8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 13, 2009

FUEL TECH, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation) 001-33059
(Commission
File Number) 20-5657551
(IRS Employer
Identification No.)

Fuel Tech, Inc.
27601 Bella Vista Parkway
Warrenville, IL 60555-1617
630-845-4500

(Address and telephone number of principal executive offices)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provision:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1 — Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement

A. On February 25, 2009, the Compensation and Nominating Committee (the “Committee”) of the Board of Directors of Fuel Tech, Inc. (the “Registrant” or “Fuel Tech”):

     (1) finalized amendments to Fuel Tech’s Corporate Incentive Plan (the “CIP”), including (a) establishing the performance targets and employee group allocation percentages for potential annual incentive awards for fiscal 2009 under the CIP, and (b) establishing the effectiveness of the 2009 CIP to be the earlier of the date the CIP is distributed to eligible employees or March 15, 2009; and

     (2) compared Fuel Tech’s actual financial performance for fiscal 2008 to the pre-determined performance targets for fiscal 2008 under the CIP, and concluded that, because the minimum EBIT performance target for fiscal 2008 had not been achieved, no incentive bonuses will be paid out under the CIP for fiscal 2008.

     The discussion of the CIP set forth below does not purport to be complete and is qualified in its entirety by reference to the Corporate Incentive Plan which is filed as Exhibit 99.1 to this Report.

B. Fuel Tech’s financial performance is measured under the CIP based upon three critical financial metrics. These financial metrics, which are measured as of the end of each fiscal year, include EBIT, revenues and backlog in Fuel Tech’s air pollution control business segment. Specifically, “EBIT” refers to the Registrant’s earnings before interest expense, taxes, profit sharing contributions, sales commissions and incentive pay, “revenues” refers to the Registrant’s net sales and “backlog” refers to customer orders for air pollution control equipment construction projects that have not yet been recognized under the percentage of completion method of accounting for revenue recognition in Fuel Tech’s consolidated statements of income. The achievement of the performance targets for EBIT, revenues and backlog each result in a percentage of EBIT being contributed to an incentive pool. However, regardless of Fuel Tech’s performance for the revenue or backlog metrics, if the minimum level of EBIT is not achieved during the year under review, the incentive pool is not funded and, consequently, no incentive bonuses are paid. If the minimum level of EBIT is achieved for the year in review, then the percentage of EBIT set aside to fund the incentive pool is based upon Fuel Tech’s performance against the pre-established performance targets in each of the EBIT, revenues and backlog categories.

C. For fiscal 2009, the minimum and target incentive pool amounts have been established at $400,000 and $2,640,000. If the Committee determines the minimum EBIT performance target has been met for fiscal 2009, all amounts in the incentive pool will be allocated among employees as follows: Officers, 45.5%; MBO Employees 47.5% and Core Group, 7%.

D. The following table sets forth the cash bonus opportunity for each of the Registrant’s named executive officers under the CIP for fiscal 2009 if Fuel Tech achieves the target bonus pool amount under the CIP. The actual amounts of fiscal 2009 cash bonuses earned, if any, for the named executive officers will be reported in the Registrant’s proxy statement for its 2010 Annual Meeting of Shareholders.

Name	Title	Target(1)
John F. Norris Jr.	Chief Executive Officer and President	$	221,500
John P. Graham	Chief Financial Officer, Sr. Vice President and Treasurer	$	120,000
Stephen P. Brady (2)	Sr. Vice President— Fuel Chem Sales	NA
Michael P. Maley(3)	Sr. Vice President, International & Project Execution	NA
Volker Rummenhohl (4)	Vice President, Catalyst Technologies	NA

(1)	Payouts under the CIP are dependent on overall corporate performance and achievement of individual performance goals. Accordingly, only the target awards (assuming all individual goals are met) are shown. Because the aggregate size of the potential Incentive Pool is restricted only by the level of the Registrant’s financial performance for the applicable fiscal year, no estimates of maximum payout amounts have been included.
(2)	Mr. Brady is not eligible to participate in the CIP. Mr. Brady will be eligible to receive certain sales commission payments in fiscal 2009 pursuant to the Officer Commission Plan discussed below.
(3)	Mr. Maley resigned from the Registrant effective February 13, 2009 as reported in the Registrant’s Current Report on Form 8-K filed February 5, 2009.
(4)	Mr. Rummenhohl is not eligible to participate in the CIP pursuant to his employment agreement with the Registrant.

E. The Committee approved the Registrant’s Senior Vice President Sales—FUEL CHEM^® Sales Commission Plan (the “Officer Commission Plan”). The Officer Commission Plan provides for sales commission payments to be made to the Registrant’s Senior Vice President, Fuel Chem Sales based upon the sale of products and services relating to the Registrant’s FUEL CHEM line of business. Under the Officer Commission Plan, Fuel Tech will pay to such officer a commission equal to a specified percentage of all commission payments made by Fuel Tech under the FUEL CHEM employee sales commission plan. Mr. Brady is the Registrant’s Senior Vice President, Fuel Chem Sales.

     An amount equal to one-third of all commission otherwise payable to the officer under the Officer Commission Plan (“Contingent Commission”) is withheld and only paid if predetermined performance annual targets are met. The predetermined performance target is based upon net revenues recognized from FUEL CHEM sales in the applicable fiscal year in the United States, Puerto Rico, Jamaica and Canada. Notwithstanding the foregoing, all or a portion of the officer’s Contingent Commission may be paid, if (i) approved in writing at the sole discretion of the Registrant’s Chief Executive Officer, and (ii) the annual FUEL CHEM revenue budget has been substantially, but not fully, achieved. The Contingent Commission is payable on or before March 31^st of the following year in which the Contingent Commission is earned.

     The discussion of the Officer Commission Plan set forth above does not purport to be complete and is qualified in its entirety by reference to the Officer Commission Plan which is filed as Exhibit 99.2 to this Report.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1	Corporate Incentive Plan of Fuel Tech, Inc.
99.2	Fuel Tech, Inc. Senior Vice President Sales — FUEL CHEM Sales Commission Plan.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Fuel Tech, Inc. (Registrant)
Date: March 19, 2009	By:	/s/ John P. Graham
		John P. Graham
		Chief Financial Officer, Sr. Vice President and Treasurer

EX-99.1

EXHIBIT 99.1

CORPORATE INCENTIVE PLAN

U.S. BASED EMPLOYEES

1. The Plan

The Corporate Incentive Plan (“Incentive Plan” or “CIP”) of Fuel Tech, Inc. a Delaware corporation, including its wholly owned subsidiaries (the “Company”), is designed to provide employees with financial incentives based on both assessed individual performance as well as company financial results. Company financial results will be measured in terms of EBIT, Revenues and Air Pollution Control (APC) segment backlog (“APC Backlog” or “Backlog”). The Plan is an annual bonus plan based on successive fiscal year performance periods commencing January 1, 2009, with payouts based on each fiscal year’s performance.

2. Plan Supersedes All Prior Incentive Compensation Programs

Except for the Sales Group Commission Plans (as that term is defined below) and the Company’s “Fuel Tech, Inc. Incentive Plan,” as amended, this CIP supersedes and replaces all prior incentive compensation programs for all regular, full-time and part-time U.S. based employees of the Company and its wholly owned subsidiaries.

3. Eligibility

Subject to the exceptions stated below, all regular, full-time and part-time U.S. based employees of the Company and its wholly owned subsidiaries are eligible to participate in this Incentive Plan, as it may be amended or modified from time to time.

The Sales Group (as that term is defined below) is not eligible to participate in the Incentive Plan. Also ineligible, is any employee who has agreed to ineligibility via a separate written agreement with the Company.

The “Sales Group” means those United States or Canada employees of the Company whom the Company selects to participate in the Company’s then current FUEL CHEM Sales Commission Plan or APC Sales Commission Plan (collectively, the “Sales Group Commission Plans”).

Eligible employees must be employed on the last day of a fiscal year (December 31) in order to be eligible for a payout under the Incentive Plan based on that fiscal year’s performance. No amounts will be deemed earned or payable under the Incentive Plan by any employee whose employment with the Company ends on or before the last day of the fiscal year. An Eligible Employee deemed to be eligible for a payout in accordance with the provisions of the Incentive Plan for a given fiscal

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year, need not be employed on the day of a bonus payout under this Incentive Plan for such fiscal year in order to be eligible for the payout.

Notwithstanding the preceding paragraph, if, during a fiscal year in which the Incentive Plan is in effect, an Eligible Employee’s employment with the Company is involuntarily terminated: (a) not for cause by the Company, or (b) on account of the Eligible Employee’s death, or (c) on account of the Eligible Employee’s disability (as that term is defined below), then to the extent and at the time the Company determines there shall be a payout for that fiscal year under the Incentive Plan, the affected Eligible Employee shall be eligible for a pro rata Incentive Plan payment (or, in the case of death, to that employee’s estate) in accordance with the applicable calculations of Section 4, “Incentive Plan Payouts” and subject to all the other provisions of the Incentive Plan. However, for such pro rata payment calculations, only the normal employee wages, excluding bonuses or severance payments, paid by the Company to the affected employee through that employee’s separation date from the Company shall be used in such pro rata payment calculations.

“Disability” means that the Eligible Employee, after exhausting any applicable leave available under the Company’s policies, is unable because of physical or mental condition to perform the essential functions of the Employee’s position, with or without a reasonable accommodation.

4. Incentive Plan Payouts

Incentive Plan payouts are based on Company and individual performance. An “Incentive Pool” is created based on the Company’s performance during the fiscal year. The amounts in the Incentive Pool are then allocated among employee groups in specified percentages. The individual members of each employee group are then awarded a portion of their group’s allocation of the Incentive Pool on or about March 15 in the year following the fiscal year earned. The methodology for calculating Incentive Plan payouts is more fully described below. Amounts shall be paid no later than the 15th day of the third month following the end of the Eligible Employee’s first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture.

(a.) Establishing an Incentive Pool Based on Company Performance

A percentage of EBIT is set aside in an Incentive Pool with respect to each fiscal year to provide for bonus payments under this Incentive Plan based on performance in the following three categories: (i) EBIT, (ii) Revenue and (iii) APC backlog. The percentage of EBIT that is set aside based on the Company’s achievement of financial targets for each of these three categories shall be determined by the Committee after consideration of the recommendations of the Company’s Chief Executive Officer.

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No amounts shall be payable under this Incentive Plan for any fiscal year unless the Company has achieved the established minimum threshold of EBIT for such fiscal year. Accordingly, if the Company’s financial performance for the fiscal year falls below the established minimum threshold of EBIT, there is no payout under the Incentive Plan of any kind, regardless of the annual Revenue or year-end APC Backlog amounts. Once the minimum EBIT threshold is met, EBIT contribution from the Revenue and APC Backlog accomplishments are added into the Incentive Pool to the extent, if any, that the applicable performance thresholds have been met.

Once the Company’s minimum threshold of EBIT is met, the percentage of EBIT set aside in the Incentive Pool for each performance category rises proportionally based on actual Company performance using the guidelines established by the Committee.

(b.) Allocating the Incentive Pool Among Employee Groups

The money in the Incentive Pool with respect to each fiscal year shall be allocated among three employee groups: (1) Officers, (2) MBO Employees and (3) the Core Group. The Core Group shall consist of all Eligible Employees who have not been expressly designated by the Company to participate in either the Officer or the MBO Employee groups.

The percentage values established for each employee group are reviewed and modified for each fiscal year. The allocation percentages are determined with the intention of allowing each employee in the Officer and MBO Employee groups to attain his or her target payout, and to allow employees in the Core Group to participate in Company profitability, however, only if the Company as a whole attains the required results established for the fiscal year.

(c.) Rewarding Individual Performance

The manner in which funds from the Incentive Pool are allocated among individual employees depends on the employee group (Officer, MBO Employee, or Core) of which the individual is a member. The methods of allocation for each employee group are as follows:

(i) Officer and MBO Employee Groups

For the Officer and MBO Employee participants, the individual payouts from their portion of the Incentive Pool will be determined by (A) the percentage achievement of their personal goals as established for the fiscal year, plus (B) their teamwork in helping achieve the overall corporate results. More specifically, each employee in the Officer and MBO Employee groups is assigned a target payout percentage. At the end of each fiscal year, each employee’s performance is reviewed relative to the goals that were established for the employee and relative to that employee’s level of participation in achieving overall corporate goals. Based on this review, an

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employee may achieve anywhere from 0% to 200% of his or her target payout percentage.

(ii) Core Group

For the Core Group of employees, payouts under this Incentive Plan will be determined by dividing their annual compensation by the compensation of all others in that group. This calculation determines the percentage of the pool dollars for that group allocated to the employee. Annual compensation for exempt employees includes base salary. Annual compensation for non-exempt employees includes pay for regular time plus overtime pay. This process will automatically prorate employees who join the Company or one of its wholly owned subsidiaries throughout the year.

5. Definitions of Key Terms

(a.) APC Backlog

For purposes of this Incentive Plan, the term “APC Backlog” refers generally to revenue to which the Company has a legally binding, contractual right, and which is associated with its APC product line, and that has not yet been recognized in the Company’s profit and loss statement, but shall be as determined by the Company, in its sole discretion.

(b.) Committee

The term “Committee” as used in this Incentive Plan means the Compensation & Nominating Committee of the Company’s Board of Directors or such other Committee as may from time to time succeed to or perform the functions of that Committee.

(c.) EBIT

For purposes of this Incentive Plan, the term “EBIT” refers generally to earnings before interest expense, taxes, profit sharing plan contributions, sales commissions and incentive pay, but shall be as determined by the Company, in its sole discretion, with the assistance of its accountants.

(d.) Eligible Employee

The term “Eligible Employee” means a regular full-time or part-time employee of Fuel Tech, Inc. or one of its wholly owned subsidiaries that is eligible to participate in this Incentive Plan in accordance with Paragraph 3 above.

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(e.) MBO Employee

As used in this Incentive Plan, the term “MBO Employee” refers to an employee who for the then current fiscal year or portion thereof, as applicable, has been categorized to be a participant in the MBO pool by the Company, in its sole discretion.

(f.) Revenue

For purposes of this Incentive Plan, the term “Revenue” refers to the Company’s net sales, but shall be as determined by the Company, in its sole discretion.

6. Other Conditions

(a.) No Alienation of Awards

Payouts under this Incentive Plan may not be assigned or alienated, except that payouts earned and payable may be assigned under the laws of descent and distribution of the employee’s domicile.

(b.) No Right of Employment

Neither the Incentive Plan nor any action taken under the Incentive Plan shall be construed, expressly or by implication, as either giving to any participant the right to be retained in the employ of the Company or any affiliate, or altering or limiting the employment-at-will relationship between the Company and any employee.

(c.) Taxes, Withholding

The Company or any affiliate shall have the right to deduct from any payout under the Incentive Plan any applicable federal, state or local taxes or other amounts required by applicable law, rule, or regulation to be withheld with respect to such payment.

(d.) Code Section 409A

The Incentive Plan is intended to be exempt from or comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

7. Plan Administration; Effectiveness for any Fiscal Year

(a.) Administration

The Incentive Plan shall be administered by or under the authority of the Committee which shall have the full discretionary power to administer and interpret this Incentive Plan and to establish rules for its administration.

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(b.) Effectiveness

The Incentive Plan will not be deemed effective for any fiscal year until such time, if any, as the determination of the Incentive Plan performance targets and Incentive Pool allocations contemplated by Sections 4(a) and (b) above have been released for communication to Incentive Plan participants which date shall be no later than March 15^th of each fiscal year.

8. Reservation of Rights, Governing Law, Contract Disclaimer

The Company reserves the right to amend or cancel the Incentive Plan in whole or in part at any time without notice. There can be no guaranty that the Incentive Plan will be in effect in any subsequent fiscal year. The Company also reserves the right to decide all questions and issues arising under the Incentive Plan and its decisions are final. The Incentive Plan shall be construed in accordance with and governed by the laws of the State of Illinois. The Incentive Plan is a statement of the Company’s intentions and does not constitute a guarantee that any particular Incentive Plan payment amount will be paid. It does not create a contractual relationship or any contractually enforceable rights between the Company or its wholly owned subsidiaries and the employee.

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EX-99.2

EXHIBIT 99.2

FUEL TECH, INC.

Sr. Vice President Sales — FUEL CHEM^®
Sales Commission Plan

1. OBJECTIVES; EFFECTIVE DATE

     1.1 Objectives. This Sr. Vice President Sales — FUEL CHEM Sales Commission Plan (“Plan”) describes the terms upon which Fuel Tech, Inc. (“Fuel Tech”) will compensate its Sr. Vice President, FUEL CHEM Sales for the sale of products and services relating to its FUEL CHEM line of business for sales occurring in the United States, Puerto Rico, Jamaica and Canada. The objective of this Plan is to increase the revenues and profitability of Fuel Tech by providing compensation incentives to the Sr. Vice President, FUEL CHEM Sales that reward results in new unit sales while also promoting continuing sales relationships with existing customers.

     1.2 Effective Date. This Plan shall be effective as of January 1, 2009.

2. DEFINITIONS

“Commission” — means the commission paid to the Officer in accordance with this Plan.

“Eligible Employee” — means any Fuel Tech employee eligible for participation in the Employee Sales Commission Plan, as such plan may be amended in Fuel Tech’s sole discretion.

“Employee Sales Commission Plan” — means the 2009 FUEL CHEM Employee Sales Commission Plan, as such plan may be amended in Fuel Tech’s sole discretion.

“Officer” — means Fuel Tech’s Sr. Vice President, FUEL CHEM Sales.

“Specified Percentage” — means the confidential percentage rate provided to the Officer together with this Plan.

3. COMMISSION

3.1 Officer Commission. Fuel Tech shall pay to the Officer a Commission equal to the Specified Percentage of all commission payments by Fuel Tech to Eligible Employees

under the Employee Sales Commission Plan; provided, however, that Fuel Tech shall be entitled to offset from such payments an amount equal to the Specified Percentage of any and all offsets made to commission payments to Eligible Employees under the Employee Sales Commission Plan. Such Commission shall be payable, if at all, in accordance with Paragraph 4 below.

4. CALCULATION AND PAYMENT OF COMMISSIONS

4.1 Payments.

     4.1.1 Quarterly Payments. Following the end of each calendar quarter during which this Plan is in effect, Fuel Tech will (a) determine the aggregate amount of Commission due to the Officer based upon Fuel Tech’s then-current internal accounting records in accordance with GAAP, and (b) pay the Officer two-thirds of the amount of such Commission from the prior calendar quarter within forty-five (45) days, subject to any offsets (it being understood that the remaining one-third of such Commission shall only be paid, if at all, in the manner contemplated by Paragraph 4.1.2 below).

     4.1.2 Annual Payment of Contingent Commission. Fuel Tech shall hold back one-third of the amount of all Commission otherwise payable to the Officer under Paragraph 4.1.1 above (the “Contingent Commission”). The Contingent Commission shall only be paid if, at the end of each calendar year, the aggregate dollar value of all Net Revenues recognized in such year meets or exceeds the annual FUEL CHEM revenue budget for the United States, Puerto Rico, Jamaica and Canada for such year; provided, however, that all or a portion of the Contingent Commission may be paid, if (a) approved in writing at the sole discretion of Fuel Tech’s Chief Executive Officer, and (b) the applicable annual FUEL CHEM revenue budget has been substantially, but not fully, achieved. The Contingent Commission payable under this Plan, if any, shall be paid on or before March 31^st of the following year in which the Contingent Commission is earned.

5. ADDITIONAL TERMS

5.1 Dispute Resolution. Disagreements or disputes between Fuel Tech and the Officer arising out of or relating to the interpretation of this Plan shall be submitted to the Chief Executive Officer and Chief Financial Officer for resolution. Such officers shall decide the issue in their sole and absolute discretion. Any such decision shall be final and binding. For the avoidance of doubt, it is understood that the Officer shall not be entitled to participate in any other incentive plan or arrangement offered by Fuel Tech.

5.2 Modification, Amendment or Termination. This Plan is subject to modification, amendment or termination at any time at the discretion of Fuel Tech. Fuel Tech shall

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provide the Officer with written notice of any such modification, amendment or termination.

5.3 Payout upon Termination of Employment. If the Officer ceases to be employed by Fuel Tech for any reason whatsoever, the Officer will be paid solely the amount of all Commissions payable as of the last day of the calendar month immediately preceding the date of cessation of employment. Such payment shall be made within 30 days of the end of the Officer’s employment. No further amounts shall be due and payable to the Officer pursuant to this Plan after such payment. The Officer shall not be entitled to receive payment of the Contingent Commission, or any portion thereof, unless the Officer is employed by Fuel Tech through the end of the year to which such Contingent Commission relates.

5.4 No Effect on Employment. This Plan is not intended to and does not in any way alter the at-will nature of the Officer’s employment with Fuel Tech, nor does it constitute a guarantee of employment for a specified period. Employment with Fuel Tech is at will, which means that either the Officer or Fuel Tech may terminate the employment relationship at any time, without or without cause or prior notice. This Plan does not create a contractual relationship or any contractually enforceable rights between the Company or its wholly owned subsidiaries and the employee.

5.5 Disclaimer. There is no guarantee that this Plan will be effective in subsequent years, and, if effective, the terms, conditions and provisions of any such plan shall be determined in the sole and absolute discretion of the Compensation and Nominating Committee of the Board of Directors of Fuel Tech.

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