Exhibit 10.2 


INTRICON
CORPORATION

ANNUAL INCENTIVE PLAN

FOR EXECUTIVES AND KEY EMPLOYEES


PLAN OBJECTIVE


The objective of this incentive plan is to align the efforts of
executives and key employees with shareholder interests by rewarding
participants for the achievement of the Company’s financial and strategic
objectives. Under the Annual Incentive Plan, executive officers and key
employees of the Company are eligible to receive incentive compensation based
on (i) the Company achieving a designated level of financial results, referred
to as the “plan target” for a designated calendar year, referred to as a “plan
year,” and (ii) if applicable, achievement of designated strategic objectives.
The plan targets and strategic objectives, if any, will be determined each year
by the Compensation Committee of the Board of Directors, referred to as the
“Committee.”


ELIGIBILITY CRITERIA


Executives and key employees of the Company are eligible for plan
participation, as determined by the Committee. Plan participants are those
individuals who can have a significant impact on the strategic and financial
performance of the Company, as determined in the sole discretion of the
Committee. 


SIZE OF AWARD OPPORTUNITY


The potential size of an award for plan participants (assuming that the
target level of financial performance and any applicable strategic objectives
of the Company are accomplished) is expressed as a percentage of base salary on
December 31st of the plan year. Salary does not include any incentive payments
made from the previous year. The Committee, in its sole discretion, may
increase or decrease the potential size of the award (percentage of base
salary) for any plan year prior to the time of adoption of the plan for that
year.


	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 Tier Level

 	
  

 	
 Positions

 	
 Potential Size of Award at 

 Plan Target

 
	
 1

 	
  

 	
 Chief
 Executive Officer

 	
 50% of base salary

 
	
 2

 	
  

 	
 Executive
 Officers

 	
 40% of base salary

 
	
 3

 	
  

 	
 Key
 Employees With Management Responsibilities

 	
 25% of base salary

 
	
 4

 	
  

 	
 Key
 Employees Without Management Responsibilities

 	
 20% of base salary

 
	
 5

 	
  

 	
 Key
 Employees Without Management Responsibilities II

 	
 10% of base salary

 


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Incentive awards for plan participants who work less than full-time
will be pro-rated accordingly. 


FUNDING THE PLAN


At the beginning of the year a plan target and incentive opportunity
for each tier will be established by the Committee. The Chief Executive Officer
or Chief Financial Officer will communicate this plan target and incentive
opportunity to you. The available incentive opportunity for any tier depends on
the percentage of the plan target that is achieved for that plan year as
follows:



	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 Percentage of Plan Target Achieved

 	
 Total Amount of Incentive

 Opportunity Available

 
	
  

 	
 Plan
 Threshold

 	
  

 	
 80%

 	
 50%

 
	
  

 	
  

 	
  

 	
 90%

 	
 75%

 
	
  

 	
 Plan Target

 	
  

 	
 100%

 	
 100%

 
	
  

 	
  

 	
  

 	
 125%

 	
 125%

 
	
  

 	
 Plan Maximum

 	
  

 	
 150%

 	
 150%

 


Below 80% of the plan target, no incentives will be paid. At the plan
threshold (80% of the plan target), the plan pays out one-half (or 50%) of the
available incentive opportunity for that tier. At the plan maximum (150% of the
plan target), the plan pays out one and one-half (150%) times of the available
incentive opportunity for that tier. Between these points, the amount of the
incentive compensation available will increase or decrease proportionately
based upon the Company achieving more or less than the plan target; however, no
incentive compensation will be paid if the Company achieves less than 80% of
the plan target and the maximum incentive compensation payable is capped at the
Company achieving 150% of the plan target. The Committee has the discretion to
determine whether (and at what level) the plan target and strategic objectives
have been satisfied and to adjust the plan target and strategic objectives as
circumstances warrant. The Committee also has the authority to weight the
importance of the strategic objectives and to determine the amount of the
awards if less than all of the strategic objectives are achieved.


PAYOUT CRITERIA: COMPANY STRATEGIC OBJECTIVES


The Company
must achieve at least the threshold plan target level (80% of target) in order
for any payout to be earned for the achievement of Company strategic objectives.
Your
incentive potential is determined by actual year-end Company financial results
achieved. 


The amount of the incentive potential that you earn will depend on the
achievement of the Company’s strategic objectives.


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At the beginning of the year, clearly measurable strategic objectives
for the Company will be communicated to you by the Chief Executive Officer or
Chief Financial Officer. The Committee will determine the strategic objectives
for the Chief Executive Officer and executive officers and either the Committee
or the Chief Executive Officer will determine the strategic objectives for the
other tiers. Typically, there will be no more than four strategic objectives
established. The strategic objectives may be weighted by tier and/or by
position within the tier to appropriately reflect the influence a given
position may have on the outcome of a specific objective. The total of the
strategic objectives will equal 100 percent for each participant. The Committee
has the authority to establish an incentive plan for any plan year without
strategic objectives for any or all tiers.


Progress against strategic objectives will be reviewed on a quarterly
basis. In rare instances, modifications may be required. Any substantive
revisions to the objectives (such as changing a strategic objective or its
weighting) will require the approval of the Committee (with respect to tiers
one and two) or the Committee or Chief Executive Officer (with respect to tiers
three, four and five).


At year-end, performance against assigned strategic objectives will be
reviewed to determine an overall evaluation score (percent of strategic
objectives achieved). The overall evaluation score will determine what portion
of the award you will receive. (For example, if 90 percent of the strategic
objectives are achieved, then 90 percent of the applicable incentive
opportunity will be payable). 


QUALIFICATION OF AWARD PAYMENT


The Chief Executive Officer reserves the right to withhold incentive
payment in the event an individual is on probation status at fiscal year end. 


PLAN ADMINISTRATION


Compensation Committee


The plan will be administered by the Committee. The Committee will have
full and exclusive power to administer and interpret the plan, to grant awards
and to adopt such administrative rules, regulations, procedures and guidelines
governing the plan and the awards as it may deem necessary in its discretion,
from time to time. The Committee’s authority includes, but not be limited to,
the authority to: (i) select award recipients and determine the extent of their
participation; (ii) establish plan targets and strategic objectives;(iii)
determines levels of funding and incentive opportunities for each tier;and
(iv) establish all other terms, conditions, restrictions and limitations
applicable to awards. The Committee will have the exclusive right to construe
the plan and any award, to settle all controversies regarding the plan or any
award, to correct defects and omissions in the plan and in any award, and to
take such further actions as the Committee deems necessary or advisable, in its
sole discretion, to carry out the purpose and intent of the plan. Such actions
shall be final, binding and conclusive upon all parties concerned.


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Payout Timing


Individual incentives will be paid upon final approval of the Committee
of the Board of Directors, with payout contingent upon completion of the
year-end audited financial results, usually no later than February 28th, but in
no event later than the end of the calendar year following the plan year.


Plan Amendment, Modification, or Termination


From time to time the Company may make plan amendments as it believes
appropriate and/or may terminate the plan at any time, provided that no such
amendment or termination will affect the right of any participant to receive
incentive compensation in accordance with the terms of the plan for the portion
of any year up to the date of the amendment or termination. Typically, any such
modification would be made on an annual basis. 


New Hires 


New hires must begin their employment by October 1st to qualify for
plan participation. For individuals hired by October 1st of the plan
year, eligibility begins on the first date of employment. Individual incentive
awards will be prorated from the date of hire.


Promotions 


For individuals promoted into an incentive eligible position that has a
different award opportunity, the new opportunity will apply based on the actual
time served in the new position, and the prior incentive opportunity will apply
to the actual time served in the prior position. At no time will an individual
receive more than a 12-month incentive payment for the fiscal year.


Promotions – Newly Eligible


Individuals must be promoted into an incentive eligible position by
October 1st to qualify. Individual incentive awards will be prorated
from the date of promotion.


Leaves of Absence 


A participating employee who takes a leave of absence from the Company
for a period of more than 12 weeks will be subject to a pro-rated incentive
award calculation. Only the length of the leave in excess of 12 weeks will be
considered in the pro-ration calculation. Leaves of absence include (but are
not limited to) Family and Medical Leave (FMLA), disability leave, medical
leave, etc.


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Termination of Employment


In the event an eligible participant ceases to be an employee during
any year in which he/she is participating in the plan, he/she will not be
eligible to receive any incentive compensation for such year. Individuals need
to be employed as of December 31st, of the plan year in order to
receive an award. 


If the plan participant is covered by an employment contract, any
provisions in the employment contractregarding payout of incentives upon
termination of employment shall be observed.


Right to Continue Employment


Nothing contained in the plan shall be construed to confer upon any
employee the right to continue in the employment of the Company, or to limit or
affect the right of the Company to terminate his/her employment at any time.


General Provisions



The extent to which incentive payments are eligible compensation for
benefit plan purposes is determined solely by the plan document governing the
respective benefit plan. Interpretation of the provisions of any employee
benefit plan, including the intent of any provision, rests solely with the
Committee. All payments are subject to Federal, state, FICA, and other required
withholdings


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