EX-10.01






2006 LONG-TERM INCENTIVE PLAN




1. Purpose. The purpose of this 2006 Long-Term Incentive Plan (this “Plan”) is to promote the
long-term financial interests and growth of Ferro Corporation and its subsidiaries and affiliated
companies (“Ferro”) by:



(a) Attracting and retaining high-quality key employees and Directors;



(b) Further motivating such employees and Directors to achieve Ferro’s long-range performance
goals and objectives and thus act in the best interests of Ferro and its shareholders generally;
and



(c) Aligning the interests of Ferro’s employees and Directors with those of Ferro’s
shareholders by encouraging increased ownership of Ferro Common Stock, par value $1.00 per share
(“Common Stock”), by such executive personnel and Directors.



2. Plan Administration. The Governance Nomination & Compensation Committee (the “Committee”) of the
Board of Directors (the “Board”) (or such other committee as the Board may from time to time
designate) will administer this Plan. The Committee shall consist of not less than three Directors,
all of whom shall be Non-Employee Directors (as defined in Rule 16b-3(b)(3)(i) of the Securities
Exchange Act of 1934) and Outside Directors (as defined in Section 162(m) of the Internal Revenue
Code of 1986). Subject to any limitations established by the Board, in administering this Plan the
Committee will have conclusive authority:



(a) To administer this Plan in accordance with its provisions in such a way as to give effect
to economic and competitive conditions, individual situations, the evaluation of individual
performance and the economic potential and business plans of various units of Ferro;



(b) To determine the terms and conditions, not inconsistent with the provisions of this Plan,
of any Award granted under this Plan and prescribe the form of any agreement or document applicable
to any such Award;



(c) To construe and interpret the provisions of this Plan and all Awards granted under this
Plan; and



(d) To establish, amend, and rescind rules and regulations for the administration of this
Plan.



The Committee will also have such additional authority as the Board may from time to time determine
to be necessary or desirable in order to further the purposes of this Plan.



3. Awards to Participants. The Committee will select the employees and Directors of Ferro
(“Participants”) who will participate in this Plan and determine the type(s) and number of award(s)
(“Awards”) to be made to each such Participant. The Committee will determine the terms, conditions
and limitations applicable to each Award. The Committee may, if it so chooses, delegate authority
to Ferro’s Chief Executive Officer to select certain of the Participants (other than executive
officers and Directors of Ferro and other individuals subject to reporting under Section 16 of the
Securities Exchange Act of 1934) and to determine Awards to be granted to such Participants on such
terms as the Committee may specify. Awards may be made singly, in combination, or in exchange for a
previously granted Award and also may be made in combination or in replacement of, or as
alternatives to, grants or rights under any other employee plan of the Company, including the plan
of any acquired entity.



4. Types of Awards. Under this Plan, the Committee will have the authority to grant the following
types of Awards to Participants of Ferro and its subsidiaries and affiliates:



(a) Stock Options. The Committee may grant Awards in the form of Stock Options. Such Stock
Options may be either incentive stock options (within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”)) or nonstatutory stock options (not intended to
qualify under Section 422 of the Code). However, incentive stock options may be granted only to
employees of Ferro and subsidiary corporations that are at least 50% owned, directly or indirectly,
by Ferro. The option price of a Stock Option may be not less than the per share Fair Market Value
of the Common Stock on the date of the grant. “Fair Market Value” means, as of any given date, the
quoted closing price of the Common Stock on such date on the New York Stock Exchange or, if no such
sale of the Stock occurs on the New York Stock Exchange on such date, then such closing price on
the next day on which the Common Stock was traded. If the Common Stock is no longer traded on the
New York Stock Exchange, then the Fair Market Value of the Common Stock shall be determined by the
Committee in good faith. Once a Stock Option has been granted, the option price may not be adjusted
or amended, whether directly or indirectly, by amendment, cancellation, replacement grants or any
other means so as to increase the value of such stock option, except as provided in Section 7
hereof. Such Stock Options will be exercisable in whole or in such installments and at such times
and upon such terms as the Committee may specify. No stock option, however, may be exercisable more
than ten years after its date of grant. A Participant will be permitted to pay the exercise price
of a Stock Option in cash, with shares of Common Stock (including by attestation of Common Stock
owned) or by a combination of cash and Common Stock. The aggregate fair market value (determined at
the time the option is granted) of shares of Common Stock as to which incentive stock options are
exercisable for the first time by a Participant during any calendar year (under this Plan and any
other plan of Ferro) may not exceed $100,000 (or such other limit as may be fixed by the Code from
time to time). Any Stock Option granted that is intended to qualify as an incentive stock option,
but fails to so qualify at or after the time of grant will be treated as nonstatutory stock option.



(b) Stock Appreciation Rights. The Committee may grant Awards in the form of Stock
Appreciation Rights. Stock Appreciation Rights will be granted for a stated number of shares of
Common Stock on such terms, conditions and restrictions as the Committee deems appropriate. Stock
Appreciation Rights will entitle a Participant to receive a payment, in cash or Common Stock, as
determined by the Committee, equal to the excess of (x) the Fair Market Value, on the date of
exercise or surrender, of the number of shares of Common Stock covered by such exercise or
surrender over (y) the Stock Appreciation Rights exercise price (which may not be less than the
Fair Market Value on the date of grant). Stock Appreciation Rights must be exercised within ten
years of the date of grant. Once a stock appreciation right has been granted, the initial share
value may not be adjusted or amended, whether directly or indirectly, by amendment, cancellation,
replacement grants or any other means, so as to increase the value of such Stock Appreciation
Right. Stock Appreciation Rights may be granted either separately or in conjunction with other
Awards granted under this Plan. Any Stock Appreciation Right related to a Stock Option, however,
will be exercisable only to the extent the related Stock Option is exercisable. Similarly, upon
exercise of a Stock Appreciation Right as to some or all of the shares of Common Stock covered by a
related Stock Option, the related Stock Option will be canceled automatically to the extent of the
Stock Appreciation Right exercised, and such shares of Common Stock shall not be eligible for
subsequent grant. Any Stock Appreciation Right related to a nonstatutory stock option may be
granted at the same time such stock option is granted or at any subsequent time before exercise or
expiration of such stock option. Any Stock Appreciation Right related to an incentive stock option
must be granted at the same time such incentive stock option is granted.



(c) Restricted Shares. The Committee may grant Awards in the form of Restricted Shares. Such
Awards may be in such numbers of shares of Common Stock and at such times as the Committee
determines. Such Awards will have such periods of vesting and forfeiture restrictions as the
Committee may determine at the time of grant. The Committee may, in its discretion, permit
dividends on Restricted Shares to be paid or require such dividends to be deferred or reinvested
and subject to forfeiture until the underlying Restricted Shares have vested. With respect to
Awards of Restricted Shares that vest based solely on the lapse of time, the aggregate Award may
not vest in whole in less than three years from the date of grant and no installment of an Award
may vest in less than 12 months. With respect to Awards of Restricted Shares that vest based on
performance criteria, the restriction period applicable to Restricted Shares may not be less than
12 months.



(d) Performance Shares. The Committee may grant Awards in the form of Performance Shares.
Performance Shares will be (i) represented by forfeitable shares of Common Stock issued at the time
of grant of a Performance Share Award or (ii) phantom Performance Shares. Such Performance Shares
will be earned upon satisfaction of Performance Targets relating to Performance Periods established
by the Committee at or prior to the time of a grant. At the end of the applicable Performance
Period, based upon the level of achievement of the Performance Targets, Performance Shares will be
converted into Common Stock, cash, or a combination of Common Stock and cash, or forfeited. If
Performance Shares initially were represented by forfeitable Common Stock, such Common Stock will
become nonforfeitable or be repurchased by Ferro at the end of the applicable Performance Period.



The Committee may establish Performance Targets in terms of any or all of the following:
sales; sales growth; gross margins; operating income; net earnings; earnings growth; cash flows;
market share; total shareholder returns; returns on equity, net assets, assets employed, or capital
employed; accomplishment of acquisitions, divestitures, or joint ventures (or the success of an
acquisition or joint venture, measured in terms of any of the preceding), or the attainment of
levels of performance of Ferro under one or more of the measures described above relative to the
performance of other businesses, or various combinations of the foregoing, or changes in any of the
foregoing. Performance Targets applicable to Performance Shares may vary from Award to Award and
from Participant to Participant.



When determining whether Performance Targets have been attained, the Committee will have the
discretion to make adjustments to take into account extraordinary or nonrecurring items or events,
or unusual nonrecurring gains or losses identified in Ferro’s financial statements, provided such
adjustments are made in a manner consistent with Section 162(m) of the Code (to the extent
applicable). Awards of Performance Shares made to Participants subject to Section 162(m) of the
Code are intended to qualify under Section 162(m) and the Committee will interpret the terms of
such Awards in a manner consistent with that intent to the extent appropriate. (The foregoing
provisions of this Section 4(d) will also apply to Awards of Restricted Shares made under Section
4(c) to the extent such Awards of Restricted Shares are subject to performance goals of Ferro.)



(e) Other Common Stock Based Awards. The Committee may grant Awards in the form of Common
Stock, phantom common stock units, deferred common stock or units, or other awards valued in whole
or in part by reference to, or otherwise based upon, Common Stock. Common Stock Awards will be
subject to conditions established by the Committee and set forth in the applicable Award Agreement.



(f) Dividend Equivalent Rights. The Committee may grant Awards in the form of Dividend
Equivalent Rights. Dividend Equivalent Rights entitle the Participant to receive credits based on
cash distributions that would have been paid on the shares of Common Stock specified in the
Dividends Equivalent Right (or other Award to which it relates) if such shares had been issued to
and held by the Participant. A Dividend Equivalent Right may be granted hereunder to any
Participant as a component of another Award or as a freestanding Award, with such terms and
conditions as set forth by the Committee.



5. Award Agreements. All Awards to Participants under this Plan will be evidenced by a written
agreement (an “Award Agreement”) between Ferro and the Participant containing such terms not
inconsistent with this Plan as the Committee may determine, including such restrictions,
conditions, and requirements as to transferability, continued employment, individual performance or
financial performance of Ferro or a subsidiary or affiliate as the Committee deems appropriate.
Each such Award Agreement will, however, provide that the Award will be forfeitable if, in the
opinion of the Committee, the Participant, without the written consent of Ferro:



(a) Directly or indirectly, engages in, or assists or has a material ownership interest in, or
acts as agent, advisor or consultant of, for, or to any person, firm, partnership, corporation or
other entity that is engaged in the manufacture or sale of any products manufactured or sold by
Ferro, or any subsidiary or affiliate, or any products that are logical extensions, on a
manufacturing or technological basis, of such products;



(b) Discloses to any person any proprietary or confidential business information concerning
Ferro, its subsidiaries, or affiliates or any of the officers, Directors, employees, agents, or
representatives of Ferro, its subsidiaries or affiliates, which the Participant obtained or which
came to his or her attention during the course of his or her employment with Ferro;



(c) Takes any action likely to disparage or have an adverse effect on Ferro, its subsidiaries,
or affiliates or any of the officers, Directors, employees, agents, or representatives of Ferro,
its subsidiaries, or affiliates;



(d) Induces or attempts to induce any employee of Ferro or any of its subsidiaries or
affiliates to leave the employ of Ferro or such subsidiary or affiliate or otherwise interferes
with the relationship between Ferro or any of its subsidiaries or affiliates and any of their
respective employees, or hires or assists in the hiring of any person who was an employee of Ferro
or any of its subsidiaries or affiliates, or solicits, diverts or otherwise attempts to take away
any customers, suppliers, or co-venturers of Ferro, any subsidiary or any affiliate, either on the
Participant’s own behalf or on behalf of any other person or entity; or



(e) Otherwise performs any act or engages in any activity which in the opinion of the
Committee is inimical to the best interests of Ferro.



6. Shares Subject to this Plan. The shares of Common Stock to be issued under this Plan may be
either authorized but unissued shares or previously issued shares reacquired by Ferro and held as
treasury shares, as the Committee may from time to time determine. Subject to adjustment as
provided in Section 7 below, the number of shares of Common Stock reserved for Awards under this
Plan is 3,000,000 shares of Common Stock.



Any shares of Common Stock issued by Ferro through the assumption or substitution of
outstanding grants previously made by an acquired corporation or entity shall not reduce the number
of shares available for Awards under this Plan. If any shares of Common Stock subject to any Award
granted under this Plan are forfeited or if such Award otherwise terminates without the issuance of
such shares or payment of other consideration in lieu of such shares, the shares subject to such
Award, to the extent of any such forfeiture or nonissuance, shall again be available for grant
under this Plan as if such shares had not been subject to an Award (except for Stock Appreciation
Rights). With respect to Stock Appreciation Rights settled in shares of Common Stock, the aggregate
number of shares subject to the Stock Appreciation Right shall be counted against the number of
shares for issuance under this Plan regardless of the number of shares of Common Stock issued upon
settlement. Shares of Common Stock tendered by Participants as full or partial payment to Ferro
upon exercise of Options or other Awards or to satisfy a Participant’s tax withholding obligations
will not increase the shares of Common Stock available for Awards under the Plan.



Subject to adjustment as provided in Section 7 below:



(a) A cumulative maximum of 300,000 shares of Common Stock will be available for issuance with
respect to incentive stock options granted under this Plan;



(b) A cumulative maximum of 1,000,000 shares of Common Stock will be available for issuance
with respect to Restricted Shares, Performance Shares, and Common Stock Awards granted under this
Plan;



(c) A maximum of 500,000 shares of Common Stock will be the subject of Awards granted to any
single Participant during any 12-month period.



7. Adjustments Upon Changes in Capitalization. If the outstanding shares of Common Stock are
changed by reason of any reorganization, recapitalization, stock split, stock dividend, combination
or exchange of shares, merger, consolidation or any change in the corporate structure or Common
Stock of Ferro, then the maximum aggregate number and class of shares of Common Stock as to which
Awards may be granted under this Plan, the maximums described in Section 6 above, the shares of
Common Stock issuable pursuant to then outstanding Awards, and the option price of outstanding
stock options and any related Stock Appreciation Rights shall be appropriately adjusted by the
Committee. If Ferro makes an extraordinary distribution in respect of Common Stock or effects a pro
rata repurchase of Common Stock, the Committee may consider the economic impact of the
extraordinary distribution or pro rata repurchase on Participants and make such adjustments as it
deems equitable under the circumstances. For purposes of this Section 7,



(a) The term “extraordinary distribution” means a dividend or other distribution of (i) cash,
where the aggregate amount of such cash dividend or distribution together with the amount of all
cash dividends and distributions made during the preceding twelve months, when combined with the
aggregate amount of all pro rata repurchases (for this purpose, including only that portion of the
aggregate purchase price of such pro rata repurchases that is in excess of the fair market value of
the Common Stock repurchased during such 12-month period), exceeds ten percent of the aggregate
fair market value of all shares of Common Stock outstanding on the record date for determining the
shareholders entitled to receive such extraordinary distribution, or (ii) any shares of capital
stock of Ferro (other than shares of Common Stock), other securities of Ferro, evidences of
indebtedness of Ferro or any other person, or any other property (including shares of any
subsidiary of Ferro), or any combination thereof; and



(b) The term “pro rata repurchase” means a purchase of shares of Common Stock by Ferro or any
of its subsidiaries or affiliates, pursuant to any tender offer or exchange offer subject to
section 13(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any
successor provision of law, or pursuant to any other offer available to substantially all holders
of Common Stock other than a purchase of shares of Ferro made in an open market transaction.



The determinations of the Committee under this Section 7 shall be final and binding upon all
Participants, in the absence of revision by the Board.



8. Assignment and Transfer. No Award of a Stock Option or a related Stock Appreciation Right shall
be transferable by a Participant or Director except by will or the laws of descent and
distribution, and Stock Options and Stock Appreciation Rights may be exercised during a
Participant’s or Director’s lifetime only by the Participant or Director or the Participant’s or
Director’s guardian or legal representative. Notwithstanding the foregoing, the Committee may, in
its discretion, authorize the transfer of all or a portion of a Stock Option and related Stock
Appreciation Right (other than an incentive stock option), so long as such transfer is made for no
consideration, to:



(a) A Participant’s or Director’s spouse, children, grandchildren, parents, siblings and other
family members approved by the Committee (collectively, “Family Members”);



(b) Trust(s) for the exclusive benefit of such Participant, Director, or Family Members; or



(c) Partnerships or limited liability companies in which such Participant, Director, or Family
Members are at all times the only partners or members.



Any transfer to or for the benefit of Family Members permitted under this Plan may be made
subject to such conditions or limitations as the Committee may establish to ensure compliance under
the Federal securities laws, or for other purposes. Subject to the terms of the Award, a
transferee-Family Member may exercise a Stock Option and/or related Stock Appreciation Right during
or after the Participant’s or Director’s lifetime.



The rights and interests of a Participant or Director with respect to any Award made under
this Plan other than Stock Options and related Stock Appreciation Rights may not be assigned,
encumbered or transferred except, in the event of the death of a Participant or Director, by will
or the laws of descent and distribution; provided, however, that the Board is specifically
authorized to permit assignment, encumbrance, and transfer of any such other Award if and to the
extent it, in its sole discretion, determines that such assignment, encumbrance or transfer would
not produce adverse consequences under tax or securities laws and such transfer is made for no
consideration.



9. Change of Control. Except as the Board may expressly provide otherwise, in the event of a Change
of Control:



(a) All Stock Options (including Director Stock Options) and Stock Appreciation Rights then
outstanding shall become fully exercisable as of the date of the Change of Control;



(b) All restrictions and conditions with respect to all Awards of Restricted Shares then
outstanding shall be deemed fully released or satisfied as of the date of the Change of Control,
except as set forth in paragraph (d) below;



(c) All previously established Performance Targets necessary to achieve 100% of a
Participant’s specified award level for Performance Shares shall be deemed to have been met as of
the date of the Change of Control; and



(d) If the Change of Control occurs during a restriction period applicable to an Award of
Restricted Shares or during a Performance Period applicable to a Performance Share Award, then
Participants will be entitled to receive a prorata proportion of the Award that would have been
distributed to them at the end of the applicable restriction period or Performance Period, based
upon the portion of the applicable restriction period or Performance Period during which the
Participant’s employment continued.



The value of all outstanding Awards, in each case to the extent vested, shall, unless otherwise
determined by the Committee in its sole discretion at or after grant but prior to a Change of
Control, be cashed out on the basis of the change of Control Price. Change of Control Price means
the higher of (i) the closing price on the New York Stock Exchange for the Common Stock on the date
of such Change of Control or (ii) the highest price per share of Common Stock actually paid in
connection with such Change of Control.



For purposes of this Section 9, the term “Change of Control” means a change of control of
Ferro of a nature that would be required to be reported (assuming such event has not been
previously reported) in response to Item 6 (e) of Schedule 14A of Regulation 14A (or any successor
provision) promulgated under the Exchange Act; provided that, without limitation, a Change of
Control shall be deemed to have occurred at such time as (i) any “person” (within the meaning of
section 14(d) of the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of Ferro representing 50% or more of the combined voting power of Ferro’s then
outstanding securities, (ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board cease for any reason to constitute at least a
majority of the Board unless the election, or the nomination for election, by Ferro’s shareholders
of each new Director was approved by a vote of at least two-thirds of the Directors then still in
office who were Directors at the beginning of the period (iii) a merger or consolidation of Ferro
occurs, other than a merger or consolidation that would result in Ferro’s shareholders holding
securities that represent immediately after the merger or consolidation more than fifty percent
(50%) of the voting securities of either Ferro or the other entity that survives such merger or
consolidation (or the parent of such entity) or (iv) Ferro sells or otherwise disposes of all or
substantially all of Ferro’s assets to an entity that is not controlled by Ferro or its
shareholders; provided, however, that no Change of Control shall be deemed to occur solely as a
result of the acquisition of any securities of Ferro by a trust exempt from tax under Section
501(a) of the Code that is formed for the purpose of providing retirement or other benefits to
employees of Ferro, any subsidiary or any affiliate.



10. Employee Rights Under this Plan. No employee or other person shall have any claim or right to
be granted any Award under this Plan. Neither this Plan nor any action taken under this Plan shall
be construed as giving any employee any right to be retained in the employ of Ferro or any
subsidiary or affiliate.



11. Settlement by Subsidiaries and Affiliates. Settlement of Awards held by employees of
subsidiaries or affiliates shall be made by and at the expense of such subsidiary or affiliate.
Ferro either will sell or contribute, in its sole discretion, to the subsidiary or affiliate, the
number of shares needed to settle any Award that is granted under this Plan. In addition, with
respect to Participants who are foreign nationals or employed outside the United States, or both,
the Committee may cause Ferro or a subsidiary or affiliate to adopt such rules and regulations,
policies, sub-plans or the like as may, in the judgment of the Committee, be necessary or advisable
in order to effectuate the purposes of this Plan.



12. Securities Law Issues. The Committee may require each Participant acquiring Common Stock
pursuant to an Award under the Plan to represent to and agree with the Company in writing that the
Participant is acquiring the Common Stock without a view to distribution thereof. Any certificates
for such shares may include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.



All shares of Common Stock or other securities issued under the Plan shall be subject to such
stop-transfer orders and other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Stock is then listed, and any applicable federal or state securities laws,
and the Committee may cause a legend or legends to be placed on any certificates for such shares to
make appropriate reference to such restrictions or to cause such restrictions to be noted in the
records of the Company’s stock transfer agent and any applicable book entry system.



13. Taxes. No later than the date as of which an amount first becomes includable in the gross
income of the Participant for federal income tax purposes with respect to any Award under the Plan,
the Participant shall pay to the Company, or make arrangements satisfactory to the Committee
regarding the payment of, any federal, state or local taxes or other items of any kind required by
law to be withheld with respect to such amount. Subject to the following sentence, unless otherwise
determined by the Committee, withholding obligations may be settled with Common Stock, including
unrestricted Common Stock previously owned by the Participant or Common Stock that is part of the
Award that gives rise to the withholding requirement. Notwithstanding the foregoing, any election
by a Section 16 Participant to settle such tax withholding obligation with Common Stock that is
previously owned by the Participant or part of such Award shall be subject to prior approval by the
Committee, in its sole discretion which may be granted in the applicable Award Agreement. The
obligations of the Company under the Plan shall be conditional on such payment or arrangements and
the Company and its Subsidiaries and Affiliates to the extent permitted by law shall have the right
to deduct any such taxes from any payment of any kind otherwise due to the Participant.



14. Amendment or Termination. Ferro reserves the right to amend, modify or terminate this Plan at
any time and, by action of the Committee and, if such amendment, modification or termination
impairs the rights of a Participant, with the consent of such Participant, to amend, modify or
terminate any outstanding Award Agreement, except to the extent that shareholder approval is
required pursuant to any applicable law, regulation or rule, including any rule relating to the
listing on a national securities exchange of Ferro Common Stock, and except with respect to any
adjustment or amendment affecting the value of a Stock Option or Stock Appreciation Right not
permitted under paragraph 4(a) or 4(b) above. Subject to the above provisions, the Committee shall
have all necessary authority to amend this Plan, clarify any provision or take into account changes
in applicable securities and tax laws or accounting rules in administering this Plan.



15. Effective Date and Term of Plan. This Plan is adopted by the Board as of September 28, 2006,
subject to subsequent approval by Ferro shareholders. No Awards shall be made under this Plan after
December 31, 2016, provided that any Awards outstanding on such date shall not be affected and
shall continue in accordance with their terms.



101563458.1