash incentive attributable to each metric is
based on achieving a minimum of 90% of the targeted performance level
established by the Compensation Committee for the metric. During 2007, if actual
performance of any metric was below 90%, no cash incentive payment was earned
with respect to this metric. Achieving between 90% and 100% of the target
resulted in an allocation between 0% and 100% of the target cash incentive
attributable to that metric. During 2007, if we achieved more than 100% of the
target for a metric, a named executive officer could potentially receive an
additional 5% of his target bonus attributable to that metric as a “kicker”, as
determined by the Compensation Committee in its sole discretion. As a result,
depending on our financial performance, it was possible for an executive to be
awarded an aggregate cash incentive ranging from 0%-120% of his base salary. The
Compensation Committee may approve adjustments to performance goals to recognize
corporate or segment contributions, particularly in situations where such
contributions may have been in conflict with the shorter term financial metrics
measured by our MIP. The Compensation Committee may also use their judgment to
exclude the impact of non-recurring gains, charges or unusual items as facts and
circumstances dictate.




Under the
MIP, the actual cash incentive payments made to each participant (other than our
CEO) are determined by our Compensation Committee based on our CEO’s assessment
of each participant’s contribution toward the attainment of specific
Company-wide or segment specific goals, as appropriate, individual goals and the
demonstration of defined leadership competencies. Following the review of the
CEO’s recommendations, the Compensation Committee approves the final MIP awards,
which may be higher or lower than the amount determined as a result of the
attainment of the financial goals described above. The Compensation Committee
performs a similar performance assessment of our CEO and approves his MIP award
based on this assessment.




On
February 15, 2008, our Compensation Committee unanimously approved amendments to
the MIP to provide that bonuses will be based upon the achievement of two
components: performance objectives (weighted at 80%) and individual strategic
initiatives (weighted at 20%).  The performance objectives for 2008
are operating earnings (weighted at 30%), operating cash flow (as defined)
(weighted at 30%), bookings (weighted at 20%) and operating margin (weighted at
20%).  The 2008 targets for each performance measure were established
by our Compensation Committee.  The MIP now provides that, in general,
no payments will be made under the MIP with respect to a particular performance
objective unless the Company or the participant’s business unit exceeds 80% of
the targets for the applicable performance objective. However, bonus payments
for performance between 80% and 90% of target are less than 10% of targeted
bonus.  Beginning in 2008, named executive officers will be eligible
to receive a target bonus of 68%-85% of their base salaries and a targeted
maximum bonus of 80%-100% of base salaries, depending on their title and
position.  If the Company or a named executive officer’s business unit
(as appropriate) exceeds the target performance objectives by 100% or more, and
the named executive officer’s individual performance is at a superior level, the
named executive officer will be eligible to receive up to an additional 10% or
20% of his or her base salary (depending on their  title and
position), resulting in a maximum bonus of up to 100%-120% of
their  base salary, depending on their title and
position.




8




Attainment of
2007 Performance Measures.2007 was
an outstanding year for our Company. Our consolidated revenues were $1.68
billion, a 48.7% increase over 2006. Operating earnings of $247.0 million for
2007 were $98.7 million, or 66.6%, greater than 2006, due to both the 48.7%
increase in revenue and a 160 basis point expansion in our operating margin to
14.7% of sales in 2007, reflecting the high in quality backlog and operating
leverage at the higher revenue level, offset by acquisition and integration
costs and learning curve costs in the seating, business jet and engineering
services segments. Bookings for 2007 were approximately $2.2 billion, a record
for any year, and drove our backlog to over $2.2 billion, also a
record.  In addition, our common stock appreciated by 106% during 2007
and was cited by the Wall Street Journal as the best performing aerospace stock
over the past one, three and five year periods ended December 31,
2007.




The
following is a summary of our financial performance during 2007 against the
measures set by the Compensation Committee under the MIP:




●
            Operating
      earnings of approximately $247.0 million, increased by 66.6% as compared
      to 2006 and was above our 2007 target;●
            Operating
      cash flow of approximately $22.0 million, decreased by $19.0 million as
      compared to 2006 as a result of the 48.7% increase in revenues and a
      $215.4 million increase in inventories associated with the product line
      expansion at our distribution segment and to support our record
      backlog.  Operating cash flow was approximately equal to our
      2007 target, as adjusted for the substantially higher than targeted
      revenue and backlog levels;●
            Operating
      margin of 14.7%, increased by 160 basis points as compared to 2006 and was
      below our 2007 target principally due to start up and learning curve costs
      for new major programs in the seating, business jet and engineering
      services segments; and●
            Bookings
      of $2.2 billion, increased by approximately 30% as compared to 2006 and
      was above our 2007 target.




On
February 5, 2008, the Compensation Committee concluded that in aggregate,
we exceeded our 2007 MIP performance target. Considering these results, as well
as certain qualitative factors which the Compensation Committee considers an
important part of its assessment (such as expanding our market shares,
demonstrating market share leadership, advances in new product development,
achievement of key strategic initiatives such as the integration of key
strategic acquisitions, and strengthening our balance sheet), and taking into
account each named executive officer’s individual performance against their
goals, and the success of their respective segment or our Company, as
applicable, the Compensation Committee determined an aggregate cash incentive
award for our named executive officers equal to approximately 93% of the total
aggregate targeted annual cash incentive opportunity (as a group).




The
Compensation Committee believes our CEO had an exceptionally successful year as
evidenced by our very strong financial performance, substantially completing the
integration of two strategically important acquisitions of Draeger Aerospace
GmbH and New York Fasteners Corp., his leadership in the development,
communication and execution of our strategy and his role in the strengthening of
our balance sheet. As a result, the Compensation Committee awarded our CEO cash
incentive compensation equal to 100% of his base salary. The actual amount of
cash incentive awards paid to each named executive officer is shown in the
“Non-Equity Incentive Plan Compensation” column of the Summary Compensation
Table that follows this Compensation Discussion and Analysis.




2007 Long-term
Equity Incentives.Approximately
33%-47% of the total targeted compensation opportunity provided to our named
executive officers in 2007 was equity-based. This emphasis on equity-based
compensation reflects our view that there should be a close alignment between
long-term shareholder value creation and named executive officer
compensation.




We believe
the use of long-term equity incentive awards accomplishes important objectives
of our executive compensation program by linking shareholder value creation to
long-term incentives. The level of benefit received by our named executive
officers is dependent, to a large degree, on the successful execution of our
strategy and delivering significant, sustained growth on a consistent
basis.




9




2007 Restricted
Stock Grants.On
October  31, 2007, the Compensation Committee approved grants of restricted
stock effective as of November 15, 2007 to approximately 245 of our
managers, including each of our named executive officers, pursuant to our 2005
Long-Term Incentive Plan. The Compensation Committee anticipates that these
awards will serve as a long-term incentive to the employees.




The amount
of the awards ranged from approximately 100%-175% of each named executive
officer’s base salary. In determining the amounts of the equity compensation
awarded to our named executive officers, the Compensation Committee considered a
variety of factors, including individual performance, competencies, skills,
prior experiences, scope of responsibility and accountability within the
organization. The actual number of shares granted to each named executive
officer was determined by dividing the dollar value of each award by the closing
price of our common stock on the date of grant. The number of shares of stock
granted and the SFAS 123R grant date fair value is shown in our Grants of
Plan-Based Awards Table following this Compensation Discussion and
Analysis.  The restricted stock awards generally vest 25% on the
first, second, third and fourth anniversary of the date of grant.




On April
28, 2008 our Compensation Committee established a performance-based component to
our restricted stock program for our managers.  The award guidelines
for each named executive officer provide for a minimum annual award equal to
75%-130% of his base salary, a targeted annual award equal to 100%-175% of his
base salary and a maximum annual award equal to 125%-220% of his base
salary.  Seventy-five percent of the annual award to each named
executive officer will be subject to time-based vesting and 25% of the annual
award will be subject to performance-based vesting.  The time-based
award will vest ratably over a period of four years.  The vesting of
the performance-based award is subject to the Company achieving the annual
operating earnings target established by the Compensation Committee in the
12-month period ending on September 30th each
year, and will vest over a four-year period subject to the following conditions:
(i) if we achieve 100% of our performance target in an applicable year, 25% of
the total performance-based award will vest in the applicable year; (ii) if we
achieve 90% of our performance target in an applicable year, 10% of the total
performance-based award will vest in the applicable year; (iii) if we achieve
between 90% and 100% of our performance target in an applicable year, between
10% and 25% of the total performance-based award will vest in the applicable
year (as determined on the basis of linear interpolation); and (iv) if we
achieve less than 90% of our performance target in an applicable year, the named
executive officer forfeits the award that would have vested in the applicable
year.




Severance and
Change of Control Benefits.We have
entered into employment agreements with each of our named executive officers,
which are described below in detail under the heading “Employment, Severance and
Change of Control Agreements.” Our employment agreements with Messrs. Khoury and
McCaffrey do not contain change of control provisions.  Our employment
agreements with our named executive officers, other than Messrs. Khoury and
McCaffrey, contain change of control provisions that provide benefits in the
event that the executive is terminated in connection with a change of control of
our Company. These change of control provisions generally provide for
continuation of the executive’s base salary for the remaining term of their
employment agreements and a severance payment ranging from one to three years of
base salary.




We also
provide each of our named executive officers with severance benefits if their
employment is terminated for any reason other than cause or in some instances,
due to their resignation for good reason (as each term is defined in the
applicable agreements). In such cases, the employment agreements require that we
pay the executive his salary for the remaining term of the applicable employment
agreement and provide a severance payment ranging from one to two times the
executive’s base salary. Our severance and change of control benefits were
determined on the basis of market practices in order to provide a competitive
overall compensation package to our named executive officers.




Retirement
Compensation. We have
agreed with Mr. Khoury to make an annual retirement contribution equal to
1.5 times his base salary to a grantor trust established on his behalf. We fund
this amount, less applicable personal income taxes, into a grantor trust on a
quarterly basis in arrears. Changes in Mr. Khoury’s base salary are
reflected on a cumulative basis in the quarterly contributions following a
change in his base salary.




We have
agreed with Mr. Baughan to make an annual retirement contribution of 50% of
his average annual salary for the preceding three-year period to a rabbi trust
established on his behalf. The retirement contributions will vest in full on
April 26, 2012. Vesting of the accrued retirement contributions will
accelerate upon the termination of Mr. Baughan’s employment due to his
death, disability or by us without cause (as defined in his employment
agreement). We fund this amount, less applicable personal income taxes, into
this rabbi trust on a quarterly basis in arrears. Changes in Mr. Baughan’s
base salary are reflected in the quarterly contributions following a change in
his base salary.




10




We also
have agreed with Mr. McCaffrey to make an annual retirement contribution of
50% of his average annual salary for the preceding three-year period to a
grantor trust established on his behalf. We fund this amount, less applicable
personal income taxes, into this grantor trust on a quarterly basis in arrears.
Changes in Mr. McCaffrey’s base salary are reflected in the quarterly
contributions following a change in his base salary.




Other than
participation in our qualified 401(k) Plan under the same terms as all
other employees, we do not offer retirement benefits to any of our other named
executive officers.




A detailed
description of the retirement benefits for our CEO, COO and CFO is set forth
below under the heading “Employment, Severance and Change of Control
Agreements.”




Other
Compensation.




In
addition to the benefits that are generally available to all of our employees,
we provide some or all of our named executive officers with the following
additional benefits and perquisites.






●
            Under
      the Medical Care Reimbursement Plan for Executives, which has been in
      effect since January 1, 1998, each of our named executive officers is
      reimbursed for medical care expenses that are not otherwise reimbursed by
      any plan or arrangement up to a maximum benefit of 10% of their base
      salary per year.●
            We
      reimburse each of our named executive officers for reasonable costs of
      financial and estate planning.●
            Certain
      named executive officers receive a monthly automobile allowance, as
      described below under the heading “Employment, Severance and Change of
      Control Agreements."●
            Messrs. Khoury,
      Baughan and McCaffrey are party to death benefit agreements under which
      their designated beneficiaries will receive death benefits of $3,000,000,
      $1,500,000 and $1,000,000, respectively, upon their death, whether during
      or following their termination from employment. With respect to Messrs.
      Khoury, Baughan and McCaffrey, we have funded these death benefit
      agreements with fully paid-up whole-term life insurance
      policies.●
            Under
      our travel policy, we provide use of a Company-owned aircraft to our CEO
      and limited use to our former CEO to ensure their personal security. As
      set forth in the “All Other Compensation” column of the Director
      Compensation Table above and the Summary Compensation Table below, our CEO
      and former CEO are taxed on the incremental cost relating to their
      personal use of the aircraft.




To the
extent applicable, these amounts are included in the Summary Compensation Table
as part of the “All Other Compensation” column.




External
Benchmarking






We
benchmark targeted pay levels for essentially every position throughout our
organization through the use of one or more compensation advisory services. Our
Compensation Committee also engages an independent compensation consultant to
assist our Compensation Committee to oversee our executive compensation program.
Market data provides a reference and framework for decisions about the base
salary, targeted annual cash incentives, and the appropriate level of long-term
incentives to be provided to each named executive officer. However, due to
year-over-year variability and the inexact science of matching and pricing
executive jobs, we believe that market data should be interpreted within the
context of other important factors and should not solely be used to dictate a
specific pay level for an executive. As a result, in setting the target pay
level of our named executive officers, market data is reviewed along with a
variety of other factors, including individual performance, competencies,
skills, future potential, prior experience, scope of responsibility and
accountability within the organization.




Mercer
Human Resources Consulting has reviewed both the individual components and
aggregate composition of our compensation packages for our named executive
officers and has advised our Compensation Committee that for each of our named
executive officers, the target total cash compensation (including base salary
and targeted annual cash incentives) is near the 75th
percentile, target total direct compensation (including base salary, annual cash
and long-term incentives) approximates the median, and total direct compensation
(including base salary, annual cash and long-term incentives) plus retirement
contributions, as applicable, is near the median of the peer group described
below.




11




Compensation
Comparison Group. The
compensation comparison group we used in 2007 was comprised of the following 12
companies in the aerospace and defense industries:






●
            Goodrich
      Corporation●
            Precision
      Castparts Corporation●
            Teleflex
      Inc.●
            Crane
      Co.●
            DRS
      Technologies, Inc.●
            Teledyne
      Technologies, Inc.●
            Moog
      Inc.●
            Hexcel
      Corporation●
            Curtiss-Wright
      Corporation●
            Esterline
      Technologies Corporation●
            AAR
      Corp.●
            Triumph
      Group Inc.




In
consultation with the Compensation Committee, these companies were selected for
our peer group on the basis that (i) as compared to our Company, they were
within a reasonable range for revenue size and equity market capitalization;
(ii) they had executive positions comparable to those at our Company which
required a similar set of management skills and experience; and (iii) they
were representative of organizations that compete with us for business and
executive talent. The median 2006 revenues and equity market capitalization of
our peer group were $1.4 billion and $2.0 billion, respectively; our revenues
for the year ended December 31, 2007 were $1.68 billion and as of
December 31, 2007 our equity market capitalization was $4.9
billion.




Benchmarking
Objectives.We
believe our executives should possess above average competencies, skills, prior
experience, and display above-average leadership skills as they discharge their
responsibilities. Our objective is to establish total targeted compensation
(defined as base salary, targeted annual cash incentive, long-term incentives,
and, where applicable, retirement contributions) for our named executive
officers near the 75th
percentile of our peer group. We believe the weighting of each component of our
compensation program is appropriate given the historically cyclical nature of
our industry which has resulted and may result in several year periods during
which substantially lower cash incentives are awarded.




Benchmarking
Process. Each
year, the Compensation Committee directs senior management to engage an
independent third-party consulting organization to advise the Compensation
Committee as it conducts its review of our compensation program and our
financial performance versus our peer group. Compensation and other financial
data for the peer group are compiled from publicly available information as well
as from the consultant’s proprietary database for similar sized industrial
companies. Because the information is based on publicly available data, the
comparisons are always against the data for the immediately preceding year
(i.e., the 2007 study was based on data included in the 2006 annual reports and
2006 proxy statements of our peer group).




Several
components of pay were analyzed by our independent consultant including: actual
and targeted base salary; cash incentives; total cash compensation (i.e., base
salary plus cash incentives); actual and targeted long-term incentives; total
direct compensation (i.e., total cash plus long-term incentives); and, to the
extent applicable, total direct compensation plus retirement contributions. The
Compensation Committee’s review of our financial performance versus our peer
group focused on revenue growth, operating earnings growth, EBITDA, as well as
total shareholder return and return on average equity.




The
Compensation Committee’s review led them to conclude that when compared to our
peer group, our financial performance as compared to the key financial metrics
described above approximated  the 75th
percentile of our peer group. The 2007 total direct compensation (including,
where applicable, retirement contributions) for our named executive officers and
the 2007 total actual cash compensation for our named executive officers
approximated the median of our peer group.




12




Stock
Ownership






We have
not established specific stock ownership guidelines for our executive officers
or directors. As of April 21, 2008, the market value of BE Aerospace stock
owned by our named executive officers as a multiple of each of their base
salaries ranged from approximately two times to fourteen times base salary. The
details of share ownership for each named executive officer are set forth above
under the heading “Security Ownership of Certain Beneficial Owners and
Management.”




Tax
Deductibility






To the
extent that it is practicable and consistent with our executive compensation
philosophy, we intend to comply with Section 162(m) of the Internal
Revenue Code of 1986, as amended, which limits the deductibility of certain
compensation payments to our executive officers in excess of $1 million. If
compliance with Section 162(m) conflicts with the compensation
philosophy or is determined not to be in the best interest of stockholders, the
Compensation Committee will abide by its compensation philosophy.




13




Report
of the Compensation Committee on Executive Compensation






The
Compensation Committee has reviewed and discussed the Compensation
Discussion and Analysis for the year ended December 31, 2007 with
management. Based on the review and discussion, the Compensation Committee has
recommended to the Board of Directors that the Compensation Discussion and
Analysis be included in this Annual Report on Form 10-K/A.




Respectfully
      submitted,The
      Compensation CommitteeCharles
      L. ChadwellJonathan
      M. Schofield




Compensation
Committee Interlocks and Insider Participation
   No person
who is or has been an officer or other employee of the Company served as a
member of the Company’s Compensation Committee. No executive officer of the
Company served as a member of the Compensation Committee on the board (or as a
director) of any company where an executive officer of such company is a member
of the Compensation Committee or a director of the Company. No member of the
Compensation Committee was a party to any transaction required to be disclosed
as a related person transaction.


Summary
Compensation Table






The
following table sets forth the compensation paid to our named executive officers
in 2007 and 2006.(1)




Name and Principal Position
                  Year
                  
                  
                  Salary ($)
                  
                  
                  Stock
                    Awards
      ($)(2)
                  
                  Option
                    Awards($)
                  
                  
                  Non-Equity
                    IncentivePlan
                    Compensation
                    ($)(3)
                  
                  
                  All
      Other
                    Compensation ($)
                  
                  
                  Total ($)(a)
                  (b)
                  
                  
                  (c)
                  
                  
                  (e)
                  
                  (f)
                  
                  
                  (g)
                  
                  
                  (i)
                  
                  
                  (j)Amin
      J. Khoury
                  2007
                  
                  $
                  1,001,200
                  
                  $
                  2,905,634
                  (4)
                  —
                  
                  $
                  1,001,200
                  
                  $
                  4,656,784
                  (5)
                  $
                  9,564,818
                  (5)Chairman
      and Chief Executive Officer
                  2006
                  
                  
                  904,000
                  
                  
                  1,019,504
                  (4)
                  —
                  
                  
                  994,400
                  
                  
                  2,648,301
                  (5)
                  
                  5,566,205Michael
      B. BaughanPresident
      and Chief
                  2007
                  
                  
                  514,000
                  
                  
                  236,173
                  
                  —
                  
                  
                  400,000
                  
                  
                  112,087
                  (6)
                  
                  1,262,260Operating
      Officer
                  2006
                  
                  
                  440,000
                  
                  
                  26,593
                  (6)
                  —
                  
                  
                  330,000
                  
                  
                  23,723
                  (6)
                  
                  820,316Thomas
      P. McCaffreySenior
      Vice President and Chief
                  2007
                  
                  
                  471,500
                  
                  
                  874,456
                  (4)
                  —
                  
                  
                  430,000
                  
                  
                  420,957
                  (7)
                  
                  2,196,913Financial
      Officer
                  2006
                  
                  
                  430,000
                  
                  
                  285,300
                  (4)
                  —
                  
                  
                  430,000
                  
                  
                  391,706
                  (7)
                  
                  1,537,006Wayne
      ExtonVice
      President and General
                  2007
                  
                  
                  275,000
                  
                  
                  133,636
                  
                  —
                  
                  
                  175,000
                  
                  
                  31,599
                  (8)
                  
                  615,235Manager
      - Business Jet Segment
                  2006
                  
                  
                  265,036
                  
                  
                  14,198
                  
                  —
                  
                  
                  110,000
                  
                  
                  70,105
                  (8)
                  
                  459,339Werner
      LieberherrVice
      President and GeneralManager—Commercial
      Aircraft
                  2007
                  
                  
                  400,000
                  
                  
                  181,919
                  
                  —
                  
                  
                  250,000
                  
                  
                  22,714
                  (9)
                  
                  854,633Products
      Group
                  2006
                  
                  
                  178,291
                  
                  
                  56,032
                  
                  —
                  
                  
                  140,000
                  
                  
                  44,546
                  (9)
                  
                  418,869Robert
      A. MarchettiVice
      President and General
                  2007
                  
                  
                  327,500
                  
                  
                  235,370
                  
                  —
                  
                  
                  327,500
                  
                  
                  28,819
                  (10)
                  
                  919,189Manager—Distribution
      Segment
                  2006
                  
                  
                  291,497
                  
                  
                  27,196
                  
                  —
                  
                  
                  300,000
                  
                  
                  28,097
                  (10)
                  
                  646,790








(1)
            All
      annual cash bonuses paid to our named executive officers are reflected in
      the “Non-Equity Incentive Plan Compensation” column of this
      table.




(2)
            The
      amounts reported in the “Stock Awards” column reflect the dollar amount,
      without reduction for risk of forfeiture, recognized for financial
      reporting purposes for the fiscal years ended December 31, 2007 and
      2006 of awards of restricted stock, calculated in accordance with the
      provisions of Financial Accounting Standards Board Statement of Financial
      Accounting Standards No. 123R “Share Based Payment”, or SFAS 123R.
      The amount set forth may include expenses attributable to equity awards
      granted during and before 2007 or 2006. Assumptions made in the
      calculation of these amounts are included in Note 12 to our audited
      financial statements for the fiscal years ended December 31, 2007 and
      2006 included in our annual report on Form 10-K filed with the
      Securities and Exchange Commission on February 20,
    2008.




(3)
            The
      amounts shown represent the annual cash incentive payments received by our
      named executive officers under our MIP. These cash awards were earned in
      2007 and 2006 and were paid on March 7, 2008 and March 6, 2007,
      respectively. The MIP is described in detail above in our Compensation
      Discussion and Analysis.




(4)
            In
      order to assist in the retention of and to further incentivize our CEO and
      CFO and in lieu of the change of control benefits which were eliminated
      from their contracts with us, on July 31, 2006, we granted our CEO an
      award of 387,900 shares of restricted stock, and we granted our CFO
      104,200 shares of restricted stock. The expenses included in the “Stock
      Awards” column with respect to these special awards for 2007 and 2006
      were  $2,398,635 and $1,004,654, respectively,  for
      Mr. Khoury and $644,641 and $270,004, respectively, for
      Mr. McCaffrey.




(5)
            With
      respect to Mr. Khoury, the amount reported for 2007 and
      2006  as “All Other Compensation” includes $1,501,800 and
      $1,356,000, respectively,  for our  annual retirement
      contributions to his grantor trust; $2,794,500 and $828,750, respectively,
      for  contributions to his grantor trust for catch up adjustments
      related to prior periods; $180,795 and $284,376, respectively,
      representing the aggregate incremental cost to us for his personal use of
      the Company aircraft; $125,983 and $126,185, respectively, for estate
      planning; $9,000 and $7,500, respectively for Company contributions to our
      401(k) Plan; $3,116 and $5,113, respectively, representing payments
      under our executive medical plan; and an additional amount relating to an
      automobile and insurance allowance. The aggregate incremental cost for the
      use of the Company aircraft for personal travel is calculated by
      multiplying the hourly variable cost rate for the aircraft by the hours
      used. The hourly variable cost rate includes costs such as fuel, oil,
      parking/landing fees, crew expenses and
  catering.




14




(6)
            With
      respect to Mr. Baughan, the amount reported for 2007 and 2006 as “All
      Other Compensation” includes $83,576 and $0, respectively, for our annual
      retirement contributions to his grantor trust, $9,000 and $7,500
      respectively for contributions to the Company’s 401(k) Plan; $2,880
      and $3,115, respectively, representing payments under executive medical
      coverage; and an additional amount relating to an automobile allowance and
      estate planning.




(7)
            With
      respect to Mr. McCaffrey, the amount reported for 2007 and
      2006  as “All Other Compensation” includes $341,967 and
      $355,278, respectively, for our annual retirement contributions to his
      grantor trust; $9,000 and $7,500, respectively, for contributions to the
      Company’s 401(k) Plan; $53,251 and $11,289, respectively,
      representing payments under our executive medical plan; and an additional
      amount relating to an automobile allowance and estate
      planning.




(8)
            With
      respect to Mr. Exton, the amount reported for 2007 and 2006 as “All
      Other Compensation” includes $9,399  and $55,474, respectively,
      for reimbursement of relocation expenses; $9,000 and $6,000, respectively,
      for contributions to the Company’s 401(k) Plan; and an additional
      amount relating to an automobile
allowance.




(9)
            With
      respect to Mr. Lieberherr, the amount reported for 2007 and
      2006  as “All Other Compensation” includes $0 and $32,747,
      respectively, for reimbursement of  relocation expenses, $9,000
      and $1,539, respectively, for contributions to the Company’s
      401(k) Plan; $514 and $3,660, respectively, representing payments
      under our executive medical plan in 2007 and COBRA in 2006,  and
      an additional amount relating to an automobile
  allowance.




(10)
            With
      respect to Mr. Marchetti, the amount reported for 2007 and 2006 as
      “All Other Compensation” includes $9,000 and $7,500, respectively, for
      contributions to the Company’s 401(k) Plan; $6,619 and $7,489,
      respectively, representing payments under our executive medical plan; and
      an additional amount relating to an automobile
  allowance.






Grants
of Plan-Based Awards Table






The
following table sets forth information concerning stock based awards made to our
named executive officers in 2007 and 2006.




Estimated Future Payouts Under Non-Equity
                  Incentive Plan (MIP
      or bonus) Awards(1)Name
                GrantDate
                
                
                Threshold($)(2)
                
                Target ($)
                
                
                Maximum ($)
                
                All Other Stock
      Awards: Number of Shares of Stock or
                  Units (#)(3)
                
                
                Grant Date FairValue of Stockand OptionAwards ($)(4)(a)
                (b)
                
                
                (c)
                
                (d)
                
                
                (e)
                
                (i)
                
                
                (k)Amin
      J. Khoury
                1/1/07
                
                $
                0
                
                $1,001,200
                
                $
                1,201,440
                
                —
                
                
                —11/15/07
                
                
                —
                
                —
                
                
                —
                
                40,914
                (5)
                $
                1,752,75611/15/06
                
                
                —
                
                —
                
                
                —
                
                66,988
                (5)
                
                1,808,0067/31/06
                
                
                —
                
                —
                
                
                —
                
                387,878
                (5)(6)
                
                9,599,981Michael
      B. Baughan
                1/1/07
                
                $
                0
                
                $514,000
                
                $
                616,800
                
                —
                
                
                —11/15/07
                
                
                —
                
                —
                
                
                —
                
                12,027
                (9)
                
                515,23711/15/06
                
                
                —
                
                —
                
                
                —
                
                32,605
                (9)
                
                880,009
                (7)Thomas
      P. McCaffrey
                1/1/07
                
                $
                0
                
                $471,500
                
                $
                565,800
                
                —
                
                
                —11/15/07
                
                
                —
                
                —
                
                
                —
                
                11,029
                (8)
                
                472,48211/15/06
                
                
                —
                
                —
                
                
                —
                
                31,864
                (8)
                
                860,0097/31/06
                
                
                —
                
                —
                
                
                —
                
                104,242
                (6)(8)
                
                2,579,990Werner
      Lieberherr
                1/1/07
                
                $
                0
                
                $320,000
                
                $
                400,000
                
                —
                
                
                —11/15/07
                
                
                —
                
                —
                
                
                —
                
                16,340
                (9)
                
                700,00611/15/06
                
                
                —
                
                —
                
                
                —
                
                8,151
                (9)
                
                219,9957/5/06
                
                
                —
                
                —
                
                
                —
                
                18,340
                (9)
                
                419,986Robert
      A. Marchetti
                1/1/07
                
                $
                0
                
                $262,000
                
                $
                327,500
                
                —
                
                
                —11/15/07
                
                
                —
                
                —
                
                
                —
                
                7,645
                (10)
                
                327,51211/15/06
                
                
                —
                
                —
                
                
                —
                
                16,673
                (10)
                
                450,004Wayne
      Exton
                1/1/07
                
                $
                0
                
                $220,000
                
                $
                275,000
                
                —
                
                
                —11/15/07
                
                
                —
                
                —
                
                
                —
                
                6,419
                (9)
                
                274,99011/15/06
                
                
                —
                
                —
                
                
                —
                
                18,525
                (9)
                
                499,990








(1)
            The
      amounts shown represent the range of annual cash incentive opportunities
      for each named executive officer under our 2007 MIP. The MIP is described
      in detail above in our Compensation Discussion and
    Analysis.




(2)
            Since
      the amount of Non-Equity Incentive Plan awards are determined on the basis
      of a named executive officer’s contributions to the success of a segment
      or the Company, as applicable, no specific threshold can be
      determined.




15




(3)
            The
      restricted stock awards made on November 15, 2007 were approved by
      our Compensation Committee at its meeting on October 31, 2007. This
      process is consistent with our policy of having the dollar value of annual
      grants of restricted stock to our employees reviewed and approved by our
      Compensation Committee at a meeting in the third or fourth quarter and
      having the grants made effective as of November 15th
      of each year (or if November 15th
      is not a business day, the first business day thereafter). The number of
      shares of restricted stock granted is equal to the dollar value approved
      by our Compensation Committee divided by the closing price of our common
      stock on the date of grant. All grants of restricted stock are made
      pursuant to our 2005 Long-Term Incentive
Plan.




(4)
            The
      amounts shown represent the SFAS 123R fair value determined as of the date
      of grant. For more information about our adoption of SFAS 123R and how we
      value stock-based awards (including assumptions made in such valuation),
      refer to Note 12 to our audited financial statements for the fiscal year
      ended December 31, 2007 included in our annual report on
      Form 10-K filed with the Securities and Exchange Commission on
      February 20, 2008.




(5)
            Twenty-five
      percent of the shares of restricted stock vests on each of the first,
      second, third and fourth anniversaries of the date of grant provided that
      Mr. Khoury is employed on the applicable vesting date. Upon
      Mr. Khoury’s termination due to death or disability or a termination
      by us for any reason, all unvested shares of restricted stock will vest
      immediately. In addition, upon a change of control of our Company prior to
      vesting, all unvested shares of restricted stock will immediately vest in
      full.




(6)
            As
      more fully described above in our Compensation Discussion and Analysis, in
      order to assist in the retention of and to further incentivize our CEO and
      CFO and in lieu of the change of control benefits which were eliminated
      from their contracts with us, on July 31, 2006, we granted our CEO an
      award of 387,900 shares of restricted stock, and we granted our CFO
      104,200 shares of restricted stock.




(7)
            On
      December 27, 2005, Mr. Baughan was granted 75,000 stock options
      in connection with his promotion to President and Chief Operating Officer
      effective as of December 31, 2005. The value of these stock options,
      determined in accordance with the provisions of SFAS 123R was $625,050. As
      more fully described above in our Compensation Discussion and Analysis,
      the vesting of these and other outstanding stock options was accelerated
      on December 31, 2005.




(8)
            Twenty-five
      percent of the shares of restricted stock vests on each of the first,
      second, third and fourth anniversaries of the date of grant provided that
      Mr. McCaffrey is employed on the applicable vesting date. Upon
      Mr. McCaffrey’s termination due to death or disability, a termination
      by us without cause or Mr. McCaffrey’s resignation for good reason
      (each as described below under the heading “Employment, Severance and
      Change of Control Agreements”) all unvested shares of restricted stock
      will vest immediately. In addition, upon a change of control of our
      Company prior to vesting, all unvested shares of restricted stock will
      immediately vest in full.




(9)
            Twenty-five
      percent of the shares of restricted stock vests on each of the first,
      second, third and fourth anniversaries of the date of grant. If the named
      executive officer’s employment terminates for any reason other than death
      or disability prior to the applicable vesting date, all unvested shares
      will be immediately cancelled. Upon a named executive officer’s
      termination due to death or disability, all unvested shares of restricted
      stock will immediately vest. In addition, upon a change of control of our
      Company prior to vesting, all unvested shares of restricted stock will
      immediately vest in full.




(10)
            Twenty-five
      percent of the shares of restricted stock granted in 2007 vest on the
      first, second, third and fourth anniversary of the date of
      grant.  Fifty percent of the shares of restricted stock granted
      in 2006 vest on each of the first and second anniversaries of the date of
      grant. If Mr. Marchetti’s employment terminates for any reason other
      than death or disability prior to the applicable vesting date, all
      unvested shares will be cancelled immediately. Upon Mr. Marchetti’s
      termination due to death or disability, all unvested shares of restricted
      stock will immediately vest. In addition, upon a change of control of our
      Company prior to vesting, all unvested shares of restricted stock will
      immediately vest in full.







Outstanding
Equity Awards at Fiscal Year-End Table






The
following table provides information concerning outstanding equity awards held
by each named executive officer at December 31, 2007.




Option
      Awards
            
            Stock
      AwardsName
            
            Number of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            
            Option Exercise
              Price
              ($)
            
            Number of
              Shares or Units
              of Stock That
              Have Not Vested
              (#)(1)
            
            Market Value of
              Shares or Units
              of Stock That
              Have Not Vested
              ($)(2)(a)
            
            (b)
            
            (e)
            
            (g)
            
            (h)Amin
      J. Khoury
            
            
            —
            
            
            
            --
            
            
            
            382,063
            
            
            $
            20,211,133Michael
      B. Baughan
            
            
            —
            
            
            
            --
            
            
            
            36,480
            
            
            
            1,929,792Thomas
      P. McCaffrey
            
            
            —
            
            
            
            --
            
            
            
            113,108
            
            
            
            5,983,413Wayne
      Exton
            
            
            —
            
            
            
            --
            
            
            
            20,312
            
            
            
            1,074,505Werner
      Lieberherr
            
            
            —
            
            
            
            --
            
            
            
            36,208
            
            
            
            1,915,403Robert
      A. Marchetti
            
            
            —
            
            
            
            --
            
            
            
            15,981
            
            
            
            845,395











(1)
            For
      Messrs. Khoury, Baughan, McCaffrey, Exton and Lieberherr, 25% of the
      shares of restricted stock will vest on each of the first, second, third
      and fourth anniversaries of the date of grant provided that the executive
      is employed on the applicable vesting date. For Mr. Marchetti, 8,336
      shares of restricted stock vest on November 15, 2008 provided that he is
      employed on that date and the balance of 7,645 shares vest ratably over a
      four year period.  The vesting provisions upon a termination of
      employment or a change of control are set forth in footnotes 5, 8, 9 and
      10 to the Grants of Plan-Based Awards Table
  above.  (2)
              The
      market value of unvested shares is based on the closing share price of
      $52.90 at December 31, 2007.  The market value of unvested
      shares based on the closing share price of $34.95 at March 31, 2008 for
      Messrs. Khoury, Baughan, McCaffrey, Exton, Lieberherr and Marchetti was
      $13,353,102, $1,274,976, $3,953,125, $709,904, $1,265,470 and $558,536,
      respectively.




16




Option
Exercises and Stock Vested Table






The
following table provides information concerning the exercise of stock options
and vesting of stock awards held by each named executive officer during the
years ended December 31, 2007 and 2006.




Option Awards
            
            Stock AwardsName
            
            Number of
              Shares
              Acquired
              on Exercise
            
            Value Realized
              on Exercise
            
            Number of
              Shares
              Acquired
              on Vesting
            
            Value Realized
              on Vesting(a)
            
            (b)(#)
            
            (c)($)
            
            (d)(#)
            
            (e)($)Amin
      J. Khoury
            2007
            —
            
            
            —
            
            
            113,717
            
            $
            4,650,5442006
            518,333
            
            $
            9,630,789
            
            
            —
            
            
            —Michael
      B. Baughan
            2007
            75,000
            
            
            1,470,000
            
            
            8,152
            
            $
            349,2322006
            213,750
            
            
            3,999,289
            
            
            —
            
            
            —Thomas
      P. McCaffrey
            2007
            —
            
            
            —
            
            
            34,027
            
            $
            1,398,2972006
            258,333
            
            
            4,600,859
            
            
            —
            
            
            —Wayne
      Exton
            2007
            20,000
            
            
            260,400
            
            
            4,632
            
            $
            198,4352006
            —
            
            
            —
            
            
            —
            
            
            —Werner
      Lieberherr
            2007
            —
            
            
            —
            
            
            6,623
            
            $
            279,4202006
            —
            
            
            —
            
            
            —
            
            
            —Robert
      A. Marchetti
            2007
            22,612
            
            
            475,124
            
            
            8,337
            
            $
            357,1572006
            26,554
            
            
            560,253
            
            
            —
            
            
            —





Nonqualified
Deferred Compensation




All of our
employees, including our named executive officers, participate in our qualified
401(k) defined contribution plan. Pursuant to this plan, we match 100% of
the first 3% and 50% of the next 2% of employee contributions up to $9,000. We
do not provide any non qualified deferred compensation benefits to any of our
employees.




Employment,
Severance and Change of Control Agreements




We have
entered into employment agreements with each of our named executive officers as
described below.




Amin J.
Khoury.Mr. Khoury is party to an employment agreement with us,
amended as of April 27, 2007, pursuant to which he serves as our Chairman
and Chief Executive Officer, or CEO. The agreement has a rolling three-year term
so that the term of the agreement extends through three years from any date as
of which the term is being determined unless terminated earlier. The agreement
provides that Mr. Khoury will receive a base salary of $1,001,200 per year
(as of July 1, 2007), subject to cost of living and other increases as
determined from time to time by our Board of Directors. Mr. Khoury is also
entitled to participate in our MIP and to receive an annual cash incentive as
determined by the Compensation Committee. During the period from January 1, 2007
through June 30, 2007, our CEO’s annual base salary was $936,000.  On
July 1, 2007 his base salary was adjusted to $1,001,200.  Mr. Khoury
received a bonus of $1,001,200 for 2007. Mr. Khoury is also eligible to
participate in all benefit plans (other than retirement plans) generally
available to our executives and we provide him with an automobile and insurance
at a cost of approximately $40,000 per year.




17




General
Provisions


Our
agreement with Mr. Khoury provides that we will make an annual retirement
contribution to a grantor trust established for his benefit in an amount equal
to 1.5 times his annual base salary. These contributions are taxed currently to
our CEO and reported in the “All Other Compensation” column of the Summary
Compensation Table above. We fund these contributions, less applicable personal
income taxes, into this grantor trust on a quarterly basis in arrears. Changes
in base salary are reflected in the quarterly contributions on a cumulative
basis in the quarter following a change in base salary. Previously taxed
contributions held in the trust will be distributed in a lump-sum to our CEO or
his beneficiary, as the case may be, as a result of a change of control or any
termination of his employment, or as otherwise provided pursuant to the terms of
this grantor trust. Our CEO’s employment agreement provides that he and his
spouse will receive medical, dental and health benefits (including benefits
under our executive medical reimbursement plan) for the remainder of their lives
notwithstanding any termination of his employment for any reason.




Pursuant
to the agreement, if our CEO’s employment with us terminates for any reason
other than death or incapacity, we will enter into a consulting arrangement with
him under which he has agreed to provide strategic planning, financial planning,
merger and acquisition advice and consultation to us, as well as periodic advice
and consultation regarding key staffing and recruitment issues and such other
services as we may mutually agree upon. The consulting arrangement will extend
for a period of five years following our CEO’s termination of employment. During
the duration of his consulting agreement, our CEO will be entitled to a
consulting fee equal to 15% of his salary in effect on the day of his
termination of employment and will also be entitled to an office, an assistant,
travel benefits under our travel policy described above in our Compensation
Discussion and Analysis, automobile benefits and reimbursement for reasonable
out-of-pocket business expenses. Unvested restricted stock awards will continue
to vest in accordance with the award agreement for so long as Mr. Khoury is
providing consulting services under this agreement. During the five-year term,
the consulting arrangement may not be amended or terminated without the prior
written consent of us and Mr. Khoury. In the event of our CEO’s death or
disability during the consulting period, he will receive a lump-sum payment
equal to the fees for the then remaining term of the consulting
period.




In the
event that any payments or other benefits made to our CEO are subject to excise
tax as an “excess parachute payment” under the Internal Revenue Code, he will
receive an excise tax “gross-up” payment. Similarly, the agreement provides him
with a tax “gross-up” payment with respect to tax obligations under
Section 409A of the Internal Revenue Code. Incidental costs and expenses
incurred in respect of certain accounting tasks and procedures associated with
these tax matters will be paid by us.




During the
term of his employment agreement and consulting agreement (if applicable) and
for a period of two years thereafter, our CEO may not compete with us or solicit
our employees. In addition, our CEO is subject to a confidentiality provision
that lasts indefinitely.




During
2005, we entered into a death benefit agreement with our CEO that provides for
the payment of a $3 million death benefit to his named beneficiary upon his
death during or after his employment. We have fully funded this death benefit
with a single payment whole life insurance policy.




Specific
Termination and Change of Control Provisions




In
addition to the benefits described above, our CEO will be entitled to receive
the following benefits and payments upon the occurrence of the following
specified events:




Voluntary Termination.If our
CEO terminates his employment with us at any time and for any reason, he is
entitled to a lump-sum severance payment amount equal to one times his annual
base salary.




Involuntary Termination.If
our CEO’s employment with us is terminated by us for any reason other than
death, incapacity or in connection with the closing of a Change of Control
transaction, he is entitled to a lump-sum payment equal to the salary he would
have received had he remained employed through the remainder of the
then-existing term, the distribution of the funds in his grantor trust
(including a final contribution determined as if he remained employed for three
years following the termination of his employment), accelerated vesting of all
outstanding equity awards, with stock options remaining exercisable for the
remainder of their applicable terms, and a lump-sum severance amount equal to
one times his annual base salary.




18




Change of Control.If a
change of control occurs, our CEO will be entitled to the immediate vesting of
all equity awards with any stock options remaining exercisable for the remainder
of their applicable terms. In addition, if his employment terminates in
connection with the closing of a Change of Control transaction, our CEO will be
entitled to a lump-sum severance amount equal to one times his annual base
salary. If our CEO’s employment is not terminated in connection with the closing
of a Change of Control transaction, his employment agreement will remain in
effect and upon a subsequent termination of employment he will be entitled to
the payments and benefits set forth in his employment agreement. In the event of
a dispute regarding the benefits payable to our CEO upon a change of control, we
will pay or reimburse him for all related legal expenses.




Death.In the event of our
CEO’s death, his designee will receive an amount equal to the salary that would
have been due to him if he remained employed through the third anniversary of
his death. In addition, our CEO’s designee will be entitled to the immediate
vesting of all equity awards with any stock options remaining exercisable for
the remainder of their applicable terms.




Incapacity.In the event of
our CEO’s termination of employment due to his incapacity, he will receive an
annual amount equal to two times the base salary that he would have received had
he remained employed through the third anniversary of his termination of
employment, payable in equal bi-monthly installments. In addition, our CEO will
be entitled to the immediate vesting of all equity awards with any stock options
remaining exercisable for the remainder of their applicable terms.




Michael B.
Baughan.Mr. Michael B. Baughan, our President and Chief Operating
Officer, or COO, is party to an employment agreement with us that was amended as
of April 27, 2007. The agreement has a rolling three-year term so that the
term extends through three years from any date as of which the term is being
determined unless terminated earlier. Under the terms of the agreement, our COO
will receive an annual salary of $514,000 per year (as of July 1, 2007),
subject to adjustment from time to time by our Board of Directors, and he may
receive an annual incentive bonus under our MIP at the discretion of our Board
of Directors, which may not (except under special circumstances at the
discretion of the Board of Directors) exceed 120% of his then current salary.
Our COO is also entitled to an automobile allowance of $1,100 per month and may
participate in all benefit plans, programs and arrangements generally made
available to our executives. During the period from January 1, 2007 through June
30, 2007, Mr. Baughan’s annual base salary was $485,000.  Mr.
Baughan’s base salary was adjusted to $514,000 on July 1, 2007, and he received
a bonus of $400,000 for fiscal 2007.




General
Provisions




Our
agreement with Mr. Baughan provides that, beginning on April 27, 2007,
we will make an annual retirement contribution to a rabbi trust established for
his benefit in an amount equal to 50% of his average annual salary for the
preceding three-year period. The retirement contributions will vest in full on
April 26, 2012 provided that Mr. Baughan remains employed through this
date. Vesting of the accrued retirement contributions will accelerate upon the
termination of Mr. Baughan’s employment due to his death, incapacity or by
us without cause. We fund these contributions into this rabbi trust on a
quarterly basis in arrears. Changes in base salary are reflected in the
quarterly contributions in the quarter following a change in base salary. Vested
funds held in the trust will be distributed in a lump-sum to our COO or his
beneficiary, as the case may be, as a result of a change of control (as defined
under Section 409A of the Internal Revenue Code) or any other termination
of his employment, as otherwise provided pursuant to the terms of the rabbi
trust.




In the
event that any payments or other benefits made to our COO are subject to excise
tax as an “excess parachute payment” under the Internal Revenue Code, our COO
will receive an excise tax “gross-up” payment. Similarly, the agreement provides
our COO with a tax “gross-up” payment with respect to tax obligations under
Section 409A of the Internal Revenue Code. Incidental costs and expenses
incurred in respect of certain accounting tasks and procedures associated with
these tax matters will be paid by us.




On
April 27, 2007, we entered into a death benefit agreement with our COO that
provides for the payment of a $1.5 million death benefit to his named
beneficiary upon his death during or after his employment. We have fully funded
this death benefit with a single payment whole life insurance
policy.




Our COO is
also party to the Company’s standard proprietary information and confidentiality
agreement.




19




Specific
Termination and Change of Control Provisions




Involuntary Termination.In
the event our COO’s employment is terminated by us without cause (as defined in
the employment agreement), he will receive a lump-sum severance amount equal to
the salary he would have received had he remained employed through the remainder
of his then-existing term. He will also be entitled to the immediate vesting
of his accrued retirement benefits as described above. In addition, all
outstanding equity awards will immediately vest with any stock options remaining
exercisable for the remainder of their applicable terms.




Change of Control. If a
change of control occurs (as defined under Section 409A of the Code), our
COO will be entitled to the immediate vesting of all equity awards with any
stock options remaining exercisable for the remainder of their applicable term.
In addition, if, in connection with the change of control his employment is
terminated by us without cause, our COO will be entitled to a lump-sum amount
equal to three times his salary, accelerated vesting of his accrued retirement
benefits as described above and two year’s continuation of his medical, dental
and health benefits to the extent permitted under Section 409A of the
Internal Revenue Code.




Death. In the event of our
COO’s termination due to his death, his designee will receive a lump-sum payment
equal to the salary that would have been due to him had he remained employed
through the third anniversary of his death. Our COO’s designee will also receive
accelerated vesting of his accrued retirement benefits as described above and
accelerated vesting of all outstanding equity awards with any stock options
remaining exercisable for the remainder of their applicable terms. In addition,
our COO’s eligible dependents will receive two year’s continuation of his
medical, dental and health benefits to the extent permitted under
Section 409A of the Internal Revenue Code.




Incapacity.In the event of
our COO’s termination due to his incapacity, he will receive the salary and
automobile allowance that he would have received had he remained employed
through the third anniversary of his termination. In addition, our COO and his
eligible dependants will be entitled to receive, for two years following his
termination due to his incapacity, continuation of medical, dental and health
benefits to the extent permitted under Section 409A of the Internal Revenue
Code. As a result of such a termination, our COO will also be entitled to
accelerated vesting of his accrued retirement benefits as described above and
accelerated vesting of all outstanding equity awards with any stock options
remaining exercisable for the remainder of their applicable terms.




Resignation; Termination for
Cause. If, at any time, our COO resigns his employment with us or his
employment is terminated by us for cause he will not be entitled to any further
compensation or benefits other than as set forth in any applicable plans,
programs and arrangements.




Thomas
P. McCaffrey.Mr. Thomas P. McCaffrey is party to an employment agreement with us,
amended and restated as of April 27, 2007, pursuant to which he serves as
our Senior Vice President and Chief Financial Officer, or CFO. The agreement has
a rolling three-year term so that the term extends through three years from any
date as of which the term is being determined unless terminated earlier. The
agreement provides that our CFO will receive a base salary of $471,500 per year
(as of July 1, 2007), subject to cost of living and other increases as
determined from time to time by our Board of Directors. Our CFO is also entitled
to participate in our MIP and to receive a discretionary annual cash incentive.
Our CFO is also eligible to participate in all benefit plans (other than
retirement plans) available to our executives and to receive an automobile
allowance of $1,100 per month. During the period from January 1, 2007 through
June 30, 2007, our CFO’s annual base salary was $445,000.  Mr.
McCaffrey’s base salary was adjusted to $471,500 on July 1, 2007 and he received
a bonus of $430,000 for fiscal 2007.




General
Provisions




Our
agreement with Mr. McCaffrey provides that we will make an annual
retirement contribution to a grantor trust established for his benefit in an
amount equal to one-half of his average annual salary for the preceding three
year period. These contributions are taxed currently to our CFO and reported in
the “All Other Compensation” column” of the Summary Compensation Table above. We
fund these contributions less applicable personal income taxes, into this
grantor trust on a quarterly basis in arrears. Changes in base salary are
reflected in the quarterly contributions in the quarter following a change in
base salary. Previously taxed and undistributed funds held in the trust will be
distributed in a lump-sum to the executive or his beneficiary, as the case may
be, as a result of a change of control (as defined in his employment agreement)
or any other termination of his employment, as otherwise provided pursuant to
the terms of this grantor trust.




In the
event that any payments or other benefits made to him are subject to excise tax
as an “excess parachute payment” under the Internal Revenue Code, our CFO will
receive an excise tax “gross-up” payment. Similarly, the agreement provides him
with a tax “gross-up” payment with respect to tax obligations under
Section 409A of the Internal Revenue Code. Incidental costs and expenses
incurred in respect of certain accounting tasks and procedures associated with
these tax matters will be paid by us.




20




During
2005, we entered into a death benefit agreement with our CFO that provides for
the payment of a $1 million death benefit to his named beneficiary upon his
death during or after his employment. We have fully funded this death benefit
with a single payment whole life insurance policy.




Specific
Termination and Change of Control Provisions




In
addition to the benefits described above, our CFO will be entitled to receive
the following benefits and payments upon the occurrence of the following
specified events:




Involuntary Termination. In
the event our CFO’s employment is terminated by us without cause or by our CFO
for good reason (as each term is defined in the employment agreement), other
than in connection with the closing of a change of control transaction, he will
receive a lump-sum severance amount equal to two times his annual salary, plus
the salary he would have received had he remained employed through the then
existing term of the agreement. He will also receive distribution of funds in
his retirement trust (including a final contribution determined as if he
continued employment for three years following the termination). As a result of
such a termination, he will also be entitled to the immediate vesting of all
equity awards with any stock options remaining exercisable for the remainder of
their applicable terms.




Change of Control. If a
change of control occurs, our CFO will be entitled to the immediate vesting of
all equity awards with any stock options remaining exercisable for the remainder
of their applicable term. In addition, if, in connection with the closing of a
Change of Control transaction, our CFO’s employment is terminated by us without
cause or by our CFO for good reason, our CFO will be entitled to a lump-sum
amount equal to two times his annual base salary. If our CFO’s employment is not
terminated in connection with the closing of a Change of Control transaction,
his employment agreement will remain in effect and upon a subsequent termination
of employment he will be entitled to the payments and benefits set forth in the
agreement. In the event of a dispute regarding the benefits payable to our CFO
upon a change of control, we will pay or reimburse him for all related legal
expenses.




Death. In the event of our
CFO’s termination due to his death, his designee will receive a lump-sum payment
equal to the salary that would have been due to him had he remained employed
through the third anniversary of his death. Our CFO’s eligible dependants will
also be entitled to receive, for two years following his death, continuation of
medical, dental and health benefits to the extent permitted under
Section 409A of the Internal Revenue Code. In addition, our CFO will be
entitled to the immediate vesting of all equity awards with any stock options
remaining exercisable for the remainder of their applicable terms.




Incapacity. In the event of
our CFO’s termination due to his incapacity, he will receive the salary and
automobile allowance that he would have received had he remained employed
through the third anniversary of his termination of employment, payable in equal
bi-monthly installments. In addition, our CFO will be entitled to the immediate
vesting of all equity awards with any stock options remaining exercisable for
the remainder of their applicable terms. Our CFO and his eligible dependants
will also be entitled to receive, for two years following his termination due to
his incapacity, continuation of medical, dental and health benefits to the
extent permitted under Section 409A of the Internal Revenue
Code.




Retirement; Resignation Without Good
Reason. If our CFO retires or resigns without good reason at any time he
is entitled to a lump-sum severance payment equal to one times his annual base
salary.




Termination for Cause. If, at
any time, our CFO is terminated by us for cause, he will not be entitled to any
further compensation and benefits other than as set forth in any applicable
plans, programs or arrangements.




Wayne
Exton. Mr. Exton is party to an employment agreement dated
May 1, 2006 that is automatically renewed for additional one-year terms
unless either we or Mr. Exton gives the other party at least 30 days’
written notice prior to the then-applicable expiration date. Under the terms of
his employment agreement Mr. Exton receives an annual salary of $258,000
per year (as of January 1, 2007), subject to adjustment from time to time.
He is also eligible to receive a discretionary incentive bonus under our MIP.
Mr. Exton is entitled to an automobile allowance of $1,100 per month and
may participate in all benefits plans, programs and arrangements generally made
available to our executive officers. During the period from January 1, 2007
through June 30, 2007, Mr. Exton’s annual base salary was
$258,000.  Mr. Exton’s base salary was adjusted to $275,000 on July 1,
2007 and he received a bonus of $175,000 for fiscal 2007.




21




Upon his
death, Mr. Exton is entitled to an amount equal to the salary that he would
have received had he remained employed through the remainder of the
then-application term. In the event of the termination of Mr. Exton’s
employment due to his incapacity, he will continue to receive his then current
salary and benefits through the expiration date of the then-applicable term of
the agreement, subject to mitigation from alternative employment. In addition,
upon a termination of his employment due to death or disability, Mr. Exton
will be entitled to the immediate vesting of all outstanding shares of
restricted stock.




If we fail
to extend the term of Mr. Exton’s employment for at least one year beyond
the then-applicable expiration date at his then-current salary and otherwise at
the same terms and conditions (other than a termination for cause), we must
continue to pay Mr. Exton his salary and medical and dental benefits for a
period equal to the lesser of 12 months and the date on which he accepts
alternative employment. Upon a termination of Mr. Exton’s employment by us
for cause or Mr. Exton’s resignation for any reason, he will not be
entitled to any further compensation or benefits.




In the
event that following a change of control, Mr. Exton resigns for good reason
or we terminate his employment without cause, he will be entitled to receive a
lump-sum payment equal to one times his base salary and continuation of his base
salary and benefits for the then-remaining term of the agreement. In addition,
upon a change of control, Mr. Exton will be entitled to the immediate
vesting of all outstanding shares of restricted stock.




Werner
Lieberherr.Mr. Lieberherr is party
to an employment agreement dated July 5, 2006 that is automatically renewed
for additional one-year terms unless either we or Mr. Lieberherr gives the
other party at least 90 days’ written notice prior to the then-applicable
expiration date. Under the terms of his employment agreement,
Mr. Lieberherr receives an annual salary of $332,000 per year (as of
January 1, 2007), subject to adjustment from time to time. He is also
eligible to receive an annual discretionary incentive bonus under our MIP.
Mr. Lieberherr is entitled to an automobile allowance of $1,100 per month
and may participate in all benefits plans, programs and arrangements generally
made available to our executive officers. During the period from January 1, 2007
through June 30, 2007, Mr. Lieberherr’s annual base salary was $332,000.
Mr. Lieberherr’s base salary was adjusted to $400,000 on July 1, 2007 and he
received a bonus of $250,000 for fiscal 2007. In all other respects the terms
and conditions of Mr. Lieberherr’s employment agreement are substantially
similar to those of Mr. Exton’s agreement.




Robert A.
Marchetti.Mr. Marchetti is party
to an employment agreement dated February 26, 2001 that is automatically
renewed for additional one-year terms unless either we or Mr. Marchetti
gives the other party at least 90 days’ written notice prior to the
then-applicable expiration date. Under the terms of his employment agreement,
Mr. Marchetti receives an annual salary of $309,000 per year (as of
January 1, 2007), subject to adjustment from time to time.
Mr. Marchetti is also eligible to receive a discretionary annual incentive
bonus of up to 100% of his salary under our MIP. Mr. Marchetti is also
entitled to an automobile allowance of $1,100 per month and may participate in
all benefits plans, programs and arrangements generally made available to our
executive officers. During the period from January 1, 2007 through June 30,
2007, Mr. Marchetti’s annual base salary was $309,000.  Mr.
Marchetti’s base salary was adjusted to $327,500 on July 1, 2007 and he received
a bonus of $327,500 for fiscal 2007. In all other respects the terms and
conditions of Mr. Marchetti’s employment agreement are substantially
similar to those of Mr. Exton’s agreement.




Potential
Payments upon a Termination or Change of Control




The tables
that follow summarize the potential compensation that would have been payable to
each of our named executive officers as a result of a termination of the named
executive officer’s employment or a change of control. The tables below assume
that the named executive officer’s employment terminated on December 31,
2007 and, if applicable, that the change of control occurred during 2007. In
addition, for purposes of the calculations, we assume that the fair market value
of our common stock was $52.90 which was the closing price of our common stock
as quoted on the NASDAQ National Market on December 31, 2007.




The tables
below do not include the value of any vested and non-forfeitable payments or
other benefits that the named executive officers would have been entitled to
receive on December 31, 2007, regardless of whether a termination event
occurred on such date (e.g., benefits the executive would have received even if
he or she voluntarily resigned on December 31, 2007), including the
following:




●
            Defined
      Contribution Plans.Each of the named
      executive officer’s account balances under the 401(k) Plan, including
      any Company contributions, were fully vested as of December 31,
      2007.




22




●
              Vested
      Equity Awards. Once vested, options
      and restricted stock are not forfeitable. The number and fair market value
      of all options and shares of restricted stock that were vested as of
      December 31, 2007 are set forth above in the Outstanding Equity
      Awards at Fiscal Year End Table and the Option Exercises and Stock Vested
      Table.●
              Life
      Insurance. Each of the named
      executive officers is entitled to receive Company paid group term life
      insurance of one times his or her base salary. This plan is applicable to
      all of our employees on a nondiscriminatory basis.●
              Death
      Benefit Agreements. We have entered into
      death benefit agreements with each of Messrs. Khoury, Baughan and
      McCaffrey pursuant to which their designated beneficiary will receive a
      death benefit of $3,000,000, $1,500,000 and $1,000,000, respectively, upon
      their death at any time during employment or following the termination of
      their employment.  We have funded these amounts with a single
      payment whole life insurance policy.●
              Executive
      Medical Benefits.Pursuant to his
      employment agreement, Mr. Khoury and his spouse are entitled to
      receive medical benefits for the remainder of their lives regardless of
      the reason for termination of employment.●
              Consulting
      Arrangement. Pursuant to his
      employment agreement, Mr. Khoury has agreed to provide consulting
      services to us for a period of five years following his termination
      of employment for any reason. In consideration of these consulting
      services, we have agreed to pay Mr. Khoury certain fees and benefits,
      including continued vesting of all outstanding equity awards as detailed
      above under the heading “Employment, Severance and Change of Control
      Agreements."




The
amounts shown in the table below represent summary estimates of the payments to
be made upon each specified termination event and do not reflect any actual
payments to be received by the named executive officers.




Change of ControlName
              
              Compensation
      Element
              
              Voluntary
      Resignation
              
              Incapicity
              
              Death
              
              InvoluntaryTermination
              
              Involuntary
                Termination
                Upon the
                ClosingDate
              
              Involuntary
                Termination
                (Assuming
                Payments
                are Subjectto
                Section 280G)
              
              Remain
                Employed
                Beyond
                280GPeriodAmin J.
      Khoury
              
              Severance
      Payment
              
              $
              1,001,200
              
              $
              0
              
              $
              0
              
              $
              1,001,200
              
              $
              1,001,200
              
              $
              1,001,200
              
              $
              0Lump-sum
      ofSalary
      for Contract Term
              
              
              0
              
              
              6,007,200
              
              
              3,003,600
              
              
              3,003,600
              
              
              0
              
              
              3,003,600
              
              
              0Accrued
      Cash Incentive
      Compensation
              
              
              0
              
              
              1,001,200
              
              
              1,001,200
              
              
              1,001,200
              
              
              1,001,200
              
              
              1,001,200
              
              
              0Retirement
      Contribution
              
              
              0
              
              
              0
              
              
              0
              
              
              4,505,000
              
              
              0
              
              
              4,505,400
              
              
              0Total
      Cash Payments
              
              $
              1,001,200
              
              $
              7,008,400
              
              $
              4,004,800
              
              $
              9,511,400
              
              $
              2,002,400
              
              $
              9,511,400
              
              $
              0Acceleration
      of Unvested Equity Awards(a)
              
              
              0
              
              
              20,211,133
              
              
              20,211,133
              
              
              20,211,133
              
              
              20,211,133
              
              
              20,211,133
              
              
              20,211,133Tax
      Gross-up
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0TOTAL
              
              $
              1,001,200
              
              $
              27,219,533
              
              $
              24,215,933
              
              $
              29,722,533
              
              $
              22,213,533
              
              $
              29,722,533
              
              $
              20,211,133




(a) The value of
the Awards based on a March 31, 2008 closing price of $34.95 was
$13,353,102.






Change of ControlName
              
              CompensationElement
              
              Voluntary
      Resignation/
                Termination forCause
              
              Incapacity
              
              Death
              
              Termination
                WithoutCause
              
              Resignation/
                Remain
                Employed
              
              Termination
                WithoutCauseMichael B.
      Baughan
              
              Lump-sumof
      Salary forContract
      Term
              
              $
              0
              
              $
              1,542,000
              
              $
              1,542,000
              
              $
              1,542,000
              
              $
              0
              
              $
              1,542,000Accrued
      CashIncentive
      Compensation
              
              
              0
              
              
              400,000
              
              
              400,000
              
              
              400,000
              
              
              0
              
              
              400,000Benefit
      Continuation
              
              
              0
              
              
              45,360
              
              
              5,760
              
              
              5,760
              
              
              0
              
              
              5,760Retirement
      Contribution
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Total
      Cash Payments
              
              $
              0
              
              $
              1,987,360
              
              $
              1,947,760
              
              $
              1,947,760
              
              $
              0
              
              $
              1,947,760Accelerationof
      UnvestedEquity
      Awards(b)
              
              
              0
              
              
              1,929,792
              
              
              1,929,792
              
              
              1,929,792
              
              
              1,929,792
              
              
              1,929,792Tax
      Gross-up
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0TOTAL
              
              $
              0
              
              $
              3,917,152
              
              $
              3,877,552
              
              $
              3,877,552
              
              $
              1,929,792
              
              $
              3,877,552




(b) The value of
the Awards based on a March 31, 2008 closing price of $34.95 was
$1,274,976.




23




Change
      of ControlName
              
              CompensationElement
              
              Death
      or Incapacity
              
              Resignation
      Without Good Reason/Retirement
              
              Resignation
                With GoodReason/
                Termination
      Without Cause
              
              Termination
      for
                Cause
              
              Involuntary
                Termination
                Upon the
                ClosingDate
              
              Involuntary
                Termination
                (Assuming
                Payments
                are Subject
                to Section 280G)
              
              Remain
                Employed
                Beyond
                280GPeriodThomas
      P. McCaffrey
              
              Severance
      Payment
              
              $
              0
              
              $
              471,500
              
              $
              943,000
              
              $
              0
              
              $
              943,000
              
              $
              943,000
              
              $
              0Lump
      Sum of Salary for Contract Term
              
              
              1,414,500
              
              
              0
              
              
              1,414,500
              
              
              0
              
              
              0
              
              
              1,414,500
              
              
              0Accrued
      Cash Incentive Compensation
              
              
              471,500
              
              
              0
              
              
              471,500
              
              
              0
              
              
              471,500
              
              
              471,500
              
              
              0Benefit
      Continuation
              
              
              146,102
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Retirement
      Contribution
              
              
              0
              
              
              0
              
              
              707,250
              
              
              0
              
              
              0
              
              
              707,250
              
              
              0Total
      Cash Payments
              
              $
              2,032,102
              
              $
              471,500
              
              $
              3,536,250
              
              $
              0
              
              $
              1,414,500
              
              $
              3,536,250
              
              $
              0Acceleration
      of Unvested Equity Awards(c)
              
              
              5,983,413
              
              
              0
              
              
              5,983,413
              
              
              0
              
              
              5,983,413
              
              
              5,983,413
              
              
              5,983,413Tax
      Gross-up
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0TOTAL
              
              $
              8,015,515
              
              $
              471,500
              
              $
              9,519,663
              
              $
              0
              
              $
              7,397,913
              
              $
              9,519,663
              
              $
              5,983,413




(c) The value of
the Awards based on a March 31, 2008 closing price of $34.95 was
$3,953,125.






Change of ControlName
              
              CompensationElement
              
              Voluntary
      Resignation/
                Termination forCause
              
              Incapacity
              
              Death
              
              Failure toRenew
                Agreement
      for at
                Least OneYear
              
              Termination
                WithoutCause
              
              RemainEmployedWayne
      Exton
              
              Severance
      Payment
              
              $
              0
              
              $
              0
              
              $
              0
              
              $
              275,000
              
              $
              275,000
              
              $
              0Lump
      Sum of Salary for Contract Term
              
              
              0
              
              
              90,411
              
              
              90,411
              
              
              0
              
              
              90,411
              
              
              0Accrued
      Cash Incentive Compensation
              
              
              0
              
              
              175,000
              
              
              175,000
              
              
              175,000
              
              
              175,000
              
              
              0Benefits
      for Contract Term
              
              
              0
              
              
              2,959
              
              
              0
              
              
              7,299
              
              
              7,299
              
              
              0Total
      Cash Payments
              
              $
              0
              
              $
              268,370
              
              $
              265,411
              
              $
              457,299
              
              $
              547,710
              
              $
              0Accelerated
      of Unvested Equity Awards(d)
              
              
              0
              
              
              1,074,505
              
              
              1,074,505
              
              
              0
              
              
              1,074,505
              
              
              1,074,505TOTAL
              
              $
              0
              
              $
              1,342,875
              
              $
              1,339,916
              
              $
              457,299
              
              $
              1,622,215
              
              $
              1,074,505




(d) The
value of the Awards based on a March 31, 2008 closing price of $34.95 was
$709,904.






Change of ControlName
            
            CompensationElement
            
            Voluntary
      Resignation/
              Termination forCause
            
            Incapacity
            
            Death
            
            Failure toRenew
                Agreementfor at Least OneYear
            
            Termination
              WithoutCause
            
            Remain
              EmployedWerner
      Lieberherr
            
            Severance
      Payment
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            400,000
            
            $
            400,000
            
            $
            0Lump
      Sum of Salary for Contract Term
            
            
            0
            
            
            202,740
            
            
            202,740
            
            
            0
            
            
            202,740
            
            
            0Accrued
      Cash Incentive Compensation
            
            
            0
            
            
            250,000
            
            
            250,000
            
            
            250,000
            
            
            250,000
            
            
            0Benefits
      for Contract Term
            
            
            0
            
            
            11,513
            
            
            0
            
            
            514
            
            
            11,513
            
            
            0Total
      Cash Payments
            
            $
            0
            
            $
            464,253
            
            $
            452,740
            
            $
            650,514
            
            $
            864,253
            
            $
            0Acceleration
      of Unvested Equity Awards(e)
            
            
            0
            
            
            1,915,403
            
            
            1,915,403
            
            
            0
            
            
            1,915,403
            
            
            1,915,403TOTAL
            
            $
            0
            
            $
            2,379,656
            
            $
            2,368,143
            
            $
            650,514
            
            $
            2,779,656
            
            $
            1,915,403





(e) The
value of the Awards based on a March 31, 2008 closing price of $34.95 was
$1,265,470.






Change of ControlName
              
              CompensationElement
              
              Voluntary
      Resignation/
                Termination forCause
              
              Incapacity
              
              Death
              
              Failure toRenew
                Agreement
      for at
                Least OneYear
              
              Termination
                WithoutCause
              
              Remain
                EmployedRobert
      Marchetti
              
              Severance
      Payment
              
              $
              0
              
              $
              0
              
              $
              0
              
              $
              327,500
              
              $
              327,500
              
              $
              0Lump
      Sum of Salary for Contract Term
              
              
              0
              
              
              51,144
              
              
              51,144
              
              
              0
              
              
              51,144
              
              
              0Accrued
      Cash Incentive Compensation
              
              
              0
              
              
              327,500
              
              
              327,500
              
              
              327,500
              
              
              327,500
              
              
              0Benefits
      for Contract Term
              
              
              0
              
              
              2,439
              
              
              0
              
              
              15,619
              
              
              4,501
              
              
              0Total
      Cash Payments
              
              $
              0
              
              $
              381,083
              
              $
              378,644
              
              $
              670,619
              
              $
              710,645
              
              $
              0Acceleration
      of UnvestedEquity
      Awards(f)
              
              
              0
              
              
              845,395
              
              
              845,395
              
              
              0
              
              
              845,395
              
              
              845,395TOTAL
              
              $
              0
              
              $
              1,226,478
              
              $
              1,224,039
              
              $
              670,619
              
              $
              1,556,040
              
              $
              845,395




(f) The
value of the Awards based on a March 31, 2008 closing price of $34.95 was
$558,536.




24


Compensation
of Directors
   Directors
who are employees of the Company receive no additional compensation for serving
on the Company’s Board of Directors. Directors who are not employees of the
Company currently receive an annual retainer of $80,000. In addition, the chairs
of our Audit Committee, Compensation Committee, and Nominating and Corporate
Governance Committee also receive additional annual retainers of $10,000,
$10,000 and $5,000, respectively. $50,000 of the $80,000 annual board retainer
is paid in cash and the remaining $30,000 of the annual board retainer is paid
in shares of our common stock. Up to 100% of the directors' cash and/or stock
retainers may be deferred pursuant to our Non-Employee Directors Deferred Stock
Plan (“Directors Plan”), as amended.  During 2007 our directors
amended the Directors Plan to allow the deferral of up to 100% of their board
retainers.  Previously 50% of board retainers and 50% of committee
fees were deferred.  In connection with the implementation of this
amendment, in March 2008 distributions of previously earned and deferred shares
totaling 25,726, 25,435, and 24,818 shares were made to Messrs. Cowart,
Hamermesh and Schofield, respectively.  The deferred cash compensation
or shares of common stock are held in an account under the Directors Plan until
the termination of the director’s service and are paid in a lump-sum or in up to
five annual installments, as elected by the director. The directors are fully
vested in the deferred shares at all times but have no rights as stockholders
until distribution. In the event of a change of control (as defined in the
plan), the share accounts under the plan will be distributed to the directors in
a lump-sum.
  In
addition, each non-employee director receives $2,000 in cash for each committee
meeting attended.
  Non-employee
directors receive an annual grant of restricted stock with a fair market value
of $40,000. The grants are made pursuant to our 2005 Long-Term Incentive Plan
and vest on each of the first, second, third and fourth anniversaries of the
date of grant, provided the director remains in continuous service through the
applicable vesting period.
  We
reimburse our non-employee directors for reasonable business and travel expenses
incurred in connection with their service on the Board of Directors. In
addition, non-employee directors are eligible to participate in our health and
business travel accident insurance program. We do not provide our directors with
any other perquisites or special benefits for their service on our
Board.
  Director
compensation is determined by the Compensation Committee and approved by the
entire Board of Directors. In 2007, we engaged an independent third-party
consultant to review our non-employee directors’ compensation program to ensure
that our program is competitive with current market practices and trends, is
consistent with the principles of good governance and is aligned with the
interests of our shareholders. We used the same compensation comparison group
for both our executive officers’ market pay analysis and our non-employee
directors’ review, as described below in our Compensation Discussion and
Analysis. The review indicated that our non-employee directors’ total
compensation was somewhat below that of our peer group. As a result of that
review, and based on the Compensation Committee’s recommendation, the Board
increased the retainer by $20,000 to the current $80,000 retainer.
  Consulting
Arrangement with Robert J. Khoury.  Effective January 1, 2006,
upon his retirement as our President and Chief Executive Officer, Mr. Khoury
entered into a consulting agreement with us pursuant to which he agreed to
provide certain specified services to us during a six-year consulting period,
including sales and marketing services, assistance in developing and
implementing key customer strategies, advice and consultation regarding
operational matters of the Company and maintenance of key customer relationships
through periodic customer visits.  In consideration for the consulting
services, Mr. Khoury receives a consulting fee of $263,300 per calendar
year.  He is also entitled to an office, secretarial support and air
travel in accordance with past practices under our travel policy.  The
consulting agreement may not be amended, modified or terminated without the
prior written consent of both parties.  If Mr. Khoury ceases to
provide the consulting services as a result of his death or disability, he or
his estate will be entitled to a lump-sum payment equal to the consulting fees
payable through the remainder of the consulting period.  As a member
of the Board, Mr. Khoury is also entitled to receive all compensation paid to
our non-employee directors.




25
 The
following table summarizes the compensation paid to our non-employee directors
in 2007.
 Director
Compensation Table
   Name
              
              Fees Earned orPaid in
                Cash($)(1)
              StockAwards($)
                (2)(3)
              
              All Other
                Compensation($)
              
              Total($)(a)
              
              (b)
              (c)
              
              (g)
              
              (h)Charles
      L. Chadwell
              
              
              43,000
              
              7,527
              
              —
              
              50,527Jim
      C. Cowart
              
              
              48,000
              
              17,311
              
              —
              
              65,311Richard
      G. Hamermesh
              
              
              43,000
              
              17,311
              
              —
              
              60,311David
      C. Hurley(5)
              
              
              18,000
              
              17,509
              
              —
              
              35,509Robert
      J. Khoury
              
              
              35,000
              
              35,214(4)
              
              361,291(4)
              
              431,505Jonathan
      M. Schofield
              
              
              50,125
              
              17,311
              
              —
              
              67,436Arthur
      E. Wegner
              
              
              43,000
              
              7,527
              
              —
              
              50,527
   
 (1)
              Includes
      all cash retainers and meeting fees paid to our non-employee directors as
      described above.(2)
              The
      amounts reported in the “Stock Awards” column reflect the dollar amount,
      without reduction for risk of forfeiture, recognized for financial
      reporting purposes for the fiscal year ended December 31, 2007 of
      awards of restricted stock, calculated in accordance with the provisions
      of Financial Accounting Standards Board Statement of Financial Accounting
      Standards No. 123R “Share Based Payment,” or SFAS 123R. The amount
      set forth may include expenses attributable to equity awards granted
      during and before 2007. Assumptions made in the calculation of these
      amounts are included in Note 12 to our audited financial statements for
      the fiscal year ended December 31, 2007 included in our annual report
      on Form 10-K filed with the Securities and Exchange Commission on
      February 20, 2008.(3)
              Each
      member of our Board of Directors as of March 31, 2007 received
      (i) an aggregate of 1,262 shares of restricted stock during 2007
      which had a fair market value on the date of grant of $40,000, plus (ii)
      an aggregate number of shares of our common stock with a fair market value
      on the date of grant equal to ($30,000), plus (iii) as further
      discussed above, up to 100% of any retainers arising from their
      participation as a member of our Audit, Compensation or Nominating and
      Corporate Governance Committees.As
      of December 31, 2007, the aggregate number of deferred shares,
      unvested restricted stock awards and unexercised stock options pursuant to
      our Non-Employee Director Deferred Stock Plan held by each non-employee
      director was as follows:Deferred
                Shares
              
              
              Stock
                Awards(#)
              
              
              Stock
                Options(#)Charles
      L. Chadwell
              
              
              745
              
              
              
              1,261
              
              
              
              -0-Jim
      C. Cowart
              
              
              25,726
              
              
              
              2,456
              
              
              
              -0-Richard
      G. Hamermesh
              
              
              25,435
              
              
              
              2,456
              
              
              
              -0-Robert
      J. Khoury
              
              
              2,045
              
              
              
              2,455
              
              
              
              -0-Jonathan
      M. Schofield
              
              
              24,818
              
              
              
              2,456
              
              
              
              -0-Arthur
      E. Wegner
              
              
              745
              
              
              
              1,261
              
              
              
              -0-(4)
              The
      amount reported for Mr. Robert J. Khoury for 2007 includes payments
      under a consulting agreement he entered into upon his retirement of
      $263,300; personal use of the Company aircraft of $75,246; and executive
      medical coverage of $22,745.  During 2007 Mr. Robert J. Khoury
      also received 1,592 shares of our common stock as compensation for his
      service as a director during 2006.  However, because the shares
      were not issued until 2007, no compensation expense was recorded in 2006
      and instead compensation expense was recorded at the closing price on the
      date the shares were issued of $50.53 per share.  The aggregate
      incremental cost for the use of the Company aircraft for personal travel
      is calculated by multiplying the hourly variable cost rate for the
      aircraft by the hours used. The hourly variable cost rate
      includes costs such as fuel, oil, parking/landing fees, crew expenses
      and catering. The terms of our executive medical plan are set forth below
      in our Compensation Discussion and Analysis.(5)
              Mr.
      Hurley resigned from the Board of Directors effective April 27,
      2007.




26






ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS




EQUITY
COMPENSATION PLAN INFORMATION
  The
Company maintains the following equity compensation plans under which the
Company's common stock is authorized for issuance to employees and directors in
exchange for services: 2005 Long-Term Incentive Plan, Amended and Restated 1989
Stock Option Plan, 1991 Directors' Stock Option Plan, United Kingdom 1992
Employee Share Option Scheme, 1996 Stock Option Plan, 2001 Stock Option Plan,
2001 Directors' Stock Option Plan, 1994 Employee Stock Purchase Plan and
Non-Employee Directors Deferred Stock Plan. The United Kingdom 1992 Employee
Share Option Scheme and the 1996 Stock Option Plan have not been approved by the
Company's stockholders; the other plans have received the approval of the
Company's stockholders. As of April 12, 2006, the 2005 Long-Term Incentive Plan
is the only plan that is available for the issuance of future equity
awards.
  The
following table provides aggregate information regarding the shares of common
stock that may be issued upon the exercise of options, warrants and rights under
all of the Company's equity compensation plans as of December 31,
2007.




Plan Category
            
            (a)
              Number of Securities
              to be Issued Upon
              Exercise of
              Outstanding
              Options,Warrants andRights
            
            (b)
              Weighted Average
              Exercise Price of
              Outstanding Options,
              Warrants and Rights
            
            (c)
              Number of Securities
              Available for Future
              Issuance Under Equity
              Compensation Plans
              (Excluding Securities
              Reflected in
              Column (a)(1))Equity
      Compensation Plans approved by security holders(2):
            
            
            58,250
            
            
            $
            15.39
            
            
            
            1,722,319Equity
      Compensation Plans not approved by security holders(3):
            
            
            186,407
            
            
            $
            9.84
            
            
            
            0Total
            
            
            244,657
            
            
            $
            11.16
            
            
            
            1,722,319







(1)
            Numbers
      in this column also include rights granted pursuant to the 1994 Employee
      Stock Purchase Plan and rights under the Non-Employee Directors Deferred
      Stock Plan.




(2)
            Options
      were granted pursuant to the following plans: the 2005 Long-Term Incentive
      Plan, the Amended and Restated 1989 Stock Option Plan, the 1991 Directors’
      Stock Option Plan, the 2001 Stock Option Plan and the 2001 Directors’
      Stock Option Plan. The Company will not make any further awards under the
      2001 Stock Option Plan, the 2001 Directors’ Stock Option Plan, the Amended
      and Restated 1989 Stock Option Plan or the 1991 Directors’ Stock Option
      Plan.




(3)
            Options
      were granted pursuant to the following plans: United Kingdom 1992 Employee
      Share Option Scheme and the 1996 Stock Option Plan. The Company will not
      make any further awards under these
plans.






Non-Stockholder Approved
Plans. The material terms of the Company’s non-stockholder approved
equity compensation plans are summarized below.
  United Kingdom 1992 Employee Share
Option Scheme. The Board of Directors adopted the United Kingdom
1992 Employee Share Option Scheme on July 15, 1992. The UK plan is a United
Kingdom Inland Revenue approved plan that provides for the grant of share
options to key employees of the Company and its subsidiaries in the United
Kingdom.
  The
exercise price of the share options granted under the UK plan were determined by
the Board of Directors and are equal to 100% of the fair market value of the
Company’s common stock on the date of grant. Unless otherwise determined by the
Board of Directors, share options vest as to 25% of the underlying shares on the
date of grant and on each of the first, second and third anniversaries of the
date of grant and expire on the tenth anniversary of the date of grant. Upon an
optionee’s termination of employment with the Company or its subsidiaries for
any reason other than death, sick leave, or an approved leave of absence, share
options will lapse immediately. In addition, upon a change of control of the
Company, share options will generally either (i) vest in full and remain
exercisable for a period of fourteen days or (ii) be canceled and replaced
with an option to purchase shares of the acquiring corporation with
substantially the same terms. No further option grants will be made under the UK
plan.
  1996 Stock Option Plan. The
Board of Directors adopted the 1996 Stock Option Plan on August 16, 1996.
The plan provides for the grant of nonstatutory stock options to employees,
consultants and advisers of the Company and its subsidiaries other than
directors and executive officers. No further option grants will be made under
the plan.
  The
exercise price of the options is determined by the Board of Directors but will
not be less than 100% of the fair market value of the Company’s common stock on
the date of grant. Unless otherwise determined by the Board of Directors,
options vest as to 25% of the underlying shares on the date of grant and on each
of the first, second and third anniversaries of the date of grant and expire on
the tenth anniversary of the date of grant.
  Upon an
optionee’s termination of employment for any reason other than death or for
cause, vested options will generally remain exercisable for three months and
unvested options will be immediately forfeited. However, if the optionee has
been an employee of the Company for at least 10 years at the time of
termination, vested options will generally remain exercisable until the original
expiration date. In addition, upon a change of control of the Company either
(i) all outstanding options will become immediately exercisable at least 20
days prior to the change of control and will terminate upon the effective date
of the change of control or (ii) the Board of Directors will provide for
the assumption or replacement of the outstanding options by the surviving
corporation resulting from the change of control. No further option grants may
be made under the plan.


27
 
  SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  The
following table and notes thereto set forth certain information with respect to
the beneficial ownership of the Company’s common stock as of April 21, 2008,
except as otherwise noted, by (i) each person who is known to us to
beneficially own more than 5% of the outstanding shares of common stock of the
Company; (ii) each of the Company’s Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer and the three other most highly paid
executive officers in 2007; (iii) each of the Company’s directors; and
(iv) all of the Company’s executive officers and directors as a group.
Except as otherwise indicated, each of the stockholders named below has sole
voting and investment power with respect to the shares of common stock
beneficially owned:
 Common Stock
                Beneficially OwnedNumber of Shares
              
              Percent of
                Outstanding
                Shares(1)American
      Century Investment Management
                4500
      Main Street, 9th Floor
                Kansas
      City, MO 64111
              
              
              8,747,423
              (2)
              
              
              9.4
              %Amin
      J. Khoury+*
              
              
              382,063
              
              
              
              **Thomas
      P. McCaffrey+
              
              
              132,779
              (3)
              
              
              **Jim
      C. Cowart*
              
              
              121,944
              (4)
              
              
              **Michael
      B. Baughan+
              
              
              42,630
              (5)
              
              
              **Jonathan
      M. Schofield*
              
              
              55,021
              (6)
              
              
              **Richard
      G. Hamermesh*
              
              
              9,407
              (7)
              
              
              **Werner
      Lieberherr+
              
              
              36,444
              
              
              
              **Wayne
      Exton+
              
              
              23,718
              
              
              
              **Robert
      A. Marchetti+
              
              
              16,293
              (8)
              
              
              **Robert
      J. Khoury*
              
              
              11,265
              (9)
              
              
              **Arthur
      E. Wegner*
              
              
              7,375
              (10)
              
              
              **Charles
      L. Chadwell*
              
              
              3,467
              (11)All
      Directors and Executive Officers as a group (14 Persons)
              
              
              899,925
              
              
              
              1
              %
   
 +
              Named
      executive officer
  *
              Director
      of the Company
  **
              Less
      than 1 percent
  (1)
              The
      number of shares of our common stock deemed outstanding includes:
      (i) 93,075,108 shares of common stock outstanding as of April 21,
      2008 and (ii) 2,000 shares of common stock subject to outstanding
      stock options which are currently exercisable by the named individual or
      group.
  (2)
              Based
      on information in the Schedule 13G, as of December 31, 2007, filed on
      February 12, 2008 by American Century Investment Management reported
      sole voting and sole dispositive power over shares. The Company has not
      attempted to independently verify any of the foregoing information, which
      is based solely upon the information contained in the Schedule 13G. The
      percent of outstanding shares set forth above is based on the number of
      our shares outstanding as of that
date.
  (3)
              Includes
      7,611 shares owned pursuant to the Company’s
    401(k) Plan.
  (4)
              Includes
      446 shares owned pursuant to the Company’s Non-Employee Directors Deferred
      Stock Plan.
  (5)
              Includes
      108 shares owned pursuant to the Company’s
    401(k) Plan.
  (6)
              Includes
      223 shares owned pursuant to the Company’s Non-Employee Directors Deferred
      Stock Plan.
  (7)
              Includes
      409 shares owned pursuant to the Company’s Non-Employee Directors Deferred
      Stock Plan.
  (8)
              Includes
      312 shares owned pursuant to the Company’s
    401(k) Plan.
  (9)
                Includes
      2,268 shares owned pursuant to the Company’s Non-Employee Directors
      Deferred Stock Plan and 5,000 shares indirectly
  owned.
  (10)
                Includes
      969 shares owned pursuant to the Company’s Non-Employee Directors Deferred
      Stock Plan.
  (11)
                Includes
      1,062 shares owned pursuant to the Company’s Non-Employee Directors
      Deferred Stock Plan.




28




ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE




Policy
and Procedures for the Review and Approval of Related Person
Transactions


We have
adopted a written policy pursuant to which our Audit Committee will be presented
with a description of any related person transactions for them to consider for
approval. The policy is designed to operate in conjunction with and as a
supplement to the provisions of our Code of Business Conduct.




Under the
policy, our Law Department will review all proposed transactions presented to or
identified by it involving a related person and in which the Company is a
participant and in which the amount exceeded $120,000. The Law Department will
present to the Audit Committee for approval any transaction at or above this
dollar amount in which the related person may have a direct or indirect material
interest. In determining whether to approve or ratify a related person
transaction, the Audit Committee will consider the following: (1) whether
the transaction was the product of fair dealing, which factors include the
timing, initiation, structure and negotiations of the transaction, and whether
the related person’s interest in such transaction was disclosed to the Company,
(2) the terms of the transaction and whether similar terms would have been
obtained from an arm’s length transaction with a third party and (3) the
availability of other sources for comparable products or services. The policy
also identifies certain types of transactions that our Board has identified as
not involving a direct or indirect material interest and are therefore, not
considered related person transactions for purposes of the policy.




The policy
requires that our Law Department implement certain procedures for the purpose of
obtaining information with respect to related person transactions. These
procedures include, among other things, (1) informing, on a periodic basis,
our directors, nominees for director and executive officers of the requirement
for presenting possible related party transactions to the Law Department for
review and (2) reviewing questionnaires completed by directors, nominees
for director and executive officers designed to elicit information about
possible related person transactions.




Certain
Relationships and Related Transactions




There are
no reportable transactions pursuant to this requirement.




Director
Independence




The Board
of Directors has determined that Messrs. Chadwell, Cowart, Hamermesh, Schofield
and Wegner are independent under NASDAQ rules




29




ITEM 14.  PRINCIPAL ACCOUNTING FEES AND
SERVICES




AUDIT
MATTERS




Deloitte &
Touche LLP has audited the financial statements of the Company for the
fiscal year ending December 31, 2007.




When
considering Deloitte & Touche LLP’s independence, the Audit Committee
of the Company’s Board of Directors considered whether its provision of services
to the Company beyond those rendered in connection with its audit and review of
the Company’s consolidated financial statements was compatible with maintaining
its independence and has determined that such services do not interfere with
that firm’s independence in the conduct of its auditing function. The Audit
Committee of the Company’s Board of Directors also reviewed, among other things,
the amount of fees paid to Deloitte & Touche LLP for audit and
non-audit services.




Principal
Accountant Fees and Services




The
following table sets forth by category of service the total fees for services
performed by Deloitte & Touche LLP during the fiscal years ended
December 31, 2007 and December 31, 2006.




2007
            
            
            2006Audit
      Fees
            
            $
            2,798,868
            
            
            $
            2,487,390Audit
      Related Fees
            
            
            13,500
            
            
            
            327,419Tax
      Fees
            
            
            1,285,636
            
            
            
            553,416All
      Other Fees
            
            
            3,577
            
            
            
            —Total
            
            $
            4,101,581
            
            
            $
            3,368,225





Audit
Fees




Audit fees
in 2007 and 2006 include aggregate fees, including expenses, billed by
Deloitte & Touche LLP in connection with the annual audit and the
audit of internal controls over financial reporting (Sarbanes Oxley Act
Section 404), the reviews of the Company’s quarterly reports on
Form 10-Q, statutory audits required for the Company’s subsidiaries and
services provided in connection with filing registration statements with the
Securities and Exchange Commission.




Audit
Related Fees




Audit
related fees in 2007 and 2006 consist of the aggregate fees, including expenses,
billed by Deloitte & Touche LLP in connection with employee benefit
plan audits and due diligence services in connection with an
acquisition.




Tax
Fees




Tax fees
in 2007 and 2006 consist of the aggregate fees, including expenses, billed by
Deloitte & Touche LLP in connection with services for tax compliance,
tax planning, tax advice and tax audit assistance.




All
Other Fees




All other
fees in 2007 consist of fees related to work to support the Company’s grant
application in Ireland.  We did not pay any fees to
Deloitte & Touche LLP in 2006 other than those described
above.




Pre-Approval
Policies and Procedures




The
Compensation Committee approves all audit, audit related services, tax services
and other services provided by Deloitte & Touche LLP. Any services
provided by Deloitte & Touche LLP that are not specifically included
within the scope of the audit must be pre-approved by the Compensation Committee
in advance of any engagement. Under the Sarbanes Oxley Act of 2002, Compensation
Committees are permitted to approve certain fees for audit related services, tax
services and other services pursuant to a de minimis exception prior to
the completion of an audit engagement. In 2007, none of the fees paid to
Deloitte & Touche LLP were approved pursuant to the de minimis
exception.




In making
its recommendation to appoint Deloitte & Touche LLP as the Company’s
independent registered public accounting firm for the fiscal year ending
December 31, 2007, the Audit Committee has considered whether the services
provided by Deloitte & Touche LLP are compatible with maintaining the
independence of Deloitte & Touche LLP and has determined that such
services do not interfere with that firm’s independence in the conduct of its
auditing function.




30




PART
IV
  ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
 
 (a)
                Documents
      filed as part of report on Form
10-K/A
  3. 
      Exhibits
      – The exhibits listed in the following “Index to Exhibits” are filed with
      this Form 10-K/A or incorporated by reference as set forth
      below.
   (b)
                The
      exhibits listed in the “Index to Exhibits” below are filed with this Form
      10-K/A or incorporated by reference as set forth
    below.
  (c)
                Financial
      Statement Schedules – None.
 
 INDEX TO
EXHIBITS
 
 Exhibit
 Number                                                        Description
 
 
 Exhibit 31
Rule 13a-14(a)/15d-14(a) Certifications
 
 31.3
Certification of Chief Executive Officer*
 
 31.4
Certification of Chief Financial Officer*
 _________________
 * Filed
herewith.
 
 31
   SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
 
 BE
      AEROSPACE, INC.By:
                /s/
      Amin J. KhouryAmin
      J. KhouryChairman
      and Chief Executive OfficerDate:  May
      2, 2008
   32