Exhibit 10.1
                                   LUKENS INC.
                 NON-EMPLOYEE DIRECTOR EQUITY COMPENSATION PLAN

I. PURPOSE

         A.  The  purpose  of  the  Lukens  Inc.  Non-Employee  Director  Equity
Compensation Plan is to advance the interest of the Company and its shareholders
by  providing  for the  payment  of a greater  portion  of the  compensation  of
Non-Employee  Directors in the form of equity  equivalents  by the grant to such
Non-Employee Directors of Deferred Stock Units under the terms set forth herein.
By  thus  compensating   Non-Employee  Directors  and  increasing  their  equity
equivalent  position  in the  Company,  the Company  seeks to  attract,  retain,
compensate and motivate these highly competent  individuals upon whose judgment,
initiative,  leadership,  and  continued  efforts  the success of the Company in
large measure depends. 

II. DEFINITIONS

         A. As used in this Plan, the following  definitions  apply to the terms
indicated below:

              a. "ABO" means the Accumulated  Benefit  Obligation of the Company
for each  Non-Employee  Director under the Retirement Plan as of April 30, 1997,
as  determined by the Plan  Actuary.  For purposes of the Plan,  (i) the ABO for
each Non-  Employee  Director  shall be  determined  by taking  Service from the
Non-Employee  Director's  Anniversary  Date through April 30, 1997 into account,
and (ii) the ABO for each Non- Employee  Director  shall be  determined  without
regard to whether or not the Non-Employee  Director's right to payment under the
Retirement Plan is vested.

              b. "Account"  means the bookkeeping  account  established for each
Non-Employee Director to which Deferred Stock Units shall be credited.

              c. "Allocation  Amount" means the amount determined by discounting
the  Annual  Retainer  in effect as of the  Allocation  Date (i) at the  30-year
Treasury  bond  rate in  effect at the  Allocation  Date for (ii) 10 years.  The
Allocation Amount shall be determined by the Plan Actuary.

              d. "Allocation Date" means each April 30 after the Effective Date.

              e.  "Anniversary  Date" means the  anniversary  of the date a Non-
Employee  Director  commenced Service that next precedes or coincides with April
30, 1997.

              f. "Anniversary Date ABO" means the Accumulated Benefit Obligation
of the Company for each  Non-Employee  Director under the Retirement  Plan as of
the Non-Employee Director's Anniversary Date, as determined by the Plan Actuary.
For  purposes  of the  Plan,  the  Anniversary  Date ABO for  each  Non-Employee
Director shall be adjusted to include interest  creditable from the Non-Employee
Director's  Anniversary  Date through  April 30, 1997, as determined by the Plan
Actuary.



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              g. "Annual Retainer" means the annual rate of retainer fees
payable to Non-Employee Directors as compensation for Service.

              h. "Board" means the Board of Directors of the Company.

              i. "Committee" means the Committee on the Board.

              j. "Company"  means Lukens Inc., a Delaware  corporation,  and any
successors thereto. 

              k. "Deferred Stock Unit" means a hypothetical Share.

              l. "Director" means a duly elected member of the Board.

              m.  "Effective  Date"  means the date  specified  in  Section  3.1
hereof.

              n.  "Employee"  means a  person  employed  by the  Company  or its
Subsidiaries in any capacity.

              o. "Exchange  Act" means the  Securities  Exchange Act of 1934, as
amended.

              p. "Fair Market Value Per Share" as of any date, means the closing
price for sales of Shares as reported  on the  Composite  Transaction  Reporting
System  on the New York  Stock  Exchange,  which  includes  other  participating
exchanges and  over-the-counter  markets, on such date, or if the Shares are not
listed on such  exchange,  on the principal  United States  securities  exchange
registered under the Exchange Act on which the Shares are listed.

              q. "Non-Employee Director" means any Director who is not a
person employed by the Company or its subsidiaries in any capacity.

              r.  "Plan"  means this Lukens Inc.  Non-Employee  Director  Equity
Compensation Plan, as in effect from time to time.

              s. "Plan Actuary" means the actuary  designated  from time to time
as the Plan Actuary for purposes of the Plan by the  Company's  Chief  Financial
Officer.

              t.  "Pro-Rated  Deferred Stock Units" means the number of Deferred
Stock  Units  determined  as the  quotient  of (i)  the  excess,  if  any,  of a
Non-Employee  Director's ABO over the Non-Employee  Director's  Anniversary Date
ABO,  divided  by (ii) the  average  Fair  Market  Value per Share for May 1997,
provided that the number of Deferred Stock Units  determined  under this Section
2.1(t) shall not be less than zero.


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              u. "Retirement Plan" means the Retirement Plan for Non-Employee
Directors of Lukens Inc.

              v. "Service" means service as a Non-Employee Director.

              w. "Share" means a share of the Company's  common stock,  $.01 par
value.

III. EFFECTIVE DATE

         A. This Plan shall be effective as of May 1, 1997.

IV. PARTICIPATION

         A.  Each  Non-Employee  Director  serving  on the Board on or after the
Effective Date shall participate in the Plan.

V. CREDITING ACCOUNTS

         A. Deferred Stock Units.

              a. Annual Credits. As of each Allocation Date, the Account of each
Non-Employee  Director shall be credited with the number of Deferred Stock Units
determined as the quotient of (i) the Allocation Amount divided by (ii) the Fair
Market Value Per Share on such Allocation Date, provided that if such Allocation
Date is not a business  day,  Fair Market Value Per Share shall be determined as
of the next succeeding business day.

              b.  Adjustments.  In  the  event  of any  merger,  reorganization,
consolidation, recapitalization, Share distribution or dividend, or other change
in  structure  affecting  the  Shares,  Deferred  Stock  Units shall be adjusted
accordingly, as determined in the sole discretion of the Committee.

         B. Dividend Credits.

              a. Annual Credits. The Account of each Non-Employee Director shall
be credited with dividend  equivalents  at the same rate per Deferred Stock Unit
as are  actually  paid per Share.  Pending  conversion  to Deferred  Stock Units
pursuant to Section  5.2(b),  no  earnings  shall be  credited  with  respect to
dividend equivalents credited to Accounts.

              b. Conversion to Deferred Stock Units. As of each Allocation Date,
dividend  equivalents  credited to each Account shall be converted to the number
of Deferred  Stock Units  determined  as the  quotient of (i) the  aggregate  of
dividend equivalents  credited to such Account,  divided by (ii) the Fair Market
Value per Share on such Allocation  Date,  provided that if such Allocation Date
is not a business day, Fair Market Value Per Share shall be determined as of the
next succeeding business day.

VI. RETIREMENT PLAN CONVERSION


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         A. Vested Non-Employee Directors. On or before June 15, 1997, each Non-
Employee  Director who has completed five (5) years of continuous  Service as of
May 1, 1997 and thus has a vested benefit under the Retirement  Plan, shall make
one of the  following  elections  with  respect to the  benefit  accrued by such
Non-Employee  Director under the Retirement  Plan as of May 1, 1997. Such vested
Non-Employee Director shall elect:

              a.  Freeze  Benefit  Under  Retirement  Plan.  To have the benefit
accrued under the Retirement  Plan as of May 1, 1997 paid under the terms of the
Retirement Plan in effect as of that date, provided that:

                        (1) the Non-Employee Director's Pro-Rated Deferred Stock
Units shall be credited to his Account as of May 1, 1997;

                        (2) benefits with respect to all Service after April 30,
1997 shall be determined under the terms of the Plan; and

                        (3)  no  further   benefits   shall   accrue  under  the
Retirement Plan; or

              b. Convert Benefit to Deferred Stock Units. To convert the benefit
accrued  under the  Retirement  Plan as of May 1, 1997 to  Deferred  Stock Units
under the Plan.  For each  Non-Employee  Director,  the number of Deferred Stock
Units shall be  determined as the quotient of (i) such  Non-Employee  Director's
ABO,  divided by (ii) the average Fair Market Value per Share for May 1997.  The
resulting number of Deferred Stock Units shall be credited to such  Non-Employee
Director's Account under the Plan.

A Non-Employee  Director who fails to file an election under this Section 6.1 on
or before  June 15,  1997 shall be deemed to have  elected to freeze the benefit
under the Retirement Plan pursuant to Section 6.1(a).

         B.  Other  Non-Employee  Directors.   Any  benefit  accrued  under  the
Retirement Plan as of May 1, 1997 by  Non-Employee  Directors who have completed
fewer  than five (5) years of  Service  as of such date  automatically  shall be
converted to the number of Deferred  Stock Units  determined  as the quotient of
(i) such  Non-Employee  Director's ABO,  divided by (ii) the average Fair Market
Value per Share for May 1997. The resulting number of Deferred Stock Units shall
be credited to such Non-Employee Director's Account under the Plan.

VII. DISTRIBUTIONS

         A. General. Except as otherwise provided in Section 7.4, the balance of
each Non-Employee  Director's Account shall be paid to the Non-Employee Director
in cash in a lump sum,  unless  the  Non-Employee  Director  elects  to  receive
distributions  in  installments  pursuant  to a  procedure  established  by  the
Committee.

         B. Lump Sum.

              a. Time of Distribution.  Unless a Non-Employee Director elects to
receive distributions in installments pursuant to a procedure established by the
Committee, the





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Company shall pay the balance of the Non-Employee  Director's  Account in a cash
lump sum on or as soon as administratively  practicable  following the first day
of the calendar quarter next following such Non-Employee  Director's termination
of Service.

              b.  Valuation  of  Distribution.   The  amount  of  the  lump  sum
distribution  shall be  calculated as the product of (i) the average Fair Market
Value per Share for the six-month  period  ending on the  effective  date of the
Non-Employee  Director's  termination  of  Service,  times  (ii) the  number  of
Deferred  Stock Units  credited to such Non- Employee  Director's  Account as of
such date.

         C. Installments.  A Non-Employee  Director may, pursuant to a procedure
established  by the  Committee,  elect  to  receive  distributions  in  monthly,
quarterly or annual installments over a period not longer than the lesser of (a)
such Non-Employee Director's full years of Service or (b) 10 years.

              a. Time of  Distribution.  If a  Non-Employee  Director  elects to
receive distributions in installments, installment payments shall commence on or
as soon as administratively  practicable following the first day of the calendar
quarter next  following  such  Non-Employee  Director's  termination of Service.
Installment  payments  shall be paid on the first day of each month,  quarter or
benefit commencement anniversary date, as applicable.

              b. Valuation of Distribution.  The total beginning Account balance
subject to  installment  distribution  shall be determined as the product of (i)
the average Fair Market Value per Share for the  six-month  period ending on the
effective date of the Non- Employee  Director's  termination  of Service,  times
(ii) the number of Deferred Stock Units credited to such Non-Employee Director's
Account as of such date. Thereafter,  the unpaid balance of the Account shall be
credited  with earnings at the 30-year  Treasury  bond rate.  The amount of each
installment  shall be  determined  as the  quotient  of (iii) the  undistributed
Account balance as of the installment  payment date,  divided by (iv) the number
of remaining unpaid installments.

              c. Death Prior to Completion of Installments.  In the event of the
death of a Non-Employee  Director prior to the payment of all  installments  due
under the Plan,  the payments which would have been payable  hereunder  shall be
paid to the Non- Employee Director's designated beneficiary for the remainder of
the installment term.

         D. Termination of Service Due to Death.

              a. Time of Distribution.  If a Non-Employee Director dies while in
Service, the balance of such Non-Employee  Director's Account shall be paid in a
lump sum in cash to the designated  beneficiary  or estate of such  Non-Employee
Director within sixty (60) days of the date of death.

              b. Valuation. The amount subject to lump sum distribution shall be
determined  in  accordance  with  Section  7.2(b),  provided  that the  relevant
valuation date shall be the date of such Non-Employee Director's death.





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VIII. NO FUNDING

         A. This Plan shall not be deemed to create  any trust,  escrow or other
funding arrangement. No benefit payable hereunder shall be considered segregated
funds and all such amounts shall,  at all times prior to the payment of same, be
and continue to be the property of the Company commingled with its other assets.
The right of any  Non-Employee  Director to benefits under this Plan shall be an
unsecured claim against the general assets of the Company.

IX. PLAN ADMINISTRATION

         A. The general  administration of this Plan and the  responsibility for
carrying out its provisions shall be vested in the Committee.  The Committee may
adopt  such  rules  and  regulations  as it may deem  necessary  for the  proper
administration  of this Plan,  and its  decision in all matters  shall be final,
conclusive,   and  binding.  If  one  or  more  members  of  the  Committee  are
disqualified by personal interest from taking part in a particular decision, the
remaining member or members of the Committee (although less than a quorum) shall
have full power to act on the matter. The Committee may delegate to the benefits
department of the Company the  responsibility  for day to day  administration of
this Plan.

X. TERMINATION OF THE PLAN

         A. The  Board  reserves  the right to  terminate  this Plan at any time
without  the  consent  of any  current  or former  Non-Employee  Director.  Upon
termination of this Plan, all Non-Employee  Directors shall continue to have the
right  to  receive   benefits  earned  and  accrued   hereunder  prior  to  such
termination.

XI. AMENDMENT OF THE PLAN

         A. The Board has the right to amend this Plan at any time and from time
to time without the consent of any current or former Director, provided however,
that no amendment shall divest any  Non-Employee  Director of rights to which he
or she would have been entitled if the Plan had been terminated on the effective
date of such amendment.

XII. CHANGE IN CONTROL

         A. Within sixty days of a Change in Control as defined in Section 12.2,
any Non- Employee Director, including any Non-Employee Director who is receiving
installment  payments,  shall receive a lump sum payment of his Account  balance
under this Plan.

         B. For purposes of the Plan,  the term  "Change in Control"  shall mean
any of the following events:
                   a.
                        (1) Any  "person"  or "group" (as such terms are used in
Sections  3(a)(9),  13(d)(3)  and  14(d)(2)  of the  Exchange  Act),  considered
together  with its or their  "affiliates"  and  "associates"  (as such terms are
defined in Rule 12b-2 of the General  Rules and  Regulations  under the Exchange
Act),  is or  becomes  the  beneficial  owner (as  defined  in Rule 13d-3 of the
General  Rules and  Regulations  under the Exchange  Act),  or acquires or holds
voting control, directly or indirectly, of securities of the Company which,



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when considered  together with any other  securities of the Company held by such
person  or group of their  affiliates  or  associates  which by their  terms are
convertible,  even if not then  convertible,  represent  twenty percent (20%) or
more of the voting power of the then outstanding securities of the Company; and

                        (2) the  Board as it  existed  immediately  prior to any
such acquisition of or change in ownership or control, after having been advised
thereof,  does not,  within ten days after being so advised,  adopt a resolution
specifically  determining  that such  acquisition  of or change in  ownership or
control does not constitute a change of control event within the meaning of this
Section 12.2; or

                   b. A change in the  composition  of a  majority  of the Board
within 24 months  after  any  "person"  or  "group"  (as such  terms are used in
Sections  3(a)(9),  13(d)(3)  and  14(d)(2)  of the  Exchange  Act),  considered
together  with its or their  "affiliates"  or  "associates"  (as such  terms are
defined in Rule 12b-2 of the General  Rules and  Regulations  under the Exchange
Act),  is or  becomes  the  beneficial  owner (as  defined  in Rule 13d-3 of the
General  Rules and  Regulations  under the  Exchange  Act) or  acquires or holds
voting control, directly or indirectly, of securities of the Company which, when
considered  together with any other  securities  held by such person or group of
their affiliates or associates which by their terms are convertible, even if not
then convertible, represent twenty percent (20%) of the voting power of the then
outstanding securities of the Company; or

                   c.

                        (1) Any  "person"  or "group" (as such terms are used in
Section  3(a)(9),  13(d)(3) and 14(d)(2) of the Exchange Act) commences a tender
offer or exchange  offer for  securities  of the  Company if, upon  consummation
thereof, the offeror, considered together with its "affiliates" and "associates"
(as such terms are  defined in Rule 12b-2 of the General  Rules and  Regulations
under  the  Exchange  Act),  would  own  or  control,  directly  or  indirectly,
securities  of the  Company  which,  when  considered  together  with any  other
securities held by such person or group or their  affiliates or associates which
by their terms are convertible,  even if not then convertible,  represent thirty
percent (30%) or more of the voting power of the then outstanding  securities of
the Company, and

                        (2) the Board of  Directors of the Company as it existed
immediately  prior to any such offer,  after having been advised  thereof,  does
not,  within  ten  business  days after  being so  advised,  adopt a  resolution
specifically determining that such offer does not constitute a change of control
event within the meaning of this Section 12.2.

         C. The terms  "person"  and  "group," as used in this Article 12, shall
not include (i) the Company;  (ii) any  corporation  in which the Company  owns,
directly  or  indirectly,  voting  securities  sufficient  to  elect  at least a
majority of the directors of such  corporation;  (iii) any employee benefit plan
of the Company or of any  corporation  described  in Section  12.2(b);  (iv) any
individual or entity organized,  appointed or established by the Company for, or
pursuant  to,  the terms of any  employee  benefit  plan  described  in  Section
12.2(c).

         D.  Payment of the lump sum  payment  described  in Section  12.1 shall
constitute full payment of all obligations of the Company under this Plan.

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XIII. MISCELLANEOUS PROVISIONS

         A. Gender and Number.  The masculine pronoun wherever used herein shall
include the feminine gender; and the feminine,  the masculine,  and the singular
number as used  herein  shall  include  the plural  unless the  context  clearly
indicates otherwise.

         B. No  Agreement  to  Retain  Directors.  This Plan does not in any way
obligate the  shareholders  of the Company to continue to retain a  Non-Employee
Director on the Board,  nor does this Plan limit the right of such  shareholders
to terminate a Non-Employee Director's Service.

         C. Rights Non-Assignable and Non-Transferable. Deferred Stock Units (or
dividend equivalents, prior to their conversion to Deferred Stock Units) may not
be assigned,  pledged,  mortgaged or  hypothecated  other than by will or by the
laws of descent  and  distribution,  and,  to the extent  permitted  by law,  no
Deferred Stock Unit or dividend  equivalent shall be subject to legal process or
attachment for the payment of any claims against any person  entitled to receive
the same.

         D. Facility of Payment.  If a current or former  Non-Employee  Director
entitled to receive any  payments  hereunder is adjudged by a court of competent
jurisdiction  to be legally  incapable of giving valid receipt and discharge for
such payments,  such payments  shall be paid to the duly  appointed  guardian of
such Non-Employee  Director.  Such payments shall, to the extent paid, be deemed
complete discharge for liabilities of the Company under this Plan.

         E. Nonforfeiture. All Deferred Stock Units and dividend equivalents are
fully  vested and  nonforfeitable  once  credited to a  Non-Employee  Director's
Account.

         F.  Withholding.  Payments  made by the Company  under this Plan to any
Non- Employee  Director shall be subject to withholding as shall, at the time of
such  payment,  be required  under any income tax or other laws,  whether of the
United States or any other jurisdiction.

         G. Successorship.  It is the intent that the obligations of the Company
to pay benefits accrued or payable hereunder shall be binding upon any successor
corporation  or  organization  which shall succeed to  substantially  all of the
assets and business of the Company and the term  "Company"  wherever used herein
shall  mean  and  include  any  such  corporation  or  organization  after  such
succession and such obligations  shall be deemed to have been expressly  assured
by any such corporation or other organization.

         H. Compliance with Laws. The Plan and the grant of Deferred Stock Units
thereunder  shall be conditioned  on and subject to all  applicable  federal and
state  laws,  including,  without  limitation,  applicable  securities  laws and
regulations.

         I.  Expenses.  All expense and costs  incurred in the operation of this
Plan shall be paid by the Company.

         J. Titles and Headings. The titles to articles and headings of sections
of this Plan are for convenience or reference only. In case of any conflict, the
text of the Plan, rather than such titles and headings, shall control.

         K.  Acceptance.  The  acceptance  of  payments  under  this Plan by any
Non-Employee  Director  constitutes  his acceptance of the terms of the Plan and
his agreement to be bound thereby.

         L.  Governing  Law and  Severability.  This Plan shall be  construed in
accordance  with the laws of the  Commonwealth of Pennsylvania to the extent not
superseded by any

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federal law. In the event any provision  hereof shall be held illegal or invalid
for any reason,  the remaining  provisions shall be construed and enforced as if
such illegal or invalid provisions had never been contained herein.


              As adopted by the Board of Directors on April 30, 1997.



Dated:  May 16, 1997                                 /s/  William D. Sprague